1
EXHIBIT 8
(000) 000-0000
September 25, 1997
Board of Directors Board of Directors
Camco Financial Corporation GF Bancorp, Inc.
000 Xxxxxxxx Xxxxxx 0 Xxxxx Xxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000 Xxxxxxxxxx, Xxxx 00000
Board of Directors Board of Directors
First Federal Savings Bank Germantown Federal Savings Bank
of Washington Courthouse 0 Xxxxx Xxxx Xxxxxx
000 Xxxx Xxxxx Xxxxxx Xxxxxxxxxx, Xxxx 00000
P.O. Box 600
Washington Courthouse, Ohio 43160
Dear Directors:
We have reviewed the Agreement of Merger and Plan of
Reorganization (the "Agreement") dated July 28, 1997, by and among Camco
Financial Corporation, a Delaware corporation ("Camco"), First Federal Savings
Bank of Washington Courthouse, a savings bank organized under the laws of the
United States ("First Federal"), which is a wholly owned subsidiary of Camco, GF
Bancorp, Inc., a Delaware corporation ("GFBC"), and Germantown Federal Savings
Bank, a savings bank organized under the laws of the United States
("Germantown"), which is a wholly owned subsidiary of GFBC, with a view to
rendering our opinion on the federal income tax consequences of the proposed
mergers of GFBC with and into Camco and Germantown with and into First Federal.
THE MERGERS
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The transactions contemplated by the Agreement are (1) a
merger under the laws of the State of Delaware of GFBC with and into Camco (the
"Company Merger") as a result of which Camco will be the surviving corporation
followed by (2) the merger under the laws of the United States of Germantown
with and into First Federal as a result of which First Federal will be the
surviving corporation.
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September 25, 1997
Page 2
At the Effective Time of the Company Merger, each outstanding
GFBC Share shall be canceled and extinguished and, in substitution and exchange
therefor, the holders thereof shall be entitled to receive from Camco 1.616
Camco Shares (the "Exchange Ratio"), subject to possible adjustment as follows:
(1) If the average closing price (as hereinafter defined)
("Average Closing Price") of Camco Shares is greater than $20.99 or is less than
$15.51, the Exchange Ratio shall be adjusted to become the product of
multiplying 1.616 by a fraction, the numerator of which is $20.99 if the Average
Closing Price is greater than $20.99, and $15.51 if the Average Closing Price is
less than $15.51, and the denominator of which is the Average Closing Price. The
Average Closing Price shall be the mean of the average of the daily closing bid
and asked prices of Camco Shares as reported on the Nasdaq National Market
System (as reported by a mutually agreed upon authoritative source) for the
twenty (20) most recent trading days ending at the close of trading on the date
three (3) days prior to the closing of the Company Merger;
(2) The Exchange Ratio shall be adjusted to reflect any stock
split, stock dividend or distributions in, or combinations or subdivisions of,
Camco Shares, between the date of the Agreement and the Effective Time of the
Company Merger;
(3) No fractional shares will be issued, and cash will be paid
in lieu of fractional shares based on the Average Closing Price. No interest
shall be payable with respect to such cash payment.
Any GFBC Shares held by a holder who dissents from the Company
Merger in accordance with Section 262 of the Delaware General Corporation Law
("DGCL"), shall not, after the Effective Time of the Company Merger, be entitled
to vote for any purpose or to receive any dividends or other distribution and
shall be entitled to receive only the fair value of such holder's GFBC Shares.
At the Effective Time of the Bank Merger, each of the
outstanding Germantown Shares will be canceled and extinguished and the shares
of First Federal held by Camco prior to the Bank Merger will remain the only
issued and outstanding shares of First Federal after the merger.
In connection with the Company Merger, management of Camco or
GFBC have made the following representations:
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Page 3
1. The fair market value of the Camco Shares to be received by
each GFBC shareholder will be approximately equal to the fair market value of
the GFBC Shares surrendered by each such shareholder pursuant to the Company
Merger.
2. There is no plan or intention by the GFBC shareholders who
own one percent (1%) or more of GFBC Shares and, to the best of the knowledge of
GFBC's management, there is no plan or intention on the part of the remaining
GFBC shareholders to sell, exchange, or otherwise dispose of a number of Camco
Shares received in the Company Merger which would reduce the GFBC's
shareholders' ownership of Camco Shares to a number of Camco Shares having a
value, as of the date of the Company Merger, of less than fifty percent (50%) of
the value of all of the formerly outstanding stock of GFBC as of the same date.
3. The liabilities of GFBC assumed by Xxxxx, and the
liabilities to which the transferred assets of GFBC are subject, were incurred
by GFBC in the ordinary course of its business.
4. Camco has no plan or intention to reacquire any of the
Camco Shares issued in the Company Merger.
5. Camco has no plan or intention to sell or otherwise dispose
of any of the assets of GFBC acquired in the Company Merger, except for
dispositions made in the ordinary course of business or transferred described in
Section 368(a)(2)(C) of the Internal Revenue Code of 1986, as amended ("the
Code").
6. Following the Company Merger, Camco will continue the
historic business of GFBC or use a significant portion of GFBC's business assets
in a business.
7. GFBC, GFBC's shareholders, and Camco will pay their
respective expenses, if any, incurred in connection with the Company Merger.
8. There is no intercorporate indebtedness existing between
Camco and GFBC that was issued, acquired, or will be settled, at a discount.
9. No two parties to the Company Merger are "investment
companies" as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
10. GFBC is not under the jurisdiction of a court in a Title
XI or similar case within the meaning of Section 368(a)(3)(A) of the Code.
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11. The fair market value of the assets of GFBC transferred to
Camco will equal or exceed the sum of the liabilities assumed by Camco, plus the
amount of liabilities, if any, to which the transferred assets are subject.
12. The payment of cash in lieu of fractional Camco Shares is
solely for the purpose of avoiding the expense and inconvenience to Camco of
issuing fractional shares and does not represent separately bargained for
consideration. The total cash consideration that will be paid in the Company
Merger to GFBC shareholders instead of issuing fractional Camco Shares, will not
exceed one percent (1%) of the total consideration that will be issued in the
Company Merger to the GFBC shareholders in exchange for the GFBC Shares. The
fractional share interests of each shareholder will be aggregated, and no GFBC
shareholder will receive cash in an amount equal to or greater than the value of
one (1) full Camco Share.
In connection with the Bank Merger, management of Camco, GFBC,
Germantown or First Federal have made the following representations:
1. The fair market value of the First Federal Shares
constructively received by Camco will be approximately equal to the fair market
value of the Germantown Shares surrendered and canceled pursuant to the Bank
Merger.
2. The liabilities of Germantown assumed by First Federal and
the liabilities to which the transferred assets of Germantown are subject were
incurred by Germantown in the ordinary course of its business.
3. First Federal has no plan or intention or sell or otherwise
dispose of any of the assets of Germantown acquired in the Bank Merger, except
for dispositions made in the ordinary course of business or transfers described
in Section 368(a)(2)(C) of the Code.
4. Following the Bank Merger, First Federal will continue the
historic business of Germantown or use a significant portion of Germantown's
business assets in a business.
5. There is no intercorporate indebtedness existing between
Germantown and First Federal that was issued, acquired, or will be settled, at a
discount.
6. No two parties to the Bank Merger are "investment
companies" as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
7. Germantown is not under the jurisdiction of a court in a
Title XI or similar case within the meaning of Section 368(a)(3)(A) of the Code.
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8. The fair market value of the assets of Germantown
transferred to First Federal will equal or exceed the sum of the liabilities
assumed by First Federal, plus the amount of liabilities, if any, to which the
transferred assets are subject.
DISCUSSION
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Section 368(a)(1)(A) of the Code defines a reorganization to
include a statutory merger. Since the Company Merger will be a statutory merger
under the laws of the State of Delaware and Bank Merger will be a merger under
the laws of the United States, 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 proprietary interest in the entity resulting from the reorganization.
Section 3.02 of Revenue Procedure 77-37, 1977-2 C.B. 568, provided 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 fifty percent (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
Camco Shares to be received by GFBC shareholders in the Company Merger exceeds
the cash paid for fractional shares and cash paid for dissenters' shares, the
continuity of interest requirement will be satisfied in that GFBC shareholders
will receive Camco Shares equal in value to the GFBC Shares exchanged therefor,
which will ensure that GFBC shareholders will have a continuing interest through
stock ownership in Camco which is equal in value to at least fifty percent (50%)
of the value of all the formerly outstanding GFBC Shares as of the effective
date of the Company Merger. Since Camco is the sole shareholder of Germantown
and First Federal at the time of the Bank Merger and will remain the sole
shareholder of First Federal after the Bank Merger, the Bank Merger also
satisfies the continuity of interest test.
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OPINIONS
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Therefore, based on the description of the Company Merger in
the Agreement, the representations set forth above upon which we have relied,
and the foregoing legal authorities, it is our opinion with respect to the
Company Merger that:
1. The Company Merger will constitute a reorganization under
Section 368(a)(1)(A) of the Internal Revenue Code of 1986, as amended
("the Code"). Camco and GFBC will each be a party to the
reorganization.
2. No gain or loss will be recognized to GFBC upon the
transfer of its assets to Camco in exchange for Xxxxx's shares and the
assumption by Camco of liabilities of GFBC.
3. No gain or loss will be recognized to Camco on the receipt
of the assets of GFBC in exchange for Camco Shares.
4. The basis of the assets of GFBC in the hands of Camco will
be the same as the basis of such assets in the hands of GFBC
immediately prior to the Company Merger.
5. The holding period of the assets of GFBC to be received by
Camco will include the period during which the assets were held by
GFBC.
6. No gain or loss will be recognized by GFBC shareholders who
exchange their GFBC Shares for Camco Shares (including fractional share
interests) pursuant to the Company Merger.
7. The basis of the Camco Shares (including fractional share
interests) to be received by a GFBC shareholder will be the same as the
basis of the GFBC Shares surrendered in exchange therefore and the
holding period of Camco Shares (including fractional share interests)
to be received by such GFBC shareholder will be the same as the holding
period of the GFBC Shares surrendered in exchange therefore.
8. Where a cash payment is received by a GFBC shareholder in
lieu of fractional Camco Shares, the cash payment will be treated as
received by such GFBC shareholder as a distribution in redemption of
the fractional share interest, subject to the provisions and
limitations of Section 302 of the Code. These cash payments will be
treated as having been received as distributions in full payment in
exchange for the fractional shares redeemed as provided in Section
302(a) of the Code.
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9. If a GFBC shareholder dissents to the Company Merger and
receives solely cash in exchange for such shareholder's GFBC Shares,
such cash will be treated as having been received by such shareholder
as a distribution in redemption of such shareholder's GFBC Shares,
subject to the provisions and limitations of Section 302 of the Code.
Such shareholder will recognize gain or loss measured by the difference
between the amount of cash received and the proportional tax basis of
the GFBC Shares so redeemed. Any such loss will be treated as a loss
from the sale of stock and will be taxed as a capital loss if the GFBC
Shares were held by such shareholder as a capital asset at the time of
the Company Merger. As discussed below, depending upon the particular
circumstances of each GFBC shareholder, any such gain from the sale of
stock will be taxable as capital gain or as a dividend taxable as
ordinary income. If, after the receipt of the cash, a dissenting GBFC
shareholder has completely terminated such shareholder's actual and
constructive ownership interest in GFBC or Camco within the meaning of
Section 302(b)(3) of the Code, then any gain recognized on the receipt
of cash will be treated as capital gain if GFBC Shares were held by
such shareholder as a capital asset at the Effective Time of the
Company Merger. If a dissenting GFBC shareholder receiving a cash
payment for such shareholder's GFBC Shares does not thereby completely
terminate such shareholder's ownership interest in GFBC or Camco within
the meaning of Section 302(b)(3) of the Code, any gain recognized on
the receipt of cash may be treated as a dividend and taxed at ordinary
income rates unless the cash payment received by such shareholder
qualifies for treatment as capital gain under the substantially
disproportionate redemption exemption of Section 302(b)(2) of the Code,
or under one of the other exceptions to dividend treatment contained in
Section 302. In order to determine whether there has been a complete
termination of actual and constructive interests in Camco, it is
necessary to consider Camco Shares owned by persons from whom ownership
is attributed to such dissenting shareholder under the rules of Section
318 of the Code.
Based on the description of the Bank Merger in the Agreement,
the representations set forth above upon which we have relied, and the foregoing
authorities, it is our opinion that:
1. The Bank Merger will constitute a reorganization under
Section 368(a)(1)(A) of the Code. First Federal and Germantown will
each be a party to the reorganization.
2. No gain or loss will be recognized to Germantown upon the
transfer of its assets to First Federal in constructive exchange for
First Federal's shares and the assumption by First Federal of
liabilities of Germantown.
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3. No gain or loss will be recognized to First Federal on the
receipt of the assets of Germantown in constructive exchange for First
Federal Shares.
4. The basis of the assets of Germantown in the hands of First
Federal will be the same as the basis of such assets in the hands of
Germantown immediately prior to the Bank Merger.
5. The holding period of the assets of Germantown to be
received by First Federal will include the period during which the
assets were held by Germantown.
6. No gain or loss will be recognized by Camco, the sole
shareholder of Germantown, which constructively exchanges its
Germantown Shares for First Federal Shares pursuant to the Bank Merger.
7. The basis of the First Federal Shares held by Xxxxx will be
increased by the same as the basis of the Germantown Shares
constructively surrendered in exchange for First Federal Shares.
OVERALL EVALUATION
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Based upon, and subject to, the foregoing, it is our opinion
that the Merger should result in the federal income tax consequences described
above.
This opinion is not binding on the Internal Revenue Service
and no ruling has been, or will be, requested from the Internal Revenue Service
as to any federal income tax consequence described above. Although this opinion
is based upon our best interpretation of current provisions of the Code and the
Treasury Department regulations promulgated thereunder, as well as existing
court decisions and administrative rulings and procedures, and sets forth the
conclusions we believe would be reached by a court if the issues were properly
briefed and presented to it, no assurance can be provided that a court in fact
would agree with our interpretation. Further, no assurance can be provided that
the applicable law will not change in a manner that will adversely affect these
consequences, and any such adverse change could be retroactive.
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No opinion is expressed as to any federal income tax
consequence other than as specifically set forth herein, and no opinion is
expressed with respect to the amount or timing of any federal income tax
deduction or credit or with respect to any tax issue arising under state, local,
or foreign tax provisions. Further, any change in the facts as set forth herein
or in the Agreement or the representations could affect this opinion, perhaps in
an adverse manner.
Very truly yours,
Xxxxx, Xxxxx, Xxxxxxx and Xxxxx
gnc/bjs
