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POTTER ANDERSON & CORROON LLP
1313 NORTH MARKET STREET
P.O. BOX 951
WILMINGTON, DELAWARE 19899-0951
302 984-6000
302 658-1192 FAX
www.pacdelaware.com
October 17, 2000
The Board of Directors
qinnet.com, Inc.
450 North Brand Boulevard
6th Floor
Glendale, CA 91203
Re: Stock Options Pursuant to 2000/A Stock Option Plan
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Dear Ladies and Gentlemen:
We have acted as special Delaware counsel to
qinnet.com, Inc., a Delaware corporation (the "Company") in
connection with the grant of 212,500 stock options (the
"Options") pursuant to the Company's 2000/A Stock Option Plan,
dated September 20, 2000 (the "Plan"). Upon exercise, each
Option entitles the holder thereof to purchase one share of the
Company's Common Stock, par value $0.00001 per share (the "Common
Stock"), at a purchase price of U.S.$10.00 per share, subject to
adjustment.
In our capacity as special Delaware counsel, we have
reviewed only the following documents and have made no other
investigation or inquiry:
1. The Certificate of Incorporation of the Company,
as amended and in effect as of the date hereof;
2. The Bylaws of the Company, as amended and in
effect as of the date hereof;
3. The Plan;
4. Stock Option Agreements (the "Option Agreements")
dated as of September 20, 2000 between the Company and each of
the following: James Jiang, Bo Qu, Nancy Qin and William
Gladstone (the "Consultants");
5. Two forms of Written Consent to Action Without
Meeting of the Directors of the Company, each dated as of
September 20, 2000, pursuant to which the Board of Directors
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The Board of Directors
October 17, 2000
Page 2
of the Company (a) adopted the Plan and (b) granted options to
purchase common stock pursuant to the Plan to each of the
Consultants;
6. A Short Form Certificate of Good Standing for the
Company dated October 6, 2000, obtained from the Secretary of
State of the State of Delaware;
7. A Certificate of the Secretary of the Company (the
"Officer's Certificate") dated September 20, 2000;
For purposes of this opinion we have not reviewed any
documents other than the documents listed in (1) through (7)
above. In particular, we have not conducted any independent
investigation beyond our review of the documents listed in (1)
through (7) above, and we have not reviewed any document (other
than the documents listed in (1) through (7) above) that is
referred to or incorporated by reference into the documents
reviewed by us. We have assumed that there exists no provision
in any document that we have not reviewed that is inconsistent
with or would otherwise alter the opinion stated herein.
In addition, we have conducted no independent factual
investigation of our own but rather have relied solely on the
foregoing documents, the statements and information set forth
therein and the additional matters related or assumed therein,
all of which we have assumed to be true, complete, and accurate.
Based upon the foregoing and upon an examination of
such questions of Delaware law as we have considered necessary or
appropriate, and subject to the assumptions, exceptions,
limitations, and qualifications set forth below, we advise you
that, in our opinion:
1. The shares of Common Stock issuable upon exercise
of the Options (a) have been duly authorized and (b) upon
issuance in connection with exercise of the Options, and subject
to payment of the consideration therefor, the due endorsement and
delivery of certificates therefor, and the reflection thereof in
the stock records of the Company, all in accordance with the
terms of the Plan and the Option Agreements, will be validly
issued, fully paid, and non-assessable.
The foregoing opinion is subject to the following
assumptions, exceptions, limitations, and qualifications:
A. The foregoing opinion is limited to the laws of
the State of Delaware presently in effect. We express no opinion
as to the laws, rules, or regulations of any other jurisdictions
including, without limitation, the federal laws of the United
States and rules and regulations relating thereto. In addition,
we express no opinion as to the securities laws of the State of
Delaware and the rules and regulations relating thereto.
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The Board of Directors
October 17, 2000
Page 3
B. We have assumed that all signatures on documents
and instruments examined by us are genuine, that all documents
and instruments submitted to us as originals are authentic, and
that all documents and instruments submitted to us as copies or
drafts of documents to be executed are complete, accurate, and
authentic copies or drafts that conform (or upon execution of the
originals, will conform) to authentic and executed originals,
which facts we have not independently verified.
C. The enforceability of the Option Agreements and
the enforceability of the rights and obligations of the parties
thereunder are subject to and may be limited by (i) applicable
bankruptcy, insolvency, moratorium, fraudulent conveyance,
fraudulent transfer, and similar laws relating to or affecting
creditors rights generally, including, without limitation, the
Delaware Uniform Fraudulent Transfers Act, the provisions of the
United States Bankruptcy Code, and the Delaware insolvency
statutes, (ii) principles of equity, including, without
limitation, concepts of materiality, good faith, fair dealing,
conscionability, and reasonableness, and the possible
unavailability of specific performance or injunctive relief
(regardless of whether such enforceability is considered in a
proceeding in equity or at law), and (iii) applicable law
relating to fiduciary duties.
D. We have assumed the due execution and delivery by
each signatory or party thereto of each document or agreement
examined by us, including, without limitation, due execution and
delivery of the Option Agreements and the forms of Written
Consent. We have further assumed the legal capacity of any
natural person who is a signatory to any agreement, certificate,
or other document examined by us.
E. We have assumed (i) that each of the statements
made and certified in the Officer's Certificate was true and
correct when made, has at no time since being made and certified
become untrue or incorrect, remains true and correct on the date
hereof, and will be true and correct on the date the Company is
or becomes obligated to issue shares of Common Stock upon
exercise of the Options, and (ii) that the written consents to
action without meeting of the directors referenced in the
Officer's Certificate have not been amended, modified, or revoked
since the time of their adoption, remain in full force and effect
on the date hereof, and will remain in full force and effect on
the date the Company is or becomes obligated to issue shares of
the Common Stock upon exercise of the Options.
F. We have assumed that (i) at the time the Company
is or becomes obligated to issue any shares of Common Stock upon
exercise of the Options, the Company will have adequate
authorized and unissued shares of Common Stock to fulfill such
obligations; and (ii) at the time the Company is or becomes
obligated to issue any shares of Common Stock upon exercise of
the Options, the per share purchase price for the Common Stock
(pursuant to the terms of the Option Agreements and as adjusted
pursuant thereto) will be at least equal to the per share par
value of the Common Stock.
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The Board of Directors
October 17, 2000
Page 4
G. The opinions expressed in this letter are rendered
as of the date hereof and are based on our understandings and
assumptions as to present facts, and on the application of
Delaware law as the same exists on the date hereof. We assume no
obligation to update or supplement this opinion letter after the
date hereof with respect to any facts or circumstances that may
hereafter come to our attention or to reflect any changes in the
facts or law that may hereafter occur or take effect.
We understand that you wish to file this opinion as an
Exhibit to the Registration Statement on Form S-8 filed by the
Company and covering the shares of Common Stock issuable upon the
exercise of the Options and we consent to such filing and to the
inclusion of this opinion in such Registration Statement. This
opinion is rendered solely for your benefit in connection with
the transactions herein described and, except as provided in the
preceding sentence, may not, without our prior written consent,
be furnished or quoted to any other person or entity.
Very truly yours,
/s/ Potter Anderson & Corroon LLP
JFG/MAP:smd/438454v2
