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EXHIBIT 8
September 19, 1995
Board of Directors Board of Directors
First Financial Management Employee Benefits Plans, Inc.
Corporation 435 Ford Road
3 Corporate Square, Suite 700 Minneapolis, MN 55426
Atlanta, Georgia 30329
Members of the Boards:
We have acted as counsel to First Financial Management
Corporation ("First Financial") in connection with the proposed merger (the
"Merger") of Gemini Acquisition Corp. ("Sub"), a wholly owned subsidiary of
First Financial, into Employee Benefit Plans, Inc. ("EBP"). The Merger will be
effected pursuant to the terms of the Agreement and Plan of Merger (the "Merger
Agreement") among First Financial, Sub and EBP, dated as of May 12, 1995.
Section 6.1(e) of the Merger Agreement provides that the receipt of this
opinion is a condition to the obligation of First Financial and EBP to effect
the Merger. The capitalized terms which are used in this opinion but not
otherwise defined herein have the same meaning in this opinion as in the Merger
Agreement.
In issuing our opinion, we have reviewed the Merger Agreement,
the Proxy Statement and Prospectus included in the registration statement (the
"Registration Statement"), on Form S-4, filed by First Financial with the
Securities and Exchange Commission on September 19, 1995, and such other
documents as we have deemed appropriate. Our opinion is based upon our
understanding that the facts, assumptions and representations set forth in this
letter are true and correct as of the present time and will be true and correct
as of the Effective Time of the Merger.
EBP is a Delaware corporation which provides, through its
subsidiaries, managed health care products and services. EBP has a single
class of voting common stock ("EBP Common Stock") outstanding.
First Financial is a Georgia corporation engaged in the
business of providing a variety of information services. First Financial has a
single class of voting common stock ("First Financial Common Stock")
outstanding.
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Board of Directors
First Financial Management
Corporation
Employee Benefits Plans, Inc.
September 19, 1995
Page 2
Sub is a Delaware corporation formed by First Financial solely
for purposes of consummating the transactions contemplated by the Merger
Agreement. Sub has no assets or business and has not carried on any activities
other than incident to its formation and in connection with the transactions
contemplated by the Merger Agreement.
The boards of directors of EBP and First Financial have
determined that the Merger is in the respective best interests of the
corporations and their shareholders.
The Merger will be effected in accordance with the Delaware
General Corporation Law. In the Merger, Sub will be merged into EBP at the
Effective Time, and EBP will continue as the Surviving Corporation and a wholly
owned subsidiary of First Financial. The Merger Agreement provides that each
share of EBP Common Stock issued and outstanding at the Effective Time will be
converted into the right to receive 0.1975 of a share of First Financial Common
Stock (except for any shares of EBP Common Stock held in the treasury of EBP or
by First Financial or its EBP subsidiaries, which will be cancelled). Cash
will be paid in lieu of fractional shares of First Financial Common Stock. The
holders of shares of EBP Common Stock are not entitled to appraisal rights in
connection with the Merger. Each outstanding share of common stock of Sub will
be converted in the Merger into one share of common stock of the Surviving
Corporation.
Neither First Financial, EBP nor Sub is an investment company
as defined in Sections 368(a)(2)(F)(iii) and (iv) of the Code. EBP is not
under the jurisdiction of a court in a Title 11 or similar case within the
meaning of Section 368(a)(3)(A) of the Code.
On June 12, 1995, First Financial and First Data Corporation
("First Data") entered into an Agreement and Plan of Merger, pursuant to which
a wholly-owned subsidiary of First Data would merge with and into First
Financial (the "First Data Merger"), so that First Financial would become a
wholly owned subsidiary of First Data. In the First Data Merger, each share of
First Financial Common Stock, including any such shares acquired by EBP
stockholders pursuant to the Merger Agreement, would be converted into 1.5859
shares of voting common stock of First Data. The First Data Merger is subject
to a number of conditions. The opinions set forth in this letter are based on
the assumption that, if the First Data Merger occurs, it will become effective
after the Merger has been consummated.
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Board of Directors
First Financial Management
Corporation
Employee Benefits Plans, Inc.
September 19, 1995
Page 3
The following representations have been made to us in
connection with the proposed transaction:
(a) To the best of the knowledge of the executive
officers of EBP, there is no plan or intention by the holders of EBP Common
Stock to sell, exchange, or otherwise dispose of a number of shares of First
Financial Common Stock received in the Merger that would reduce the ownership
of First Financial Common Stock by the holders of EBP Common Stock to a number
of shares of First Financial Common Stock having a value, as of the date of the
Merger, of less than 50 percent of the value of all of the formerly outstanding
EBP Common Stock as of the same date. For purposes of this representation,
shares of EBP Common Stock exchanged for cash in lieu of fractional shares of
First Financial Common Stock will be treated as outstanding on the date of the
Merger. Moreover, shares of EBP Common Stock and shares of First Financial
Common Stock held by holders of EBP Common Stock and otherwise sold, redeemed
or disposed of prior to or subsequent to the Merger will be considered in
making this representation.
(b) Following the Merger, EBP will hold at least 90
percent of the fair market value of its net assets and at least 70 percent of
the fair market value of its gross assets, and at least 90 percent of the fair
market value of Sub's net assets and at least 70 percent of the fair market
value of Sub's gross assets held immediately prior to the Merger. For purposes
of this representation, EBP assets used to pay its Merger expenses, and all
redemptions and distributions (except for regular, normal dividends) made by
EBP immediately preceding the Merger, will be included as assets of EBP held
immediately prior to the Merger.
(c) Sub will have no liabilities assumed by EBP, and will
not transfer to EBP any assets subject to liabilities.
(d) First Financial has no plan or intention to liquidate
EBP; to merge EBP with or into another corporation; to sell or otherwise
dispose of the stock of EBP except for transfers of stock to corporations
controlled by First Financial within the meaning of Section 368(a)(2)(C) of the
Code; or to cause EBP to sell or otherwise dispose of any of its assets or any
of the assets acquired from Sub, except for dispositions made in the ordinary
course of business or transfers of assets to a corporation controlled by EBP.
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Board of Directors
First Financial Management
Corporation
Employee Benefits Plans, Inc.
September 19, 1995
Page 4
(e) Following the Merger, EBP will continue its historic
business or use a significant portion of its historic business assets in a
business.
(f) Following the Merger, EBP will not issue additional
shares of its stock that would result in First Financial losing control of EBP.
(g) First Financial has no plan or intention to reacquire
any of its stock issued in the Merger.
(h) There is no intercorporate indebtedness existing
between First Financial and EBP or between Sub and EBP that was issued,
acquired or will be settled at a discount.
(i) None of the compensation received by any
shareholder-employee of EBP following the Merger will be separate consideration
for, or allocable to, any of his shares of EBP Common Stock, and none of the
shares of First Financial Common Stock received by any shareholder-employee of
EBP in the Merger will be separate consideration for, or allocable to, any
employment agreement.
(j) The payment of cash in lieu of fractional shares of
First Financial Common Stock is solely for the purpose of avoiding the expense
and inconvenience of issuing fractional shares and does not represent
separately bargained-for consideration.
(k) First Financial, Sub, EBP and the stockholders of EBP
will pay their respective expenses, if any, incurred in connection with the
Merger, except as provided in Section 5.5 of the Merger Agreement.
(l) In the Merger, shares of EBP Common Stock representing
control of EBP, as defined in Section 368(c)(1) of the Code, will be exchanged
solely for voting First Financial Common Stock (except for cash received in
lieu of fractional shares First Financial Common Stock).
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Board of Directors
First Financial Management
Corporation
Employee Benefits Plans, Inc.
September 19, 1995
Page 5
On the basis of the terms of the Merger Agreement and the
above facts and representations, it is our opinion that the Merger will have
the following Federal income tax consequences:
(i) The Merger will constitute a "reorganization" within
the meaning of Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
(ii) No gain or loss will be recognized by First
Financial, EBP or Sub as a result of the Merger.
(iii) No gain or loss will be recognized by the
stockholders of EBP upon the conversion of their shares of EBP Common
Stock into shares of First Financial Common Stock pursuant to the
Merger, except with respect to cash, if any, received in lieu of
fractional shares of First Financial Common Stock.
(iv) The aggregate tax basis of the shares of First
Financial Common Stock received in exchange for shares of EBP Common
Stock pursuant to the Merger (including fractional shares of First
Financial Common Stock for which cash is received) will be the same as
the aggregate tax basis of such shares of EBP Common Stock. Since no
fractional shares of First Financial Common Stock will actually be
issued in the Merger, the aggregate basis of the First Financial
Common Stock actually received by an EBP stockholder will not include
that portion of the aggregate basis of the EBP Common Stock exchanged
in the Merger which is allocable to shares of EBP Common Stock
exchanged for cash in lieu of fractional shares.
(v) The holding period for shares of First Financial
Common Stock received in exchange for shares of EBP Common Stock
pursuant to the Merger will include the holder's holding period for
such shares of EBP Common Stock, provided such shares of EBP Common
Stock were held as capital assets by the holder at the Effective Time.
(vi) A stockholder of EBP who receives cash in lieu of a
fractional share of First Financial Common Stock will recognize gain
or loss equal to the difference, if any, between such stockholder's
basis in the fractional share (as described in clause (iv) above) and
the amount of cash received. Such gain or loss will be capital gain
or loss,
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Board of Directors
First Financial Management
Corporation
Employee Benefits Plans, Inc.
September 19, 1995
Page 6
provided that the stockholder's shares of EBP Common Stock were held
as capital assets at the Effective Time.
This opinion is rendered solely with respect to the federal
income tax consequences of the Merger specifically set forth above. We express
no opinion as to the treatment of the Merger under the income or other tax laws
of any foreign, state or local jurisdiction. Our opinions are based upon the
present provisions 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 opinions may be affected.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the references to our firm and this
opinion in the Proxy Statement and Prospectus included as part of the
Registration Statement.
Very truly yours,
SUTHERLAND, ASBILL & BRENNAN