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Exhibit 8.1
[XXXXX, GAMBELL & XXXXXXX, LLP LETTERHEAD]
September 24, 1997
SouthFirst Bancshares, Inc.
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx 00000
First Federal Savings and Loan Association
of Xxxxxxx County
000 0xx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Re: Agreement and Plan of Merger under which First Federal Savings
and Loan Association of Xxxxxxx County will merge with and
into First Federal of the South, a wholly-owned subsidiary of
SouthFirst Bancshares, Inc.
Gentlemen:
We have acted as counsel to SouthFirst Bancshares, Inc. ("SouthFirst")
and its wholly-owned subsidiary, First Federal of the South ("First Federal") in
connection with the proposed merger (the "Merger") of First Federal Savings and
Loan Association of Xxxxxxx County ("Xxxxxxx County"), with and into First
Federal, pursuant to the terms of and as described in that certain Amended and
Restated Agreement and Plan of Merger (the "Merger Agreement") dated as of
September 17, 1997 by and among SouthFirst, First Federal and Xxxxxxx County,
described in the SouthFirst Registration Statement on Form S-4, to be filed with
the Securities and Exchange Commission on or about September 26, 1997 (the
"Registration Statement"). At your request, in connection with the filing by
SouthFirst of the Registration Statement and the Prospectus/Joint Proxy
Statement of SouthFirst and Xxxxxxx County as amended through the date hereof
(the "Prospectus/Joint Proxy Statement") included as part of the Registration
Statement, we are rendering our opinion concerning certain federal income tax
consequences of the Merger. Unless otherwise indicated, all capitalized terms
used in this opinion have the same meanings given therefor in the
Prospectus/Joint Proxy Statement.
For purposes of rendering our opinion herein, we have conducted an
examination of the Internal Revenue Code of 1986, as amended (the "Code"), and
such other applicable laws, regulations, rulings, decisions, documents and
records as we have deemed necessary. With respect to factual matters, we have
relied upon the Merger Agreement, including, without limitation, the
representations of SouthFirst, First Federal and Xxxxxxx County set forth
therein, and upon certain statements and representations made to us in
certificates by officers of SouthFirst and Xxxxxxx County,
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SouthFirst Bancshares, Inc.
First Federal Savings and Loan
Association of Xxxxxxx County
September 26, 1997
Page 2
respectively, in each case without independent verification thereof. We have,
with your consent, assumed the accuracy and completeness of the statements and
representations contained in such certificates and have further assumed that the
statements and representations contained in such certificates will be complete
and accurate as of the Effective Time. We have also relied on the accuracy and
completeness of the statements and representations contained in the
Prospectus/Joint Proxy Statement. In addition, for purposes of this opinion, we
have assumed that at least fifty percent of the outstanding shares of Xxxxxxx
County Common Stock will be exchanged for SouthFirst Common Stock in the Merger,
and that the shares of Xxxxxxx County Common Stock constitute capital assets in
the hands of each holder thereof.
Based on the foregoing, and subject to the qualifications set forth
below, we are of the opinion that under the Code:
(1) The Merger will constitute a reorganization under Code
ss.ss.368(a)(1)(A) and 368(a)(2)(D), and SouthFirst, First Federal and Xxxxxxx
County will each be a party to the reorganization within the meaning of Code
ss.368(b).
(2) Holders of shares of Xxxxxxx County Common Stock who exchange such
shares solely for shares of SouthFirst Common Stock will not recognize gain or
loss on the exchange.
(3) The federal income tax basis of shares of SouthFirst Common Stock
received in exchange for shares of Xxxxxxx County Common Stock will be equal to
the holder's basis of the shares of Xxxxxxx County Common Stock surrendered in
exchange therefor, and the holding period of such SouthFirst Common Stock will
include the holding period of the shares of Xxxxxxx County Common Stock
surrendered in exchange therefor.
(4) Holders of shares of Xxxxxxx County Common Stock who exchange such
shares solely for cash will recognize capital gain or loss in an amount equal to
the difference between the cash received and the basis of the shares of Xxxxxxx
County Common Stock surrendered.
(5) The receipt of cash in lieu of fractional shares will be treated as
if the fractional shares were distributed as part of the exchange and then
redeemed by SouthFirst, and capital gain or loss will be recognized in an amount
equal to the difference between the cash received and the basis of the
fractional share of SouthFirst Common Stock surrendered.
The opinions expressed herein are based upon our interpretation of
existing legal authorities, and no assurance can be given that such
interpretations would be followed if the exchange of shares contemplated by the
Merger became the subject of administrative or judicial proceedings. Statements
of opinion herein are opinions only and should not be interpreted as guarantees
of the current status
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of the law, nor should they be accepted as a guarantee that a court of law or
administrative agency will concur in such statement.
No opinion is expressed with respect to any of the following:
(i) The appropriate method to determine the fair market value of any
stock or other consideration received in any sale or exchange;
(ii) The state, local or foreign tax consequences of any aspect of the
Merger; or
(iii) The federal income tax consequences of any aspect of the Merger
to holders of Xxxxxxx County Common Stock who are subject to special tax
treatment for federal income tax purposes, including among others, life
insurance companies, tax exempt entities and foreign taxpayers, or to holders
of Xxxxxxx County Options which are exchanged for or converted into options or
warrants to acquire SouthFirst Common Stock.
We expressly consent to the filing of this opinion with the Securities
and Exchange Commission as an exhibit to the Registration Statement, and to the
references to this opinion in the Prospectus/Joint Proxy Statement. In giving
this opinion, we do not hereby admit that we are in the category of persons
whose consent is required under Section 7 of the Securities Act of 1933, as
amended.
Very truly yours,
XXXXX, XXXXXXXX & XXXXXXX, LLP
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx
