Exhibit 5.1.1
Owen M. Naccarato
Attorney At Law
19600 Fairchild, Suite 260
Irvine, California 92612
Telephone (949) 851-9261 Telecopier (949) 851-9262
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March 5, 2001
New Millennium Capital Partners II, LLC
155 1st Street, Suite B
Mineola, NY 11501
AJW Partners, LLC
155 1st Street, Suite B
Mineola, NY 11501
Re: Secured Convertible Debenture Purchase Agreement and the First Amendment to
the Secured Convertible Debenture Purchase Agreement: Digital Descriptor
Systems, Inc.
Ladies and Gentlemen:
I have acted as counsel to Digital Descriptor systems, Inc. ("the
Company"), a corporation incorporated under the laws of the State of Delaware,
in connection with the proposed issuance and sale of the Company's 12%
Convertible Debentures (the "Debentures") pursuant to the Secured Convertible
Debenture Purchase Agreement and the First Amendment to the Secured Convertible
Debenture Purchase Agreement (collectively the "Purchase Agreement"), dated the
date hereof between the Company and New Millennium Capital Partners II, LLC and
AJW Partners, LLC, (collectively referred to as the "Buyers"). .
In connection with rendering the opinions set forth herein, I have
examined the Transaction Documents as defined in the Purchase Agreement, the
Company's Certificate of Incorporation, and its Bylaws, each as amended to date,
the proceedings of the Company's Board of Directors taken in connection with
entering into the Purchase Agreement and such other documents, agreements and
records as I deemed necessary to render the opinions set forth below.
In conducting my examination, I have assumed the following: (i) that
each of the Transaction Documents have been executed by each of the parties
thereto in the same form as the forms which we have examined, (ii) the
genuineness of all signatures, the legal capacity of natural persons, the
authenticity and accuracy of all documents submitted to us as originals, and the
conformity to originals of all documents submitted to us as copies, (iii) that
each of the Transaction Documents have been duly and validly authorized,
executed, and delivered by the party or parties thereto, and (iv) that each of
the Transaction Documents constitutes the valid and binding agreement of the
party or parties thereto, enforceable against such party or parties in
accordance with the Transaction Documents' terms.
Based upon and subject to the foregoing, we are of the opinion that:
1. Each of the Company and its Subsidiaries organized in the
United States is a corporation, duly incorporated, validly existing and in good
standing under the laws of Delaware, the jurisdiction of its incorporation, with
the requisite corporate power and authority to own and use its properties and
assets and to carry on its business as currently conducted. Each of the Company
and its Subsidiaries is duly qualified to do business and is in good standing as
a foreign corporation in each jurisdiction in which the nature of the business
conducted or property owned by it makes such qualification necessary.
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2. The Company has the requisite corporate power and authority
to enter into and to consummate the transactions contemplated by each of the
Transaction Documents and otherwise to carry out its obligations hereunder. The
execution and delivery of each of the Transaction Documents by the Company and
the consummation by it of the transactions contemplated thereby have been duly
authorized by all necessary action on the part of the Company. Each of the
Transaction Documents has been duly executed and delivered by the Company and
constitutes the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium,
liquidation or similar laws relating to, or affecting generally the enforcement
of, creditors' rights and remedies or by other equitable principles of general
application.
3. No shares of Common Stock, are entitled to preemptive or
similar rights. Except as specifically disclosed in Schedule 2.1(c) to the
Purchase Agreement or as a result of the purchase and sale of the Debentures and
the Warrants, there are no outstanding options, warrants, script rights to
subscribe to, calls or commitments of any character whatsoever relating to,
securities, rights or obligations convertible into or exchangeable for, or
giving any person any right to subscribe for or acquire any shares of Common
Stock, or contracts, commitments, understandings, or arrangements by which the
Company or any Subsidiary is or may become bound to issue additional shares of
Common Stock, or securities or rights convertible or exchangeable into shares of
Common Stock.
4. The Debentures and the Warrants have been duly authorized
and, when paid for and issued in accordance with the terms of the Purchase
Agreement shall have been validly issued, fully paid and nonassessable.
5. The Company has duly authorized and reserved for issuance
such number of Underlying Shares as are issuable upon conversion of the
Debentures, as payment of interest thereon, and upon exercise of the Warrants as
required pursuant to the terms of the Purchase Agreement, the Debentures and the
Warrants, respectively. When issued by the Company in accordance with the terms
of the Purchase Agreement, the Debentures and the Warrants, the Underlying
Shares will be validly issued, fully paid and nonassessable.
6. The execution, delivery and performance of the Transaction
Documents by the Company and the consummation by the Company of the transactions
contemplated by such agreements do not and will not (i) conflict with or violate
any provision of its or any of its Subsidiary's Certificates of Incorporation or
Bylaws, (ii) conflict with, or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, acceleration or cancellation of, (A) any
agreement, indenture or other written instrument relating to indebtedness of the
Company or a Subsidiary thereof or instrument to which the Company or a
Subsidiary thereof is a party attached as an exhibit to the SEC Documents and
(B) to our knowledge, any other agreement, indenture or other written instrument
relating to indebtedness of the Company or a Subsidiary thereof or instrument to
which the Company or a Subsidiary thereof is a party, (iii) result in a
violation of any law, rule or regulation of any governmental authority,
regulatory body, stock market or trading facility to which the Company is
subject, or by which any property or asset of the Company is bound or affected,
or (iv) result in any violation of any order, judgment, injunction, decree or
other restriction of which we have knowledge of any court or governmental
authority. To our knowledge, the business of the Company is not being conducted
in violation of any law, ordinance or regulation of any governmental authority.
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7. Other than the Required Approvals, neither the Company nor
any Subsidiary is required to obtain any consent, waiver, authorization or order
of, or make any filing or registration with, any court or other Federal, state,
local or other governmental authority or other person in connection with the
execution, delivery and performance by the Company of the Transaction Documents.
8. The security interests and liens intended to be created by
the Security Agreement in the collateral secured by the Security Agreement have
been created and constitute valid, enforceable and, subject to the filings of
the UCC financing statements on Form-1 in the jurisdiction of Bucks County,
Pennsylvania and with the Secretary of State of Pennsylvania, perfected first
priority security interests in and liens on the collateral covered thereby in
your favor, upon the terms therein purported to be granted. To the best of our
knowledge such collateral is not subject to any other liens and encumbrances or
other rights, options or claims of any kind.
9. Assuming the accuracy of the representations and warranties
of the Company set forth in Section 2.1 of the Purchase Agreement and of the
Purchaser set forth in Section 2.2 of the Purchase Agreement, the offer,
issuance and sale of the Debentures and the Warrants and the offer, issuance and
sale of the Underlying Shares to the Purchasers pursuant to the Purchase
Agreement, the Debentures and the Warrants, are exempt from the registration
requirements of the Securities Act pursuant to Regulation D of the Securities
Act of 1933 ("as amended").
Truly yours,
/s/ Owen Naccarato
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Owen Naccarato
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