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EXHIBIT 8
[A&P LETTERHEAD]
October , 1995
First American Corporation
First American Center
Nashville, Tennessee 37237-0700
Charter Federal Savings Bank
110 Piedmont Avenue
Bristol, Virginia 24201
Ladies and Gentlemen:
You have requested our opinion regarding certain federal income tax
consequences of the proposed merger (the "Merger") of Charter Interim Federal
Savings Bank ("Charter Interim"), a federal savings bank to be formed as a
wholly owned first tier subsidiary of the First American Corporation ("FAC"),
with and into Charter Federal Savings Bank ("Charter").
FAC is a registered bank holding company organized under the laws of
Tennessee and headquartered in Nashville, Tennessee. Charter Interim will be a
federally chartered interim savings bank headquartered in Bristol, Virginia and
organized solely for the purpose of facilitating the Merger. First American
National Bank ("FANB"), a national banking association headquartered in
Nashville, Tennessee, is organized under the laws of the United States. FANB is
a wholly owned subsidiary of FAC.
Charter, a federally chartered savings bank headquartered in Bristol,
Virginia, is organized under the laws of the United States. Charter, which
operates offices in Virginia and Tennessee, provides retail, consumer financial
and residential mortgage services in its market areas.
The terms of the proposed Merger are contained in (i) the Agreement and
Plan of Reorganization dated as of May 17, 1995, as amended as of October 11,
1995, between FAC and Charter (the "Plan of Reorganization"), and (ii) the
Agreement and Plan of Merger and Combination that will be entered into by
Charter and Charter Interim after the formation of Charter Interim (the "Plan of
Merger"). A copy of the Plan of Merger is attached as an Exhibit to the Plan of
Reorganization. Charter and FAC have also entered into the Stock Option
Agreement (the "Option Agreement") dated as of May 17, 1995, pursuant to which
Charter granted FAC an option to purchase Charter Common Stock. Exercise of the
option is contingent upon the occurrence of specified events described in the
Option Agreement. The Plan of Reorganization, the Plan of Merger and the Option
Agreement are collectively referred to as the "Agreements."1
You have permitted us to assume in preparing this opinion that (1) the
Merger will be consummated in accordance with the terms, conditions and other
provisions of the Agreements, (2) all of the factual information, descriptions,
representations and assumptions set forth in the Agreements and in the letters
to us from FAC dated , 1995, and from Charter dated , 1995 (the
"Letters"), were accurate and complete at the respective dates of such letters
and will be accurate and complete at the time the Merger becomes effective (the
"Effective Time"), and (3) the disclosure set forth in the Prospectus/Proxy
Statement dated , 1995, that is to be mailed to Charter shareholders
in connection with the annual meeting of shareholders (at which the shareholders
will be asked to approve the Merger among other proposals), was accurate and
complete and will be accurate and complete at the Effective Time, and (4) any
contingent consideration paid with respect to the Goodwill Litigation will
consist solely of FAC Common Stock. You have also received an advance copy of
this letter and recognize that we are relying upon the assumptions set forth
herein. We have not independently verified any factual matters relating to the
Merger with or apart from our preparation of this opinion and, accordingly, our
opinion does not take into account any matters not set forth herein which might
have been disclosed by independent verification.
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1 Unless otherwise defined herein, capitalized terms used in this letter shall
have the meanings assigned to them in the Plan of Reorganization.
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First American Corporation
October , 1995
Page 2
Subject to the qualifications and other matters set forth herein and based
on all the assumptions set forth in the preceding paragraph, it is our opinion
that for federal income tax purposes --
1. The Merger will constitute a "reorganization" within the meaning of
section 368(a) of the Internal Revenue code of 1986, as amended (the
"Code");
2. To the extent Charter Common Stock is exchanged in the Merger for
FAC Common Stock (including any Contingent FAC Shares), no gain or loss
will be recognized by the shareholders of Charter, except to the extent any
Contingent FAC Shares constitute a payment of interest (including imputed
interest);
3. Gain or loss, if any, will be recognized by Charter shareholders
upon the receipt of cash in lieu of fractional shares of FAC Common Stock;
and
4. Each of FAC and Charter will be a "party to a reorganization"
within the meaning of section 368(b) of the Code.
Our opinion is limited to the foregoing federal income tax consequences of
the Merger, which are the only matters as to which you have requested our
opinion, and you must judge whether the matters addressed herein are sufficient
for your purposes. We do not address any other federal income tax consequences
of the Merger or other matters of federal law and have not considered matters
(including state or local tax consequences) arising under the laws of any
jurisdiction other than matters of federal law arising under the laws of the
United States.
In particular, we express no opinion on the federal income tax consequences
of the Merger if any contingent consideration is paid with respect to the
Goodwill Litigation that consists of any property (including cash) other than
solely FAC Common Stock. The reason for this is that there are several federal
income tax questions presented in such circumstances that are not adequately
addressed by applicable statutes, regulations, court decisions or administrative
pronouncements. While arguments can be made that the Merger would qualify as a
"reorganization" within the meaning of section 368(a), in the event that the
contingent consideration is not FAC Common Stock, there is a substantial
likelihood that the Merger would not constitute a "reorganization" under such
circumstances. If the Merger does not constitute a "reorganization" within the
meaning of section 368(a) then gain or loss will be recognized by the Charter
shareholders on the exchange of their Charter Common Stock for FAC Common Stock
or any other consideration and FAC and Charter will not be parties to a
reorganization within the meaning of section 368(b).
Our opinion is based on the understanding that the relevant facts are, and
will be at the Effective Time, as set forth or referred to in this letter. If
this understanding is incorrect or incomplete in any respect, our opinion could
be affected.
Our opinion is also based on the Code, Treasury Regulations, case law, and
Internal Revenue Service rulings as they now exist, none of which squarely
addresses every precise factual circumstance present in connection with the
Merger but all of which, taken together, in our opinion provide a sufficient
legal basis for our opinions set forth herein. However, the possibility exists
that our opinion as to the proper application of the law to the facts of the
Merger would not be accepted by the Internal Revenue Service or would not
prevail in court. In addition, the authorities upon which we have relied are all
subject to change and such change may be made with retroactive effect. We can
give no assurance that after any such change, our opinion would not be
different.
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First American Corporation
October , 1995
Page 3
We undertake no responsibility to update or supplement our opinion. Our
opinion is directed to the Boards of Directors of FAC and Charter; provided,
however, that we have consented to the filing with the Securities and Exchange
Commission of this opinion as an exhibit to FAC's Registration Statement on Form
S-4 relating to shares of FAC Common Stock that may be issued in connection with
the Merger and to the reference to our firm under the headings
"Summary -- Certain Federal Income Tax Consequences" and "Certain Federal Income
Tax Consequences" in the Prospectus/Proxy Statement. In giving such consent, we
did not thereby admit that we are in the category of persons whose consent is
required under Section 7 of the Securities Act of 1933.
Very truly yours,
ARNOLD & PORTER