Exhibit 5.1
XXXXXXXX & XXXXXXXX
000 Xxxxxxx Xxxxxx, X.X.
Washington, D.C. 20005
000-000-0000
August 24, 1998
e-Net, Inc.
00000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Re: Shares of Common Stock, par value $0.01, of e-Net, Inc. (the
"Company") to be offered and sold pursuant to the Company's
Registration Statement on Form SB-2, as filed on June 29, 1998, as
amended by Amendment No. 1 thereto, as filed on August , 1998 (such
shares of Common Stock, the "Common Stock" and such amended
Registration Statement, as it may be further amended from time to
time, the "Registration Statement")
Ladies & Gentlemen:
We have acted as special counsel to the Company in connection with the
registration of 1,125,000 shares of Common Stock pursuant to the Registration
Statement of which: (A) 825,000 shares of Common Stock were issued or reserved
for issuance pursuant to a private placement in April 1998 (the "Private
Placement") comprised of (i) 750,000 shares of Common Stock issued in the
Private Placement (the "Issued Private Placement Stock"), and (ii) 75,000 shares
of Common Stock underlying a five-year warrant issued to Pennsylvania Merchant
Group Ltd., the placement agent for the Private Placement (the "Placement
Agent"), with an exercise price of $9.00 per share (such warrant, the "Placement
Agent's Warrant" and such underlying shares, the "Placement Agent's Stock"); and
(B) 300,000 shares of Common Stock (the "Underwriter's Stock" and, together with
the Private Placement Stock, the "Offered Stock") underlying: (i) five-year
warrants issued at the direction of Xxxxxx Xxxxx Securities, Inc., the
underwriter (the "Underwriter") of the Company's initial public offering of
securities in April 1997 to purchase 150,000 shares of Common Stock, with an
exercise price of $8.25 per share (the "Common Stock Representative Warrants");
and (ii) five-year warrants to purchase
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August 24, 1998
Page 2
150,000 shares of Common Stock, with an exercise price of $8.25 per share, which
warrants (the "Underlying Warrants") underlie five-year warrants issued at the
direction of the Underwriter to purchase the Underlying Warrants, with an
exercise price of $0.20625 per Underlying Warrant (the "Warrant Representative
Warrants" and collectively with the Common Stock Representative Warrants and the
Underlying Warrants, the "Underwriter's Warrants" and collectively with the
Underwriter's Warrants and the Placement Agent's Warrant, the "Warrants").
We are members of the Bar of the District of Columbia. We do not hold
ourselves out as experts on, nor do we express any opinion as to or with respect
to the applicability of, the laws of any jurisdiction other than the laws of the
District of Columbia, the federal laws of the United States, and the General
Corporation Law of the State of Delaware (the "Opining Jurisdictions").
We express no opinion with respect to any of the following legal issues:
(a) state or federal securities laws or regulations; (b) fraudulent transfer and
fraudulent conveyance laws; or (c) federal and state tax laws and regulations.
In connection with this Opinion, we have examined: (i) the Registration
Statement; (ii) the prospectus related thereto (the "Prospectus"); (iii) the
Common Stock Purchase Agreement dated as of April 15, 1998 (the "Common Stock
Purchase Agreement") by and among the Company, the Placement Agent and each of
the purchasers named on the signature pages thereto pursuant to which the Issued
Private Placement Stock was issued; (iv) the Placement Agent's Warrant issued by
the Company to the Placement Agent dated as of April 15, 1998; and (v) the
Representative Warrant Agreement dated as of April 7, 1997 ("the "Representative
Warrant Agreement") by and between the Company and the Underwriter pursuant to
which the Underwriter's Warrants were issued. The Common Stock Purchase
Agreement, the Placement Agent's Warrant and the Representative Warrant
Agreement are collectively referred to herein as the "Agreements." In addition
to the foregoing, we have reviewed such documents and given consideration to
such matters of law and fact as we have deemed appropriate, in our professional
judgment, to render this Opinion. We have also relied, without further
independent investigation, as to certain matters of fact, on information
obtained from public officials, from officers of the Company and from other
sources believed by us to be responsible.
The assumptions, opinions and conclusions stated below are subject to: (a)
bankruptcy, insolvency, reorganization, receivership, moratorium and other
similar laws affecting the rights and remedies of creditors generally; and (b)
general principles of equity and the exercise of judicial discretion.
We have assumed, without further investigation, the following: (a) all
natural persons who are involved have sufficient legal capacity to enter into
all relevant
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August 24, 1998
Page 3
Agreements, in such capacity as is provided thereby, and to perform
the transactions contemplated by such Agreements (collectively, the
"Transactions") or to carry out their roles in the Transactions; (b) each party
to the Transactions has satisfied those legal requirements that are applicable
to it to the extent necessary to make the Agreements to which it is a party
enforceable against it; (c) each party to the Transactions has complied with all
legal requirements pertaining to its status as such status relates to its rights
to enforce the Agreements against the other parties to the Transactions; (d)
each document submitted to us for review is accurate and complete, each such
document that is an original is authentic, each such document that is a copy
conforms to an authentic original, and all signatures on each such document are
genuine; (e) each certificate issued by a government official concerning a
person or entity's property or status is accurate, complete and authentic and
all official public records (including their proper indexing and filing) are
accurate and complete; (f) the conduct of the parties to the Transactions has
complied with any requirement of good faith, fair dealing and unconscionability;
(g) the parties have acted in good faith and without notice of any defense
against the enforcement of any rights created by the Transactions; (h) there are
no agreements or understandings among the parties, written or oral, and there is
no usage of trade or course of prior dealing among the parties that would, in
either case, define, supplement or qualify the terms of the Agreements; (i) all
statutes, judicial and administrative decisions, and rules and regulations of
governmental agencies constituting the law of the Opining Jurisdictions are
generally available (i.e., in terms of access and distribution following
publication or other release) to lawyers practicing in the Opining
Jurisdictions, and are in a format which makes legal research reasonably
feasible; (j) the constitutionality or validity of a relevant statute, rule,
regulation or agency action is not in issue unless a reported decision in the
Opining Jurisdiction has specifically addressed but not resolved, or has
established, its unconstitutionality or validity; (k) the parties will obtain
all permits and governmental approvals required in the future, and take all
actions similarly required, relevant to subsequent consummation of the
Transactions or performance of the Agreements; (l) all parties to the
Transactions will act in accordance with, and will refrain from taking any
action that is forbidden by, the terms and conditions of the Agreements; and (m)
the Transactions and the execution, delivery and performance of the Agreements
will not (i) breach, or result in a default under, any existing obligation of a
party to the Transactions to a contract to which such party is a party or by
which its property is bound, or (ii) breach or otherwise violate any existing
obligation of any court and administrative order, writ, judgment or decree that
names any such party and is specifically directed to it or its property. Each
assumption specifically described in this Opinion is made with the express
consent and approval of the Company. However, we have not relied on information
(including certificates or other documentation) or assumptions, otherwise
appropriate in the circumstances, if we have knowledge that the information or
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August 24, 1998
Page 3
assumptions are false or if we have knowledge of facts that under the
circumstances would make the reliance unreasonable.
This Opinion speaks only as of its date. We have no obligation to advise
the Company (or any third party) of changes in law or fact that occur after the
date of this Opinion, even though the change may affect the legal analysis, a
legal conclusion or an informational confirmation in this Opinion.
Based upon the foregoing and subject to the qualifications contained below,
we are of the opinion that the Issued Private Placement Stock was validly
authorized and, assuming that (a) the pertinent provisions of the Securities Act
of 1933 and such "blue sky" and other securities laws as may be applicable were
complied with and (b) such Issued Private Placement Stock was duly delivered
against payment therefor as contemplated by the Common Stock Purchase Agreement,
such Issued Private Placement Stock is validly issued, fully paid, and
nonassessable.
Based upon the foregoing and subject to the qualifications contained in the
next paragraph, we are of the opinion that the Placement Agent's Stock and the
Underwriter's Stock are validly authorized and, when (a) the pertinent
provisions of the Securities Act of 1933 and such "blue sky" and other
securities laws as may be applicable have been complied with and (b) such
Placement Agent's Stock and Underwriter's Stock have been duly delivered against
payment therefor upon exercise of the Placement Agent's Warrant, the Common
Stock Representative Warrants and the Underlying Warrants, as the case may be,
all as contemplated by the Placement Agent's Warrant and the Representative
Warrant Agreement, such Placement Agent's Stock and Underwriter's Stock will be
validly issued, fully paid, and nonassessable.
We note that the Company intended to increase the number of its authorized
shares of Common Stock from 10,000 to 50,000,000 (the "Increase") by means of a
Certificate of Amendment to its Certificate of Incorporation, which amendment
was filed with the Delaware Secretary of State on January 25, 1996 (the "Prior
Amendment"). The Increase, however, was not formally ratified by the
shareholders of the Company until a special meeting held on March 15, 1996. On
April 14, 1998, the Company filed a Certificate of Correction (the "Correction")
correcting the effective date of the Increase from January 25, 1996 to March 15,
1996. While the matter is not entirely free from doubt, in our opinion it is
very unlikely that the Correction was not effective to cause the Increase. Also
in our opinion, the Correction should be effective to correct the effective date
of the Increase to March 15, 1996.
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August 24, 1998
Page 5
This Opinion deals only with the specific legal issues it explicitly
addresses. Accordingly, the express opinions set forth above concerning a
particular legal issue do not address any other matters.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement. In giving this consent, we do not admit that we are in the category
of persons whose consent is required under Section 7 of the Securities Act of
1933 or the rules and regulations thereunder.
Very truly yours,
/s/ Xxxxxxxx & Xxxxxxxx
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XXXXXXXX & XXXXXXXX
