Hall Dickler Kent Goldstein & Wood, LLP
909 Third Avenue
New York, New York 10022
January 9, 2000
Pipeline Data, Inc.
250 East Hartsdale Avenue
Suite 21
Hartsdale NY 10530
Re: Pipeline Data, Inc. (the "Company") - Post-Effective Amendment
No.1 (the "Amendment") to its Registration Statement on Form SB-2
Filed Under SEC Registration No. 333-79831 (the "Registration
Statement")
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Gentlemen:
We have acted as counsel for the Company in connection with the preparation
and filing of the Amendment under the Securities Act of 1933, as amended (the
"Act"). The Amendment relates to:
1. the Company's previous registration under the Act of:
(a) 1,000,000 shares of its common stock, $.001 par value per share
(the "Common Stock"), 791,890 of which were issued at the closing
of the initial public offering consummated after the Registration
Statement was declared effective;
(b) 1,000,000 class A redeemable warrants, 785,210 of which were
issued in that offering; and
(c) 2,325,000 shares of common stock to be sold by the holders of
those shares (the "Selling Stockholders");
2. the reduction in the exercise price of the class A redeemable warrants
from $3.00 to $1.50
3. 1,000,000 class B redeemable warrants which were previously registered
under the Act pursuant to the Registration Statement, none of which
were sold, and all of which shall be distributed as a dividend to the
holders of the Common Stock;
4. the reduction in the exercise price of the class B redeemable warrants
from $5.00 to $2.50; and
5. the resale of up to 1,785,210 shares of common stock issuable upon
exercise of the outstanding class A redeemable warrants and upon
exercise of the
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class B redeemable warrants by the holders of such instruments.
In connection with the opinions hereinbelow expressed, we have examined the
following documents (or true copies thereof): the Company's Certificate of
Incorporation, the Company's By-Laws, its stock and warrant records, the minutes
of actions heretofore taken by the Company's stockholders and directors, the
Amendment (and the forms of prospectus contained therein), the warrant
agreements which the Company entered into with American Stock Transfer & Trust
Company, as warrant agent, which govern the issuance, exercise, termination and
other rights, privileges and conditions pertaining to the class A and class B
redeemable warrants, the forms of class A and class B redeemable warrant
certificates, the form of Common Stock certificate and such other documents as
we deemed necessary or appropriate under the circumstances.
Based upon, and subject to the foregoing, we are of the opinion that:
1. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the state of Delaware, and has all
requisite power and authority (corporate and other) to own or lease
its properties and conduct its business.
2. The Company has taken all necessary corporate action required with
respect to:
(a) the reduction of the exercise prices of the class A and class B
redeemable warrants; and
(b) the execution and distribution, on or about January 20, 2001, of
the class B redeemable warrants as a dividend to the holders of
the Common Stock on the December 29, 2000 record date for such
distribution.
3. The Company has reserved a sufficient number of its authorized but
unissued shares of Common Stock for issuance upon valid exercise of
the class A and class B redeemable warrants.
4. Subject to the proviso that none of the class B redeemable warrants
shall be distributed in any jurisdiction unless and until a valid Blue
Sky registration or exemption therefrom pertaining to such securities
shall be in effect, the same shall be validly issued and outstanding
securities of the Company entitling the holders thereof to purchase
shares of the Company's Common Stock in accordance with the terms, and
subject to the conditions and limitations set forth therein and in the
warrant agreement pertaining thereto.
5. Subject to the further proviso that none of the class A or class B
redeemable warrants, the shares of Common Stock to be issued upon
exercise thereof or the shares of Common Stock to be sold by the
Selling Stockholders shall be issued or sold, as the case may be, in
any jurisdiction unless and until a valid Blue Sky registration or
exemption therefrom pertaining to such securities or sale transactions
shall be in effect, upon receipt of full payment for the shares of
Common Stock issuable upon exercise of the class A and class B
redeemable warrants, such shares shall be (or, in the case of the
Selling Stockholders' shares of Common Stock, already will have been)
validly issued and outstanding as fully paid and non-assessable shares
of the Company's Common Stock.
The opinions we have expressed herein are limited solely to the effects of
the federal securities laws and the Delaware General Corporation Law upon the
matters addressed herein. We assume no obligation to supplement this opinion if,
after the date hereof, any applicable laws change, or we become aware of any
facts that might change our opinions, as expressed herein.
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The opinions expressed herein may be relied upon by the Company in
connection with the registration of the class A and class B redeemable warrants
and the Common Stock to be sold by the Selling Stockholders and by the persons
exercising any of such warrants, as contemplated by, and in conformity with, the
Amendment and the prospectus contained therein. With the exception of the
foregoing, the opinions expressed herein may not be relied upon by any other
person without our prior written consent.
Very truly yours,
/s/ Hall Dickler Kent Goldstein & Wood LLP
Hall Dickler Kent Goldstein & Wood LLP
