Exhibit 8.1
Internet ID: @thacherproffitt.com
, 1999
Westborough Savings Bank
101 E. Main Street
Westborough, Massachusetts 01581
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 Westborough Savings Bank (the
"Bank") will reorganize from a state-chartered mutual savings bank into a mutual
holding company structure. These transactions and the related sale of common
stock, also discussed below, will be effected pursuant to the Plan of
Reorganization From a Mutual Savings Bank to a Mutual Holding Company and Stock
Issuance Plan, adopted by the Board of Trustees of the Bank on March 15, 1999
(the "Plan") and amended as of the date hereof. The Reorganization and its
component and related transactions are described in the Plan and in the
Prospectus (the "Prospectus") filed with the Securities and Exchange Commission
in connection with the Reorganization and proposed sale of common stock. We are
rendering this opinion pursuant to Section 4(G) 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. For purposes of this letter, the term "mutual
interests," with respect to the Bank and Mutual Holding Company (as defined
below), shall mean the liquidation rights in, respectively, the Bank and Mutual
Holding Company.
The Reorganization will be effected, pursuant to the Plan, as follows:
(1) The Bank will organize Westborough Bancorp, as a mutual
savings bank ("Mutual Bank").
(2) Mutual Bank will organize two wholly-owned subsidiaries, one
of which will be Westborough Financial Services, Inc. ("Stock
Holding Company"), and the other of which will be an interim
stock savings bank ("Interim").
Westborough Savings Bank
, 1999
(3) The Bank will exchange its charter for a Massachusetts stock
savings bank charter and thereby become a stock savings bank
("Stock Bank") known as The Westborough Bank (the
"Conversion"). The holders of deposit accounts in the Bank
(the "Depositors") will constructively exchange their mutual
interests in the Bank for shares of stock in Stock Bank. The
Depositors will hold deposit accounts in Stock Bank in the
same amount and on the same terms and conditions as the
deposit accounts previously held in the Bank.
(4) Mutual Bank will exchange its charter for a Massachusetts
mutual holding company charter and thereby become a mutual
holding company ("Mutual Holding Company").
(5) Interim will merge with and into Stock Bank with Stock Bank
surviving. In the merger, the Depositors will exchange the
stock of Stock Bank constructively received in the Conversion
for mutual interests in Mutual Holding Company (the
"Exchange"), which mutual interests will be substantially
similar to those previously held in the Bank.
(6) Mutual Holding Company will then contribute all of the stock
of Stock Bank to Stock Holding Company.
(7) Stock Holding Company will offer for sale up to 49% of its
common stock pursuant to the Plan, with priority subscription
rights granted in descending order to certain Depositors, to
certain employee stock benefit plans of the Bank, to other
Depositors and to certain members of the general public.
The steps of the Reorganization described in (3) through (6) will occur
simultaneously. As a result of the Reorganization, Stock Bank will be a
wholly-owned subsidiary of Stock Holding Company and Stock Holding Company will
be a majority-owned subsidiary of Mutual Holding Company.
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 upon, without independent verification, the representations of the Bank
contained in its letter to us dated [__, 1999]. 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.
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 the Bank or
Stock Bank) will recognize no gain or loss as a result of the Conversion;
(2) no Depositor will recognize gain or loss upon the constructive
receipt of shares of Stock Bank stock solely in exchange for such Depositor's
mutual interests in the Bank;
(3) no Depositor will recognize gain or loss upon the issuance to such
Depositor of deposits in Stock Bank in the same dollar amount as such
Depositor's deposits in the Bank.
(b) AS REGARDS THE EXCHANGE:
(4) the Exchange will qualify as an exchange of property for stock
under Code section 351;
Westborough Savings Bank
, 1999
(5) no shareholder of Stock Bank (I.E., a former Depositor) will
recognize gain or loss upon the transfer to Mutual Holding Company of Stock Bank
stock constructively received in the Conversion in exchange for mutual interests
in Mutual Holding Company;
(6) Mutual Holding Company will recognize no gain or loss upon its
receipt from the shareholders of Stock Bank of shares of Stock Bank stock in
exchange for mutual interests in Mutual Holding Company;
(c) AS REGARDS THE OFFERING UNDER THE PLAN:
(7) no gain or loss will be recognized by the Company upon the sale of
shares of the Company common stock under the Plan;
(8) no gain or loss will be recognized by Depositors upon the
distribution to them of nontransferable subscription rights to purchase shares
of the Company common stock under the Plan, provided that the amount to be paid
for such shares is equal to the fair market value of such shares;
(9) the basis to the shareholders of shares of the Company common stock
purchased under the 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 (8), above, and our opinion regarding the
tax basis of shares of the Company common stock in (9), 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 Depositors and Eligible Account Holders, Supplemental Eligible Account
Holders and other investors who purchase shares pursuant to the Plan, and may
not be relied upon by any other party or 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 Application for the Establishment of a Mutual Holding Company
and Associated Stock Issuance filed with the Board of Bank Incorporation and the
Division of Banks of the Commonwealth of Massachusetts in accordance with
Chapters 167A, 167H and 168 of the Massachusetts General Laws, as a supporting
document to the notice filed with the Federal Deposit Insurance Corporation
pursuant to Sections 303.161 and 303.163 and as an exhibit to the Registration
Statement on Form SB-2 filed with the Securities and Exchange Commission.
Very truly yours,
THACHER PROFFITT & WOOD
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