[LETTERHEAD OF XXXXXXX, XXXXXXX & XXXXXXXX LLP]
November 22, 1999
E*TRADE Group, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Ladies and Gentlemen:
This opinion is being delivered to you in connection with (i) the
Agreement and Plan of Merger and Reorganization (the "Agreement") dated as of
May 31, 1999, by and among E*TRADE Group, Inc., a Delaware corporation
("E*TRADE"), Turbo Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of E*TRADE ("Sub"), and Telebanc Financial Corporation, a Delaware
corporation ("Telebanc"), and (ii) the preparation and filing with the
Securities and Exchange Commission of a Form S-4 Registration Statement relating
to the Merger (the "Registration Statement"). Pursuant to the Agreement, Sub
will merge with and into Telebanc (the "Merger"), and Telebanc will become a
wholly owned subsidiary of E*TRADE.
Except as otherwise provided, 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").
We have acted as legal counsel to E*TRADE in connection with the Merger.
As such, and for the purpose of rendering this opinion, we have examined and are
relying upon (without any independent investigation or review thereof) the truth
and accuracy, at all relevant times, of the statements, covenants,
representations and warranties contained in the following documents (including
all schedules and exhibits thereto):
1. The Agreement;
2. The Registration Statement; and
3. Such other instruments and documents related to the formation,
organization and operation of E*TRADE, Telebanc and Sub and to the consummation
of the Merger and the other transactions contemplated by the Agreement as we
have deemed necessary or appropriate.
November 22, 1999
Page 2
In connection with rendering this opinion, we have assumed or obtained
representations (and are relying thereon, without any independent investigation
or review thereof) that:
A. Original documents submitted to us (including signatures) are
authentic, documents submitted to us as copies conform to the original
documents, and there has been (or will be by the Effective Time) due execution
and delivery of all documents where due execution and delivery are prerequisites
to the effectiveness thereof; and
B. The Merger will be consummated in accordance with the Agreement
without any waiver or breach of any material provision thereof, and the Merger
will be effective under applicable state law.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein, we are
of the opinion that the statements regarding United States federal income tax
consequences set forth in the Registration Statement under the heading "The
Merger - Certain Federal Income Tax Considerations," insofar as they constitute
statements of law or legal conclusions, are correct in all material respects.
We express no opinion as to any federal, state or local, foreign or other tax
consequences, other than as set forth in the Registration Statement under the
heading "The Merger - Certain Federal Income Tax Considerations."
In addition to the assumptions and representations described above, this
opinion is subject to the exceptions, limitations and qualifications set forth
below.
(1) This opinion represents and is based upon our best judgment
regarding the application of federal income tax laws arising under the Code,
existing judicial decisions, administrative regulations and published rulings
and procedures. Our opinion is 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, on either a
prospective or retroactive basis, will 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.
(2) No opinion is expressed as to any transaction other than the Merger
(whether or not undertaken in connection with the Merger) or as to any
transaction whatsoever, including the Merger, if all the transactions described
in the Agreement are not consummated in accordance with the terms of such
Agreement and without waiver or breach of any material provision thereof or if
all of the representations, warranties, statements and assumptions upon which we
relied are not true and accurate at all relevant times. In the event any one of
the statements, representations, warranties or assumptions upon
November 22, 1999
Page 3
which we have relied to issue this opinion is incorrect, our opinion might be
adversely affected and may not be relied upon.
This opinion is rendered to you solely in connection with the filing of
the Registration Statement. We hereby consent to the filing of this opinion as
an exhibit to the Registration Statement. We also consent to the references to
our firm name wherever appearing in the Registration Statement with respect to
the discussion of the federal income tax consequences of the Merger, including
any amendments to the Registration Statement. This opinion may not be relied
upon for any other purpose, and may not be made available to any other person,
without our prior written consent.
Very truly yours,
XXXXXXX, XXXXXXX & XXXXXXXX LLP
