Exhibit 5.1
DRAFT
__________, 2003
Board of Directors
Jefferson Bancshares, Inc.
120 Evans Avenue
Morristown, Tennessee 37814
Re: Registration Statement on Form S-1
Gentlemen:
We have acted as special counsel for Jefferson Bancshares, Inc., a
Tennessee corporation (the "Company"), in connection with the registration
statement on Form S-1 (the "Registration Statement") initially filed on
____________, 2003, by the Company with the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"), and the regulations
promulgated thereunder.
The Registration Statement relates to the proposed issuance by the
Company of (i) up to 6,612,500 shares ("Offered Shares") of common stock, $0.01
par value per share, of the Company ("Common Stock") in a subscription offering,
a community offering and a syndicated community offering (the "Offerings")
pursuant to the Plan of Conversion adopted by Jefferson Bancshares, M.H.C.,
Jefferson Federal Savings and Loan Association of Morristown (the "Association")
and the Company, (ii) up to 1,389,073 shares ("Exchange Shares") of Common Stock
to be exchanged for outstanding shares of common stock, $1.00 par value per
share, of the Association pursuant to the Plan of Conversion and the Agreement
and Plan of Merger by and among the Association, the Company and Jefferson
Interim Savings Association attached as Annex B to the Plan of Conversion, which
provides for the merger of Jefferson Interim Savings Association with and into
the Association (the "Merger"), with the Association as the surviving entity and
(iii) 375,000 shares ("Foundation Shares") of Common Stock to the Jefferson
Federal Charitable Foundation (the "Foundation"), a privately-owned charitable
foundation formed by the Company, pursuant to a gift instrument.
We understand that the Company will lend to the trust for the
Association's Employee Stock Ownership Plan (the "ESOP") the funds the ESOP
trust will use to purchase shares of Common Stock for which the ESOP trust
subscribes pursuant to the Offerings and, for purposes of rendering the opinion
set forth in paragraph 1 below, we assume that: (a) the Board of Directors of
the
Board of Directors
Jefferson Bancshares, Inc.
_____________, 2003
Page 2
Company has duly authorized the loan to the ESOP trust (the "Loan"); (b) the
ESOP serves a valid corporate purpose for the Company; (c) the Loan will be made
at an interest rate and on other terms that are fair to the Company; (d) the
terms of the Loan will be set forth in customary and appropriate documents
including, without limitation, a promissory note representing the indebtedness
of the ESOP trust to the Company as a result of the Loan; and (e) the closing
for the Loan and for the sale of Common Stock to the ESOP trust will be held
after the closing for the sale of the other shares of Common Stock sold in the
Offerings and the receipt by the Company of the proceeds thereof.
In the preparation of this opinion, we have examined originals or
copies identified to our satisfaction of: (i) the Company's charter filed with
the Tennessee Secretary of State on March 12, 2003 (the "Charter"); (ii) the
Company's Bylaws; (iii) the Registration Statement, including the prospectus
contained therein and the exhibits thereto; (iv) certain resolutions of the
Board of Directors of the Company relating to the issuance of the Common Stock
being registered under the Registration Statement; (v) the Plan of Conversion;
(vi) the gift instrument whereby shares of Common Stock will be granted to the
Foundation; (vii) the ESOP trust agreement and the ESOP Loan agreement; and
(viii) the form of stock certificate approved by the Board of Directors of the
Company to represent shares of Common Stock. We have also examined originals or
copies of such documents, corporate records, certificates of public officials
and other instruments, and have conducted such other investigations of law and
fact, as we have deemed necessary or advisable for purposes of our opinion.
In our examination, we have assumed, without verification, the
genuineness of all signatures, the authenticity of all documents and instruments
submitted to us as originals, the conformity to the originals of all documents
and instruments submitted to us as certified or conformed copies, the
correctness of all certificates, and the accuracy and completeness of all
records, documents, instruments and materials made available to us by the
Company.
Our opinion is limited to the matters set forth herein, and we express
no opinion other than as expressly set forth herein. In rendering the opinion
set forth below, we do not express any opinion concerning law other than the
corporate law of the State of Tennessee. Our opinion is expressed as of the date
hereof and is based on laws currently in effect. Accordingly, the conclusions
set forth in this opinion are subject to change in the event that any laws
should change or be enacted in the future. We are under no obligation to update
this opinion or to otherwise communicate with you in the event of any such
change.
For purposes of this opinion, we have assumed that, prior to the
issuance of any shares, (i) the Registration Statement, as finally amended, will
have become effective under the Act and (ii) the Merger will have become
effective.
Board of Directors
Jefferson Bancshares, Inc.
____________ , 2003
Page 3
Based upon and subject to the foregoing, it is our opinion that:
(1) upon the due adoption by the Board of Directors of the Company (or
authorized committee thereof) of a resolution fixing the number of
shares of Common Stock to be sold in the Offerings, the Offered
Shares (including the shares to be issued to the ESOP trust), when
issued and sold in the manner described in the Registration
Statement, will be validly issued, fully paid and nonassessable;
(2) the Exchange Shares, when issued in accordance with the terms of
the Plan of Conversion upon consummation of the Merger
contemplated therein, will be validly issued, fully paid and
nonassessable; and
(3) the Foundation Shares, when granted in accordance with the gift
instrument, will be validly issued, fully paid and nonassessable.
The following provisions of the Company's charter may not be given
effect by a court applying Tennessee law, but in our opinion the failure to give
effect to such provisions will not affect the duly authorized, validly issued,
fully paid and nonassessable status of the Common Stock:
A. Subsections C and G of Article XII, which grant the Board of
Directors the authority to construe and apply the provisions of
that Article, subsection D of Article XII, to the extent that
subsection obligates any person to provide to the Board of
Directors the information such subsection authorizes the Board of
Directors to demand, and the provision of Subsection D of Article
XIII empowering the Board of Directors to determine the Fair
Market Value of property offered or paid for the Company's stock
by an Interested Stockholder, in each case to the extent, if any,
that a court applying Tennessee law were to impose equitable
limitations upon such authority; and
B. Article XIV, which authorizes the Board of Directors to consider
the effect of any offer to acquire the Company on constituencies
other than stockholders in evaluating any such offer.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to Jefferson Bancshares, M.H.C.'s Application on Form
AC to the Office of Thrift Supervision (the "OTS Application"), and to the
reference to our firm under the heading "Legal Matters" in the prospectus which
is part of such registration statement as such may be amended or supplemented,
or incorporated by reference in any Registration Statement covering additional
shares of Common Stock to be issued or sold under the Plan of Conversion that is
filed pursuant to Rule 462(b) of the Act, and to the reference to our firm in
the OTS Application. In giving such consent, we do not
Board of Directors
Jefferson Bancshares, Inc.
_______________, 2003
Page 4
hereby admit that we are experts or are otherwise within the category of persons
whose consent is required under Section 7 of the Act or the rules or regulations
of the Securities and Exchange Commission thereunder.
Very truly yours,
DRAFT
MULDOON MURPHY & FAUCETTE LLP