Kleinerts Inc/PA – ‘S-4/A’ on 8/27/96 – EX-8

As of:  Tuesday, 8/27/96   ·   Accession #:  950115-96-1236   ·   File #:  333-05841

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Pre-Effective Amendment to Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4/A       Amendment to Registration Statement                  219    784K 
 2: EX-8        Opinion of Cozen and O'Connor                          5     18K 
 4: EX-23.(C)   Consent of Independent Accountants                     1      6K 
 3: EX-23.B     Consent of Ernst & Young LLP                           2      7K 

EX-8   —   Opinion of Cozen and O’Connor

EX-8
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[COZEN AND O'CONNOR LETTERHEAD] 

                                   August 27, 1996

Kleinert's, Inc.                                                                
Scott Mills, Inc.                                                               
120 West Germantown Pike                                                        
Suite 100                                                                       
Plymouth Meeting, PA  19462                                                     

Ladies and Gentlemen:                                                           

             You have requested our opinion concerning certain Federal
income tax consequences of the merger (the "Merger") of Scott Mills, Inc., (the 
"Company"), a Pennsylvania corporation, with and into Kleinert's, Inc. of       
Alabama ("Sub"), an Alabama corporation which is a wholly-owned subsidiary of   
Kleinert's, Inc. ("Parent"), a Pennsylvania corporation. As a result of the     
Merger, the separate corporate existence of the Company shall cease, and Sub    
shall be the surviving corporation.                                             

 We understand certain facts to be as follows:

                 The Merger will be effected pursuant to an Agreement and Plan
                  of Merger by and among Parent, Sub and the Company dated as of
                June 10, 1996 (the "Merger Agreement"). Each of the Company,
                 Parent and Sub has taken all such actions as are necessary to
              adopt the Merger Agreement as a valid and binding plan and
                  agreement of merger. The Merger will become effective upon the
             filing of a Certificate of Merger with the Secretaries of
              State of the Commonwealth of Pennsylvania and the State of
Alabama.                                    

             Pursuant to the Merger, each share of common stock of the
               Company ("Company Common Stock") will be converted into the
                right to receive $0.03 in cash plus such fraction of a share
of                                          

EX-8
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Kleinert's, Inc.                                                                
August 27, 1996                                                                 
Page  2                                                                         
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                  voting common stock of Parent ("Parent Common Stock") as shall
                 have a value of $0.27 based upon the "Average Price" (as that
             term is defined in the Merger Agreement) of Parent Common
              Stock. Notwithstanding the foregoing, cash will be paid in
              lieu of fractional shares to each holder of Company Common
                  Stock who otherwise would receive a fractional share of Parent
Common Stock in the Merger.                 

            For purposes of our opinion, we have examined the Merger
Agreement, that certain Proxy Statement-Prospectus of Parent and the Company    
that was included in Amendment No. 2 to the Registration Statement on Form S-4, 
File No. 333-5841, (the "Prospectus"), and such other records, documents, and   
instruments, and have considered such matters of law as in our judgment have    
been necessary or appropriate. In addition, in rendering our opinion, we have   
relied upon the accuracy of those representations previously made to us by the  
Company, Parent and certain stockholders of the Company, and reconfirmed to us  
on the date hereof by the Company, Parent and those stockholders, without having
confirmed the accuracy thereof.                                                 

                  In addition to the facts set forth above, we have been advised
of or have assumed all of the following additional facts:                       

  a.    The holders of Company Common Stock (the
                    "Stockholders") have approved and adopted the Merger
Agreement.                      

       b.    The Merger has been consummated in the manner
                    contemplated by and in accordance with the terms and
                    provisions set forth in the Merger Agreement and the
                   Prospectus and is valid and effective in accordance
                     with the Business Corporation Law of the Commonwealth
                    of Pennsylvania and the Alabama Business Corporation
Law.                            

              c.    Each of the Company, Parent and Sub will comply with
                    all reporting obligations with respect to the Merger
                    required under the Internal Revenue Code of 1986, as
                  amended (the "Code"), and the Treasury regulations
thereunder.                     

EX-8
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Kleinert's, Inc.                                                                
August 27, 1996                                                                 
Page  3                                                                         
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              An inaccuracy in the assumed facts or the representations,
or a change after the date hereof in the facts or representations on which      
we have relied or in the law applicable to the Merger, could adversely affect   
our opinion. No ruling has been or will be sought from the IRS as to the Federal
income tax consequences of any aspect of the Merger.                            

                 Based on and subject to the foregoing, it is our opinion that
the following are the material Federal income tax consequences of the Merger:   

                           (1)    The Merger constitutes a reorganization within
                            the meaning of sections 368(a)(1)(A) and
             368(a)(2)(D) of the Code.

                    (2)    None of the Company, Parent or Sub will
                           recognize gain or loss by virtue of the
Merger.     

                        (3)    The Stockholders will not recognize gain or
                                loss on the exchange of Company Common Stock
                           for Parent Common Stock pursuant to the
Merger.     

                  (4)    If a Stockholder realizes gain on the
                               exchange or Company Common Stock for Parent
                           Common Stock and cash, the gain will be
                        recognized to the extent of the cash
                     received. If the cash paid to the
                     Stockholder has the effect of the
                                distribution of a dividend, the gain will be
                                treated as ordinary dividend income; if such
                           payment does not have the effect of the
                      distribution of a dividend to such
                            Stockholder, any gain recognized will be
                              treated as capital gain, provided that the
                               shares of Company Common Stock were held as
                         a capital asset as of the time of the
                              Merger, and will be long-term capital gain
                              if such shares had been held for more than
                          one year. Because the determination of
                               whether the cash consideration received has
                                the effect of the distribution of a dividend
                           is made on a Stockholder-by-Stockholder
                              basis and is based upon each Stockholder's
                               individual tax situation, counsel is unable
                            to express an opinion as to whether gain
                            recognized by any particular Stockholder
                              would be capital gain or ordinary dividend
            income. If a Stockholder

EX-8
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Kleinert's, Inc.                                                                
August 27, 1996                                                                 
Page  4                                                                         
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                              realizes a loss on the exchange of Company
                            Common Stock for Parent Common Stock and
                              cash, the loss will not be recognized, and
                             the amount of the disallowed loss will be
                                included in the Stockholder's adjusted basis
                              of the Parent Common Stock received in the
Merger.     

                         (5)    A Stockholder who receives cash in lieu of a
                                fractional share of Parent Common Stock will
                                be treated as having received the fractional
                             share and then as having received cash in
                              redemption by the Parent of the fractional
                            share interest. As such, the Stockholder
                            will recognize gain or loss equal to the
                                difference between the cash payment received
                          and the Stockholder's tax basis in the
                       portion of the Company Common Stock
                             exchanged therefor, and such gain or loss
                              will be capital gain or loss assuming that
                           such Company Common Stock was held as a
                            capital asset at the time of the Merger.

                        (6)    Each Stockholder will obtain a tax basis in
                              the shares of Parent Common Stock received
                                in the Merger equal to the tax basis of such
                           Stockholder in the Company Common Stock
                               surrendered in exchange therefor, decreased
                         by the amount of cash received in the
                                Merger, and increased by the amount of gain,
                       if any, recognized in the exchange,
                          including any recognized gain which is
          treated as a dividend.

                    (7)    The holding period of any Parent Common
                          Stock received by a Stockholder in the
                             Merger will include the holding period of
                           such Stockholder's Company Common Stock
                              surrendered in exchange therefor, provided
                               that the shares of Company Common Stock are
                             held as capital assets at the time of the
Merger.     

EX-8
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Kleinert's, Inc.                                                                
August 27, 1996                                                                 
Page  5                                                                         
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           No opinion is expressed as to any matter not specifically
addressed above. Further, no opinion is expressed as to the tax consequences    
of any of the transactions under any foreign, state, or local tax law.          

                This opinion is given as of the date hereof and we assume no
obligation to update or supplement this opinion to reflect any facts or         
circumstances which may hereafter come to our attention or any changes in laws  
which may hereafter occur.                                                      

            This opinion is solely for your benefit and that of your
successors and assigns in connection with the Merger and it may not be quoted or
relied upon by, nor may copies to delivered to, any other person and it may not 
be used for any other purpose, without our prior written consent, other than for
inclusion as an exhibit to the Registration Statement referred to herein.       

                         Very truly yours,

                              /s/ COZEN AND O'CONNOR

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘S-4/A’ Filing		Date		First		Last			Other Filings
Filed on:		8/27/96		1		5			10-K/A,  10-Q/A
		6/10/96		1
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