Exhibit 8.1
[THT Letterhead]
[Month] __, 2001
SmarterKids.com, Inc.
15 Crawford Street
Needham, MA 02494
Re: Merger pursuant to Contribution Agreement and Plan of Reorganization
and Merger, dated as of November 14, 2000, by and among
SmarterKids.com, Inc., Earlychildhood LLC, LearningStar Corp., and S-E
Educational Merger Corp.
Ladies and Gentlemen:
We have acted as counsel for SmarterKids.com, Inc., a Delaware corporation
("SmarterKids"), in connection with the proposed merger of S-E Educational
Merger Corp., a Delaware corporation ("Merger Sub") wholly owned by LearningStar
Corp., a Delaware corporation ("LearningStar"), with and into SmarterKids
pursuant to the Contribution Agreement and Plan of Reorganization and Merger,
dated as of November 14, 2000 (together with all exhibits and schedules thereto,
the "Agreement"), by and among SmarterKids, Earlychildhood LLC, a California
limited liability company ("Earlychildhood"), LearningStar, and Merger Sub.
Pursuant to the Agreement, it is contemplated that Merger Sub will merge with
and into SmarterKids (the "Merger"), the holders of all outstanding LLC
membership interests in Earlychildhood will contribute those interests to
LearningStar (the "Contribution"), and Earlychildhood and SmarterKids will each
become wholly-owned subsidiaries of LearningStar. Unless otherwise defined,
capitalized terms referred to herein have the meanings set forth in the
Agreement. All section references, unless otherwise indicated, are to the
Internal Revenue Code of 1986, as amended (the "Code").
The opinions expressed herein are being delivered to you in connection with
the filing of a registration statement (the "Registration Statement") on Form
S-4, which includes the proxy statement and prospectus relating to the
Agreement. In delivering these opinions, we have reviewed, and are relying upon
(without any independent investigation or examination thereof) the truth and
accuracy at all relevant times of, the facts, statements, descriptions,
covenants, representations, and warranties set forth in the Registration
Statement, the Agreement, certificates issued by SmarterKids, Earlychildhood,
LearningStar, and Merger Sub, respectively
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Page 2
(the "Corporate Representations"), and such other instruments and documents
related to the formation, organization, and operation of SmarterKids,
Earlychildhood, LearningStar, and Merger Sub or to the consummation of the
Merger and the Contribution and the transactions contemplated in the Agreement
as we have deemed necessary or appropriate. We have assumed that all parties to
the Agreement and to any other documents examined by us have acted, and will
act, in accordance with the terms of such Agreement and documents and that the
Merger, the Contribution, and related transactions will be consummated at the
Effective Time pursuant to the terms and conditions set forth in the Agreement
and related documents without the waiver or modification of any such terms and
conditions.
In connection with rendering these opinions, we have also assumed or
obtained representations (and are relying thereon, without any independent
investigation or examination thereof) that:
a) Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has been
and will be due execution and delivery of all documents where due execution and
delivery are prerequisites to effectiveness thereof;
b) Any statement made in any of the documents referred to herein "to the
knowledge of" or "to the best of the knowledge of" any person or party or
similarly qualified is and will be true and correct in all respects at all
relevant times without such qualification;
c) All facts, statements, descriptions, covenants, representations, and
warranties contained in any of the documents referred to herein or otherwise
made to us (including, without limitation, the aforementioned Corporate
Representations) are and will be true and correct in all respects at all
relevant times and no actions have been or will be taken which are inconsistent
with such positions;
d) As to all matters for which a person or entity has represented that
such person or entity is not a party to or does not have or is not aware of any
plan, intention, understanding, or agreement to take an action, there is and
will be in fact no such plan, intention, understanding, or agreement and such
action will not be taken; and
e) The Merger and the Contribution will be consummated in accordance with
the terms of the Agreement, without waiver, breach, or amendment of any
provision thereof, and will be effective under applicable law.
Based upon our examination of the items described above and subject to the
assumptions, limitations, and qualifications set forth herein, we are of the
opinion that:
[Month]__, 2001
Page 3
1. For United States federal income tax purposes, the Merger will be
treated as a "reorganization" under Section 368(a) of the Code or, taken
together with the Contribution, as a transfer of property to LearningStar
qualifying under Section 351 of the Code; and
2. The discussion in the paragraph captioned "Material Federal Income Tax
Consequences to SmarterKids.com Stockholders of Treatment of Merger as a
`Reorganization' or as Part of a Section 351 Transfer" under the section
"Material United States Federal Income Tax Consequences of the Combination" in
the Registration Statement accurately describes the material United States
federal income tax consequences that would result from treatment of the Merger
as a "reorganization" under Section 368(a) of the Code or, taken together with
the Contribution, as a transfer of property to LearningStar qualifying under
Section 351 of the Code, to SmarterKids stockholders receiving LearningStar
common stock in the Merger, subject to the limitations on the scope of such
discussion as expressed in the Registration Statement.
These opinions represent and are based upon our best judgment regarding the
application of United States federal income tax laws including the Code,
existing judicial decisions, administrative regulations, and published rulings
and procedures. Our opinions are not binding upon the Internal Revenue Service
or the courts, and there is no assurance that the Internal Revenue Service will
not successfully assert a contrary position. Furthermore, no assurance can be
given that future legislative, judicial, or administrative changes (including
during the period between the issuance of this letter and the Effective Time),
applied on either a prospective or retroactive basis, would not adversely affect
the accuracy of the conclusions stated herein. Nevertheless, we undertake no
responsibility to advise you of any new developments in the application or
interpretation of the federal income tax laws.
These opinions address only the specific United States federal income tax
consequences of the Merger set forth above and do not address any state, local,
or foreign or other federal tax consequence that may result from the Merger, the
Contribution, or any other transaction (including any transaction undertaken in
connection with or in contemplation of the Merger or the Contribution). No
opinion is expressed as to any transaction other than the Merger as described in
the Agreement (whether or not undertaken in connection with or in contemplation
of the Merger) or as to any transaction whatsoever, including the Merger and the
Contribution, if all the transactions described in the Agreement are not
consummated in accordance with the terms of the Agreement and without waiver,
breach, or modification of any material provision thereof or if any of the
facts, statements, descriptions, covenants, representations, warranties, or
assumptions upon which we have relied (including, without limitation, the
Corporate Representations) are not true and accurate in all respects at all
relevant times. In the event any one of the facts, statements, descriptions,
covenants, representations, warranties, or assumptions upon which we have relied
to issue these opinions is incorrect, our opinions might be adversely affected
and may not be relied upon. In rendering these opinions, we have assumed that
Latham
[Month]__, 2001
Page 4
& Watkins has delivered, and has not withdrawn, an opinion that the
Contribution will be treated for federal income tax purposes as a transfer of
property to LearningStar qualifying under Section 351 of the Code, and that the
Contribution will be so treated consistently with such opinion.
Our opinions expressed herein are rendered solely to you for the purpose of
inclusion as an exhibit to the Registration Statement. They may not be relied
upon for any other purpose or by any other person or entity, and may not be made
available to any other person or entity without our prior written consent. We
hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement and further consent to the references to our firm name in
the Registration Statement in connection with the federal income tax matters
described herein. In giving this consent, however, we do not hereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules or regulations of the SEC
promulgated thereunder.
Very truly yours,
TESTA, HURWITZ & THIBEAULT, LLP
8361/4.2035348