Internet ID: @thacherproffitt.com
August , 1998
Revere Federal Savings and Loan Association
310 Broadway
Revere, MA 02151
Ladies and Gentlemen :
Dear Sirs:
You have requested our opinion regarding certain federal income tax
consequences of the proposed transactions (collectively, the "Reorganization"),
more fully described below, pursuant to which (i) Revere Federal Savings and
Loan Association (the "Bank") will convert from a federally chartered mutual
savings bank ("Mutual Bank") into a federally chartered stock savings bank
("Stock Bank") and become the wholly-owned subsidiary of RFS Bancorp, Inc., a
newly formed federal stock holding company ("Stock Company") and (ii) Stock
Company will become a majority-owned subsidiary of Revere MHC, a newly formed
federal mutual holding company ("Mutual Company"). These transactions and the
related sale of Common Stock, also discussed below, will be effected pursuant to
the Plan of Reorganization from Mutual Savings Bank to Mutual Holding Company
and Stock Issuance Plan adopted by the Board of Directors of Stock Bank on
January 21, 1998 (the "Plan"). The Reorganization and its component and related
transactions are described in the Plan and in the Prospectus filed with the
Office of Thrift Supervision in connection with the Reorganization and proposed
sale of common stock (the "Prospectus")]. We are rendering this opinion pursuant
to Section 6 of the Plan. All capitalized terms used but not defined in this
letter shall have the meanings assigned to them in the Plan or Prospectus.
August , 1998 Page 2.
The Reorganization will be effected, pursuant to the Plan, as follows:
1. Mutual Bank will organize Mutual Company, which will initially be
organized in stock form and initially exist as Mutual Bank's wholly-owned
subsidiary.
2. Mutual Company will organize two wholly-owned subsidiaries, one of which
will be Stock Company, and the other of which will be an interim stock
savings bank ("Interim").
3. The following events will occur simultaneously pursuant to the Plan: (i)
Mutual Bank will exchange its charter for a federal stock savings bank
charter and thereby become Stock Bank (the "Conversion"); (ii) Interim will
merge with and into Stock Bank with Stock Bank surviving; (iii) Mutual
Company will cancel its stock and exchange its charter for a federal mutual
holding company charter and thereby become a mutual holding company the
members of which (the "Mutual Company Members") will be the former
depositors in and borrowers of Mutual Bank immediately prior to these
transactions ("Mutual Bank Members"). As a mutual entity, Mutual Company
will not have any authorized capital stock. As a result of the merger and
charter exchanges, Stock Bank will become a wholly-owned subsidiary of
Mutual Company, and the Mutual Company Members will hold interests in
Mutual Company comparable to the interests they previously held in Mutual
Bank.
4. Mutual Company will then contribute all of the stock of Stock Bank to
Stock Company.
As a result of these transactions, Stock Bank will be a wholly-owned
subsidiary of Stock Company and Stock Company will be a wholly-owned subsidiary
of Mutual Company. In substance, upon the Conversion and pursuant to the other
transactions described above, the Mutual Bank Members will constructively
receive the stock of Stock Bank and will then exchange such stock for membership
interests in Mutual Company (the "Exchange").
Simultaneously with the Reorganization, Stock Company will offer to sell
additional shares of its common stock pursuant to the Plan, with priority
subscription rights granted in descending order of priority to certain members
of Mutual Bank, the Bank's employee stock ownership plan, other members of
Mutual Bank and, perhaps, certain members of the general public.
In connection with the opinions expressed below, we have examined and
relied upon originals, or copies certified or otherwise identified to our
satisfaction, of the Plan and the Prospectus and of such corporate records of
the parties to the Reorganization as we have deemed appropriate. We have also
relied, without independent verification, upon the representations of Mutual
Bank contained in the Bank's letter to us letter dated , 1998. We have assumed
that such representations are true and that the parties to the Reorganization
will act in accordance with the Plan. In addition, we have made such
investigations of law as we have deemed appropriate to form a basis for the
opinions expressed below.
, 1998 Page 3.
Based on and subject to the foregoing, it is our opinion that for federal
income tax purposes, under current law -
(a) as regards the Conversion:
(1) the Conversion will constitute a reorganization under section
368(a)(1)(F) of the Code, and the Bank (in either its status as Mutual Bank or
Stock Bank) will recognize no gain or loss as a result of the Reorganization;
(2) the basis of each asset of Mutual Bank held by Stock Bank immediately
after the Conversion will be the same as Mutual Bank's basis for such asset
immediately prior to the Conversion;
(3) the holding period of each asset of Mutual Bank held by Stock Bank
immediately after the Conversion will include the period during which such asset
was held by Mutual Bank prior to the Conversion;
(4) for purposes of Code section 381(b), Stock Bank will be treated as if
there had been no reorganization and, accordingly, the taxable year of the
Mutual Bank will not end on the effective date of the Reorganization and the tax
attributes of Mutual Bank (subject to application of Code sections 381, 382, and
384), including Mutual Bank's bad debt reserves and earnings and profits, will
be taken into account by Stock Bank as if the Reorganization had not occurred;
(5) Mutual Bank Members will recognize no gain or loss upon their
constructive receipt of shares of Stock Bank common stock solely in exchange for
their interest (i.e., liquidation and voting rights) in Mutual Bank;
(6) a Mutual Bank Member's basis in the shares of Stock Bank common stock
constructively received in the Conversion will be the same as the basis of the
Mutual Bank interest constructively surrendered in exchange therefor;
(7) a Mutual Bank Member's holding period for the shares of Stock Bank
common stock constructively received in the Conversion will include the holding
period of the Mutual Bank interest constructively surrendered in exchange
therefor; and
(8) no gain or loss will be recognized by depositors of Mutual Bank upon
the issuance to them of deposits in Stock Bank in the same dollar amount as
their deposits in Mutual Bank.
(b) as regards the Exchange:
(9) the Exchange will qualify as an exchange of property for stock under
Code section 351;
(10) the shareholders of Stock Bank (the former Mutual Bank Members) will
recognize no gain or loss upon the transfer to Mutual Company of the shares of
Stock Bank common stock they
, 1998 Page 4.
constructively received in the Conversion in exchange for interests (i.e.,
liquidation and voting rights) in Mutual Company;
(11) the basis of the interest in Mutual Company received by each
shareholder of Stock Bank in exchange for such shareholder's shares of Stock
Bank common stock will be equal to the basis of such shares of Stock Bank common
stock;
(12) the holding period of the interest in Mutual Company received by each
shareholder of Stock Bank will, as of the date of the Exchange, be the same as
the holding period of the shares of Stock Bank common stock transferred in
exchange therefor, provided such shares of Stock Bank common stock were held as
a capital asset on the date of the Exchange;
(13) Mutual Company will recognize no gain or loss upon its receipt from
the shareholders of Stock Bank of shares of Stock Bank common stock in exchange
for interests in Mutual Company;
(14) Mutual Company's basis for each share of Stock Bank common stock
received from a shareholder of Stock Bank in exchange for an interest in Mutual
Company will be the equal to the basis of such share of common stock in the
hands of such Stock Bank shareholder; and
(15) Mutual Company's holding period for each share of Stock Bank common
stock received from a shareholder of Stock Bank in exchange for an interest in
Mutual Company will, as the date of the Exchange, be the same as the holding
period of such shares in the hands of such Stock Bank shareholder.
(c) as regards the offering under the Stock Issuance Plan:
(16) no gain or loss will be recognized by Stock Bank upon the sale of
shares of Stock Bank common stock under the Stock Issuance Plan;
(17) no gain or loss will be recognized by Eligible Account Holders or
Supplemental Eligible Account Holders upon the distribution to them of
nontransferable subscription rights to purchase shares of Stock Bank common
stock under to the Stock Issuance Plan, provided that the amount to be paid for
such shares is equal to the fair market value of such shares;
(18) the basis to the shareholders of shares of Stock Bank common stock
purchased under the Stock Issuance Plan pursuant to such subscription rights
will be the amount paid therefor and the holding period for such shares will
begin on the date on which such subscription rights are exercised.
In rendering our opinion in (17), above, and our opinion regarding the tax
basis of shares of Stock Bank common stock in (18), above, we have relied,
without independent verification, on the opinion of RP Financial, LC that the
nontransferable subscription rights have no value.
This opinion is given solely for the benefit of the parties to the Plan,
the shareholders of Stock Bank and Eligible Account Holders, Supplemental
Eligible Account Holders and other investors who purchase shares pursuant to the
Stock Issuance Plan, and may not be relied upon by any other party or
, 1998 Page 5.
entity or referred to in any document without our express written consent. We
consent to the filing of this opinion as an exhibit to the Form MHC-1 to be
filed with the Office of Thrift Supervision and to the references to us in the
Prospectus under "The Reorganization - Federal and State Tax Consequences of the
Reorganization."
Very truly yours,
THACHER PROFFITT & WOOD
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