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EXHIBIT TO S-4
REGISTRATION STATEMENT
EXHIBIT 8
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[WERNER & BLANK CO., L.P.A. LETTERHEAD]
November 4, 1996
The Board of Directors
The Delaware County Bank & Trust Company
41 N. Sandusky Street
Delaware, Ohio 43015
Attention: Mr. Larry D. Coburn
Re: Plan of Corporate Reorganization under which The Delaware County Bank &
Trust Company, Delaware, Ohio, will become a wholly owned subsidiary of
DCB Financial Corp.
Gentlemen:
We have been requested as special counsel to The Delaware County Bank & Trust
Company (the "Bank") to render our opinion expressed below in connection with
the proposed merger (the "Merger") of the Bank and Delaware Interim Bank (the
"New Bank"), a wholly owned subsidiary of DCB Financial Corp. (the
"Corporation"), an Ohio corporation organized at the direction of the Bank
pursuant to the terms and conditions of a Merger Agreement (the "Agreement"),
by and among the Bank, the Corporation, and the New Bank described in the Form
S-4 Registration Statement (the "Registration Statement") filed by the
Corporation.
In rendering our opinion, we have conducted an examination of applicable law,
regulations, rulings, decisions, documents, and records, and have made such
investigation of fact as we have deemed necessary, and we have relied upon the
representations in the Agreement and upon the following "Assumptions of Facts"
and certain "Representations" which have heretofore been made to us by
directors and officers.
ASSUMPTIONS OF FACTS
The Delaware County Bank & Trust Company
The Delaware County Bank & Trust Company ("Bank") is a State Bank organized
under the laws of the State of Ohio, with its principal office and place of
business at 41 N. Sandusky Street, Delaware, Ohio 43015.
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The Board of Directors
November 4, 1996
The Bank has an authorized capital structure of 1,424,400 shares of common
stock, par value $1.00 per share, all of which 1,424,400 authorized shares are
presently issued and outstanding.
The Bank is engaged in the general banking business in the City of Delaware,
which is located in Delaware County. The Bank provides customary retail and
commercial banking services to its customers, including checking and savings
accounts, time deposits, safe deposit facilities, personal loans, and
installment loans. It also makes secured and unsecured commercial loans. The
Bank does not operate any foreign offices.
DCB Financial Corp.
DCB Financial Corp. ("Corporation") is a domestic corporation which was
incorporated under the laws of the State of Ohio on June 13, 1996, at the
direction of the management of the Bank for the purpose of becoming a bank
holding company by acquiring all of the outstanding shares of common stock of
the Bank. Corporation also has its principal place of business at 41 N.
Snadusky Street, Delaware, Ohio 43015.
Corporation has an authorized capital structure of 7,500,000 shares, without
par value. After the merger becomes effective, and as and when required by the
Agreement, Corporation will issue up to 4,273,200 shares of its common stock in
exchange for Bank common stock, as provided in the Agreement.
Corporation maintains its books of account on a calendar year basis, and
computes its income for financial purposes under the accrual method of
accounting.
Delaware Interim Bank
Delaware Interim Bank (the "New Bank") is a banking corporation which will be
organized under the laws of the State of Ohio and will be wholly owned by
Corporation. It is intended that the New Bank will never open for business as
a separate operating entity, but will only be an "interim" bank to be merged
with the Bank as part of the proposed reorganization. New Bank will also have
its principal place of business at 41 N. Sandusky Street, Delaware, Ohio
43015.
The New Bank will have an authorized capital structure of 1,000 shares of
common stock, par value of $125.00 per share, all of which shares will be
issued and outstanding at the time of the Merger.
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The Board of Directors
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PROPOSED TRANSACTION
In the proposed transaction, the Bank will become a wholly owned subsidiary of
the Corporation. Each of the following steps has been or will be undertaken at
the direction of the Bank to carry out the plan of reorganization.
The Corporation will acquire 100% of the stock of the New Bank, as soon as the
New Bank receives a charter and issues shares of its common stock. The New
Bank will be merged with and into the Bank, under the laws of the State of Ohio
and pursuant to a Merger Agreement (the "Agreement"), which has been entered
into between the Bank, the New Bank, and joined by the Corporation.
Pursuant to the Agreement, the resulting bank (hereinafter called the
"Resulting Bank") will continue the name and banking business of the Bank
without change. The Resulting Bank will continue to hold all of the Bank's
assets and will assume all of the Bank's liabilities subsequent to the
transaction. The name of the Resulting Bank will be "The Delaware County Bank
& Trust Company" and the Resulting Bank's Articles of Incorporation and Code of
Regulations will be the Articles of Incorporation and Code of Regulations of
the Bank upon the effective date of the merger. The Resulting Bank will
operate under the charter of the Bank. The principal office of the Bank will
continue to be the principal office of the Resulting Bank.
Each share of the common stock of the Bank then issued and outstanding will, by
operation of law, be transferred into the Corporation, and the holders thereof
will receive three (3) shares of common stock of Corporation in exchange
therefor, unless such holder properly exercises his dissenter's right of
appraisal under Ohio law. The shareholders of the Bank have the right to
dissent from the transaction under applicable law.
The amount and number of shares of capital stock of the New Bank outstanding
immediately before the merger becomes effective (specifically, $125,000 divided
into 1,000 shares, $125 par value) will be increased in the amount and number
of shares of the capital stock of the Bank outstanding immediately before the
merger becomes effective. At the effective date of the merger, the Resulting
Bank will redeem and simultaneously cancel the 1,000 shares of $125 par value
stock formerly representing the capital stock of the New Bank from the
Corporation.
BUSINESS PURPOSES
The Boards of Directors of the Bank and the Corporation believe that the
proposed merger will provide a means whereby the Resulting Bank can provide
improved commercial banking services to the Delaware area.
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The Board of Directors
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The bank holding company structure will give the Resulting Bank greater
flexibility in carrying on its present activities and responding effectively in
the future to meet the changing needs of its customers. Enterprises with
facilities or customers outside of the Resulting Bank's local area can be
served more effectively by the broader geographic coverage of the Corporation.
Total earnings of the group, including the Corporation and the Resulting Bank,
should be increased through the use of the combined skills of the Bank and the
Corporation.
The new structure will also provide an opportunity for diversification, either
through the formation of new subsidiaries or by acquisition of established
companies. The extent of such diversification is governed by the provisions of
the Bank Holding Company Act of 1956, as amended, and is limited essentially to
ownership of banks and of companies whose activities are closely related to
banking. The activities in which a bank holding company may engage include
mortgage banking, financial companies, credit card activities, servicing of
loans for others, electronic data processing, equipment leasing, insurance
agencies or insurance brokerage operations and certain equity and debt
investments.
In summary, the merger of the New Bank with and into the Bank, and the
Resulting Bank's affiliation with the Corporation is expected to enable the
Resulting Bank to operate more efficiently and profitably for the benefit of
its customers, employees and the shareholders of the Corporation.
REPRESENTATIONS
The following representations are made in connection with the proposed
transaction:
1. The fair market value of the Corporation's stock and other consideration
received by each Bank shareholder will be approximately equal to the fair
market value of the Bank stock surrendered in the exchange.
2. There is no plan or intention by the shareholders of Bank who own one
percent (1%) or more of the Bank stock, and to the best of the knowledge
of the management of Bank, there is no plan or intention on the part of
the remaining shareholders of Bank to sell, exchange or otherwise dispose
of a number of shares of the Corporation stock received in the transaction
that would reduce the Bank shareholders' ownership of the Corporation
stock to a number of shares having a value, as of the date of the
transaction, of less than eighty percent (80%) of the value of all of the
formerly outstanding stock of the Bank as of the same date. For purposes
of this representation, shares of Bank stock exchanged for cash or other
property, surrendered by dissenters or exchanged for cash in lieu of
fractional shares of parent stock will be treated as outstanding Bank
stock and shares of Corporation stock held by Bank shareholders and
otherwise sold, redeemed, or disposed of prior or subsequent to the
transaction will be considered in making this representation.
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The Board of Directors
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3. The New Bank will acquire at least 90 percent of the fair market value of
the net assets and at least 70 percent of the fair market value of the
gross assets held by the Bank immediately prior to the transaction. For
purposes of this representation, amounts paid by the Bank to dissenters,
amounts paid by the Bank to shareholders who receive cash or other
property, the Bank assets used to pay its reorganization expenses, and all
redemptions and distributions (except for regular, normal dividends) made
by the Bank immediately preceding the transfer, will be included as assets
of the Bank held immediately prior to the transaction.
4. Prior to the transaction, the Corporation will be in control of the New
Bank within the meaning of Section 368(c) of the Internal revenue Code.
5. Following the transaction, Resulting Bank will not issue additional
shares of its stock that would result in Corporation losing control of
Resulting Bank within the meaning of Section 368(c) of the Internal
Revenue Code.
6. The Corporation has no plan or intention to reacquire any of its stock
issued in the transaction.
7. The Corporation has no plan or intention to liquidate the Resulting Bank;
to merge the Resulting Bank with and into another corporation; to sell or
otherwise dispose of the stock of the Resulting Bank; or to cause the
Resulting Bank to sell or otherwise dispose of any of the assets of the
Bank acquired in the transaction, except for dispositions made in the
ordinary course of business of transfers described in Section 368(a)(2)(C)
of the Internal Revenue Code.
8. The liabilities of the New Bank assumed by the Bank and the liabilities
to which the transferred assets of the New Bank are subject were incurred
by the New Bank in the ordinary course of its business.
9. Following the transaction, the Resulting Bank will continue the historic
business of the Bank or use a significant portion of the Bank's business
assets in a business.
10. The Corporation, the New Bank, and the Bank, and the shareholders of the
Bank will pay their respective expenses, if any, incurred in connection
with the transaction.
11. There is no intercorporate indebtedness existing between the Corporation
and the Bank or between the New Bank and the Bank that was issued,
acquired, or will settle at a discount.
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12. No two parties to the transaction are investment companies as defined in
Section 368(a)(2)(F)(iii) and (iv) of the Internal Revenue Code.
13. The Bank is not under the jurisdiction of a court in a Title 11 or
similar case within the meaning of Section 368(a)(3)(A) of the Internal
Revenue Code.
14. The fair market value of the assets of the New Bank transferred to the
Bank will equal or exceed the sum of the liabilities assumed by the Bank,
plus the amount of liabilities, if any, to which the transferred assets
are subject.
15. No stock of the New Bank will be issued in the transaction.
16. No dividends will be paid by the Bank prior to the consummation of the
transaction other than regular periodic dividends, consistent in amount
and in effect with prior dividend distributions.
17. The Bank presently has, and on the date of the proposed transaction will
have, no outstanding warrants, options or convertible securities or any
other type or right pursuant to which any person could acquire shares of
Bank.
OPINION
Based on the foregoing "Assumptions of Facts" and "Representations," it is our
opinion that:
1. The merger of the New Bank with and into the Bank qualifies as a
statutory merger under the laws of the State of Ohio, and provided that
after the transaction the Resulting Bank will hold substantially all of
the assets and substantially all of the liabilities of the Bank and the
New Bank, and in the transaction shareholders of the Bank will exchange,
an amount of stock of Bank representing "control," within the meaning of
Section 368(c), for Corporation voting common stock, the transaction will
constitute a reorganization, within the meaning of Section 368(a)(1)(A)
and (a)(2)(E) of the Internal Revenue Code of 1986, as amended. For
purposes of this opinion, "substantially all" means at least 90 percent of
the fair market value of the gross assets of the Bank and the New Bank.
2. No gain or loss will be recognized by the Corporation, the Bank or the
New Bank upon the acquisition by the Corporation of the stock of the Bank,
as described in number 1, above.
3. The basis of the assets received by the Resulting Bank will be the same
as the basis of such assets in the hands of the Bank immediately prior to
the merger (Section 362(b)).
4. No gain or loss will be recognized by the Corporation upon receipt of
stock of the Bank solely in exchange for stock in the Corporation (Section
354(a)(1)).
5. With respect to Bank shareholders who receive only Corporation voting
stock in the transaction, no gain or loss will be recognized by them on
the receipt of shares of
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The Board of Directors
November 4, 1996
Corporation voting common stock solely in exchange for shares of their
stock in the Bank (Section 354(a)(1)).
6. With respect to those Bank shareholders who receive only Corporation
voting stock in the transaction, the basis of the Corporation stock
received by them will be the same as the basis of their shares of the Bank
stock surrendered in exchange therefor (Section 358(a)(1)).
7. The holding period for the Corporation's stock to be received by the
shareholders of the Bank will include the period during which their shares
of stock in the Bank surrendered in exchange therefor were held, provided
that the shares of the Bank stock surrendered in the exchange were held as
capital assets on the date of the exchange (Section 1223(1)).
This letter is solely for your information and use and, except to the extent
that such may be referred to in the Registration Statement on Form S-4 as filed
with the Securities and Exch
ange Commission as an exhibit to same, it is not to be used, circulated, quoted
or otherwise referred to for any other purpose, or relied upon by any other
person, for whatever reason without our prior written consent.
Sincerely,
Werner & Blank Co., L.P.A.