EXHIBIT 8.0 DRAFT OPINION OF PATTON BOGGS LLP RE: FEDERAL TAX MATTERS
Exhibit 8.0
(202) 457-6000
DRAFT
September 8, 1998
Board of Directors
First Federal Savings and Loan Association of Warren
185 East Market Street
Warren, Ohio 44482
Re: Certain Federal Tax Consequences of the Conversion of First Federal
Savings and Loan Association of Warren from a Federally Chartered
Mutual Savings and Loan Association to a Federally Chartered Stock
Savings and Loan Association and the Issuance of Common Stock of First
Federal Savings and Loan Association of Warren to First Place
Financial Corp., pursuant to a Plan of Conversion, and the Sale of
First Place Financial Corp. Common Stock
Dear Ladies and Gentlemen:
You have requested our opinion as to certain federal income tax
consequences of the plan of conversion of First Federal Savings and Loan
Association of Warren (the "Association") from a federally chartered mutual
savings and loan association to a federally chartered stock savings and loan
association, the issuance of the Association's capital stock to First Place
Financial Corporation, a Delaware corporation, (the "Company" or the "Holding
Company"), and the sale of Holding Company common stock pursuant to the plan of
conversion adopted by the Board of Directors on June 15, 1998 (collectively, the
"Plan of Conversion" or "Conversion").
The proposed transaction is described in the section of this letter
entitled "STATEMENT OF FACTS."
Our opinions are based on the STATEMENT OF FACTS, the representations
described in the section of the letter entitled "REPRESENTATIONS," and our
examination of such corporate records, certificates and other documents as we
have
Board of Directors
September 8, 1998
Page 2
considered necessary or appropriate for this opinion. In such examination, we
have accepted, and not independently verified, the authenticity of all original
documents, the accuracy of all copies, and the genuineness of all signatures.
Unless otherwise noted, section references are to the Internal Revenue Code of
1986 as amended (the "Code") as in effect as of the date of this letter.
Capitalized terms not defined in this letter have the meanings assigned to them
in the Plan of Conversion.
STATEMENT OF FACTS
The Association is a federally chartered mutual savings association. As a
mutual savings and loan association, the Association has never been authorized
to issue stock. Instead, the proprietary interest in the reserves and
undivided profits of the Association belong to the deposit account holders of
the Association, hereinafter sometimes referred to as "depositors." A depositor
of the Association has a right to share, pro rata, with respect to the
withdrawal value of his respective deposit account in any liquidation proceeds
distributed in the event the Association is ever liquidated. In addition, a
depositor of the Association is entitled to interest on his account balance as
fixed and paid by the Association.
In order to provide organizational and economic strength to the
Association, the Board of Directors has adopted the Plan of Conversion whereby
the Association will convert into a federally chartered stock savings and loan
association (the "Converted Association"), the stock of which will be held
entirely by a newly created Holding Company, First Place Financial Corporation.
As part of the Conversion, the Association will issue all its capital stock to
the Holding Company. Holding Company will issue and sell its common stock ("the
Conversion Stock") in accordance with the Plan of Conversion. The aggregate
sales price of the Conversion Stock will be based on an independent appraiser's
valuation of the estimated pro forma market value of the Common Stock of the
Converted Association held by Holding Company. The Conversion of Association
and sale of the Conversion Stock will be subject to approval by the Office of
Thrift Supervision and the approval of the Voting Members.
As part of the Conversion, the Association will establish a liquidation
account in an amount equal to its net worth as of the latest practicable date
prior to Conversion. The liquidation account will be maintained by the
Association for the benefit of the Eligible Account Holders and Supplemental
Eligible Account Holders who continue to maintain their savings accounts at the
Association. Each Eligible Account Holder and Supplemental Eligible Account
Holder will, with respect to his savings account, hold a related inchoate
interest in a portion of the liquidation account balance, in relation to his
Board of Directors
September 8, 1998
Page 3
savings account balance on the Eligibility Record Date or the Supplemental
Eligibility Record Date or to such balance as it may be subsequently reduced.
In the unlikely event of a complete liquidation of the Association (and
only in such event), following all liquidation payments to creditors (including
those to account holders to the extent of their savings accounts) each Eligible
Account Holder and Supplemental Eligible Account Holder shall be entitled to
receive a liquidating distribution from the liquidation account, in the amount
of the then adjusted sub-account balance for his savings account then held,
before any liquidation distribution may be made to any holders of the
Association's capital stock. No merger, consolidation, purchase of bulk assets
with assumption of savings accounts and other liabilities, or similar
transaction with an FDIC institution, in which the Association is not the
surviving institution, shall be deemed to be a complete liquidation for this
purpose. In such transactions, the liquidation account shall be assumed by the
surviving institution.
As part of the Conversion, Holding Company and the Association intend to
establish a charitable foundation that will qualify as an exempt organization
under section 501(c)(3) of the Code (the "Foundation") and to donate to the
Foundation from authorized, but unissued, shares of Common Stock of the Holding
Company an amount up to 7.7% of the number of shares of Common Stock sold in the
Conversion. The Foundation is intended to further the Converted Association's
long term commitment to its community. The Plan of Conversion provides that the
Foundation is intended to complement the Association's existing community
reinvestment activities so as to allow the local community to share in the
growth and profitability of the Holding Company and the Converted Association
over the long term. In the event that the Foundation does not qualify as an
organization exempt from tax under section 501(c)(3), the Association may
determine to complete the Conversion without creating the Foundation.
The Foundation will be dedicated to the promotion of charitable purposes
including community development and grants or donations to support housing
assistance, not-for-profit community groups and other types of organizations or
civic minded projects. The Foundation will annually distribute total grants to
assist charitable organizations or to fund projects within its local community
of not less than 5% of the average fair value of Foundation assets each year.
In order to serve the purposes for which it was formed and to maintain its
section 501(c)(3) qualification, under the Plan of Conversion, the Foundation
may sell, on an annual basis, a limited portion of the Common Stock contributed
to it by the Holding Company.
Board of Directors
September 8, 1998
Page 4
REPRESENTATIONS
You have provided the following representations concerning this
transaction:
(a) The fair market value of the withdrawable deposit accounts plus
interests in the liquidation account of the Converted Association to be received
by Eligible Account Holders and Supplemental Eligible Account Holders under the
Plan of Conversion will be equal to the fair market value of the withdrawable
deposit accounts (plus the related interest in the residual equity of the
Association) deemed to be surrendered in exchange therefor.
(b) If an individual's total deposits in the Association equal or exceed
$50 as of the Eligibility Record Date or Supplemental Eligibility Record Date,
then no amount of that individual's total deposits will be excluded from
participating in the liquidation account. The fair market value of the deposit
accounts of the Association which have a balance of less than $100 on the
Eligibility Record Date or Supplemental Eligibility Record Date will be less
than 1% of the total fair market value of all deposit accounts of the
Association.
(c) Immediately following the Conversion, the Eligible Account Holders and
Supplemental Eligible Account Holders of the Association will own all of the
outstanding interests in the liquidation account and will own such interest
solely by reason of their ownership of deposits in the Association immediately
before the Conversion.
(d) After the Conversion, the Converted Association will continue the
business of the Association in the same manner as prior to the Conversion. The
Converted Association has no plan or intention and the Holding Company has no
plan or intention to cause the Converted Association to sell its assets other
than in the ordinary course of business.
(e) The Holding Company has no plan or intention to sell, liquidate or
otherwise dispose of the stock of the Converted Association.
(f) The Holding Company and the Converted Association have no current plan
or intention to redeem or otherwise acquire any of the Conversion Stock issued
in the Conversion transaction.
(g) Immediately after the Conversion, the Converted Association will
possess the same assets and liabilities of the Association immediately prior to
the Conversion,
Board of Directors
September 8, 1998
Page 5
plus the net proceeds from the sale of the Converted Association's common stock
to the Holding Company and any liability associated with indebtedness incurred
by the Employee Plans in the acquisition of Common Stock by the Employee Plans.
(h) The Association, Converted Association and the Holding Company are
corporations within the meaning of section 7701(a)(3) of the Code.
(i) None of the shares of the Conversion Stock to be purchased by the
depositor-employees of the Association in the Conversion will be issued or
acquired at a discount. However, shares may be given to certain Directors and
employees as incentive compensation through the Employee Plans. Compensation to
be paid to such Directors and depositor-employees will be commensurate with
amounts paid to third parties bargaining at arm's length for similar services.
(j) The fair market value of the assets of the Association, which will be
transferred to the Converted Association in the Conversion, will equal or exceed
the sum of the liabilities of the Association which will be assumed by the
Converted Association and any liabilities to which the transferred assets are
subject. Association has not incurred any liabilities other than in the
ordinary course of business.
(k) The Association is not under the jurisdiction of a bankruptcy or
similar court in any Title 11 or similar case within the meaning of the Code.
(l) No cash or property will be given to Eligible Account Holders,
Supplemental Eligible Account Holders, or others in lieu of (i) nontransferable
subscription rights, or (ii) an interest in the liquidation account of the
Converted Association.
(m) Depositors will pay the expenses of the Conversion solely applicable
to them, if any. The Holding Company and the Association will each pay expenses
of the transaction attributable to them and will not pay any expenses solely
attributable to the depositors or to the Holding Company shareholders.
(n) The exercise price of the subscription rights received by the
Association's Eligible Account Holders, Supplemental Eligible Account Holders,
and other holders of subscription rights to purchase Holding Company Common
Stock will be equal to the fair market value of the stock of the Holding Company
at the time of the completion of the Conversion as determined by an independent
appraisal.
Board of Directors
September 8, 1998
Page 6
OPINION
Based solely on the foregoing representations and information and assuming
the Plan of Conversion occurs in accordance with the Plan, it is our opinion
that:
(1) The Conversion of the Association from a mutual savings and loan
association to a stock savings and loan association will be a tax-free
reorganization within the meaning of section 368(a)(1)(F) of the Code (Rev. Rul.
80-105, 1980-1 C.B. 78). Neither the Association nor the Converted Association
will recognize gain or loss as a result of the Conversion. The Association and
the Converted Association shall 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 the Converted Association or the
Holding Company on the receipt by the Converted Association of money from the
Holding Company in exchange for shares of the Converted Association's capital
stock or by the Holding Company upon the receipt of money from the sale of its
Common Stock (section 1032(a)).
(3) The basis of the deposit accounts in the Converted Association to be
received by the Eligible Account Holders and Supplemental Eligible Account
Holders will be the same as the basis of their deposit accounts in the
Association surrendered in exchange therefor (section 1012).
(4) The basis of each Eligible Account Holder's or Supplemental Account
Holder's interest in the liquidation account of the Converted Association will
be zero (Rev. Rul. 71-233, 1971-1 C.B. 113).
(5) No gain or loss will be recognized by an Eligible Account Holder or
Supplemental Eligible Account Holder on the receipt of an interest in the
liquidation account and/or nontransferable subscription rights to purchase
shares of stock in the Holding Company to the extent the interest in the
liquidation account and the nontransferable subscription rights received have no
fair market value. (We understand that you have received a letter from Keller &
Company, Inc. indicating that the subscription rights have no fair market value.
In various private letter rulings, the Internal Revenue Service has stated that
interests similar to interests in the liquidation account have no fair market
value. Neither the Keller & Company letter nor private letter rulings issued to
other taxpayers are binding on the Service. We express no legal opinion on the
fair market value of liquidation accounts or nontransferable subscription
Board of Directors
September 8, 1998
Page 7
rights or on whether gain will be recognized if the interests in the
liquidation account or nontransferable subscription rights have value).
(6) Eligible Account Holders and Supplemental Eligible Account Holders will
not realize any taxable income as a result of the exercise by them of the
nontransferable subscription rights (Rev. Rul. 56-572, 1956-2 C.B. 182).
(7) The basis to the stockholders of the Holding Company Common Stock
purchased in the Conversion will be the purchase price paid therefor (section
1012).
SCOPE OF OPINION
Since this letter is rendered in advance of the closing of this
transaction, we have assumed that the transaction will be consummated in
accordance with the Plan, as well as all the information and representations
referred to herein. Any changes in the transaction could cause us to modify our
opinion.
The opinions contained herein are rendered only with respect to the
specific matters discussed herein and we express no opinion with respect to any
other legal, federal, state, local or foreign aspect of these transactions. If
any of the information upon which we have relied is incorrect, or if changes in
the relevant facts occur after the date hereof, our opinion could be affected
thereby. In particular, if the subscription rights are subsequently found to
have a fair market value, income may be recognized by various recipients of the
subscription rights and the Company and/or the Bank may be taxable on the
distribution of the subscription rights.
Moreover, our opinion is based on case law, the Code, Treasury Regulations
thereunder, and Internal Revenue Service rulings and other administrative
guidance as they now exist. These authorities are all subject to change, and
such change may be made with retroactive effect. We can give no assurance that,
after such change, our opinion would not be different. We undertake no
responsibility to update or supplement our opinion. This opinion is not binding
on the Internal Revenue Service and there can be no assurance, and none is
hereby given, that the Internal Revenue Service will not take a position
contrary to one or more of the positions reflected in the foregoing opinion, or
that our opinion will be upheld by the courts if challenged by the Internal
Revenue Service.
We express no opinion as to any state or local income tax consequences of
the Conversion or federal, state, or local income tax consequences of the
formation of the
Board of Directors
September 8, 1998
Page 8
foundation. We understand that the accounting firm of Crowe, Chizek and Company
LLP will be addressing the state tax consequences of the Conversion in a
separate letter. We understand that Crowe, Chizek and Company LLP will also be
addressing the federal, state, and local income tax consequences of the
formation of the foundation.
CONSENT
We consent to the inclusion of this opinion as an exhibit to the Form AC
and Form S-1 Registration Statement of Holding Company and the references to the
summary of this opinion in such Form AC and Form S-1 Registration Statement. In
addition, we consent to Crowe, Chizek and Company LLP's reliance on this letter
solely for the purpose of issuing an opinion on the Ohio tax consequences of the
Conversion.
Sincerely,
PATTON BOGGS LLP