February 27 1997
ILX Incorporated
2111 East Highland, Suite 210
Phoenix, Arizona 85016
Gentlemen:
We have acted as counsel to ILX Incorporated, an Arizona corporation,
(the "Company") in connection with its registration of 8,456,988 shares of its
common stock including shares of common stock issuable upon exercise of certain
options (the "Common Stock") currently held by certain third parties (the
"Current Holders"). As such counsel, we have examined and relied upon the
following documents:
1. Form S-3 Registration Statement filed with the Securities and
Exchange Commission ("SEC") on February 27, 1997, as amended
prior to its effective date (the "Registration Statement");
2. Resolutions of the Company's Board of Directors authorizing the
issuance of the Common Stock (the "Resolutions").
3. The Company's Articles of Incorporation certified by the Arizona
Corporation Commission;
4. The Company's Bylaws certified by the Company's Secretary;
5. A specimen of the certificates of the Common Stock;
6. A certificate of the Company's Chief Financial Officer regarding
payments made for the Common Stock and the number of shares of
ILX Common Stock that have been issued and are currently
outstanding;
7. A representation from the Company, satisfactory to us, that the
Company has not been advised that any stop order suspending the
effectiveness of the Registration Statement has been issued or
that any proceedings for that purpose have been initiated or are
pending or contemplated under the Securities Act of 1933, as
amended (the "Act"); and
Exhibit 05
ILX Incorporated
February 27, 1997
Page 2
8. The letter of Deloitte and Touche dated February 25, 1997
relating to the financial statements in, or incorporated in, the
Registration Statement and other matters referred to therein.
We also have examined and relied upon such certificates of public
officials and others and such other documents as we have deemed relevant and
necessary as a basis for the opinion set forth below. We also exclusively have
relied upon and assumed the accuracy of the representations and warranties as to
factual matters made by various officers of the Company. We exclusively have
relied upon certificates of the Arizona Corporation Commission that the Company,
as a domestic corporation, is in good standing and as to the current form of
articles of incorporation, and on representations that the Company was in good
standing at all times when issuing the Common Stock. We have not made any
independent review or investigation of orders, judgments, rules or other
regulations or decrees by which the Company or any of its respective properties
may be bound or of suits, investigations or proceedings, if any, pending or
threatened against the Company. For purposes of this opinion, we have not
reviewed or examined any documents other than those referred to above, and have
not undertaken or conducted any independent investigation or other inquiry
whatsoever, except as may be specifically stated herein.
Based upon the foregoing, and subject to the limitations, assumptions
and qualifications stated below, we are of the opinion that the Common Stock,
when first issued by the Company to the Current Holders or their predecessor
shareholders, legally was, or would be, issued under Arizona's General
Corporation Law by the Company, and was, or would be, when first issued by the
Company, fully paid and non-assessable.
Our opinion is subject to the following assumptions, qualifications,
limitations and exceptions:
1. In rendering the opinion expressed above with respect to
the Common Stock, we have assumed without investigation, with respect to each
offer, issuance, sale and delivery by the Company of shares of the Common Stock,
each purchase of such shares by the purchaser thereof, each purchase or other
acquisition by the Company of shares of its capital stock, each sale or other
disposition by the seller thereof, each offer, reissuance, resale, and delivery
by the Company of shares so purchased or acquired, and each purchase by the
purchaser thereof (which transactions, including any written and oral agreements
pertaining thereto and the execution, delivery, consummation and performance of
such agreements, collectively are referred to for purposes of this paragraph as
"Transactions," and, individually, a "Transaction") that:
(a) At the time thereof, at all times subsequent thereto, and
as to the Company or any other party, such Transactions did not
violate, result in a breach of, or conflict
ILX Incorporated
February 27, 1997
Page 3
with any law, rule, regulation, order, judgment, or decree, in each
case whether then or subsequently in effect;
(b) At the time thereof and at all times subsequent thereto,
the persons authorizing each such Transaction for the Company or for
any such other party were acting pursuant to properly granted authority
and did not violate any fiduciary or other duty owed by them;
(c) No event has taken place subsequent to any such
Transaction, or will take place, that would cause any such Transaction
not to comply with any law, rule, regulation, order, judgment, decree,
or duty, or that would permit the Company or any such other party at
any time thereafter to cancel, rescind, or otherwise avoid such
Transaction;
(d) There was no misrepresentation, omission or deceit by the
Company, any such other party, or any other person or entity in
connection with any such Transaction;
(e) Each such Transaction is governed by the laws of the State
of Arizona (without giving effect to provisions regarding conflict of
laws);
(f) Each party to each such Transaction:
(i) if not a natural person, (A) had duly and validly
taken all necessary corporate or other proceedings of the
directors (or a committee of directors), stockholders,
partners, members and all other bodies to authorize the
Transaction and (B) did not, at the time of such Transaction
or thereafter, by entering or consummating such Transaction,
violate or cause a breach of any term of its Articles of
Incorporation, bylaws, or other governing document; and
(ii) whether or not a natural person, (A) had the
power, authority, and capacity to execute, deliver, consummate
and perform each such Transaction, and (B) duly authorized
each such Transaction, and each such Transaction constituted
and now constitutes the legal, valid, and binding obligation
of such other party, and was and is enforceable as to such
other party in accordance with its terms;
(g) At the time thereof and at all times subsequent thereto,
each such Transaction did not, does not now, and will not violate,
result in a breach of, conflict with, or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate
or call a default under any term of any contract, agreement,
instrument, lease, license, arrangement or understanding to which the
Company or any such other party is
ILX Incorporated
February 27, 1997
Page 4
or becomes a party or to which any of them or any of their respective
properties, assets, or security holders are or will be subject;
(h) Each document pertaining to a Transaction was duly
executed, delivered, and performed by the Company and each other party
to such Transaction;
(i) Each oral agreement pertaining to a Transaction was duly
performed by the Company and each other party to such Transaction,
constituted the legal, valid, and binding obligation of the Company and
each other party to such Transaction, and was enforceable as to the
Company and each other party to such Transaction in accordance with its
terms;
(j) Any share or other security of another corporation
received by the Company in exchange for shares of capital stock of the
Company or in exchange for securities convertible into, entitling the
holder thereof to purchase, or exercisable in exchange for shares of
capital stock of the Company, in any case in a stock-for-stock
acquisition, merger, exchange, recapitalization or otherwise, was
validly authorized, validly issued, fully paid, and non-assessable;
(k) Stock certificates representing the Common Stock were
prepared properly, and the officers of the Company purporting to sign
the stock certificates either manually or by facsimile in fact executed
the certificates (and, if facsimile signatures were used, such
certificates were properly countersigned); and
(l) The consideration for the issuance of the Common Stock was
paid to the Company in cash, in other property (whether tangible or
intangible) or in labor or services actually performed for the Company,
and such consideration did not include promissory notes or promises of
future services.
As used in this paragraph, the term "Company" means the Company and its
predecessors, as well as corporations the stock of which the Company has
obtained in exchange for shares of capital stock of the Company or in exchange
for securities convertible into, entitling the holder thereof to purchase, or
exercisable in exchange for, shares of capital stock of the Company, in any
case, in a stock-for-stock acquisition, merger, exchange recapitalization, or
otherwise.
2. We have assumed without investigation the authenticity of
any document submitted to us as an original, the conformity to the original of
any document submitted to us as a copy, the authenticity of the original of such
latter documents, the conformity to the executed documents of any documents
submitted to us as the form to be executed, the genuineness of all signatures,
and the legal capacity of natural persons. We have assumed
ILX Incorporated
February 27, 1997
Page 5
without investigation that any certificate, representation (oral or otherwise),
telegram, telex, telecopy or other document on which we have relied, whether or
not given or dated earlier than the date hereof, is authentic and remains
accurate insofar as relevant to this opinion from such earlier date through and
including the date hereof. For purposes of this opinion, we have not reviewed or
examined any other documents and have not undertaken or conducted any
independent investigation or other inquiry whatsoever, except as may be
specifically stated herein. References herein to knowledge of any kind encompass
only the actual present knowledge of only those present attorneys of the
undersigned (acting in such capacity) who have given substantive attention to
the Registration Statement.
3. We have assumed without investigation the due authorization
and execution of the Resolutions by the Company's Board of Directors to the
extent such authorization and execution is a prerequisite to the effectiveness,
validity, binding nature or enforceability of the Resolutions and issuance of
the Common Stock; neither the execution and delivery by the Company, nor the
issuance of the Common Stock, conflicts with or results in a breach of, or
constitutes a default under, any agreement or other obligation to which the
Company is a party or by which it or its property is bound, or results in the
creation or imposition of any encumbrance upon any of its properties; the
Company has obtained all necessary governmental consents, authorizations,
approvals, permits or certificates that were and are required as a condition to
its authorizing and issuing the Common Stock; no fraud or duress has occurred in
connection with the promulgation of the Resolutions; and the Company has not
revoked or modified the Resolutions.
4. We express no opinion as to the possible impact upon the
matters opined upon of the laws, orders or judgments of any jurisdiction other
than United States federal law, and the local law of the State of Arizona
(without reference to Arizona choice-of-law rules). We express no opinion as to
compliance with any antifraud law, rule or regulation relating to securities or
to the sale or issuance thereof.
5. Our opinion is limited to the matters set forth herein and
to the date hereof. No opinion may be inferred or implied beyond the matters
expressly stated herein. Our opinion is applicable only to the addressee hereof
and shall not apply to any other person, firm, corporation or other entity.
6. The opinion expressed herein is subject to bankruptcy,
insolvency, reorganization, arrangement, receivership, conservatorship,
moratorium, fraudulent conveyance or other state and federal laws now or
hereafter affecting the enforcement of creditors' rights in general. We render
no opinion concerning the validity or enforceability of purported waivers, or
provisions regarding insolvency, bankruptcy, or related provisions.
ILX Incorporated
February 27, 1997
Page 6
7. Our opinion is based upon existing laws, rules and
regulations, and we undertake no obligation to advise you of changes that may be
brought to our attention after the date hereof.
We hereby consent to the filing of this opinion, or copies thereof, as
an exhibit to the Registration Statement. In giving this consent, we do not
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933 or the rules and regulations of the SEC
thereunder.
We are furnishing this opinion to you solely for your use in connection
with the Registration Statement. Except as stated in the prior paragraph, our
opinion is not to be used, reproduced or filed publicly or used by any other
person without our prior written consent, nor shall it be used, quoted,
circulated, or otherwise referred to for any other purposes.
Very truly yours,
/s/ COLOMBO & BONACCI, P.C.
COLOMBO & BONACCI, P.C.