EXHIBIT 8
OPINION DRAFT
July 15, 1997
00-000-000
Xxxx Real Estate Services
and its Shareholders
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Re: Agreement and Plan of Reorganization
dated as of May 14, 1997, by and among
CB Commercial Real Estate Services Group, Inc.,
CBC Acquisition Corporation, Xxxx Real Estate Services,
and certain Shareholders of Xxxx Real Estate Services
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Ladies and Gentlemen:
We have acted as counsel to Xxxx Real Estate Services, a Delaware
corporation ("KRES"), and certain holders of the KRES Common in connection with
the above-referenced agreement (the "Merger Agreement") and the transactions
contemplated thereby. Pursuant to the Merger Agreement, KRES will be merged with
CBC Acquisition Corporation, a Delaware corporation and wholly-owned subsidiary
of CB Commercial Real Estate Services Group, Inc., a Delaware corporation
("CBC"), as a result of which KRES will become a wholly-owned subsidiary of CBC.
This opinion is delivered to you pursuant to Section 11.3(g) of the Merger
Agreement. Terms defined in the Merger Agreement and not otherwise defined
herein are used herein with the meanings set forth in the Merger Agreement.
Documents Reviewed and Factual Matters. In order to formulate and
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render our opinion as set forth herein, we have examined the originals or
copies, certified or otherwise identified, to our satisfaction, of the
following:
1. The Merger Agreement, including all Exhibits attached
thereto;
2. The Certificate of Incorporation and Bylaws, together with
any amendments thereto, of KRES;
Xxxx Real Estate Services and
its Shareholders
July 15, 1997
Page 2
3. The minutes of meetings of the Board of Directors and the
Stockholders of KRES and the stock record book of KRES; and
4. The representation letter of KRES in favor of Xxxxxxx &
XxXxxxxx dated as of the Closing Date (the "KRES Letter"), and the
exhibits thereto which include representation letters of the
stockholders of KRES (the "KRES Stockholder Letters"), and the
representation letter of CBC.
We also have conferred with such officers and directors of KRES and
have reviewed such corporate and other records, documents, certificates and
other papers as we deemed necessary to render this opinion.
As to certain questions of fact material to our opinion, we have
relied upon the representations by XXXX contained in the KRES Letter and by the
stockholders of KRES in the KRES Stockholder Letters. Among the representations
made by the stockholders of KRES is a representation that they have no present
plan or intention to sell or otherwise dispose of the CBC Common they will
receive in the Merger. There can be no assurance that the stockholders of KRES
will not, pursuant to a present plan or intention, sell or otherwise dispose of
the CBC Common they receive in the Merger. If a sufficient amount of CBC
Common, in the aggregate, is sold or otherwise disposed of by the stockholders
of KRES pursuant to a present plan or intention, then the Merger will be a
taxable transaction to all of the stockholders of KRES, whether or not they sold
CBC Common received in the Merger.
Additionally, among the representations made by KRES is a
representation that the fair market value of the Warrants and any other property
received by the holders of KRES Common in connection with the Merger does not
constitute more than twenty percent (20%) of the total fair market value of all
consideration given by CBC in exchange for all outstanding KRES Common on the
Effective Time. If the fair market value of the Warrants and other
consideration exceeds twenty percent (20%) of the total fair market value of the
outstanding KRES Common, then the Merger would be a taxable transaction to all
of the stockholders of KRES, whether or not they received Warrants in the
Merger.
Assumptions. For purposes of rendering the opinions set forth herein,
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we have made and relied, without independent inquiry, upon the following
assumptions:
Xxxx Real Estate Services and
its Shareholders
July 15, 1997
Page 3
1. The due authorization, execution and delivery of any
documents referred to herein by any party other than KRES; the
genuineness of all signatures on original and certified copies; and
the conformity to original or certified copies of all copies submitted
to us as conformed or reproduction copies thereof.
2. The Merger, as contemplated in the Merger Agreement, will
constitute a valid statutory merger in accordance with applicable
state law .
Opinions of Counsel. The existing Treasury Regulations promulgated
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under sections 354 and 355 of the Code treat the Warrants as neither stock nor
securities for reorganization purposes. However, under applicable case law
preceding such regulations, the Warrants could be treated as securities for
reorganization purposes. In December 1996, the Department of the Treasury
proposed Treasury Regulations which would treat the Warrants as securities
without a principal amount. As presently drafted, such regulations would apply
to exchanges occurring on or after sixty (60) days following its adoption. Such
Treasury Regulations, however, have not yet been adopted. Thus, at the present
time, it is not clear whether the Warrants received by the KRES stockholders
will be treated for purposes of this Merger as "stock or securities" or as
property other than "stock or securities."
Based upon the foregoing and subject to the qualifications and
conditions expressed herein, we are of the opinion that, for federal income tax
purposes:
1. The Merger will qualify as a "reorganization" as defined in
Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code.
2. No gain or loss will be recognized by KRES, Acquisition
Corporation or CBC as a result of the Merger.
3. A KRES stockholder who receives a cash payment in lieu of a
fractional share of CBC Common will be treated as if such fractional
share were distributed in the Merger and then redeemed by CBC, and
should recognize capital gain or loss measured by the difference
between the amount of cash received and the stockholder's basis in the
fractional share (which will be a pro rata portion of the
stockholder's basis in the CBC Common received in the Merger),
provided that such stockholder's KRES Common is held as a capital
asset on the Effective Date.
Xxxx Real Estate Services and
its Shareholders
July 15, 1997
Page 4
Based upon the foregoing and subject to the qualifications and
conditions expressed herein, and PROVIDED THAT THE WARRANTS ARE TREATED FOR
PURPOSES OF THIS MERGER AS "STOCK OR SECURITIES" (AS MORE PARTICULARLY DESCRIBED
ABOVE), we are of the further opinion that, for federal income tax purposes:
1. No gain or loss will be recognized by the holders of KRES
Common who exchange all of their KRES Common for CBC Common and/or
Warrants in the Merger.
2. The aggregate basis of the CBC Common received by each
holder of KRES Common will be the same as the aggregate basis of such
holder in KRES Common exchanged therefor in the Merger.
3. The aggregate basis of the Warrants received by each holder
of KRES Common will equal zero.
4. The holding period of the CBC Common and Warrants received
by a holder of KRES Common will include the period during which such
holder held KRES Common exchanged therefor in the Merger, provided
that such stock was held as a capital asset on the Effective Date.
If, however, the Warrants are treated for purposes of the Merger as
property other than "stock or securities" as set forth in the existing Treasury
Regulations, then: (a) holders of KRES Common will recognize gain upon receipt
of Warrants in the Merger exchange in an amount equal to the lesser of (i) the
excess of the fair market value of the CBC Common and Warrants received over the
basis of such stockholder in the KRES Common exchanged in the Merger, or (ii)
the fair market value of such Warrants received in the Merger; (b) the aggregate
basis of the Warrants will equal the fair market value of such Warrants; (c) the
aggregate basis of the CBC Common received by each holder of KRES Common will be
the same as the aggregate basis of the KRES Common surrendered in exchange
therefor decreased by the fair market value of any Warrants received and
increased by the amount of gain such holder recognizes upon receipt of the
Warrants; and (d) the holding period for the Warrants received in exchange for
KRES Common will commence on the day following receipt of such Warrants.
Xxxx Real Estate Services and
its Shareholders
July 15, 1997
Page 5
Except for the opinions specifically set forth above, no opinion is
expressed with respect to any other aspect of this transaction, including,
without limitation, any state, local or foreign tax consequences or any tax
consequences with respect to holders of stock options issued in connection with
services.
Our opinions herein are issued upon the condition that we receive the
representations from KRES contained in the KRES Letter, the representations from
the stockholders of KRES contained in the KRES Stockholder Letters and the
representations from CBC contained in the representation letter of CBC
(collectively, the "Representations") on or before the Effective Time. Subject
to the receipt of the Representations on or before the Effective Time, our
opinions herein shall be effective as of the Effective Time. We reserve the
right to revoke or amend this opinion on or before the Effective Time if any
legal developments or factual matters arise subsequent to the date hereof but on
or before the Effective Time which would affect the opinions expressed herein.
Very truly yours,
/s/ XXXXXXX & XxXXXXXX
