Assuming that the merger will be treated as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, the discussion below sets forth the opinions of Pillar Aught LLC and Kilpatrick Townsend & Stockton LLP, insofar as such discussion constitutes statements of U.S. federal income tax law or legal conclusions, as to the material U.S. federal income tax consequences of the merger to William Penn shareholders: • holders of William Penn common stock who receive Mid Penn common stock in the merger in exchange for all their shares of William Penn common stock will not recognize any gain or loss with respect to shares of Mid Penn common stock received (except with respect to cash received instead of a fractional share interest in Mid Penn common stock); and • holders of William Penn common stock who receive cash instead of a fractional share interest in Mid Penn common stock will recognize gain or loss equal to the difference between the cash received and the portion of the basis of the holders’ shares of William Penn common stock allocable to that fractional share interest. Tax Basis and Holding Period The aggregate tax basis of the Mid Penn common stock received by a William Penn shareholder in the merger (including fractional shares deemed received and redeemed as described below) will be the same in the aggregate as the tax basis of the shares of William Penn common stock surrendered by such shareholder for the Mid Penn common stock. Each William Penn shareholder’s holding period in any shares of Mid Penn common stock received in the merger (including any fractional shares deemed received and redeemed as described below) will, in each instance, include the period during which the shares of William Penn common stock surrendered in exchange therefor were held, provided that those shares of William Penn common stock were held as capital assets on the effective date of the merger. Cash Received in Lieu of a Fractional Share Interest Cash received by a William Penn shareholder in lieu of a fractional share interest in Mid Penn common stock will be treated as though the fractional share had been received and then redeemed for cash, and in general gain or loss will be recognized, measured by the difference between the amount of cash received and the portion of the basis of the shares of William Penn common stock allocable to such fractional interest. Such gain or loss generally will be long-term capital gain or loss if the holding period for such shares of William Penn common stock was more than one year as of the effective date of the merger. If, however, the receipt of cash instead of a fractional share of Mid Penn common stock has the effect of the distribution of a dividend with respect to a shareholder, part or all of the cash received may be treated as a dividend. Mid Penn and William Penn Mid Penn and William Penn will each be a party to the reorganization within the meaning of Section 368(b) of the Internal Revenue Code. As a result, no gain or loss will be recognized by Mid Penn or William Penn as a result of the merger (except for amounts resulting from any required change in accounting methods and any deferred income, deferred gain or deferred loss to be taken into account under the relevant consolidated return regulations). Backup Withholding Backup withholding will generally apply to merger consideration that includes cash if the exchanging William Penn shareholder fails to properly certify that it is not subject to backup withholding, generally on IRS Form W-9. Certain holders, including, among others, United States corporations, are not subject to backup 109
RkJQdWJsaXNoZXIy NTYwMjI1