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EXHIBIT 8(a)
[Letterhead of Xxxxxxx Xxxxx Xxxx & White LLP]
, 1998
American Banks of Florida, Inc.
0000 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Re: Agreement and Plan of Merger by and between American Banks of
Florida, Inc., 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 and a bank holding
company registered pursuant to the Bank Holding Company Act (12 USC ss. 1841, et
seq.) and Regulation Y promulgated thereunder ("SouthTrust"), regarding the
transactions contemplated by that certain Agreement and Plan of Merger dated
February 18, 1998 (the "Merger Agreement"), by and between American Banks of
Florida, Inc. ("American"), SouthTrust and SouthTrust of Alabama, Inc., a
Alabama corporation and a wholly-owned subsidiary of SouthTrust ("Merger Sub").
Specifically, you have requested us to opine that the merger of American with
and into Merger Sub (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 American upon the receipt solely of SouthTrust
voting common stock in exchange for their American stock upon consummation of
the Merger.
This opinion is being rendered pursuant to the requirements of Item
21(a) of the registration statement on Form S-4 (the "Registration Statement")
which is being filed today on SouthTrust's behalf with the Securities Exchange
Commission under the Securities Act of 1933, as amended, and pursuant to Section
7.08 of the Merger Agreement. 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 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 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
American and SouthTrust included in the Merger Agreement.
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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, Merger Sub nor American has requested or will receive an advance
ruling from the IRS as to any of the federal income tax effects to holders of
American stock of the Merger, or of any of the federal income tax effects to
SouthTrust, Merger Sub or 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 Merger Sub, 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 be 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.
Immediately prior to the Merger, SouthTrust will own 100% of the
capital stock of Merger Sub, and Merger Sub will own 100% of the capital stock
of SouthTrust Bank, National Association, a national banking corporation
("ST-Bank"). Both of Merger Sub and ST-Bank are included in the consolidated
federal income tax return of SouthTrust.
American is a corporation organized pursuant to the laws of
the State of Florida and a registered bank holding company. As of February 18,
1998, the authorized capital stock of American consisted of (I) 2,000,000 shares
of common stock, par value $1.00 per share, of which 1,183,751 shares were
issued and outstanding (the "American Common Stock"); (ii) 2,000,000 shares of
preferred stock, $1.00 par value per share, of which 13,334 shares have been
designated as Series A Preferred Stock, of which, as of January 31, 1998, none
were issued and outstanding, 13,334 shares have been designated as Series B
Preferred Stock, of which, as of January 31, 1998, 9,770.534 were issued and
outstanding, 13,334 shares have been designated as Series C Preferred Stock, of
which,
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, 1998
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as of January 31, 1998, 10,225.266 shares were outstanding, and 13,335 shares
have been designated as Series D Preferred Stock, of which, as of January 31,
1998, 10,897.256 shares were issued and outstanding (the "American Preferred
Stock," and together with the American Common Stock, the "American Capital
Stock"), and there has been no change in the number of shares of American
Capital Stock outstanding as of the date hereof. Each of the issued and
outstanding shares of American Preferred Stock is convertible into one share of
American Common Stock. American owns 100% of the issued and outstanding capital
stock of American National Bank of Florida, a national bank and the sole banking
subsidiary of American (the "Bank"). American is an accrual method taxpayer
using a calendar year accounting period.
A dispute has arisen between, on the one hand, Xxxxxxx X. Xxxxx, Xx.,
Chairman Emeritus and member of the Board of Directors of American ("Xx.
Xxxxx"), and, on the other hand, Xxxxxxx X. Xxxxx, Xx., Xxxxxxx X. Xxxxxxx and
T. Xxxxx Xxxxx (the "Bonus Shareholders"), who are also members of the Board of
Directors of American. (Xx. Xxxxxxx X. Xxxxx, Xx. is also Chairman, President
and Chief Executive Officer thereof, and Xx. Xxxxx is also Executive Vice
President, Secretary and Treasurer thereof.) This dispute concerns the
enforceability of certain stock bonus agreements, dated May 26, 1995, between
each of the Bonus Shareholders and American (the "Stock Bonus Agreements"),
under which each of the Bonus Shareholders was awarded 30,000 shares of American
Common Stock, for an aggregate of 90,000 shares of American Common Stock (the
"Bonus Shares"). Xx. Xxxxx disputes whether these Stock Bonus Agreements were
duly authorized by the Board of Directors of American and whether American met
certain performance benchmarks set forth in the Stock Bonus Agreements before
such 90,000 shares were issued.
THE PROPOSED TRANSACTIONS
Pursuant to the Merger Agreement the following transactions will take
place:
(1) American will merge with and into Merger Sub in accordance with the
applicable corporation laws of the States of Florida and Alabama (the "Corporate
Laws"), after which Merger Sub will be the surviving corporation. Merger Sub
will acquire all of the assets and assume all of the liabilities of American.
Merger Sub will be the surviving corporation and the separate corporate
existence of American will terminate.
(2) SouthTrust will issue a total of 3,930,282 shares of SouthTrust
Common Stock in exchange for all of the issued and outstanding American Capital
Stock. As of the date of the Merger Agreement and assuming the conversion of all
of the American Preferred Stock into American Common Stock, a total of
1,214,644.056 shares of American Common Stock would be issued and outstanding,
which total includes 90,000 Bonus Shares with respect to which the dispute
described above exists.
(3) Each share of American Capital Stock, including the Bonus Shares,
will become and be converted into the right to receive 3.23574794 shares of
SouthTrust Common Stock, and eight
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twenty-sevenths of a Right will be issued with each share of SouthTrust Common
Stock exchanged in the Merger for American Stock.
(4) No fractional shares of SouthTrust Common Stock will be issued in
the Merger; each holder of American Capital Stock who would otherwise be
entitled to receive a fractional share interest, if any, will receive cash in
lieu of a fractional share.
(5) Any holder of 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.
(6) Unless the dispute regarding the Bonus Shares is resolved prior to
the Effective Time of the Merger in a manner consistent with the Merger
Agreement, immediately prior to the Effective Time of the Merger, the Bonus
Shares will be delivered to the Escrow Agent (as hereinafter defined) and will
be held and disposed of in accordance the Merger Agreement and with the
provisions of the Escrow Agreement (as hereinafter defined). If the dispute
regarding the Bonus Shares is resolved prior to the Effective Time of the Merger
in accordance with the Merger Agreement, the consideration which is or would
have been applicable to the Bonus Shares will be distributed in accordance with
such resolution; if such resolution is that all or some of the Bonus Shares will
be canceled and treated as not issued, then such consideration will be
allocated, on a pro rata basis, to increase the amount of SouthTrust Common
Stock to be received by the American shareholders.
(7) Provided that the issues related to the Bonus Shares have not been
resolved earlier in a manner that would not conflict with the Merger Agreement,
American will enter into an escrow agreement (the "Escrow Agreement") with Xx.
Xxxxx, the Bonus Shareholders and an escrow agent to be agreed upon (the "Escrow
Agent"). The Escrow Agreement will provide for resolution of the dispute between
Xx. Xxxxx and the Bonus Shareholders to be determined by award of an arbitrator
or a final, non-appealable decision of a court of proper jurisdiction, as
determined and selected by the mutual agreement of Xx. Xxxxx and the Bonus
Shareholders. In order to accomplish this result, the Escrow Agreement will
provide that the Bonus Shareholders must deliver to and deposit with the Escrow
Agent the certificate or certificates representing the Bonus Shares.
Accordingly, at the Effective Time of the Merger, the Escrow Agent will exchange
the certificates representing the Bonus Shares for shares of SouthTrust Common
Stock pursuant to the terms of the Merger Agreement (these shares of SouthTrust
Common Stock are referred to as the "Escrow Fund").
(8) In the event it is determined that the issuance of all the Bonus
Shares to the Bonus Shareholders was valid, the Escrow Agent will release the
Escrow Fund to the Bonus Shareholders in the proportions to which the Bonus
Shareholders are entitled to the Bonus Shares. In the event it is determined
that the Bonus Shareholders are entitled to some number of the Bonus Shares less
than 90,000, the Escrow Agent will release a portion of the Escrow Fund to the
Bonus Shareholders, and the remaining Escrow Fund will be released, on a pro
rata basis, to those persons who were shareholders of American at the Effective
Time of the Merger. In the event it is determined that the Bonus Shareholders
are entitled to none of the Bonus Shares, then the Escrow Agent will
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release all of the Escrow Fund, on a pro rata basis, to those persons who were
shareholders of American at the Effective Time of the Merger.
REPRESENTATIONS
Officers of 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.
OPINION
Upon the basis of the foregoing facts and representations, and solely
for purposes of the Code, we are of the opinion that:
(i) The Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code.
(ii) No gain or loss will be recognized by the shareholders of American
upon the receipt of SouthTrust Common Stock (including the Rights associated
therewith) solely in exchange for their shares of American Capital Stock. In
addition, no gain or loss will be recognized by American stockholders upon the
receipt of the Rights attached to the SouthTrust Common Stock.
(iii) The basis of the SouthTrust Common Stock to be received by the
American shareholders will be the same as the basis of American Capital Stock
surrendered in exchange therefor, except for the basis allocated to any
fractional shares and shares treated as interest.
(iv) The holding period of the shares of SouthTrust Common Stock to be
received by the shareholders of American will include the period during which
American Capital Stock surrendered in exchange therefor was held.
(v) The payment of cash to an 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 stock redeemed. Generally, any
gain or loss recognized upon such exchange will be a capital gain or loss.
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.
Specifically, no opinion is expressed with respect to the federal income tax
consequences of the
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Escrow Agreement, other than that the consummation of the transactions
contemplated by the Escrow Agreement will not cause the Merger to fail to
qualify as a reorganization pursuant to Section 368(a) of the Code.
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 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 or Merger Sub 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.
Yours very truly,
