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EXHIBIT 8
[LETTERHEAD OF JACKSON & KELLY PLLC]
June 22, 2000
Citizens National Bank of Berkeley Springs
212 S. Washington Street
P. O. Box 130
Berkeley Springs, West Virginia 25411-0130
Re: Certain Federal Income Tax Consequences of Merger of CNB
Interim Bank, Inc., a wholly-owned Subsidiary of CNB
Financial Services, Inc., with and into Citizens National
Bank of Berkeley Springs
Ladies and Gentlemen:
We have acted as special counsel to Citizens National Bank of
Berkeley Springs ("Citizens National"), in connection with the proposed merger
(the "Merger") of CNB Interim Bank, Inc. ("Merger Sub"), a wholly-owned
subsidiary of CNB Financial Services, Inc. ("CNB") into Citizens National. The
Merger will be effected pursuant to the Agreement and Plan of Merger by and
among Citizens National, CNB and Merger Sub, dated as of April 5, 2000 (the
"Agreement").
In our capacity as counsel to Citizens National, our opinion
has been requested with respect to all material federal income tax consequences
associated with the proposed Merger. In rendering this opinion, we have examined
(i) the Internal Revenue Code of 1986, as amended (the "Code"), and Treasury
Regulations promulgated thereunder, (ii) the legislative history of applicable
sections of the Code, and (iii) appropriate Internal Revenue Service and
judicial authorities. In addition, we have relied upon certain information made
known to us as more fully described below. All capitalized terms used herein
without definition shall have the respective meanings specified in the
Agreement, and, unless otherwise specified, all section references herein are to
the Code.
In our capacity as counsel to Citizens National in the Merger,
and for purposes of rendering the opinions expressed herein, we have examined
and relied upon such documents as we have deemed appropriate, including:
(1) the Agreement and exhibits thereto;
(2) the Registration Statement and Proxy Statement/Prospectus
being filed with the Securities and Exchange Commission
regarding the Merger; and
(3) such additional documents as we have considered relevant.
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Citizens National Bank of Berkeley Springs
June 22, 2000
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We have also obtained written certification letters (the
"Certification Letters") from CNB, Merger Sub and Citizens National to verify
certain facts that we have assumed in rendering this opinion. Before rendering
our opinion in connection with the closing of the Merger, we intend to obtain
appropriate written certificates to confirm certain material facts that we have
assumed herein.
In connection with our review of the Agreement, the written
certificates described above, and the other documents described herein, we have
assumed, with your consent, that all documents submitted to us as photocopies
faithfully reproduce the originals thereof, that such originals are authentic,
that all such documents have been or will be duly executed to the extent
required and that all statements set forth in such documents are accurate. We
also have assumed, without independent verification or investigation, that (i)
we have been provided with true, correct and complete copies of all such
documents, (ii) none of the documents has been amended or modified; (iii) all
such documents are in full force and effect in accordance with the terms
thereof; (iv) there are no other documents which affect the opinions hereinafter
set forth; and (v) the documents reviewed by us reflect the entire agreement of
the parties thereto with respect to the subject matter thereof. We have further
assumed that any representations or statements made "to the best knowledge of"
or similarly qualified, are true and correct without such qualification. With
your permission, we have also assumed certain other factual matters set forth
more fully below.
We have not made an independent investigation of the
Registration Statement. Consequently, we have relied upon your representation
that the information presented in the Registration Statement or otherwise
furnished to us accurately and completely describes all material relevant facts.
You have advised us that the proposed Merger: (i) will permit
greater flexibility to Citizens National in meeting financial needs of its
customers; (ii) will provide a vehicle for growth and potential geographic
diversification; and (iii) may provide additional funding sources for Citizens
National, as well as better access to capital markets. To achieve these goals,
the following will occur pursuant to the Agreement:
(1) Merger Sub will merge with and into Citizens National
pursuant to the terms of the Agreement and the laws of the State of West
Virginia. Merger Sub's separate corporate existence will cease to exist, and
Citizens National will be the surviving corporation. Thereafter, Citizens
National will be a wholly-owned subsidiary of CNB, and will continue to operate
the businesses of Citizens National conducted prior to the Merger;
(2) The only class of Citizens National Stock outstanding is
Common Stock, par value of $10.00 per share ("Citizens National Common Stock").
Each share of Citizens National Common Stock (excluding shares held by Citizens
National stockholders who perfect their dissenters' rights of appraisal) issued
and outstanding immediately prior to the Effective Time of the Merger, as
defined in the Agreement, (the "Effective Time") shall, as of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
thereof, be converted into and exchanged for the right to receive shares of CNB
Common Stock (as defined in the Agreement) in accordance with the Agreement;
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Citizens National Bank of Berkeley Springs
June 22, 2000
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(3) At the Effective Time the holders of certificates
representing Citizens National Common Stock, including holders of Dissenting
Shares, shall cease to have any rights as stockholders of Citizens National; and
(4) Fractional shares of CNB Common Stock will be issued as a
result of the proposed Merger.
With your consent, and the consent of CNB and Merger Sub, we
have also assumed that the following statements of fact are true as of the date
hereof and will be true as of the Effective Time and that you, CNB, and Merger
Sub will reaffirm these representations at the Effective Time. Jackson & Kelly
PLLC has not independently verified the completeness and accuracy of any of the
following representations. Furthermore, to the extent that these assumptions and
representations contain legal conclusions, Jackson & Kelly PLLC did not rely
upon those legal conclusions. Jackson & Kelly PLLC is relying on these
representations in rendering the opinions contained herein:
(1) The Merger will be consummated in compliance with the
material terms of the Agreement, and none of the material terms and conditions
therein have been waived or modified, and neither Citizens National nor CNB has
any plan or intention to waive or modify any material conditions of the
Agreement.
(2) The ratio for the exchange of shares of CNB Common Stock
in exchange for shares of Citizens National Common Stock was negotiated through
arm's length bargaining. The fair market value of CNB Common Stock (including
any fractional share interest) received by the stockholders of Citizens National
will be, in each instance, approximately equal to the fair market value of the
Citizens National Common Stock surrendered in exchange therefor;
(3) Following the Merger, Citizens National will hold at least
90% of the fair market value of its net assets and at least 70% of the fair
market value of its gross assets (including assets disposed of by Citizens
National prior to or subsequent to the merger and in contemplation thereof)
(including without limitation any asset disposed of by Citizens National, other
than in the ordinary course of business, pursuant to a plan or intent existing
during the period ending on the Effective Date and beginning with the
commencement of negotiations; whether formal or informal, with CNB regarding the
Merger) and at least 90% of the fair market value of Merger Sub's net assets and
at least 70% of the fair market value of Merger Sub's gross assets held
immediately prior to the Merger. For purposes of this representation, amounts
paid by Citizens National or Merger Sub to dissenters, amounts paid by Citizens
National or Merger Sub to stockholders who receive cash or other property,
amounts used by Citizens National or Merger Sub to pay reorganization expenses
or other expenses incurred in connection with the Merger, amounts, if any, used
by Citizens National to make payments to employees, for severance and
termination of employment contracts, and all redemptions and distributions
(except for regular, normal dividends) made by Citizens National will be
included as assets of Citizens National or Merger Sub, respectively, immediately
prior to the Merger;
(4) Prior to the Merger, CNB will be in control of Merger Sub
within the meaning of Section 368(c) of the Code. Code Section 368(c) defines
control to mean ownership of stock possessing at
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Citizens National Bank of Berkeley Springs
June 22, 2000
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least 80% of the total combined voting power of all classes of stock entitled to
vote and at least 80% of the total number of shares of each other class of stock
of the corporation;
(5) Citizens National has no plan or intention to issue
additional shares of its stock that would result in CNB losing control of
Citizens National within the meaning of Section 368(c) of the Code;
(6) During the five year period beginning on the Effective
Date, neither CNB nor any "CNB Related Person" (as defined below) has (i) any
plan or intention to purchase, redeem or otherwise acquire any of the CNB Common
Stock that will be issued pursuant to the Merger or (ii) participated in or will
participate in any purchase, redemption or other acquisition of Citizens
National Common Stock in contemplation or as part of the Merger. For purposes of
this paragraph, any arrangement that would result in a reduction of the risk of
loss with respect to the holding of any interest in the shares of CNB Common
Stock or Citizens National Common Stock as the case may be shall constitute an
acquisition of such shares.
"CNB Related Person" is (i) a member of its affiliated group
within the meaning of Section 1504 of the Code, (ii) a corporation as to which
CNB owns, actually or constructively, 50% or more of the total voting power or
total value of the shares of all classes of stock outstanding, or (iii) a
corporation which owns, actually or constructively, 50% or more of the total
voting power or total value of the shares of all classes of stock of CNB. A
person will be related to CNB for this purpose if such relationship exists
either immediately before or immediately after such acquisition or arises in
connection with the Merger, and a person that is a partner in a partnership will
be deemed to own or have acquired stock that such partnership acquired in
accordance with the partner's interest in the partnership;
(7) During the five-year period ending on the Effective Date,
neither Citizens National nor any "Citizens National Related Person" (as defined
below) has (i) purchased, redeemed or otherwise acquired any Citizens National
Common Stock in contemplation or as part of the Merger or (ii) will acquire any
Citizens National Common Stock prior to the Merger. During the five-year period
ending on the Effective Date, neither Citizens National nor any Citizens
National Related Person has made any extraordinary distribution with respect to
Citizens National stock. For purposes of this paragraph, any arrangement that
would result in a reduction of the risk of loss with respect to the holding of
any interest in the shares of Citizens National Common Stock shall constitute an
acquisition of such shares.
A "Citizens National Related Person" is (i) a corporation as
to which Citizens National owns actually or constructively 50% or more of the
total voting power or total value of the shares of all classes of stock
outstanding, or (ii) a corporation which owns actually or constructively 50% or
more of the total voting power or total value of all shares of all classes of
stock of Citizens National. A person will be deemed related to Citizens National
for this purpose if such relationship exists either immediately before or
immediately after such acquisition, and a person that is a partner in a
partnership will be deemed to own or have acquired any stock that such
partnership acquired in accordance with the partner's interest in the
partnership;
(8) CNB has no plan or intention to liquidate Citizens
National; to merge Citizens National with or into another corporation other than
Merger Sub; to sell or otherwise dispose of the stock of Citizens National
except for transfers of stock to corporations controlled by CNB; or to cause
Citizens National to sell or otherwise dispose of any of its assets or of any of
the assets acquired from Merger Sub,
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June 22, 2000
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except for dispositions made in the ordinary course of business or transfers of
assets to a corporation controlled by Citizens National;
(9) Merger Sub will have no liabilities assumed by Citizens
National, and it will not transfer to Citizens National any assets subject to
liabilities, in the Merger;
(10) At the time of the Merger, the only class of issued and
outstanding stock of Citizens National will be the Citizens National Common
Stock;
(11) In the Merger, shares of Citizens National stock
representing control of Citizens National, as defined in Section 368(c) of the
Code, will be exchanged solely for CNB Common Stock. For purposes of this
representation, shares of Citizens National stock exchanged for cash or other
property originating with CNB will be treated as outstanding Citizens National
stock on the date of the Merger;
(12) The Citizens National Common Stock to be surrendered by
each stockholder of Citizens National will not be subject to any liability, and
neither Citizens National nor CNB will assume any liability with respect to the
surrendered Citizens National Common Stock;
(13) At the time of the Merger, Citizens National will not
have outstanding any warrants, options, convertible securities, or any other
type of right pursuant to which any person could acquire stock in Citizens
National that, if exercised or converted, would affect CNB's acquisition or
retention of control of Citizens National, as defined in Section 368(c) of the
Code;
(14) Neither CNB nor any CNB Related Person owns, directly or
indirectly, nor has it or any CNB Related Person owned during the past five
years, directly or indirectly, any shares of the stock of Citizens National;
(15) Following the Merger, Citizens National will either
continue its historic business or use a significant portion of its historic
business assets in a business;
(16) CNB, Merger Sub, Citizens National and the stockholders
of Citizens National will pay their respective expenses, if any, incurred in
connection with the Merger;
(17) There is no intercorporate indebtedness existing between
CNB and Citizens National or between Merger Sub and Citizens National that was
issued, acquired, or will be settled at a discount;
(18) CNB will not issue cash in lieu of fractional share
interests;
(19) None of the compensation received, or to be received, by
any stockholder-employees of Citizens National will be separate consideration
for, or allocable to, any of their shares of Citizens National Common Stock;
none of the shares of CNB Common Stock or cash received, or to be received, by
any stockholder-employees of Citizens National pursuant to the Merger will be
separate consideration for, or allocable to, any employment agreement; and the
compensation paid to any stockholder-employees of Citizens
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Citizens National Bank of Berkeley Springs
June 22, 2000
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National will be for services actually rendered, or to be rendered, and will be
commensurate with amounts paid to third parties bargaining at arm's length for
similar services;
(20) The only consideration to be received, directly or
indirectly, by holders of Citizens National Common Stock in the Merger is CNB
Common Stock. CNB has not agreed to assume, nor will it, directly or indirectly,
assume any expense or liability, whether contingent or fixed, of any holder of
Citizens National Common Stock. CNB has no plan or intention to contribute any
additional capital to Citizens National, to purchase additional Stock of
Citizens National or to make any loans to Citizens National following the Merger
for the purpose of directly or indirectly paying any additional consideration to
any holders of Citizens National Common Stock. None of the Citizens National
Common Stock exchanged for CNB Common Stock in the Merger will be subject to any
liabilities. No part of the consideration exchanged for Citizens National Common
Stock will be received by a shareholder as a creditor, employee, or in any
capacity other than that of a stockholder of Citizens National;
(21) The Agreement and documents, agreements and other matters
specifically identified therein represent the entire understanding of CNB,
Merger Sub and Citizens National with respect to the Merger contemplated
thereby, and the Merger will be effected in accordance with the Agreement;
(22) The Merger is being undertaken for one or more valid
business purposes, including those described herein;
(23) Merger Sub is a corporation newly formed for the purpose
of participating in the Merger and at no time prior to the Merger has had assets
or business operations; and
(24) Either (a) no shares of Citizens National Common Stock,
if any, that were acquired in connection with the performance of services are
subject to substantial limitations upon continued ownership or (b) any shares of
CNB Common Stock received in exchange for shares of Citizens National Common
Stock that were acquired in connection with the performance of services and are
subject to substantial limitations on continued ownership will be subject to
substantially the same limitations on continued ownership after the Merger.
In addition to the mutual representations you, CNB and Merger
Sub have made to us, with your consent, we have also assumed that the following
statements are true as of the date hereof and will be true as of the Effective
Time and that you will reaffirm these representations at the Effective Time.
Jackson & Kelly PLLC has not independently verified the completeness and
accuracy of any of the following representations. Jackson & Kelly PLLC is
relying on these representations in rendering the opinions contained herein:
(1) For Citizens National, not more than 25% of the fair
market value of its adjusted total assets consists of stock and securities of
any one issuer, and not more than 50% of the fair market value of its adjusted
total assets consists of stock and securities of five or fewer issuers. For
purposes of the preceding sentence, (i) a corporation's adjusted total assets
exclude cash, cash items (including accounts receivable and cash equivalents),
and United States government securities, (ii) a corporation's adjusted total
assets exclude stock and securities issued by any subsidiary at least 50% of the
voting power or 50% of the total fair market
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Citizens National Bank of Berkeley Springs
June 22, 2000
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value of the stock of which is owned by the corporation, but the corporation is
treated as owning directly a ratable share (based on the percentage of the fair
market value of the subsidiary's stock owned by the corporation) of the assets
owned by any such subsidiary, and (iii) all corporations that are members of the
same "controlled group" within the meaning of Section 1563(a) of the Code are
treated as a single issuer.
(2) Citizens National is not under the jurisdiction of a court
in a case under Title 11 of the United States Code, a receivership, foreclosure,
or similar proceeding in a federal or state court.
(3) At the Effective Time, the fair market value of the assets
of Citizens National will exceed the liabilities plus the amount of liabilities,
if any, to which the assets are subject.
(4) At all times during the five-year period ending on the
Effective Date, the fair market value of all of Citizens National's United
States real property interests was and will have been less than 50% of the total
fair market value of, (a) its United States real property interests, (b) its
interests in real property located outside the United States and (c) its other
assets used or held for use in a trade or business. For purposes of the
preceding sentence, (x) United States real property interests include all
interests (other than an interest solely as a creditor) in real property and
associated personal property (such as movable walls and furnishings) located in
the United States or the Virgin Islands and interests in any corporation (other
than a controlled corporation) owning any United States real property interest,
Citizens (y) Citizens National is treated as owning its proportionate share
(based on the relative fair market value of its ownership interest to all
ownership interests) of the assets owned by any controlled corporation or any
partnership, trust, or estate in which Citizens National is a partner or
beneficiary, and (z) any such entity in turn is treated as owning its
proportionate share of the assets owned by any controlled corporation or any
partnership, trust, or estate in which the entity is a partner or beneficiary.
As used in this paragraph, "controlled corporation" means any corporation at
least 50% of the fair market value of the stock of which is owned by Citizens
National, in the case of a first-tier subsidiary of Citizens National, or by a
controlled corporation, in the case of a lower-tier subsidiary.
(5) Citizens National will not take any position on any
Federal, state or local income tax return or franchise tax return, or take any
other action or reporting position, that is inconsistent with the treatment of
the Merger as a reorganization within the meaning of Section 368(a) of the Code
or with the representations made herein.
(6) Citizens National has not filed, and does not hold any
asset subject to, a consent pursuant to Section 341(f) of the Code and
regulations thereunder.
(7) Citizens National is not a party to, and does not hold any
asset subject to, a "safe harbor lease" under former Section 168(f)(8) of the
Code and regulations thereunder.
(8) There is no plan or intention by the stockholders of
Citizens National who own 1% or more of the Citizens National Common Stock, and
to the best of the knowledge of management of Citizens National, there is no
plan or intention by the remaining stockholders of Citizens National to sell,
exchange or otherwise transfer ownership (including by derivative transactions
such as an equity swap which would have the economic effect of a transfer of
ownership) to CNB or any CNB Related Person, directly or indirectly,
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Citizens National Bank of Berkeley Springs
June 22, 2000
Page 8
of a number of CNB shares received in the Merger that would reduce the
stockholders' ownership of CNB Common Stock to a number of shares having a
value, as of the date of the Merger, of less than 50% of the value of all of the
formerly outstanding Citizens National Common Stock as of the same date. For
purposes of this representation, Citizens National Common Stock exchanged for
cash or other property will be treated as outstanding Citizens National Common
Stock at the date of the Merger. Moreover, Citizens National Common Stock and
CNB Common Stock held by the stockholders of Citizens National and otherwise
sold, redeemed, or disposed of prior or subsequent to the Merger are considered
in making this representation.
(9) During the five-year period prior to the Effective Time,
Citizens National did not declare any dividends with respect to its outstanding
stock other than regular, normal dividends consistent in amount and effect with
prior dividend distributions.
Also, in addition to the mutual representations you, CNB and
Merger Sub have made to us, and the specific representations that you have made
to us, with the consent of CNB and Merger Sub, we have also assumed that the
following statements are true as of the date hereof and will be true as of the
Effective Time and that CNB and Merger Sub will reaffirm these representations
at the Effective Time. Jackson & Kelly PLLC has not independently verified the
completeness and accuracy of any of the following representations. Jackson &
Kelly PLLC is relying on these representations in rendering the opinions
contained herein:
(1) For each of CNB and Merger Sub, not more than 25% of the
fair market value of its adjusted total assets consists of stock and securities
of any one issuer, and not more than 50% of the fair market value of its
adjusted total assets consists of stock and securities of five or fewer issuers.
For purposes of the preceding sentence, (i) a corporation's adjusted total
assets exclude cash, cash items (including accounts receivable and cash
equivalents), and United States government securities, (ii) a corporation's
adjusted total assets exclude stock and securities issued by any subsidiary at
least 50% of the voting power or 50% of the total fair market value of the stock
of which is owned by the corporation, but the corporation is treated as owning
directly a ratable share (based on the percentage of the fair market value of
the subsidiary's stock owned by the corporation) of the assets owned by any such
subsidiary, and (iii) all corporations that are members of the same "controlled
group" within the meaning of Section 1563(a) of the Code are treated as a single
issuer.
(2) Neither CNB nor Merger Sub is under the jurisdiction of a
court in a case under Title 11 of the United States Code, a receivership,
foreclosure, or similar proceeding in a federal or state court.
(3) At the Effective Time, the fair market value of the assets
of CNB will exceed the sum of its liabilities plus the amount of liabilities, if
any, to which the assets are subject. At the Effective Time, the fair market
value of the assets of Merger Sub will exceed the sum of its liabilities plus
the amount of liabilities, if any, to which the assets are subject.
(4) Currently, CNB has no ongoing stock repurchase program
where it acquires its own stock through repurchases in the open market. No such
stock repurchase program will be created in connection with the Merger.
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(5) Neither CNB nor Merger Sub will take any position on any
Federal, state or local income tax return or franchise tax return, or take any
other action or reporting position, that is inconsistent with the treatment of
the Merger as a reorganization within the meaning of Section 368(a) of the Code
or with the representations made herein.
(6) There is no plan or intention by the stockholders of
Citizens National who own 1% or more of the Citizens National Common Stock, and
to the best of the knowledge of management of CNB, there is no plan or intention
by the remaining stockholders of Citizens National to sell, exchange or
otherwise transfer ownership (including by derivative transactions such as an
equity swap which would have the economic effect of a transfer of ownership) to
CNB or any CNB Related Person, directly or indirectly, of a number of CNB shares
received in the Merger that would reduce the stockholders' ownership of CNB
Common Stock to a number of shares having a value, as of the date of the Merger,
of less than 50% of the value of all of the formerly outstanding Citizens
National Common Stock as of the same date. For purposes of this representation,
Citizens National Common Stock exchanged for cash or other property will be
treated as outstanding Citizens National Common Stock at the date of the Merger.
Moreover, Citizens National Common Stock and CNB Common Stock held by the
stockholders of Citizens National and otherwise sold, redeemed, or disposed of
prior or subsequent to the Merger are considered in making this representation.
On the basis of the foregoing in reliance upon the
representations and assumptions described herein, and assuming that the Merger
will be consummated in accordance with the Plan of Merger, we are of the opinion
that for federal income tax purposes:
(1) The Merger will constitute a reorganization within the
meaning of Section 368(a)(1)(A) and Section 368(a)(2)(E) of the Code. CNB,
Merger Sub and Citizens National will each be a "party to a reorganization"
within the meaning of Section 368(b) of the Code;
(2) No gain or loss will be recognized by Citizens National,
CNB, or Merger Sub as a result of the Merger;
(3) The holders of Citizens National Common Stock will
recognize no gain or loss upon the exchange of their shares of Citizens National
Common Stock solely for shares of CNB Common Stock. Code Section 354(a)(1);
(4) The tax basis of the CNB Common Stock received by the
holders of Citizens National Common Stock in the Merger will, in each case, be
the same as the basis of the Citizens National Common Stock surrendered in
exchange therefor. Code Section 358(a)(l);
(5) The holding period of the CNB Common Stock received by the
holders of Citizens National Common Stock in the Merger will, in each case,
include the period during which the Citizens National Common Stock surrendered
in exchange therefor was held by the exchanging stockholders, provided that the
Citizens National Common Stock was held as a capital asset in the hands of the
exchanging stockholders on the date of the Merger. Code Section 1223(1);
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Page 10
(6) The payment of cash to Citizens National stockholders in
exchange for Citizens National Common Stock pursuant to the exercise of
dissenter's rights will be treated as having been received as a distribution in
redemption of such stockholder's Citizens National Common Stock, subject to the
provisions and limitations of Section 302 of the Code. Where as a result of such
distribution a stockholder owns no Citizens National Common Stock either
directly or through the application of Section 318(a) of the Code, the
redemption will be a complete termination of interest within the meaning of
Section 302(b)(3) of the Code and such cash will be treated as a distribution in
full payment in exchange for his or her Citizens National Common Stock, as
provided in Section 302(a) of the Code. Under Section 1001 of the Code, gain or
(subject to the limitations of Section 267 of the Code) loss will be realized
and recognized to such stockholders in an amount equal to the difference between
the amount of such cash and the adjusted basis of the Citizens National Common
Stock surrendered, as determined under Section 1011 of the Code. If a Citizens
National stockholder has held his or her stock for more than one year, the gain
should be treated as long-term capital gain, provided that the shares were held
as a capital asset on the date of the exchange; and
Our opinion represents our best judgement of how a court would
decide, if presented with the issues addressed herein and is not binding on the
Internal Revenue Service or any court. Our opinion is not the equivalent of a
ruling from the Internal Revenue Service and may upon audit be challenged by the
Internal Revenue Service. Thus, no assurances can be given that a position taken
in reliance on our opinion will not be challenged by the IRS or rejected by a
court.
Our opinion is based on the understanding that the relevant
facts are, and will be at the Effective Time, as set forth in this letter. It is
also based on the Code, Treasury Regulations, case law and Internal Revenue
Service rulings as they now exist. These authorities are all subject to change
and such change may be made with retroactive effect. Were there to be such
changes either before or after the Effective Time, or should the relevant facts
prove to be other than as we have reviewed, our opinion could be affected. We
can give no assurance that after any such change our opinion would not be
different. We do not undertake to advise you of matters that may come to our
attention subsequent to the date hereof and that may affect the opinions
expressed herein, including, without limitation, future changes in applicable
law.
Also, our opinion is based on the assumption, and we have
assumed with your permission that the cash paid to Citizens National
stockholders pursuant to the Merger (including, pursuant to a shareholder's
statutory dissent) will not exceed 5% of the value of all rights to shares of
Citizens National outstanding as of the Effective Time.
In addition, our opinions are based solely on the documents
that we have examined, the additional information that we have obtained
(including, by way of example, but not limitation, the representations) and the
statements set out herein, which we have assumed and you, CNB and Merger Sub
have confirmed to be true on the date hereof and the date the Merger is
consummated. Our opinions cannot be relied upon if any of the facts contained in
such documents or if such additional information is, or later becomes,
inaccurate, or if any of the statements set out herein is, or later becomes,
inaccurate.
Our opinions do not address the tax consequences to certain
Citizens National stockholders in light of their particular circumstances,
including, by way of example, but not limitation, some or all of the following:
Citizens National stockholders who hold their Citizens National Common Stock
other than as a
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June 22, 2000
Page 11
capital asset, foreign stockholders, stockholders who are not United States
citizens, tax exempt organizations, financial institutions, persons subject to
the alternative minimum tax, insurance companies, retirement plans, and persons
who acquired their Citizens National Common Stock as compensation. Finally, our
opinions are limited to the federal income tax matters specifically covered
hereby, and we have not been asked to address, nor have we addressed, any other
tax consequences of the Merger to any party, whether federal, state, local or
foreign including, by way of example, but not limitation, tax consequences of a
required change in accounting method, if any, or the termination of a bad debt
reserve, if any.
The opinions expressed herein are solely for your benefit and
the benefit of your shareholders and are being furnished only to you and your
shareholders in connection with the Merger and solely for your and your
shareholders' benefit in connection therewith and may not be used or relied upon
in any manner or for any purpose by any other person nor any copies published,
communicated, quoted or otherwise made available in whole or in part to any
other person or entity without our express prior written consent. This letter is
our opinion as to certain legal conclusions as specifically set forth herein and
is not and shall not be deemed to be a representation or opinion as to any
factual matters.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. We also consent to the references to Jackson &
Kelly PLLC under the heading "Certain Federal Income Tax Consequences" in the
Registration Statement. In giving this consent, we do not admit that we are
within the category of persons whose consent is required by Section 7 of the
Securities Act or other rules and regulations of the Securities and Exchange
Commission thereunder.
Respectfully,
JACKSON & KELLY PLLC
/s/ Robert G. Tweel
------------------------------------
Robert G. Tweel, Member
RGT:mh
