KELLEY DRYE & WARREN
Two Stamford Plaza
281 Tresser Boulevard
Stamford, Connecticut 06901-3229
December 23, 1999
IBS Interactive, Inc.
2 Ridgedale Avenue, Suite 350
Cedar Knolls, New Jersey 07927
Ladies and Gentlemen:
We have acted as special counsel to IBS Interactive, Inc., a Delaware
corporation (formerly known as Internet Broadcasting System, Inc.) (the
"Company"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") of a Registration Statement on Form
S-3 and any amendments thereto (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to 934,668 shares (the "Shares") of the Company's common stock, $0.01
par value per share (the "Common Stock"). Of the Shares: (i) a total of 480,000
shares of Common Stock have been issued and 120,000 shares of Common Stock are
to be issued upon the exercise of certain warrants (the "November Warrants")
issued to several private investors in a private placement transaction in
November 1999 (the "November Offering"), (ii) a total of 100,000 shares of
Common Stock have been issued and 25,000 shares of Common Stock are to be issued
upon the exercise of certain warrants (the "December Warrants") issued to
several private investors in a private placement transaction in December 1999
(the "December Offering"), (iii) 100,000 shares of Common Stock are to be issued
upon the exercise of certain warrants (the "EBI Warrants") issued to EBI
Securities Corporation as fees payable in connection with mergers and
acquisitions consulting services performed by EBI Securities Corporation on
behalf of IBS, (iv) 86,668 shares of Common Stock have been issued to Arnold
Schron pursuant to the Agreement and Plan of Merger among Spencer Analysis,
Inc., IBS Interactive, Inc. and SAI Acquisition Corp. dated as of June 30, 1999,
(v) up to 15,000 shares of Common Stock are to be issued upon the exercise of
certain warrants (the "October Warrants") issued to several private investors in
a private placement transaction consummated in October 1999 (the "October
Offering"); and (vi) 8,000 shares of Common Stock are to be issued upon the
exercise of certain warrants (the "LaSalle St. Warrants") issued to LaSalle St.
Securities, LLC as a commission in December 1999 (the November Warrants, the
December Warrants, the EBI Warrants, the October Warrants and the LaSalle St.
Warrants are sometimes collectively referred to herein as the "Warrants").
IBS Interactive, Inc.
December 23, 1999
Page 2
In connection with this opinion, we have examined and relied upon
copies certified or otherwise identified to our satisfaction of: (i) the
November Warrants; (ii) the December Warrants; (iii) the EBI Warrants; (iv) the
October Warrants; (v) the LaSalle St. Warrants; (vi) an executed copy of the
Registration Statement; (iv) the Company's Restated Certificate of Incorporation
and Restated By-laws; and (v) the minute books and other records of corporate
proceedings of the Company, as made available to us by officers of the Company;
and have reviewed such matters of law as we have deemed necessary or appropriate
for the purpose of rendering this opinion.
For purposes of this opinion we have assumed the authenticity of all
documents submitted to us as originals, the conformity to originals of all
documents submitted to us as certified or photostatic copies, and the
authenticity of the originals of all documents submitted to us as copies. We
have also assumed the legal capacity of all natural persons, the genuineness of
all signatures on all documents examined by us, the authority of such persons
signing on behalf of the parties thereto other than the Company and the due
authorization, execution and delivery of all documents by the parties thereto
other than the Company. As to certain factual matters material to the opinion
expressed herein, we have relied to the extent we deemed proper upon
representations, warranties and statements as to factual matters of officers and
other representatives of the Company. Our opinion expressed below is subject to
the qualification that we express no opinion as to any law other than the laws
of the State of Delaware and the federal laws of the United States of America.
Without limiting the foregoing, we express no opinion with respect to the
applicability thereto or effect of municipal laws or the rules, regulations or
orders of any municipal agencies within any such state.
Based upon and subject to the foregoing qualifications, assumptions and
limitations and the further limitations set forth below, it is our opinion that
(i) the Shares already issued have been duly authorized and validly issued and
are fully paid and non-assessable and (ii) the Shares to be issued upon exercise
of any of the Warrants have been duly authorized and, when issued and paid for
in accordance with the terms of the Warrants, will be validly issued, fully paid
and non-assessable.
We hereby consent to the filing of this letter as an exhibit to the
Registration Statement and to all references to our firm included in the
Registration Statement as of the date hereof. In giving such consent, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
KELLEY DRYE & WARREN LLP
By: /s/ Jay R. Schifferli
______________________________________
A Partner