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EXHIBIT 5.1
[SKADDEN ARPS SLATE MEAGHER & FLOM LLP LETTERHEAD]
December 7, 2000
eToys Inc.
12200 W. Olympic Blvd.
Los Angeles, California 90064
Re: eToys Inc.
Registration Statement on Form S-3
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Ladies and Gentlemen:
We have acted as special counsel for you in connection with
the preparation of the registration statement on Form S-3 (File No. 333-50824)
(as so amended, the "Registration Statement") filed by you with the Securities
and Exchange Commission (the "Commission") on November 27, 2000, under the
Securities Act of 1933, as amended (the "Securities Act"). The Registration
Statement relates to the sale from time to time by certain selling
securityholders (as set forth in the Registration Statement, the "Selling
Securityholders"), pursuant to Rule 415 of the General Rules and Regulations of
the Commission promulgated under the Securities Act, of shares of common stock,
par value $.0001 per share (the "Common Stock"), issuable upon the conversion of
(the "Conversion Shares") or in lieu of cash dividends on (the "Dividend
Shares") the Series D Convertible Preferred Stock and upon exercise of the
related warrants (the "Warrant Shares") of eToys Inc., a Delaware corporation
(the "Company"). Pursuant to Rule 429 under the Securities Act, the
prospectus included in the Registration Statement also relates to 12,398,094
shares of common stock registered under Registration Statement No. 333-40018
(the "Prior Registration Statement").
This opinion is being furnished in accordance with the
requirements of Item 601(b)(5) of Regulation S-K promulgated under the
Securities Act.
In connection with this opinion, we have examined originals
or copies, certified or otherwise identified to our satisfaction, of: (i) a
copy of the Registration Statement as filed with the Commission; (ii) the
Prior Registration Statement; (iii) an executed copy of the Securities
Purchase Agreement, dated June 12, 2000, between the Company and certain
investors (the "Purchase Agreement"); (iv) an executed copy of each of the
warrants (the "Warrants"); (v) copies of the shares of Series D Convertible
Preferred Stock (the "Preferred Shares"); (vi) a specimen certificate
representing the Common Stock; (vii) the Amended and Restated Certificate of
Incorporation of the Company, as currently in effect; (viii) the
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eToys Inc.
December 6, 2000
Page 2
Amended and Restated Bylaws of the Company, as currently in effect; (ix) the
Certificate of Designations, Preferences and Rights of the Preferred Shares
(the "Certificate of Designations"), as filed with the Secretary of State of
the State of Delaware; and (x) certain resolutions of the Board of Directors
of the Company relating to, among other things, the creation, issuance and
sale of the Preferred Shares and the issuance and sale of the Warrants in the
manner contemplated by the Purchase Agreement (the "Board Resolutions").
We have also examined originals or copies, certified or
otherwise identified to our satisfaction, of such records of the Company and
such agreements, certificates or records of public officials, certificates of
officers or other representatives of the Company, and such other documents,
certificates and records as we have deemed necessary or appropriate as a basis
for the opinions set forth herein.
In our examination, we have assumed the legal capacity of all
natural persons, the genuineness of all signatures, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such copies. In making our examination of
executed documents, we have assumed that the parties thereto, other than the
Company, had or will have the power, corporate or other, to enter into and
perform all obligations thereunder and have also assumed the due authorization
by all requisite action, corporate or other, and execution and delivery by such
parties of such documents and the validity, enforceability and binding effect
thereof on such parties. As to any facts material to the opinions expressed
herein which were not independently established or verified, we have relied upon
oral or written statements and representations of officers and other
representatives of the Company and the Selling Securityholders.
We do not express any opinion as to the laws of any
jurisdiction other than Delaware General Corporation Law.
Based upon and subject to the foregoing, we are of the opinion
that:
1. The Conversion Shares initially issuable upon the
conversion of the Preferred Shares in accordance with the terms of the
Certificate of Designations and the Warrant Shares initially issuable upon
exercise of the Warrants in accordance with the terms of the Warrants, have been
duly authorized and reserved for issuance and, when issued in accordance with
the terms of the Certificate of Designations and the Warrants,
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eToys Inc.
December 6, 2000
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as the case may be, will be validly issued, fully paid and non-assessable,
provided in each case that such shares are issued for prices in excess of the
par value;
2. The Dividend Shares, when the Board of Directors of the
Company or an authorized committee thereof has taken all necessary corporate
action to authorize the issuance of the Dividend Shares in accordance with the
Board Resolutions and, when issued in accordance with the terms of the
Certificate of Designations, will be validly issued, fully paid and
non-assessable.
With respect to the foregoing opinions, we call to your
attention that because the conversion rate of the Preferred Shares is subject to
adjustment under the terms of the Certificate of Designations based, in part, on
decreases in the market prices for the Common Stock, it may be necessary for the
Company to take additional corporate action and make additional filings with the
Secretary of State of the State of Delaware in order to increase the number of
shares of Common Stock authorized and reserved for issuance. In addition, with
respect to the foregoing opinions, we have assumed, with your consent, that the
certificates representing the Conversion Shares, the Warrant Shares and the
Dividend Shares will be manually signed by one of the authorized officers of the
transfer agent and registrar of the Company and will conform to the specimen
thereof examined by us. With respect to the opinion in paragraph 2 above, we
have assumed compliance with Section 170 of the Delaware General Corporation
Law.
We hereby consent to the filing of this opinion with the
Commission as an exhibit to the Registration Statement. We also consent to the
reference to our firm under the caption "Legal Matters" in the prospectus which
constitutes a part of the Registration Statement. In giving this consent, we do
not thereby admit that we are included in the category of persons whose consent
is required under Section 7 of the Securities Act or the rules and regulations
of the Commission promulgated thereunder. This opinion is expressed as of the
date hereof and we disclaim any undertaking to advise you of any subsequent
changes in the facts stated or assumed herein or of any subsequent changes in
applicable law.
Very truly yours,
/s/ Skadden, Arps, Slate, Meagher & Flom LLP
