1
EXHIBIT 8
__________ ____, 1998
First American Bank of Indian River County
0000 00xx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Re: Agreement and Plan of Merger of SouthTrust Bank, National
Association and First American Bank of Indian River County,
joined in by SouthTrust Corporation and SouthTrust of
Alabama, Inc.
Ladies and Gentlemen:
You have requested the opinion of Xxxxxxx Xxxxx Xxxx & White
LLP, as counsel to SouthTrust Corporation, a Delaware corporation
("SouthTrust"), regarding the transactions contemplated by that certain
Agreement and Plan of Merger dated July 1, 1998, as amended by that Amendment
No. 1 to Agreement and Plan of Merger dated September 14, 1998 (as amended, the
"Merger Agreement"), of SouthTrust Bank, National Association (ST-Bank) and
First American Bank of Indian River County ("First American"), joined in by
SouthTrust and SouthTrust of Alabama, Inc., an Alabama corporation and a
wholly-owned subsidiary of SouthTrust ("ST-Sub"). Specifically, you have
requested us to opine that the merger of First American with and into ST-Bank
(the "Merger") pursuant to the Merger Agreement will constitute a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), and that no gain or loss will be recognized by the
stockholders of First American upon the receipt solely of SouthTrust voting
common stock in exchange for their First American stock upon consummation of
the Merger.
This opinion is being rendered pursuant to Section 9.8 of the
Merger Agreement (as modified by that Certain Side Letter dated October 20,
1998, waiving the requirement of Section 9.8 subject to the provision of this
opinion) and the requirements of Item 21(a) of the registration statement on
Form S-4 (the "Registration Statement") which is being filed on SouthTrust's
behalf with the Securities and Exchange Commission under the Securities Act of
1933, as amended. Capitalized terms used herein and not otherwise defined
herein have the meanings given to them in the Merger Agreement.
In rendering the opinion set forth below, we have examined
and relied upon originals or copies of the Merger Agreement, and upon
representations given to us by letter from First American of even date herewith
and from SouthTrust of even date herewith, each as described in the
representation section of this letter (the "Representation Letters"), and such
other documents and materials as we have deemed necessary as a basis for such
opinion. In connection with such examination, we have assumed the genuineness
of all signatures, the authenticity of all documents, agreements
2
First American Bank
___________ ____, 1998
Page 2
and instruments submitted to us as originals, the conformity to original
documents, agreements and instruments of all documents, agreements and
instruments submitted to us as copies or specimens and the authenticity of the
originals of such documents, agreements and instruments submitted to us as
copies or specimens, and, as to factual matters, the veracity of written
statements made by officers and other representatives of First American and
SouthTrust included in the Merger Agreement and the Representation Letters.
The opinion stated below is based upon the relevant
provisions of the Code, regulations promulgated pursuant thereto by the
Department of the Treasury and the Internal Revenue Service (the "IRS"),
current administrative rulings and applicable judicial decisions, all of which
are subject to change. Neither SouthTrust, ST-Sub, ST-Bank nor First American
has requested or will receive an advance ruling from the IRS as to any of the
federal income tax effects to holders of First American stock of the Merger, or
of any of the federal income tax effects to SouthTrust, ST-Sub, ST-Bank or
First American of the Merger. Our opinion set forth below is not binding upon
the IRS, and there can be no assurance, and none hereby is given, that the IRS
will not take a position contrary to one or more of the positions reflected
herein, or that our opinion will be upheld by the courts if challenged by the
IRS.
FACTS
SouthTrust is a registered bank holding company and is the
common parent of an affiliated group of corporations, including ST-Bank, that
file consolidated federal income tax returns on the calendar year basis.
SouthTrust Common Stock is publicly held and publicly traded through the
Automated Quotation System of the Nasdaq Stock Market.
In accordance with resolutions of SouthTrust's Board of
Directors adopted on February 22, 1989, each share of SouthTrust Common Stock
issued and outstanding carries with it eight twenty-sevenths of a right to
purchase from SouthTrust one one-hundredth of a share of SouthTrust Preferred
Stock designated as the Series A Junior Participating Preferred Stock at a
purchase price of $75.00 (a "Right"). These Rights will expire on February 22,
1999 unless redeemed earlier and are not exercisable or transferable separately
from the shares of SouthTrust Common Stock until the occurrence of certain
events associated with an acquisition of a substantial amount of SouthTrust
Common Stock. The provisions of the Rights are more fully described in the
Rights Agreement between SouthTrust and Mellon Bank, N.A. (now known as
ChaseMellon Shareholder Services LLC), as Rights Agent, and the Certificate of
Designation for the Series A Preferred Stock, copies of each of which are
exhibits to the Registration Statement.
3
First American Bank
___________ ____, 1998
Page 3
Immediately prior to the Merger, SouthTrust will own 100% of
the capital stock of ST-Sub, and ST-Sub will own 100% of the capital stock of
ST-Bank. Both of ST-Sub and ST-Bank are included in the consolidated federal
income tax return of SouthTrust.
First American is a corporation organized pursuant to the
laws of the State of Florida and a registered bank holding company. As of March
31, 1998, the authorized capital stock of First American consisted of 213,000
shares of common stock, par value $10.00 per share, of which 128,865 shares
were issued and outstanding (the "First American Common Stock"). As of the date
of the Merger Agreement, a total of 128,865 shares of First American Common
Stock would be issued and outstanding (assuming that no options for First
American Common Stock shall have been exercised). First American is an accrual
method taxpayer using a calendar year accounting period.
THE PROPOSED TRANSACTIONS
Pursuant to the Merger Agreement the following transactions
will take place:
(1) ST-Sub will acquire all of the assets and
liabilities of First American in exchange for voting common stock of SouthTrust
in a transaction in which ST-Sub directs that all of the assets and liabilities
of First American will be transferred to ST-Bank by means of a statutory merger
of First American into ST-Bank pursuant to the Merger Agreement.
(2) First American will merge with and into ST-Bank in
accordance with Sections 655.412 and 658.40 through 658.45 of the Florida
Financial Institutions Code and in accordance with 12 U.S.C. ss. 215a, and
ST-Bank shall be the surviving corporation. ST-Bank will acquire all of the
assets and assume all of the liabilities of First American, and the separate
corporate existence of First American will terminate.
(3) SouthTrust will issue a total of 243,168 shares of
SouthTrust Common Stock in exchange for all of the issued and outstanding First
American Common Stock (assuming that no options for First American Common Stock
shall have been exercised).
(4) Each share of First American Common Stock will become
and be converted into the right to receive 1.887 shares of SouthTrust Common
Stock, and eight twenty-sevenths of a Right will be issued with each share of
SouthTrust Common Stock exchanged in the Merger for First American Common
Stock.
4
First American Bank
___________ ____, 1998
Page 4
(5) No fractional shares of SouthTrust Common Stock will
be issued in the Merger; each holder of First American Common Stock who would
otherwise be entitled to receive a fractional share interest, if any, will
receive cash in lieu of a fractional share.
(6) In accordance with Section 2.2 of the Merger
Agreement, obligations of First American under certain outstanding stock
options which entitle the holders thereof to acquire First American shares and
which were issued by First American (the "First American Options") will be
assumed by ST-Sub in accordance with the terms of the particular First American
Stock Option Plans under which such First American Options were issued and the
particular stock option agreements under which such First American Stock
Options are evidenced, and each such First American Option will be converted
into an option to acquire a number of SouthTrust shares equal to the number of
First American shares subject to such First American Option immediately prior
to the Effective Time multiplied by the Conversion Ratio, and the per share
exercise price under each such First American Option shall be adjusted by
dividing the per share exercise price under each such First American Option by
the Conversion Ratio and rounding down to the nearest cent.
(7) Any holder of First American Common Stock who
dissents from the Merger will be entitled to receive from the surviving
corporation the fair value of his or her shares in cash. Immediately prior to
the Effective Time of the Merger, First American will establish an escrow
account with an amount of cash equal to One Hundred and Fifty Percent (150%) of
the value of the SouthTrust Common Stock which the dissenting shareholders
would have been entitled to receive in the Merger but for the exercise of their
rights of dissent (the "Dissent Escrow"). The escrow agent will disburse the
escrowed funds to the dissenting shareholders in accordance with the Dissent
Provisions. Any and all funds remaining in the Dissent Escrow after such
disbursement will be remitted to ST-Bank as the surviving corporation.
REPRESENTATIONS
Officers of First American and SouthTrust each have made
certain written representations to us on behalf of their respective
institutions by letters each of even date herewith (the "Representation
Letters"), and with your consent, we have relied upon the accuracy and validity
of these representations provided in the Representation Letters in offering the
opinions expressed below.
5
First American Bank
___________ ____, 1998
Page 5
OPINION
Upon the basis of the foregoing facts and representations,
and solely for purposes of the Code, we are of the opinion that:
(i) For federal income tax purposes the Merger will be
viewed as an acquisition by ST-Sub of substantially all of the assets of First
American solely in exchange for SouthTrust voting common stock and the
assumption of all the liabilities of First American by ST-Sub, followed by the
transfer of the assets of First American to ST-Bank and the assumption by
ST-Bank of the liabilities of First American.
(ii) The acquisition by ST-Sub of substantially all of the
assets of First American in exchange solely for shares of SouthTrust voting
common stock and the assumption by ST-Sub of First American' s liabilities, as
described above, will constitute a reorganization within the meaning of Section
368(a)(1)(C) of the Code. For purposes of this opinion, "substantially all"
means at least ninety percent (90%) of the fair market value of the net assets
and at least seventy percent (70%) of the fair market value of the gross assets
of First American. Pursuant to Section 368(a)(2)(C) of the Code, the
acquisition by ST-Sub of substantially all of the assets of First American will
not be disqualified under Section 368(a)(1)(C) of the Code solely by reason of
the fact that the assets of First American that were acquired by ST-Sub are
transferred to ST-Bank. SouthTrust, ST-Sub and First American each will be a
"party to the reorganization" within the meaning of Section 368(b) of the Code.
The requirement under Section 368(a)(2)(G) of the Code that First American
distribute the stock, securities, and other properties it receives, as well as
its other properties, in pursuance of the plan of reorganization will be
satisfied by reason of the issuance by ST-Sub of the merger consideration
directly to the holders of First American Common Stock, and by reason of the
cessation of the separate corporate existence of First American pursuant to the
Merger Agreement and the applicable provisions of the Florida Code.
(iii) No gain or loss will be recognized by the
shareholders of First American upon the receipt of SouthTrust Common Stock
(including the Rights associated therewith) solely in exchange for their shares
of First American Common Stock. In addition, no gain or loss will be recognized
by First American shareholders upon the receipt of the Rights attached to the
SouthTrust Common Stock.
(iv) The basis of the SouthTrust Common Stock to be
received by the First American shareholders will be the same as the basis of
First American Common Stock surrendered in exchange therefor, except for the
basis allocated to any fractional shares.
(v) The holding period of the shares of SouthTrust Common
Stock to be received by the shareholders of First American will include the
period during which First American Common Stock surrendered in exchange
therefor was held; provided that the shares of First American
6
First American Bank
___________ ____, 1998
Page 6
Common Stock were held as capital assets within the meaning of Section 1221 of
the Code as of the Effective Time.
(vi) First American shareholders who exercise dissenters'
rights, and as a result of which receive only cash, will be treated as having
received such cash as a distribution in redemption of their First American
Common Stock, subject to the provisions and limitations of Section 302 of the
Code. Those First American shareholders who hold no SouthTrust Common Stock,
directly or indirectly through the application of Section 318(a) of the Code,
following the Merger shall be treated as having a complete termination of
interest within the meaning of Section 302(b)(3) of the Code, and the cash
received will be treated as a distribution in full payment in exchange for
First American Common Stock as provided in Section 302(a) of the Code. As
provided in Section 1001 of the Code, gain or loss will be realized and
recognized by such shareholders measured by the difference between the
redemption price and the adjusted basis of the First American shares
surrendered as determined under Section 1011 of the Code. Provided Section 341
of the Code (relating to collapsible corporations) is inapplicable and the
First American Common Stock is a capital asset in the hands of such
shareholders, the gain, if any, will constitute capital gain. Such gain will
constitute a long-term capital gain if the surrendered First American shares
were held by the shareholder for a period greater than one year prior to the
Merger; if the surrendered First American shares where held by such shareholder
for a period of one year or less, the gain will constitute short-term capital
gain.
(vii) The payment of cash to a First American shareholder
in lieu of issuing a fractional share interest in SouthTrust Common Stock will
be treated as if the fractional share actually was issued as part of the Merger
and then was redeemed by SouthTrust. This cash payment will be treated as
having been received as a distribution in full payment in exchange for the
fractional share of stock redeemed. Generally, any gain or loss recognized upon
such exchange will be a capital gain or loss.
Our opinion, as stated above, is based upon our analysis of
the Code, the regulations issued thereunder, current case law, and published
rulings of the Internal Revenue Service; the foregoing are subject to change,
and such changes may be given retroactive effect. In the event of such changes,
our opinion set forth above may be affected and may not be relied upon.
Furthermore, no opinion is expressed as to the federal tax treatment of the
transaction under any other provisions of the Code and regulations, or as to
the tax treatment of any conditions existing at the time of, or effects
resulting from, the transaction that are not specifically covered by the
opinion.
This opinion is rendered solely with respect to certain
federal income tax consequences of the Merger under the Code, and does not
extend to the income or other tax
7
First American Bank
___________ ____, 1998
Page 7
consequences of the Merger under the laws of any state or any political
subdivision of any state; nor does it extend to any tax effects or consequences
of the Merger to SouthTrust, ST-Sub or ST- Bank other than those expressly
stated in the above opinion.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement. We also consent to the references to this firm
under the heading "Certain Federal Income Tax Consequences" in the Registration
Statement and in the prospectus which is included as part of the Registration
Statement. In giving such consent, we do not thereby admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended.
Yours very truly,
