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Exhibit 8.1
November 1, 1996
Continental Equity Investors, Inc.
10670 North Central Expressway
Suite 300
Dallas, Texas 75231
Re: Continental Equity Investors, Inc.
Registration Statement on Form S-4
4,185,240 shares of Common Stock, par value $.01 per share
Ladies and Gentlemen:
We have acted as counsel for Continental Equity Investors, Inc., a
Nevada corporation (the "Company"), in connection with a Registration Statement
on Form S-4 filed with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Registration Statement"), covering
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), to be offered in connection with the proposed merger (the "Merger") of
Continental Equity Corporation, a California corporation (the "California
Corporation") (the successor in interest to Continental Mortgage and Equity
Trust, a California real estate investment trust (the "Trust")) with and into
the Company (the "Incorporation Procedure"). In that capacity, we have
examined the charter and bylaws of the Company and of the California
Corporation, the Second Amended and Restated Declaration of Trust, as amended,
and the Restated Trustees' Regulations of the Trust, the Registration
Statement, the corporate action taken by the Company and the California
Corporation, and the action taken by the Trust in connection with the
Incorporation Procedure that provide for the incorporation of the Trust, the
Merger, and the issuance of 4,185,240 shares of the Common Stock pursuant
thereto, and such other materials and matters as we have deemed necessary to
the issuance of this opinion.
In all such examinations, we have assumed the genuineness of all
signatures, the authority to sign of all signatories, the due execution of all
original and certified documents, and the conformity to the original and
certified documents of all copies submitted to us as conformed, photostatic or
facsimile copies. As to various questions of fact material to our opinion, we
have relied upon statements and certificates of officers of the Company, the
California Corporation and the Trust, public officials and others. In
addition, we have assumed that the Agreement and Plan of Merger to be entered
into between the California Corporation and the Company in connection with
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Continental Equity Investors, Inc.
November 1, 1996
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the Merger (the "Merger Agreement") will become effective substantially in the
form included in the Registration Statement and that the Incorporation
Procedure will be consummated as described in the Registration Statement and
pursuant to and in accordance with the Merger Agreement.
Based upon such examination and the qualifications set forth herein
and in reliance thereon, we are of the opinion that (i) for federal income tax
purposes the Incorporation Procedure will constitute a reorganization within
the meaning of section 368(a)(1)(F) of the Internal Revenue Code of l986, as
amended (the "Code") and (ii) the information in the Registration Statement
under the caption "Material Federal Income Tax Consequences," to the extent it
constitutes matters of law or legal conclusions, is correct in all material
respects. Upon consummation of the Incorporation Procedure, the Company will
be treated as the same taxpayer as the Trust for federal income tax purposes.
Thus, the conversion of the Trust into the Company essentially will be
irrelevant for federal income tax purposes and the operations of the Trust and
the Company will be combined for purposes of determining whether the Company
qualifies as a real estate investment trust for the taxable year in which the
Incorporation Procedure is consummated. The Incorporation Procedure will not,
in and of itself, adversely affect the ability of the Trust or the Company to
qualify as a real estate investment trust for federal income tax purposes.
The opinions herein are based upon our interpretations of current law,
including court authority and existing Final and Temporary Regulations, which
are subject to change both prospectively and retroactively, and upon the facts
and assumptions discussed herein. This opinion letter is limited to the
matters set forth herein, and no opinions are intended to be implied or may be
inferred beyond those expressly stated herein. Our opinions are rendered as of
the date hereof and we assume no obligation to update or supplement these
opinions or any matter related to these opinions to reflect any change of fact,
circumstances, or law after the date hereof. In addition, our opinions are
based on the assumption that the matter, if litigated, will be properly
presented to the applicable court. Furthermore, our opinions are not binding
on the Internal Revenue Service or a court. In addition, we must note that our
opinions represent merely our best legal judgment on the matters presented and
that others may disagree with our conclusions. There can be no assurance that
the Internal Revenue Service will not take contrary positions or that a court
would agree with our opinions if litigated. In the event any one of the
statements, representations or assumptions we have relied upon to issue these
opinions is incorrect, our opinions might be adversely affected and may not be
relied upon.
This opinion is solely for the benefit of the addressee hereof, and,
without our prior written consent, may not be quoted in whole or in part or
otherwise referred to in any legal opinion, document, or other report, and may
not be furnished to any person or entity. This opinion is limited
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Continental Equity Investors, Inc.
November 1, 1996
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to the matters stated herein, and no opinion is implied or may be inferred
beyond the matters expressly stated. We consent to the filing of this opinion
as an exhibit to the Registration Statement and to the reference to this firm
under the caption "Proposed Incorporation Procedure ---- Material Federal
Income Tax Consequences" in the Registration Statement and Proxy
Statement/Prospectus that is a part thereof. By giving such consent, we do not
hereby admit that we are an expert with respect to any part of the Registration
Statement, including this exhibit, within the meaning of the term "expert" as
used in the Securities Act of l933, as amended. This opinion is delivered as
of the date hereof and we disclaim any responsibility to update this opinion at
any time following the date hereof.
Very truly yours,
/s/ ANDREWS & KURTH L.L.P.