EXHIBIT 5.1
November 23, 2004
TO THE SUBSCRIBERS LISTED ON SCHEDULE A HERETO
RE: AMERICAN ORIENTAL BIOENGINEERING, INC.
SUBSCRIPTION AGREEMENT DATED NOVEMBER 23, 2004
Ladies and Gentlemen:
We have acted as counsel to American Oriental Bioengineering, Inc. (the
"Company") in connection with the offer and sale by the Company of shares of the
Company's common stock ("Common Stock") and issuance of Class A and Class B
common stock purchase warrants to purchase shares of Common Stock ("Warrants")
in the amounts set forth on Schedule A, to the Subscribers identified thereto,
pursuant to the exemption from registration under the Securities Act of 1933, as
amended (the "Act") as set forth in Regulation D ("Regulation D") promulgated
thereunder. Capitalized terms used herein and not otherwise defined shall have
the meaning assigned to them in the subscription agreement (the "Agreement") by
and between the Company and Subscriber (the "Purchaser") entered into at or
about the date hereof. The Agreement, and the agreements described below are
sometimes hereinafter referred to collectively as the "Documents."
In connection with the opinions expressed herein, we have made such
examination of law as we considered appropriate or advisable for purposes
hereof. As to matters of fact material to the opinions expressed herein, we have
relied, with your permission, upon the representations and warranties as to
factual matters contained in and made by the Company and the Purchaser pursuant
to the Documents and upon certificates and statements of certain government
officials and of officers of the Company as described below. We have also
examined originals or copies of certain corporate documents or records of the
Company as described below:
(a) Form of Agreement
(b) Class A Common Stock Purchase Warrant
(c) Class B Common Stock Purchase Warrant
(d) Funds Escrow Agreement
(e) Certificate of Incorporation of the Company
(f) Bylaws of the Company
(g) Minutes of the action of the Company's Board of Directors,
including unanimous Board of Directors approval of the
Documents, a copy of which is annexed hereto.
In rendering this opinion, we have, with your permission, assumed: (a)
the authenticity of all documents submitted to us as originals; (b) the
conformity to the originals of all documents submitted to us as copies; (c) the
genuineness of all signatures; (d) the legal capacity of natural persons; (e)
the truth, accuracy and completeness of the information, factual matters,
representations and warranties contained in all of such documents; (f) the due
authorization, execution and delivery of all such documents by Subscribers, and
the legal, valid and binding effect thereof on Subscribers; and (g) that the
Company and the Purchasers will act in accordance with their respective
representations and warranties as set forth in the Documents.
We have also assumed that the Agreement and the actions contemplated in
the Agreement will not violate any indenture, mortgage, deed of trust, agreement
or other instrument to which the Company to or by which it or any of its
property is bound or any judgment, decree or order of any court of governmental
body. In addition, in conducting our examination, we have relied on the
statements, certifications and other assurances from the executive officers of
the Corporation without any independent investigation. Such certifications
include two Officer's Certificates dated February 11, 2004, an Officer's
Certificate dated September 2003, from the Corporation, an Officer's Certificate
dated September 17, 2003, an Officer's Certificate dated July 21, 2003, an
Officer's Certificate dated July 9, 2004 and an Officer's Certificate dated
November 22, 2004 (collectively the "Certificates").
16
We express no opinion regarding any of the factual representations and
warranties contained in the Agreement, except for those matters expressly opined
to in this letter. As to the factual representations and warranties opined to
herein, we have relied exclusively upon the Certificates and have not
independently verified the statements contained in those Certificates.
We have not been asked to review any Prospectus, Registration
Statement, Supplemental Registration Statement, SB-2 or similar document and
express no opinion concerning those documents or similar documents.
We are members of the bar of the State of Nevada. We express no opinion
as to the laws of any jurisdiction other than Nevada. We express no opinion with
respect to the effect or application of any other laws. Special rulings of
authorities administering any of such laws or opinions or other counsel have not
been sought or obtained by us in connection with the rendering the opinions
expressed herein.
We express no opinion regarding the effect of any securities laws on
the Agreement or the Warrants including, without limitation, the following acts
or laws:
a. The Securities Act of 1933;
b. The Securities Exchange Act of 1934;
c. The Public Utility Holding Company Act of 1935;
d. The Investment Company Act of 1940;
e. The Investment Advisers Act of 1940;
f. The Employees Retirement Income Security Act of 1974;
g. The National Housing Act;
h. The Commodity Exchange Act;
i. Chapter 90 of the Nevada Revised Statutes and any regulation
promulgated pursuant to those statutes.
We express no opinion regarding the existence of: (a) any issuer's lien
pursuant to N.R.S. Section 104.8209; (b) adverse claim as defined by N.R.S.
Section 104.8102; or (c) any other security interest, including those arising
under Articles 8 and 9 of the U.C.C., against the common stock to be conveyed
pursuant to the Consulting Agreements.
We make no representations regarding the value of the Warrants or any
common stock to be issued pursuant to the Agreement and Warrants.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Company is duly incorporated, validly existing and in good
standing in the State of Nevada and has the requisite corporate power and
authority to conduct its business, and to own, lease and operate its properties
in the State of Nevada.
2. The Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under the Documents. The Documents,
and the issuance of the Common Stock and Warrants and the reservation and
issuance of Common Stock issuable upon exercise of the Warrants ("Warrant
Shares") have been duly approved by the Board of Directors of the Company, and
no further consent or authorization of the Company or Board of Directors or
stockholders is required.
17
3. The execution, delivery and performance of the Documents by the
Company and the consummation of the transaction contemplated thereby, will not,
with or without the giving of notice of the passage of time or both:
a. Violate the provisions of the Certificate of Incorporation or
bylaws of the Company; or
b. Result in violations of Nevada law applicable to the Company
or by with any property or asset of the Company is bound or
affected, except for such violations as would not,
individually or in the aggregate, have a material adverse
effect.
4. The Documents constitute the valid and legally binding obligations
of the Company and are enforceable against the Company in accordance with their
respective terms.
5. When so issued and upon payment of the applicable purchase or
exercise price, the Warrants, Warrant Shares and Common Shares will be duly and
validly issued, fully paid and nonassessable, and free of any liens,
encumbrances and preemptive or similar rights contained in the Company's
Certificate of Incorporation or Bylaws or, to our knowledge, in any agreement to
which the Company is a party.
6. The authorized capital stock of the Company consists of 60,000,000
shares of Common Stock, of which 33,631,827 shares currently are issued and
outstanding, and 2,000,000 shares of Preferred Stock, of which 1,000,000 shares
are currently issued and outstanding.
7. To our knowledge, and based upon litigation searches we ran on
October 15, 2004, with the United States District Court for the District of
Nevada, the United States Bankruptcy Court for the District of Nevada and the
District Court for Xxxxx County, Nevada (collectively the "Courts"), the Company
is not a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any of the Courts.
Our opinions expressed above are specifically subject to the following
limitations, exceptions, qualification and assumptions:
A. The effect of bankruptcy, insolvency, reorganization, moratorium
and other similar laws relating to or affecting the relief of debtors or the
rights and remedies of creditors generally, including without limitation the
effect of statutory or other law regarding fraudulent conveyances and
preferential transfers.
X. Limitations imposed by state law, federal law or general equitable
principles upon the specific enforceability of any of the remedies, covenants or
other provisions of any applicable agreement and upon the availability of
injunctive relief or other equitable remedies, regardless of whether enforcement
of any such agreement is considered in a proceeding in equity or at law.
C. This opinion letter is governed by, and shall be interpreted in
accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of
Business Law (1991). As a consequence, it is subject to a number of
qualifications, exceptions, definitions, limitations on coverage and other
limitations, all as more particularly described in the Accord, including the
General Qualifications and the Equitable Principles Limitation, and the opinion
letter should be read in conjunction therewith.
18
This opinion letter is rendered as of the date first written above, is
solely for your benefit in connection with the Agreement and may not be flied
upon or used by, circulated, quoted, or referred to nor may any copies hereof be
delivered to any other person without our prior written consent. We disclaim any
obligation to update this opinion letter or to advise you of facts,
circumstances, events or developments which hereafter may be brought to our
attention and which may alter, affect or modify the opinions expressed herein.
SINCERELY YOURS,
/S/ XXXXXXX XXXXXXXXX, CHTD.
XXXXXXX XXXXXXXXX, CHTD.
19
