[Letterhead of Theodore Goddard]
The Dialog Corporation plc
The Communications Building
48 Leicester Square
London
WC2H 7DB
18 June 1999
Dear Sirs,
1 INTRODUCTION
1.1 We are the solicitors to The Dialog Corporation plc (the
"COMPANY") a public company incorporated with limited
liability in England.
1.2 We are writing to you with our opinion in connection with
the filing with the Securities and Exchange Commission
(the "COMMISSION") of the Company's Registration Statement
on Form S-8 (the "REGISTRATION STATEMENT") under the
Securities Act of 1933, as amended (the "SECURITIES ACT")
relating to in aggregate 18,086,000 ordinary shares of 1
pence each in the capital of the Company ("ORDINARY
SHARES") which may be issued pursuant to the exercise of
the following options granted or available to be granted
over the following number of American Depositary Shares
("ADSs"):-
1.2.1 6,250 ADSs issuable by the Company upon exercise of an
option granted to Mr Roger Summit under a non-statutory
stock option outside the Company's 1997 Share Option Plan
(the "1997 PLAN") but subject to the terms and conditions
of the 1997 Plan pursuant to an agreement dated 12 December
1997 between the Company and Mr Roger Summit (the "SUMMIT
AGREEMENT") and 6,250 ADSs issuable by the Company on
exercise of an option granted to Mr Summit under a
non-statutory stock option outside the 1997 Plan and dated
1 April 1999 (the "SUMMIT OPTION");
1.2.2 530,125 ADSs issuable by the Company upon the exercise of
options granted pursuant to the 1997 Plan;
1.2.3 67,720 ADSs issuable by the Company upon the exercise of
options granted pursuant to the Company's 1998 Employee
Stock Purchase Plan (the "1998 PLAN");
1.2.4 6,711 ADSs issuable by the Company upon the exercise of an
option granted pursuant to an option agreement between the
Company (1) and Richard Swank (2) dated 14 November 1997
and 4,232 ADSs issuable by the Company upon the exercise
of an option granted pursuant to an option agreement
between the Company (1) and Richard Swank (2) dated 8
September 1998 (the "SWANK OPTION AGREEMENTS");
1.2.5 3,900,212 ADSs relating to options or other rights to
purchase available to be granted under the 1997 Plan and
1998 Plan.
1.3 The headings used in this letter are for ease of reference
only.
2 DOCUMENTS EXAMINED
2.1 For the purpose of this opinion, we have examined the
following copy documents provided by the Company:-
2.1.1 the rules of the 1997 Plan as at the date hereof;
2.1.2 the rules of the 1998 Plan as at the date hereof;
2.1.3 the form of Purchase Plan Offering Document to be used in
connection with the 1998 Plan (the "1998 PURCHASE PLAN
OFFERING DOCUMENT");
2.1.4 the Summit Agreement;
2.1.5 the Summit Option;
2.1.6 the Swank Option Agreements;
2.1.7 minutes of a meeting of the board of directors of the
Company passed on 13th November 1997 resolving, inter
alia, to:
(a) adopt and approve the rules of the 1997 Plan;
(b) grant the following options pursuant to the 1997
Plan subject to closing of the acquisition pursuant
to a Stock Purchase Agreement dated 29 September
1997 between the Company and Knight - Ridder
Business Information Services, Inc. ("KR
INFORMATION ACQUISITION AGREEMENT");
NAME NUMBER OF ADSs
Jeffery S Galt 25,000
Marck A Shipley 25,000
Peter Papano 12,500
(c) approve and grant an option to Richard Swank to
purchase ADSs pursuant to the Swank Option
Agreement dated 14 November 1997;
(d) authorise the Renumeration Committee to grant
options pursuant to the 1997 Plan;
2.1.8 minutes of a meeting of the board of directors of the
Company passed on 25 March 1998 and 25 June 1998 approving
the rules of the 1998 Plan and the Purchase Plan Offering
Document;
2.1.9 notice of an extraordinary general meeting of the Company
held on 10 November 1997 (the "EGM NOTICE");
2.1.10 notice of an annual general meeting of the Company held on
16 June 1998 (the "AGM NOTICE"):
2.1.11 minutes of the Meeting referred to in paragraph 2.1.8
above signed by Marmaduke Hussey recording that all of the
resolutions referred to in the EGM Notice had been validly
passed (the "EGM RESOLUTIONS") and a certified copy of the
minutes of the meeting referred to in paragraph 2.1.9
above certified by Jonathan Ball, the Company Secretary,
recording that all of the resolutions referred to in the
AGM Notice had been validly passed (the "AGM
RESOLUTIONS");
2.1.12 minutes of meetings of the Remuneration Committee of the
Company held on:-
(a) 12 December 1997;
(b) 9 April 1998;
(c) 30 April 1998;
(d) 5 June 1998;
(e) 8 September 1998;
(f) 8 October 1998; and
(g) 1 April 1999;
2.1.13 two sets of minutes of meetings of the board of directors
of the Company each passed on 17 March 1999 ratifying the
grant of options of the initial offering and the second
offering under the 1998 Plan;
2.1.14 board minutes of a meeting of the board of directors of
the Company passed on 24 March 1999 ratifying execution of
the Swank Option Agreement dated 8 September 1998 and
approving the third offering under the 1998 Plan;
2.1.15 resolutions of the remuneration committee of the board of
directors of the Company dated on 1 April 1999; and
2.1.16 a draft Registration Statement as set out in the Annexure
attached to this letter.
2.2 We have also examined a copy of the Memorandum and
Articles of Association of the Company current at the date
hereof.
2.3 We have examined no other contracts, instruments or other
documents entered into by or affecting the Company or any
corporate records of the Company other than those
specified in this paragraph 2 and paragraph 4 below and
have not made any other enquiries concerning the Company.
3 GENERAL ASSUMPTIONS AND CAVEATS
3.1 In giving this opinion, we have assumed;
3.1.1 each ADS represents four Ordinary Shares;
3.1.2 the genuineness of all signatures;
3.1.3 the conformity to original documents of all documents
submitted to us as copies, the authenticity of all
certifications of such copies and the authenticity and
completeness of such original documents;
3.1.4 the legal capacity of natural persons;
3.1.5 the veracity, accuracy and completeness of all statements
or opinions as to matters of fact made by an officer or
officers of the Company (whether in writing or orally) to
us and upon which we have relied without making any
further enquiry in giving this opinion;
3.1.6 that the resolutions of the board of directors of the
Company referred to at paragraphs 2.1.7, 2.1.8, 2.1.12,
2.1.13, 2.1.14 and 2.1.15 above were duly passed at
properly convened and held meetings of such directors
validly holding office and that duly qualified quorums of
such directors voted in favour of such resolutions and
that any provisions contained in the Companies Act 1985
(as amended) (the "COMPANIES ACT") and/or the Company's
Articles of Association relating to the declaration of
directors' interests or the power of interested directors
to vote were duly observed and that such resolutions have
not been amended or rescinded and will at all times in the
future remain in full force and effect;
3.1.7 that the Memorandum and Articles of Association of the
Company as referred to at paragraph 2.2 above have not
been amended;
3.1.8 that the provisions of the Shipley Agreement and the Swank
Option Agreements and the options granted pursuant to the
1997 Plan and the 1998 Plan constitute legally binding and
enforceable obligations of the parties thereto under all
applicable laws;
3.1.9 that the EGM Resolutions were duly passed at a properly
convened Extraordinary General Meeting of the Company on
10 November 1997, that a quorum of members was present
throughout the meeting and that the requisite majority
voted in favour of approving the resolutions and that such
resolutions have not been and will not be amended or
rescinded and will remain at all times in the future in
full force and effect;
3.1.10 that the AGM Resolutions were duly passed at a properly
convened Annual General Meeting of the Company on 16 June
1998, that a quorum of members was present throughout the
meeting and that the requisite majority voted in favour of
approving the said resolutions and that such resolutions
numbered 7, 8 and 9 in the AGM Notice have not been and
will not be amended or rescinded at any time in the future
and will remain at all times in the future in full force
and effect;
3.1.11 that no additional matters would have been disclosed by
company searches of the file of the Company maintained by
the Registrar of Companies (as defined in paragraph 4.1
below) being carried out since the carrying out of the
search referred to in paragraph 4.1 below;
3.1.12 that the grant of options referred to in paragraphs 1.2.1
to 1.2.4 (inclusive) have been and will at the date of
issue of any Ordinary Shares pursuant to the exercise of
the options referred to in those paragraphs be validly
granted under the Plan or agreement (as the case may be)
under which they are purported to be granted; and
3.1.13 that the directors of the Company have approved the grant
and the terms of the Summit Option.
3.2 In giving this opinion we have also assumed that:-
3.2.1 at the date of grant of the options referred to in
paragraphs 1.2.1 to 1.2.4 (inclusive):-
3.2.1.1 the Company had sufficient duly created and duly
authorised but unissued Ordinary Shares for the
options in question;
3.2.1.2 the directors of the Company had the requisite
authority to grant those options and were
empowered to grant those options as if Section 89
of the Companies Act did not apply to any such
grant; and
3.2.1.3 the directors of the Company or a duly authorised
Committee thereof passed the necessary resolutions
to grant these options.
3.2.2 at the date of grant of any option or other rights
referred to in paragraph 1.2.5 and at the date of issue of
any of the Ordinary Shares pursuant to the exercise of
options granted under the 1997 Plan and the 1998 Plan, the
Swank Option Agreements and the Summit Agreement (together
the "OPTION DOCUMENTS"):-
3.2.2.1 the Company will have sufficient duly created and
duly authorised but unissued Ordinary Shares;
3.2.2.2 the directors of the Company will have the
requisite authority to grant the options and allot
the Ordinary Shares and will be empowered to grant
such options and allot such Ordinary Shares as if
Section 89 of the Companies Act did not apply to
any such grant or allotment;
3.2.2.3 options and other rights referred to in paragraph
1.2.5 will have been validly granted under the
1997 Plan and/or the 1998 Plan (as the case may
be);
3.2.2.4 options referred to in paragraph 1.2 will be
validly exercised;
3.2.2.5 such Ordinary Shares will be duly issued in
accordance with the relevant Option Document;
3.2.2.6 the full subscription price payable for the issue
of such Ordinary Shares shall have been paid to
the Company in cleared funds;
3.2.2.7 the directors of the Company or a duly authorised
Committee thereof will have passed and not amended
or revoked the necessary resolutions to grant the
relevant options and allot and issue such Ordinary
Shares; and
3.2.2.8 the resolutions referred to in paragraph 3.2.1.3
above will not have been amended or revoked;
3.2.3 there will be no restrictions imposed otherwise than
pursuant to the laws of England as at the date hereof or
the current Memorandum and Articles of Association of the
Company, affecting the ability of the Company to issue
Ordinary Shares; and
3.2.4 the Company will not have become insolvent, subject to
liquidation or winding-up procedures, receivership or
administration or struck-off the register or otherwise
become subject to any legal disability to issue shares in
the capital of the Company.
Our opinion will not apply if the price payable for the issue of any
Ordinary Share is less than the nominal value of such Ordinary Share.
We have not taken any steps to verify any of the above assumptions.
3.3 Apart from the knowledge of those members of this firm who
have had the conduct of the preparation of this opinion,
this opinion is not given on the basis of knowledge (if
any) as to factual matters concerning the Company or any
of its subsidiaries which may be possessed by any other
member of this firm.
3.4 We are qualified to practise in the laws of England and
Wales only and we are not expert in, and we neither
express nor imply any opinion as to, the laws of any
jurisdiction other than the laws of England and Wales as
applied by the courts of competent jurisdiction of England
and Wales as at the date hereof. In particular, but
without limitation, we have made no investigation into the
federal laws of the United States or the laws of any state
in the United States (or of any political or judicial
subdivision thereof) (as to which we express no opinion)
nor do we give any opinion on the Company's ADSs or
American Depositary Receipts referred to in any of the
documents described in paragraph 2.1.
3.5 We have made no investigation and express no opinion as to
whether the Company has obtained all and any necessary
consents, approvals or licences of any court or
governmental agency of any applicable jurisdiction outside
the United Kingdom of Great Britain and Northern Ireland
(the "UNITED KINGDOM") for the performance of its
obligations under the Option Documents;
3.6 We have not investigated whether the Company is or will by
reason of the matters contemplated by the Option Documents
be in breach of any of its obligations under any
agreement, document, deed or instrument except such
documents as stated herein.
3.7 We have not been involved in the drafting or preparation
of the Registration Statement and therefore express no
opinion as to the effectiveness of it to achieve the
purposes contemplated by it.
3.8 Our opinion is subject to the provisions of the Emergency
Laws (Re-enactments and Repeals) Act 1964 (and directions
issued by H.M. Treasury pursuant thereto) which contain
certain restrictions in relation to securities held by
residents of Iraq.
4 SEARCHES AND ENQUIRIES
4.1 We carried out on 7 June 1999 a search of the public
file of the Company, being the file maintained in respect
of the Company by the Registrar of Companies of England
and Wales (the "REGISTRAR OF COMPANIES") in accordance
with the Companies Act. It should be noted that such file
is not necessarily complete or up to date and we have not
conducted any further search since such date. We have
examined and relied upon such of the records, documents,
certificates and instruments as shown thereby as in our
judgment are necessary or appropriate to enable us to give
the opinions expressed in this letter.
4.2 We have made no enquiry of the High Court of Justice in
England and Wales (the "HIGH COURT") as to whether any
petitions for winding-up or administration have been
presented and are outstanding against the Company. We
have assumed for the purpose of this Opinion that no such
petition has been presented, resolution passed or order or
appointment made.
4.3 We have carried out no other searches and enquiries other
than that specified in paragraph 4.1.
5 THE OPINION
Based upon and relying upon, and subject to the foregoing, we are of the
opinion that the Ordinary Shares to be issued pursuant to the exercise
of options granted under the Option Documents will be validly issued and
will be fully paid or credited as fully paid.
6 CONFIDENTIALITY AND GOVERNING LAW
6.1 We have acted for the Company alone and this opinion is
for the use and benefit of the Company only in connection
with filing of the Registration Statement with the
Commission under the Securities Act. It shall not be
disclosed or communicated to any other party or relied on
by any other party or for any other purpose or quoted or
referred to in any public document, or filed with any
governmental agency or other person without, in each such
case, our prior written consent.
6.2 We hereby consent to the filing of this opinion with the
Commission as Exhibit 5.1 to the Registration Statement
and to the use of our name in the Registration Statement
in the form and context to which it appears in the
Annexure.
6.3 The terms of this opinion shall be governed by and
construed in accordance with the laws of England.
Yours faithfully,
Theodore Goddard