July 6, 2000
Board of Directors
Infotopia, Inc.
43 Taunton Green, Suite 5
Taunton, MA 02780
Gentlemen;
We have acted as securities counsel for Infotopia, Inc.
("Infotopia" or the "Company"). You have asked us to render this
opinion to Infotopia.
You have advised that:
1. Infotopia is current in its reporting responsibilities to
the Securities and Exchange Commission as mandated by the
Securities Exchange Act of 1934, as amended.
2. Mark Levine and David Richmond will act in a management
capacity for one of the Company's products pursuant to the terms
of a License Agreement dated June 26, 2000.
3. In their capacities as management, the above-named
individuals have provided and will provide bona-fide services to
the Company which are not in relation to the offer or sale of
securities in a capital-raising transaction, and which did not
either directly or indirectly promote or maintain a market for
Infotopia's securities.
4. Infotopia has agreed to issue its common stock to the above-
named individuals as compensation for their services on behalf of
Infotopia.
5. The shares to be issued to these individuals are pursuant to
corporate resolution and the approval of the Board of Directors
of Infotopia. These shares shall be registered pursuant to a
Registration Statement on Form S-8. These shares may be issued
without restrictive legend. However, these shares are considered
control stock, representing 11.77 % of the issued and outstanding
shares and will be subject to resale restrictions pursuant to
Rule 144.
In connection with this opinion, we have discussed with the
Company that an "affiliate," as defined by Rule 144 is ".a person
that directly, or indirectly through one or more intermediaries,
controls, or is controlled by or is under the common control with
such issuer." The discussion also encompassed the fact that the
Company is deemed to be an "issuer" for purposes of the above-
mentioned definition.
In summary, Rule 144 applies to affiliates (that is, control
persons) and non affiliates when they resell restricted
securities purchased from the issuer or an affiliate of the
issuer in nonpublic transactions. Non affiliates reselling
restricted securities, as well as affiliates selling restricted
or non-restricted securities, are not considered to be engaged in
a distribution and, therefore, are not deemed to be underwriters
as defined in Section 2(11) if the following six conditions are
met:
(1) Adequate current public information must be
available about the issuer unless sales are
limited to those made by non-affiliates after two
years.
(2) When restricted securities are sold, generally
there must be a one-year holding period.
(3) When either restricted securities or non-
restricted securities are sold by an affiliate
after one year, there are limitations on the
amount of securities that may be sold; when
restricted securities are sold by non-affiliates
between the first and second years, there are
identical limitations: after two years, there are
no volume limitations for re-sales by non-
affiliates.
(4) Except for sales of restricted securities made by
non-affiliates after two years, all sales must be
made in brokers' transactions as defined in
Section 4(4) of the 1933 Act.
(5) Except for sales of restricted securities made by
non-affiliates after two years, a notice of
proposed sale must be filed for all sales in
excess of 500 shares or with an aggregate sales
price in excess of $10,000.
(6) There must be a bona fide intention to sell.
Pursuant to Rule 144 (e), except as hereinafter provided, the
amount of securities of an "affiliate" which may be sold in
reliance upon this rule shall be determined as follows:
(1) If restricted or other securities are sold for the account
of an affiliate of the issuer, the amount of securities sold,
together with all sales of restricted and other securities of the
same class within the preceding three months, shall not exceed
the greater of
(i) one percent of the shares or other units of the class
outstanding as shown by the most recent report or statement
published by the issuer, or
(ii) the average weekly reported volume of trading in such
securities on all national securities exchanges and/or reported
through the automated quotation system of a registered securities
association during the four calendar weeks preceding the filing
of notice required by paragraph (h), or if no such notice is
required the date of receipt of the order to execute the
transaction by the broker or the date of execution of the
transaction directly with a market maker, or
(iii) the average weekly volume of trading in such securities
reported through the consolidated transaction reporting system
contemplated by Rule 11Aa3-1 under the Securities Exchange Act of
1934 during the four-week period specified in subdivision (ii) of
this paragraph.
Predicated upon the documents supplied and the representations
from the Company and the law existing as of the date hereof, said
shareholders of the Company do appear to be affiliates. In
accordance with Rule 144, these shareholders may freely transfer,
without restrictive legend, a certain number of their shares as
determined by Rule 144. Given your representations that there are
35,385,402 shares of common stock outstanding, at least 353,854
shares (1% of the total number of shares shown in the most recent
report or statement published by the Company) may be transferred
within any three-month period. This number may be higher, up to a
maximum of the average weekly volume during the four calendar
weeks immediately preceding the filing of the Form 144 (as
required by Rule 144(h)). The number of shares that may be
transferred at the time the Form 144 is filed is reduced by the
number of shares, if any, that have been transferred during the
three months preceding that date.
Concurrently with the placing of a brokerage order, a notice of
proposed sale on Form 144 must be filed with the Securities and
Exchange Commission if the number of shares sold is greater than
500, or if the total sales price exceeds $10,000.
We have read such documents as have been made available to us.
For purposes of this opinion, we have assumed the authenticity of
such documents.
Based on the accuracy of the information supplied to us, it is
our opinion that Infotopia may avail itself of a Registration
Statement on Form S-8, and is qualified to do so. It is our
further opinion that the above-named individuals are proper
persons qualified to receive shares which are registered in a
Registration Statement on Form S-8.
We consent to the use of this letter in the Registration
Statement filed on Form S-8.
Sincerely,
/s/ Chapman & Flanagan, Ltd.
Chapman & Flanagan, Ltd.
