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Exhibit 8
(000) 000-0000
March 30, 1998
State Savings Company
Board of Directors
00 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Re: Federal Income Tax opinion Regarding Merger of State
Savings Company and Fifth Third Bancorp
Ladies and Gentlemen:
We have reviewed the Affiliation Agreement (the "Agreement") by and
between Fifth Third Bancorp, an Ohio corporation and registered bank holding
company under the Bank Holding Company Act of 1956 ("Fifth Third"), and State
Savings Company, an Ohio corporation and multiple savings and loan holding
company under Section 10 of the Home Owners' Loan Act of 1933 ("State Savings
Co."), with a view to expressing our opinion on the federal income tax
consequences of the proposed merger between Fifth Third and State Savings Co.
The transaction contemplated by the Agreement is a merger (the
"Merger") under the laws of the State of Ohio of State Savings Co. with and into
Fifth Third. Fifth Third will be the surviving corporation, and the separate
corporation existence of State Savings Co. will cease.
The authorized capital stock of Fifth Third consists of a total of
300,500,000 shares, of which 300,000,000 shares are classified as common stock
without par value ("Fifth Third Common Stock") and 500,000 shares are classified
as preferred stock without par value. As of the close of business on November
30, 1997, 155,163,554 shares of Fifth Third Common Stock were issued and
outstanding, and 3,677,597 shares were held in Fifth Third's treasury. As of the
date of the Agreement, no shares of preferred stock had been issued. The
authorized capital stock of State Savings Co. consists of 600,000 shares of
common stock, $100 par value ("State Savings Co. Common Stock"), of which 6,000
shares were issued and outstanding as of the date of the Agreement.
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At the effective time of the Merger, as defined in the Agreement,
each share of State Savings Co. Common Stock then issued and outstanding, other
than shares of State Savings Co. Common Stock either held in the treasury of
State Savings Co. or as to which the holder has commenced as of the effective
time of the Merger all procedures necessary through the effective time to assert
dissenters' rights in accordance with the provisions of Section 1701.85 of the
Ohio Revised Code ("Dissenting Shares"), shall be converted into the right to
receive 1,847.26 shares of Fifth Third Common Stock, subject to adjustment in
certain limited circumstances.
At the effective time, all the shares of State Savings Co. Common
Stock other than Dissenting Shares, whether issued or unissued, including
treasury shares, will be, by virtue of the Merger, canceled and extinguished and
all rights in respect thereof shall cease to exist. Holders of Dissenting Shares
shall, upon the effectiveness of the Merger, with respect to any such Dissenting
Shares, have only such rights, if any, as they may have pursuant to Sections
1701.84 and 1701.85 of the Ohio Revised Code, and any amounts required by
Section 1701.85 to be paid to any holder of Dissenting Shares shall be paid by
Fifth Third as the surviving corporation.
No fractional shares of Fifth Third Common Stock will be issued by
Fifth Third in the Merger. In lieu thereof, each holder of shares of State
Savings Co. Common Stock shall receive cash in an amount determined by
multiplying the fractional share interest to which such holder would otherwise
be entitled by the per-share closing price of Fifth Third Common Stock as
reported on the NASDAQ National Market System on the date the Merger becomes
effective.
Our opinion is based upon the following representations of State
Savings Co. or State Savings Co. management with respect to matters
pertaining to State Savings Co. or its shareholders, and upon certain
assumptions with regard to matters pertaining to Fifth Third:
1. There is a business purpose for the Merger.
2. The fair market value of Fifth Third Common Stock to be received
by the shareholders of State Savings Co. will, in each instance, be
approximately equal to the fair market value of State Savings Co. Common Stock
exchanged therefor.
3. There is no plan or intention by the shareholders of State
Savings Co. who own 1% or more of State Savings Co. Common Stock, and to the
best of the knowledge of the management of State Savings Co., there is no plan
or intention on the part of the remaining shareholders of State Savings Co. to
sell, exchange, or otherwise dispose of a number of shares of Fifth Third Common
Stock received in the transaction that would reduce the State Savings Co.
shareholders' ownership of Fifth Third to a number of shares having a value, as
of the date of the Merger, of less than 50% of the value of all of the formerly
outstanding State Savings Co. Common Stock as of the same date. For purposes of
this representation, shares of State Savings Co. Common Stock exchanged for cash
or other property, surrendered by dissenters, or exchanged for cash in lieu of
fractional shares of Fifth Third Common Stock, will be treated as outstanding
State Savings Co. Common Stock on the date of the Merger.
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4. Fifth Third has no plan or intention to reacquire any of the
Fifth Third Common Stock issued in the Merger.
5. Fifth Third has no plan or intention to sell or otherwise dispose
of any of the assets of State Savings Co. acquired in the Merger, except for (a)
dispositions in the ordinary course of business, (b) transfers described in
Section 368(a)(2)(C) of the Internal Revenue Code of 1986, as amended ("the
Code"), (c) the merger of State Savings Bank, a wholly owned subsidiary of State
Savings Co., with and into The Fifth Third Bank of Columbus, a wholly owned
subsidiary of Fifth Third, or (d) the merger of Century Bank, a wholly owned
subsidiary of State Savings Co., with and into The Fifth Third Bank, a wholly
owned subsidiary of Fifth Third.
6. The liabilities of State Savings Co. assumed by Fifth Third in
the Merger and the liabilities to which the transferred assets of State Savings
Co. are subject were incurred by State Savings Co. in the ordinary course of its
business.
7. Following the Merger, Fifth Third will continue the historic
business of State Savings Co. or use a significant portion of State Savings
Co.'s historic assets in a business.
8. Fifth Third, State Savings Co. and the shareholders of State
Savings Co. will pay their respective expenses, if any, incurred in connection
with the Merger.
9. There is no intercorporate indebtedness existing between State
Savings Co. and Fifth Third that was issued, acquired or will be settled at a
discount.
10. Neither Fifth Third nor State Savings Co. is an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
11. The fair market value of the assets of State Savings Co.
transferred to Fifth Third will equal or exceed the sum of the liabilities
assumed by Fifth Third plus the amount of liabilities, if any, to which the
transferred assets are subject.
12. The payment of cash in lieu of fractional shares of Fifth Third
Common Stock is solely for the purpose of avoiding the expense and inconvenience
to Fifth Third of issuing fractional shares and does not represent separately
bargained for consideration. The total cash consideration that will be paid in
the Merger to the shareholders of State Savings Co. instead of issuing
fractional shares of Fifth Third Common Stock will not exceed 1% of the total
consideration that will be issued in the Merger to the State Savings Co.
shareholders in exchange for their shares of State Savings Co. Common Stock.
DISCUSSION
Section 368(a)(1)(A) of the Code defines a tax-free reorganization
to include a statutory merger. Since the Merger will be a statutory merger under
the laws of the State of
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Ohio, this statutory requirement is satisfied.
In addition, certain non-statutory requirements have been imposed by
the courts and by the Internal Revenue Service in determining whether
reorganizations are in compliance with Section 368 of the Code. These include
requirements that there be a business purpose for the reorganization, that there
be a continuity of the business enterprise of the acquired corporation, and that
the shareholders of all corporate parties to the reorganization emerge with some
continuing propriety interest in the entity resulting from the reorganization.
Section 3.02 of Revenue Procedure 77-37, 1977-2 C.B. 568, provides that the
continuity of interest requirement is satisfied "if there is a continuing
interest through stock ownership in the acquiring or transferee corporation . .
. on the part of the former shareholders of the acquired or transferor
corporation which is equal in value, as of the effective date of the
reorganization, to at least 50% of the value of all of the formerly outstanding
stock of the acquired or transferor corporation as of the same date."
Pursuant to the representations that have been made, it is our
opinion that the non-statutory requirements of business purpose and continuity
of business enterprise are satisfied. Furthermore, assuming that the value of
Fifth Third Common Stock to be received by State Savings Co. shareholders in the
Merger exceeds the amount of cash paid for fractional shares and cash paid for
Dissenting Shares, the continuity of interest requirement will be satisfied in
that shareholders of State Savings Co. will receive Fifth Third Common Stock
equal in value to the State Savings Co. Common Stock exchanged therefor, which
will insure that shareholders of State Savings Co. will have a continuing
interest through stock ownership in Fifth Third which is equal in value to at
least 50% of the value of all the formerly outstanding State Savings Co. Common
Stock as of the effective date of the Merger.
OPINION
Therefore, based on the transaction provided for in the Agreement
and the representations and assumptions set forth above on which we have relied,
we are of the opinion that the federal income tax consequences of the Merger
will be follows:
1. The Merger will be a reorganization within the meaning of Section
368(a)(1)(A) of the Code. State Savings Co. and Fifth Third will each be a
"party" to the reorganization within the meaning of Section 368(b) of the Code.
2. No gain or loss will be recognized by State Savings Co. upon the
transfer of its assets to Fifth Third in exchange for Fifth Third Common Stock
and the assumption by Fifth Third of the liabilities of State Savings Co.
3. No gain or loss will be recognized by the shareholders of State
Savings Co. who exchange their State Savings Co. Common Stock solely for shares
of Fifth Third Common Stock, except to the extent of any cash received in lieu
of a fractional share of Fifth Third Common Stock.
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4. The basis of the shares of Fifth Third Common Stock to be
received by shareholders of State Savings Co. who receive solely shares of Fifth
Third Common Stock will be the same as the basis of the shares of State Savings
Co. Common Stock surrendered and exchanged therefor (reduced by any amount
allocated to a fractional share of Fifth Third Common Stock with respect to
which cash is received).
5. The payment of cash in lieu of fractional shares of Fifth Third
Common Stock will be treated for federal income tax purposes as if the
fractional shares were distributed as part of the exchange and then redeemed by
Fifth Third; such cash payments will be treated as having been received as
distributions in full payment in exchange for the fractional shares redeemed
subject to the conditions and limitations of Section 302 of the Code.
6. The holding period of the shares of Fifth Third Common Stock
received by shareholders of State Savings Co. will include the holding period of
the shares of State Savings Co. surrendered in exchange therefor, provided that
the State Savings Co. Common Stock was held as a capital asset in the hands of
the shareholder of State Savings Co. on the effective date of the Merger.
7. As to any State Savings Co. shareholder who perfects dissenters'
rights and receives solely cash in exchange for his or her shares of State
Savings Co. Common Stock, such cash will be treated as having been received by
such shareholder as a distribution in redemption of his or her stock subject to
the provisions of Section 302 of the Code. Where, as a result of such
distribution, a shareholder owns no Fifth Third Common Stock, either directly or
through the application of the constructive ownership rules of Section 318(a) of
the Code, the redemption will be a complete termination of interest within the
meaning of Section 302(b)(3) of the Code, and the cash will be treated as a
distribution in full payment in exchange for State Savings Co. Common Stock
redeemed as provided in Section 302(a). Gain or loss will be realized and
recognized to such shareholder in an amount equal to the difference between the
redemption price and the adjusted basis of the State Savings Co. Common Stock
surrendered in exchange therefor.
The forgoing opinion is based on the provisions of the present Code,
treasury regulations promulgated thereunder, and judicial and administrative
interpretations of the Code. However, an opinion of counsel is not binding on
the Internal Revenue Service, and the Internal Revenue Service could disagree
with the conclusions reached in this opinion. In the event of such disagreement,
there could be no assurance that the Internal Revenue Service would not prevail
in a judicial proceeding, although we believe that the positions expressed in
our opinion should prevail if the matter were litigated.
Very truly yours,
Xxxxx, Xxxxx, Xxxxxxx and Xxxxx LLP
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