Sino Splendid Holdings Limited — Proxy Solicitation & Information Statement 2003

Apr 3, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

This circular is for information purposes only and does not constitute an invitation or offer to acquire or subscribe for securities.

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in HONGKONG.COM CORPORATION , you should at once hand this circular to the purchaser(s) or the transferee(s) or to the bank, stockbroker or other agent through whom the sale was effected for transmission to the purchaser(s) or the transferee(s).

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this circular.

HONGKONG.COM CORPORATION 香港網國際網絡公司 [*]

(incorporated in the Cayman Islands with limited liability)

DISCLOSEABLE TRANSACTION PURCHASE OF 100% INTEREST IN PALMWEB INC.

This circular will remain on the GEM website at www.hkgem.com on the “Latest Company Announcements” page for at least 7 days from the date of its posting.

3rd April, 2003

* for identification purpose only

CHARACTERISTICS OF GEM

GEM has been established as a market designed to accommodate companies to which a high investment risk may be attached. In particular, companies may list on GEM with neither a track record of profitability nor any obligation to forecast future profitability. Furthermore, there may be risks arising out of the emerging nature of companies listed on GEM and the business sectors or countries in which the companies operate. Prospective investors should be aware of the potential risks of investing in such companies and should make the decision to invest only after due and careful consideration. The greater risk profile and other characteristics of GEM mean that it is a market more suited to professional and other sophisticated investors.

Given the emerging nature of companies listed on GEM, there is a risk that securities traded on GEM may be more susceptible to high market volatility than securities traded on the main board of the Stock Exchange and no assurance is given that there will be a liquid market in the securities traded on GEM.

The principal means of information dissemination on GEM is publication on the Internet website operated by the Stock Exchange. Listed companies are not generally required to issue paid announcements in gazetted newspapers. Accordingly, prospective investors should note that they need to have access to the GEM website in order to obtain up-todate information on GEM-listed issuers.

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CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Appendix — General information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16

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DEFINITIONS

In this circular, unless the context otherwise requires, the following words and expressions have the following meanings:

“$” or “US$”	means the U.S. dollar, the legal currency of the U.S.;
“Agreement”	means the legally binding agreement dated 17th
	March, 2003 entered into between CMMC, Palmweb
	Inc. and the Sellers for the purchase of the Sale
	Shares;
“Beijing Newpalm”	means Beijing Newpalm Information Technology Co.
	Ltd.（北京掌中萬維科技有限公司）, a PRC company
	currently owned by Xiao Xiangyang, John and Du
	Yanming, Victor;
“Beijing Wisecom”	means Beijing Wisecom Information Technology Co.
	Ltd.（北京瑞智通聯科技有限公司）, a PRC company
	currently owned by Xiao Xiangyang, John and Du
	Yanming, Victor;
“Board”	means the board of directors of the Company;
“Budget”	means the financial plan for the Determination Period
	as prepared and delivered by Palmweb Inc. and
	accepted and agreed by the Company;
“Closing”	has the meaning given to such term in the sub-section
	titled “Completion” in the section headed “THE
	AGREEMENT DATED 17TH MARCH, 2003”;
“Closing Date”	2nd April, 2003, being the date of the Closing;
“CMMC”	CDC Mobile Media Corporation;
“Company”	means hongkong.com Corporation, a company
	incorporated in the Cayman Islands, the shares of
	which are listed on GEM;
“Consideration”	has the meaning given to such term in the sub-section
	titled “Consideration and Payment Terms” in the
	section headed “THE AGREEMENT DATED 17TH
	MARCH, 2003”;
“Determination Period”	means the period from 1st January, 2003 to 31st
	December, 2004;

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DEFINITIONS

“Director(s)”	means the director(s) of the Company;
“EIP”	means the 2001 Equity Incentive Plan of Palmweb
	Inc. whereby officers and employees of Palmweb Inc.
	have been granted options to acquire ordinary shares
	in Palmweb Inc.;
“Employee Share Options”	means options to purchase ordinary shares in Palmweb
	Inc., issued under and in accordance with the EIP;
“GAAP”	means generally accepted accounting principles of the
	U.S.;
“GEM”	the Growth Enterprise Market of the Stock Exchange;
“GEM Listing Rules”	means The Rules Governing the Listing of Securities
	on GEM;
“Group”	The Company and its subsidiaries;
“HK$”	means Hong Kong dollar, the legal currency of Hong
	Kong;
“Hong Kong”	means the Hong Kong Special Administrative Region
	of the PRC;
“Institutional Sellers”	has the meaning given to such term in the sub-section
	titled “Parties” under the section headed “THE
	AGREEMENT DATED 17TH MARCH, 2003”;
“Latest Practicable Date”	31st March, 2003, being the latest practicable date
	prior to the printing of this circular for the purpose of
	ascertaining certain information for the inclusion in
	this circular;
“Management Sellers”	has the meaning given to such term in the sub-section
	titled “Parties” under the section headed “THE
	AGREEMENT DATED 17TH MARCH, 2003”;
“Newpalm (China)”	means Newpalm (China) Information Technology Co.
	Ltd.（掌中萬維（中國）信息科技有限公司）, a PRC
	wholly foreign-owned enterprise wholly owned by
	Palmweb Inc.;

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DEFINITIONS

“Non-Management Sellers”	means, collectively, the Institutional Sellers and the
	Other Sellers;
“Option Holder”	means each of the employees who holds Employee
	Share Options, whether vested or unvested, granted
	pursuant to the EIP;
“Other Sellers”	has the meaning given to such term at the page in the
	sub-section titled “Parties” under the section headed
	“THE AGREEMENT DATED 17TH MARCH, 2003”;
“PRC”	means the People’s Republic of China;
“Pre-IPO Scheme”	means the pre-IPO share option scheme adopted by
	the Company on 25th February, 2000;
“Post-IPO Scheme”	means the post-IPO share option scheme adopted by
	the Company on 25th February, 2000;
“Related Entities”	means Beijing Newpalm and Beijing Wisecom;
“Rmb”	means Renminbi, the legal currency of the PRC;
“Sale Shares”	means those shares (including the ordinary shares
	underlying the options granted by Palmweb Inc.
	pursuant to the EIP) representing 100% of the total
	issued and outstanding equity in the capital of
	Palmweb Inc. on a fully diluted basis as of Closing;
“SDI Ordinance”	means the Securities (Disclosure of Interests)
	Ordinance Chapter 396 of the Laws of Hong Kong;
“Sellers”	has the meaning given to such term in the sub-section
	titled “Parties” under the section headed “THE
	AGREEMENT DATED 17TH MARCH, 2003”;
“Selling Shareholder(s)	means the representative(s) defined as such in the
Representative”	Agreement as nominated by the Sellers;
“Share(s)”	means share(s) of HK$0.10 each in the capital of the
	Company;
“Shareholders”	means the shareholders of the Company;

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DEFINITIONS

“SMS” means short message service; “Stock Exchange” means The Stock Exchange of Hong Kong Limited; “U.S.” or “US” means the United States of America; “WAP” means wireless application protocol; “2003 Actual Net Income” means the pro forma combined net income after tax and minority interests of Palmweb Inc., Newpalm (China) and the Related Parties for the fiscal year 2003; “2004 Actual Net Income” means the pro forma combined net income after tax and minority interests of Palmweb Inc., Newpalm (China) and the Related Parties for the fiscal year 2004; “2003 Financial Statements” means the pro forma combined financial statements of Palmweb Inc., Newpalm (China) and the Related Entities for the year ended and as of 31st December, 2003 including the audited balance sheets of each of Palmweb Inc., Newpalm (China) and the Related Entities and the related audited statements of operations, shareholders’ equity and cash flow statements for such period prepared in accordance with GAAP, together with a true and correct copy of the report on such audit information along with all existing management letters from the auditors, with respect to the results of such audits; and

“2004 Financial Statements”

means the pro forma combined financial statements of Palmweb Inc., Newpalm (China) and the Related Entities for the year ended and as of 31st December, 2004 including the audited balance sheets of each of Palmweb Inc., Newpalm (China) and the Related Entities and the related audited statements of operations, shareholders’ equity and cash flow statements for such period prepared in accordance with GAAP, together with a true and correct copy of the report on such audit information along with all existing management letters from the auditors, with respect to the results of such audits.

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LETTER FROM THE BOARD

HONGKONG.COM CORPORATION 香港網國際網絡公司 [*]

(incorporated in the Cayman Islands with limited liability)

Executive Directors:

Ch’ien Kuo Fung, Raymond (Chairman) Yip Hak Yung, Peter (Vice-Chairman) Zhou Shun Ao (Vice-Chairman) Chan Kai Yu, Rudy (Chief Executive Officer) Kwok Yee Leen, Elaine

Registered office: Scotia Centre 4th Floor P.O. Box 2804 George Town Grand Cayman Cayman Islands

Non-executive Director:

Chan Wing Tak, Douglas

Independent Non-executive Directors: Chou Kei Fong, Silas Wong Sin Just Wang Cheung Yue, Fred

Head office and

principal place of business: 34/F, Citicorp Centre 18 Whitfield Road Causeway Bay Hong Kong

3rd April, 2003

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION PURCHASE OF 100% INTEREST IN PALMWEB INC.

1. INTRODUCTION

On 17th March, 2003, CMMC, a wholly-owned subsidiary of the Company, entered into a share purchase agreement for the acquisition of shares in Palmweb Inc. (a company incorporated under the laws of the Cayman Islands with limited liability and a holding company of Newpalm (China)), representing 100% of the entire issued share capital of Palmweb Inc., from all of the existing shareholders of Palmweb Inc. for the Consideration to be paid in three installments comprising (i) US$14,000,000 to be paid at Closing; (ii) an amount of cash equal to the 2003 Actual Net Income of Palmweb Inc. multiplied by 9.4 multiplied by 0.3797 to be paid within 15 days of Palmweb Inc.’s delivery of the 2003 Financial Statements; and (iii) an amount of cash equal to the 2004 Actual Net Income of Palmweb Inc. multiplied by 9.4 multiplied by 0.1203 to be paid within 15

* for identification purpose only

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LETTER FROM THE BOARD

days of Palmweb Inc.’s delivery of the 2004 Financial Statements, provided that the Consideration in aggregate may not exceed US$55,000,000. The transaction contemplated under the Agreement was announced by the Board on 17th March, 2003.

The transaction contemplated under the Agreement constitutes a discloseable transaction of the Company under the GEM Listing Rules. This circular is to provide you with, among others, additional information relating to the Agreement.

2. THE AGREEMENT DATED 17TH MARCH, 2003

Parties:

CMMC, a wholly-owned subsidiary of the Company (as purchaser);

Palmweb Inc.; and

all the existing shareholders of Palmweb Inc. (as vendor) comprising:

• (i) the “Institutional Sellers”, namely:

• (a) Baring Asia II Holdings (6) Limited;

• (b) EDB Ventures Pte Ltd.; and

• (c) M-Commerce Ventures Pte Ltd.;

• (ii) the “Management Sellers”, namely:

• (a) China Web Technology Inc.; and

• (b) Mobile21 Ltd.; and

• (iii) the “Other Sellers”, namely:

• (a) DOT.COM Consultants Inc.;

• (b) Asia Internet Inc.; and

• (c) Bestgrand Industrial Investments Limited,

• (collectively, the “Sellers”).

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LETTER FROM THE BOARD

Subject Matter

Subject to the terms and conditions of the Agreement, and in reliance upon the representations, warranties and covenants contained therein as of the date thereof and Closing, CMMC will purchase the Sale Shares, being those shares representing 100% of the total issued and outstanding equity in the capital of Palmweb Inc., from the Sellers and each Seller agrees, severally, to sell, transfer, convey, assign and deliver the Sale Shares to CMMC.

Consideration and Payment Terms

The consideration to be paid for the Sale Shares by CMMC (the “Consideration”) shall be paid in three installments in the following manner:

• (i) CMMC shall pay US$14,000,000 at Closing to the Sellers and to Palmweb Inc. on behalf of the Option Holders for apportionment among them as set forth in the Agreement (the “First Installment”); provided that the aggregate payments to be received by the Management Sellers under the First Installment shall not exceed US$1,200,000 in the apportioned amounts among them as set forth in the Agreement;

• (ii) within 15 days of the certification by the board of directors of Palmweb Inc. of the 2003 Financial Statements and delivery to CMMC, CMMC shall (A) pay to each Non-Management Seller an amount in cash equal to the product of 2003 Actual Net Income multiplied by 9.4 multiplied by 50% multiplied by the shareholding percentage held by such Non-Management Seller in Palmweb Inc. as set forth in the Agreement, (B) pay to each Management Seller an amount in cash equal to the product of 2003 Actual Net Income multiplied by 9.4 multiplied by 25% multiplied by the shareholding percentage held by such Management Seller in Palmweb Inc. as set forth in the Agreement and (C) pay to Palmweb Inc. on behalf of the Option Holders an amount in cash equal to the product of 2003 Actual Net Income multiplied by 9.4 multiplied by 25% multiplied by the shareholding percentage attributed to the Option Holders in Palmweb Inc. as set forth in the Agreement (the “Second Installment”) (the Second Installment is, in total, equivalent to the 2003 Actual Net Income of Palmweb Inc. multiplied by 9.4 multiplied by 0.3797); and

• (iii) within 15 days of the certification by the board of directors of Palmweb Inc. of the 2004 Financial Statements and delivery to CMMC, CMMC shall (A) pay to each Management Seller an amount in cash equal to the product of 2004 Actual Net Income multiplied by 9.4 multiplied by 25% multiplied by the shareholding percentage held by such Management Seller in Palmweb Inc. as set forth in the Agreement and (B) pay to Palmweb Inc. on behalf of the Option Holders an

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LETTER FROM THE BOARD

amount in cash equal to the product of 2004 Actual Net Income multiplied by 9.4 multiplied by 25% multiplied by the shareholding percentage attributed to the Option Holders in Palmweb Inc. as set out in the Agreement (the “Third Installment”) (the Third Installment is, in total, equivalent to the 2004 Actual Net Income of Palmweb Inc. multiplied by 9.4 multiplied by 0.1203);

provided that the Consideration may not exceed US$55,000,000.

Both the 2003 Financial Statements and 2004 Financial Statements will be prepared in accordance with GAAP and will be for the respective years ending 31st December, Palmweb Inc.’s relevant financial year-end. The Second Installment and the Third Installment are to be paid within 15 days of the certification and delivery of the relevant financial statements, which certification and delivery is expected to take place within 3 months of the relevant financial year-end.

The Consideration comprises the First Installment, the Second Installment and the Third Installment. Whilst the First Installment is a fixed amount of US$14,000,000, the Second Installment and the Third Installment, as can be noted above, will vary by reference to the 2003 Actual Net Income and 2004 Actual Net Income respectively, subject to the Consideration in aggregate not exceeding the above-mentioned figure of US$55,000,000.

The Consideration was determined on the basis of price/earning ratios of about 10 (according to market information) used in comparable overseas transactions and was arrived at after arm’s length commercial negotiations between the parties. The rationale for the determination of the Consideration is as follows:

• (a) The sum of the Second Installment (being 9.4 multiplied by 0.3797 multiplied by the 2003 Actual Net Income) and the Third Installment (being 9.4 multiplied by 0.1203 multiplied by the 2004 Actual Net Income) is intended to represent about half (the sum of 0.3797 and 0.1203 being 0.5) of the Consideration at a price/earning ratio of about 9.4.

• (b) The First Installment is determined by annualising the month-end net profit of Palmweb Inc. for December 2002 and multiplying the annualised amount by 0.5 (as the intention is for the First Installment to represent about half of the Consideration) and further multiplying that product by a price/earning ratio of about 8.45.

Given this rationale for the determination of the Consideration, the above-mentioned maximum figure for the Consideration of US$55,000,000 should not be simplistically used for the calculation of the overall price/earning ratio represented by the Consideration. That figure of US$55,000,000 constitutes a cap above which the Consideration may not exceed. The formulation of the Consideration is such that the actual amount of the

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LETTER FROM THE BOARD

Consideration paid in the end may be less (or much less) than US$55,000,000. The cap figure of US$55,000,000 was arrived at after arm’s length commercial negotiations between the parties and its basis is to minimise uncertainty for the Company and to ensure that the transaction contemplated under the Agreement is only a discloseable transaction under the GEM Listing Rules. For the avoidance of doubt, the cap of US$55,000,000 is not a profit or revenue forecast in any form.

Prior to or concurrently with Closing, Palmweb Inc. shall, and the Sellers shall cause Palmweb Inc. to, cancel all outstanding Employee Share Options and issue cash awards to the Option Holders for that purpose. These cash awards shall treat each Employee Share Option as if it had been fully accelerated and shall be paid to the Option Holders in up to three installments as described above, subject to continuing service requirements. From and after the date of the Agreement, Palmweb Inc. shall not, and the Sellers shall cause Palmweb Inc. not to, issue any additional Employee Share Options and shall cause to terminate the EIP, conditional upon the completion of Closing.

Completion

The closing of the purchase and sale of the Sale Shares (the “Closing”) shall take place on the Closing Date which is the later of:

• (i) 2nd April, 2003, subject to certain conditions set out in the Agreement being satisfied or waived in accordance with the terms of the Agreement; and

• (ii) such other date as Palmweb Inc., the Company and the Sellers shall agree in writing.

Conditions

The Agreement is conditional upon the satisfaction (or waiver in accordance with the Agreement) of, among others, the following conditions:

• Each of the representations and warranties made by the Sellers, Palmweb Inc. and/or each Related Entity in the Agreement and all facts and statements specified in the disclosure schedules referred to therein shall be true and correct in all respects in which they are given as of Closing.

• Each Seller, Palmweb Inc., Newpalm (China) and each Related Entity shall have performed and complied with, each agreement, covenant and obligation required by the Agreement to be so performed or complied with by Palmweb Inc., Newpalm (China), any Related Entity or any Seller at or before Closing.

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LETTER FROM THE BOARD

• All such consents, approvals and actions of, filings with and notices to any third party, governmental or regulatory authority necessary to permit each Seller and Palmweb Inc. to perform their respective obligations under the Agreement and to consummate the transactions contemplated hereby and thereby as set out therein shall have been duly obtained, made or given, and shall be in full force and effect as at Closing.

• The Company and CMMC shall have received all consents and approvals as required under the GEM Listing Rules relating to the transactions contemplated under the Agreement.

• Provided that the board of Palmweb Inc. believes that sufficient cash is available for working capital purposes in accordance with its then existing operating plan, Palmweb Inc. shall declare and pay a special dividend on its Series A Preferred Shares in the amount of US$6,000,000 prior to Closing.

• Each of Xiao Xiangyang, John and Du Yanming, Victor shall have executed a performance undertaking in the form and substance of a draft attached to the Agreement.

• The Management Sellers shall cause, prior to Closing, the shareholders of Beijing Newpalm to enter into an agreement substantially in such form and substance of the draft attached to the Agreement with two PRC individuals designated by Palmweb Inc. for the transfer of 100% equity interest in Beijing Newpalm to the said PRC individuals.

• The Management Sellers shall cause, prior to Closing, the shareholders of Beijing Wisecom to enter into an agreement substantially in such form and substance of the draft attached to the Agreement with two PRC individuals designated by Palmweb Inc. for the transfer of 100% equity interest in Beijing Wisecome to the said PRC individuals.

3. BUSINESS OF THE COMPANY

The Company currently operates a bilingual Internet portal under the domain name of www.hongkong.com and a Singapore-based travel-trade publishing company, TTG Asia Media Pte Ltd. The Company provides a one-stop gateway to the Internet to meet the needs of users interested in localised information pertaining to Hong Kong. Through the Group’s editorial team and the cooperation with an extensive group of content providers, the Group offers a broad range of content value-added community services and e-commerce capabilities.

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LETTER FROM THE BOARD

4. PALMWEB INC.

Palmweb Inc. is a company incorporated in the Cayman Islands, the entire issued share capital of which was, as at the Latest Practicable Date owned by the Sellers, the respective shareholdings of which are set out below:

Percentage of Direct Shareholder Name Shareholding China Web Technology Inc. 37.95% Baring Asia II Holdings (6) 23.27% Limited EDB Ventures Pte Ltd. 4.36% M-Commerce Ventures Pte Ltd. 4.36% Mobile21 Ltd. 7.84% DOT.COM Consultants Inc. 7.84% Asia Internet Inc. 7.84% Bestgrand Industrial 6.54% Investments Limited. 100%	Number of Shares Share Class 14,511,250 Ordinary Shares 8,898,396 Series A Preferred Shares 1,668,449 Series A Preferred Shares 1,668,449 Series A Preferred Shares 2,996,250 Ordinary Shares 2,996,250 Ordinary Shares 2,996,250 Ordinary Shares 2,500,000 Ordinary Shares 38,235,294

China Web Technology Inc. is ultimately beneficially owned by Xiao Xiangyang, John and Du Yanming, Victor.

Baring Asia II Holdings (6) Limited is wholly owned by Baring Asia Private Equity Fund II LP, a limited partnership incorporated in Guernsey, the controlling general partner of which is a subsidiary of Baring Private Equity Partners Limited, a wholly owned subsidiary of the ING Group. Besides the said general partner, Baring Asia Private Equity Fund II LP has more than 30 other limited partners.

EDB Ventures Pte Ltd is a wholly-owned subsidiary of EDB Investments Pte Ltd., a company incorporated in Singapore which, in turn, is the wholly-owned investment holding company of the Singapore Economic Development Board.

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LETTER FROM THE BOARD

M-Commerce Ventures Pte Ltd. is an investment holding company incorporated in Singapore, owned by eight companies including EDB Investments Pte Ltd., CTI (H) Pte Ltd., FLV Fund C.V.A., Global TIMES Ventures Administration GmbH, Siemens Ventures Capital GmbH, Keppel Communications Pte Ltd., Infocomm Investments Pte Ltd. and PSINet Strategic Investments, Inc. Some of the eight companies have very devised ultimate shareholding structure.

Mobile21 Ltd. is ultimately beneficially owned by Xiao Xiangyang, John.

DOT.COM Consultants Inc. is ultimately beneficially owned by Du Shan Li.

Asia Internet Inc. is ultimately beneficially owned by Lee Lan Kuen.

Bestgrand Industrial Investments Limited is ultimately beneficially owned by Huang Shao Kang and Yip Chi Yu.

Each of the Sellers or their ultimate beneficial owners is an independent third party, not connected with the Company and its subsidiaries, any directors, chief executive, substantial shareholders of such companies or any of their respective associates (as defined in the GEM Listing Rules).

Palmweb Inc., Newpalm (China) and the Related Entities are principally engaged in providing mobile value-added services in the PRC, providing to about 2.8 million paying subscribers services such as x-city (a subscription — based community mobile chatting, city dating and friendship posting service), jokes (daily jokes subscription service and downloads), fortune telling (love fortune and work fortune games), mobile interactive games (role-playing, simulation and quiz types), ringtones and logo download. The majority of the services are based on SMS and WAP technologies. Palmweb Inc. was established in 2000 with an initial focus on system integration business in the telecom industry. Palmweb Inc. changed its business strategies in early 2002 and began to focus on the business of the provision of mobile value-added services and have since the middle of 2002 devoted significant resources to the business and gained significant momentum both in terms of subscribers and revenue. Palmweb Inc. has about 130 employees with service coverage spanning over 22 provinces in the PRC reaching the customers of both China Mobile and China Unicom. Palmweb Inc. has developed strong market presence in the prosperous Eastern provinces of Shandong, Jiangsu and Jiejiang. Palmweb Inc. has consistently ranked as one of the top value-added service providers in terms of revenue and market share in these provinces.

It was announced by the Board on 17th March, 2003 that based on the information (prepared on a pro-forma consolidated and GAAP basis) provided by Palmweb Inc., the value of net tangible assets of Palmweb Inc. as at 31st December, 2002 was HK$65,536,000 (Rmb69,543,000) . Following the completion of the 2002 audit of

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LETTER FROM THE BOARD

Palmweb Inc., that figure has been revised to HK$65,684,000 (Rmb69,701,000) . It was also announced by the Board on 17th March, 2003 that based on the said same information, Palmweb Inc. made a net loss of HK$21,879,000 (Rmb23,217,000) for the year ended 31st December, 2001 and a net profit of HK$936,000 (Rmb993,000) for the year ended 31st December, 2002. Following the completion of the 2002 audit of Palmweb Inc., the net profit for the year ended 31st December, 2002 has been revised to HK$1,162,200 (Rmb1,233,000).

The Agreement contains provisions governing the operation of Palmweb Inc. after Closing. Some of such provisions are summarised below:

• During the Determination Period, Palmweb Inc., Newpalm (China) and each Related Entity will not and the Company will not cause Palmweb Inc., Newpalm (China) or any Related Entity to take any actions inconsistent with the Budget (except otherwise provided in the Agreement) or which will lead to a “Material Adverse Effect” (as defined in the Agreement) occurring, and, with the exception of the transactions contemplated in the Agreement, Palmweb Inc., Newpalm (China) and each Related Entity will carry on (and the Company shall cause Palmweb Inc., Newpalm (China) and each Related Entity to carry on) their business in the ordinary course in substantially the same manner as conducted prior to Closing.

• From and after Closing through the last day of the Determination Period, unless otherwise agreed to in writing by each of the Selling Shareholder Representatives (which agreement in any event shall not be unreasonably withheld), the Company shall:

• (i) not cause or permit Palmweb Inc., Newpalm (China) or any Related Entity (except as contemplated by the Budget) to, among others: (i) sell all or substantially all of its assets, (ii) sell or transfer or otherwise dispose of any asset that is material, necessary or required in connection with the production of income, (iii) merge or consolidate with any person (other than a shell corporation wholly owned by the Company), (iv) purchase all or substantially all of the assets or share capital of any person, (v) purchase any division or line of products or services from any person or (vi) add any subsidiary;

• (ii) not, and shall cause any subsidiary of the Company (other than as set out in the Agreement) not to, compete in the PRC with Palmweb Inc. in the SMS or multimedia messaging services business as it exists on the date hereof; and

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LETTER FROM THE BOARD

• (iii) cause all transactions between the Company and subsidiaries of the Company, on the one hand, and Palmweb Inc., on the other hand, to be conducted on a revenue-sharing basis on terms and conditions at least as favorable to Palmweb Inc. as Palmweb Inc. could obtain from an independent third-party.

• From and after Closing, the Company shall provide Palmweb Inc., on a revenuesharing basis, with the benefits of those of the Company’s own products and services as may be agreed between Palmweb Inc., Newpalm (China) or Related Entity on the one hand and the Company on the other hand, from time to time. Initially the Company shall use its best effort to include in such products and services the news feed, online dating and online gaming services and other logistical support necessary to enable Palmweb Inc. to operate the most profitably and efficiently after Closing.

The Agreement does not provide for and there is no intention to appoint any of the Sellers or their ultimate beneficial owners as directors of the Company.

5. REASONS FOR THE TRANSACTION

The Directors are of the view that the Agreement will benefit the Company for the following reasons:

• The Company can participate in the provision of mobile value-added service in the PRC, a large and rapidly growing market;

• The business model of Palmweb Inc. is proven and will broaden and strengthen the revenue stream of the Company;

• Synergy of Palmweb Inc. and the Company — the user base of Palmweb Inc. and that of the Company are potential subscribers for each other; and

• The portion of recurring subscription based revenue of the Company will increase.

The Directors believe that the terms of the Agreement are fair and reasonable so far as the Company and the Shareholders are concerned, and that the acquisition of the Shares by CMMC is in the interests of the Company.

6. FINANCIAL EFFECT OF THE ACQUISITION AND THE OPTION TO THE GROUP

Upon Closing, the Directors expect that there will be a positive contribution to the future earnings of the Group from Closing and there will be no material impact on the assets and liabilities of the Group.

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LETTER FROM THE BOARD

7. GENERAL

The transaction contemplated under the Agreement constitutes a discloseable transaction of the Company under the GEM Listing Rules. On 17th March, 2003, the Board announced the entering into of the Agreement. This circular is to provide additional information relating to the Agreement.

8. ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendix to this circular.

Your faithfully, By Order of the Board

hongkong.com Corporation Rudy Chan Chief Executive Officer

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief:

• (a) the information contained in this circular is accurate and complete in all material respects and not misleading;

• (b) there are no other matters the omission of which would make any statement in this circular misleading; and

• (c) all opinions expressed in this circular have been arrived at after due and careful consideration and are founded on bases and assumptions that are fair and reasonable.

2. DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of the Directors and the chief executives of the Company in the share capital of the Company or any of its associated corporations (within the meaning of the SDI Ordinance) which were notified to the Company and the Stock Exchange pursuant to section 28 of the SDI Ordinance (including interests in which each of them had taken or deemed to have under section 31 of, or Part I of the Schedule to, the SDI Ordinance), or which were required, pursuant to section 29 of the SDI Ordinance, to be entered in the register referred to therein, or which were required pursuant to Rules 5.40 to 5.59 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

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GENERAL INFORMATION

APPENDIX

(a) Ordinary Shares in the Company

	Number of Shares held and	Number of Shares held and	Number of Shares held and
		nature of interests
	Personal	Corporate	Total
	interests	interests	interests
	(number of	(number of	(number of
Name of director	shares)	shares)	shares)
Ch’ien Kuo Fung, Raymond	2,274,000	—	2,274,000
Chan Kai Yu, Rudy	3,416,000	—	3,416,000
Chan Wing Tak, Douglas	3,416,000	—	3,416,000
Wong Sin Just	1,000,000	—	1,000,000
Yip Hak Yung, Peter	—	3,416,000	3,416,000
		(Note)
Zhou Shun Ao	5,000,000	—	5,000,000

Note: These shares were beneficially owned by Asia Internet Holdings Limited in respect of which Mr. Yip Hak Yung, Peter was entitled to exercise, or control the exercise of, onethird or more of the voting power of general meetings and, accordingly Mr. Yip Hak Yung, Peter had an interest in such shares under the SDI Ordinance.

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GENERAL INFORMATION

APPENDIX

• (b) Class A common shares in chinadotcom corporation which was, according to the SDI Ordinance, an associated corporation of the Company:

	Number	of shares held	and nature of	interests
	Personal	Family	Corporate	Total
	interests	interests	interests	interests
	(number of	(number of	(number of	(number of
Name of director	shares)	shares)	shares)	shares)
			(Note)
Ch’ien Kuo Fung,
Raymond	921,773	—	—	921,773
Yip Hak Yung, Peter	—	442,219	16,135,686	16,577,905
			(Note)
Zhou Shun Ao	17,794	—	—	17,794

Note: These shares were beneficially owned by Asia Pacific Online Limited in respect of which Mr. Yip Hak Yung, Peter was entitled to exercise, or control the exercise of, one-third or more of the voting power of general meetings and accordingly, Mr. Yip Hak Yung, Peter had an interest in such shares under the SDI Ordinance.

Save as disclosed in sub-sections (a) and (b) above, none of the Company’s directors, chief executive and their associates had any interests in the share capital of the Company and chinadotcom corporation as recorded in the register as at the Latest Practicable Date maintained under Section 29 of the SDI Ordinance or which are required, pursuant to Rules 5.40 to 5.59 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange.

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GENERAL INFORMATION

APPENDIX

(c) Options to subscribe for ordinary shares in the Company

• Pursuant to the Pre-IPO Scheme and the Post-IPO Scheme of the Company, certain Directors were granted options to subscribe for the Company’s ordinary shares and the details of which as the Latest Practicable Date were as follows:

			Number of
			share options
			outstanding as at
			the Latest
		Exercise	Practicable
Name of director	Date of grant	Price	Date
		HK$
Chien Kuo Fung, Raymond	9th March, 2000	1.880	10,000,000
	10th April, 2001	0.286	4,000,000
Chan Kai Yu, Rudy	9th March, 2000	1.880	60,000,000
	5th October, 2000	0.582	10,000,000
	10th April, 2001	0.286	20,000,000
Chan Wing Tak, Douglas	9th March, 2000	1.880	1,000,000
	10th April, 2001	0.286	600,000
Chou Kei Fong, Silas	9th March, 2000	1.880	1,000,000
	10th April, 2001	0.286	600,000
Hung Shuk Tak, Vicky	9th March, 2000	1.880	5,000,000
(resigned on			(Note)
30th January, 2003)
	10th April, 2001	0.286	2,000,000
			(lapsed)
Lin, Jack	9th March, 2000	1.880	530,000
(resigned on			(Note)
30th January, 2003)
	10th April, 2001	0.286	2,000,000
			(lapsed)
Wong Sin Just	9th March, 2000	1.880	1,000,000
	10th April, 2001	0.286	600,000
Yip Hak Yung, Peter	9th March, 2000	1.880	6,000,000
	10th April, 2001	0.286	2,400,000
Zhou Shun Ao	9th March, 2000	1.880	6,000,000
	10th April, 2001	0.286	2,400,000

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GENERAL INFORMATION

APPENDIX

Note: Share options in the amount of 5,000,000 and 530,000 granted to Hung Shuk Tak, Vicky and Lin, Jack respectively under the Pre-IPO Scheme will lapse on 30th April, 2003.

(d) Options to subscribe for Class A common shares in chinadotcom corporation:

Pursuant to the share option scheme of chinadotcom corporation, certain Directors were granted options to subscribe for Class A common shares in chinadotcom corporation and the details of which as at the Latest Practicable Date were as follows:

			Option
Name of		Exercise	Exercise	No. of Share
director	Date of grant	price	period	Options granted
		(US$)
Ch’ien Kuo	22nd June, 1999	3.3750	Note (1)	66,667
Fung,	17th October, 2000	6.8125	Note (3)	100,000
Raymond	9th January, 2001	4.2813	Note (2)	30,000
	27th April, 2001	2.7400	Note (3)	400,000
	13th July, 2001	2.9700	Note (3)	400,000
Chan Kai Yu,	15th November, 1999	14.5000	Note (4)	38,000
Rudy	15th April, 2000	14.2375	25th February, 2001
			– 14th April, 2005	4,500
	29th July, 2000	15.7500	Note (5)	4,500
	17th October, 2000	6.8125	25th November, 2000
			– 14th November, 2009	8,265
	11th July, 2001	2.3810	Note (3)	80,000*

• (10,000 was exercised during 2002 and the balance is now 70,000)

Chan Wing	22nd June, 1999	3.3750	Note (1)	40,000
Tak,	9th January, 2001	4.2813	Note (2)	30,000
Douglas	12th July, 2001	2.5800	Note (2)	50,000
Yip Hak	22nd June, 1999	3.3750	Note (1)	60,000
Yung, Peter	12th July, 1999	5.0000	Note (1)	1,881,442**
	9th January, 2001	4.2813	Note (2)	30,000
	6th June, 2002	2.8200	Note (2)	200,000
Zhou Shun	22nd June, 1999	3.3750	Note (1)	120,000**
Ao	15th April, 2000	14.2375	15th January, 2001
			– 14th April, 2005	9,000
	29th July, 2000	15.7500	Note (7)	9,000
	20th October, 2000	8.1250	Note (3)	60,000
	9th January, 2001	4.2813	Note (2)	30,000

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GENERAL INFORMATION

APPENDIX

• ** These options were granted to companies in respect of which the relevant Director was entitled to exercise, or control the exercise of, one-third or more of the voting power at general meetings and, accordingly, the relevant Director had an interest in such options under the SDI Ordinance. Mr. Yip Hak Yung, Peter held the share options through Asia Pacific Online Limited and Mr. Zhou Shun Ao held the share options through Golden Tripod Technology Limited.

Notes:

• (1) One year after the date of grant to the year ending 10 years after the grant date.

• (2) From the date of grant to the year ending 10 years after that date.

• (3) Three months after the date of grant to the year ending 10 years after the grant date.

• (4) From 25th November, 2000 to the year ending 10 years after the grant date.

• (5) From 25th February, 2001 to the year ending 10 years after the grant date.

• (6) From 17th July, 2001 to the year ending 10 years after the grant date.

• (7) Six months after the date of grant to the year ending 10 years after the grant date.

• (8) No option lapsed during the year ended 31st December, 2002.

3. SPONSOR’S INTERESTS

Two employees of BNP Paribas Peregrine Capital Limited (“BNP Paribas”) held a total of 4,000 shares in the Company as at the Latest Practicable Date. Save as disclosed herein, the Company’s sponsor, BNP Paribas, its respective directors, employees and associates (as referred to in Note 3 to Rule 6.35 of the GEM Listing Rules), as at the Latest Practicable Date, did not have any interest in the securities of the Company or any members of the Group, or any right to subscribe for or to nominate persons to subscribe for the securities of the Company or any members of the Group.

The sponsors’ agreement with BNP Paribas dated 9th March, 2000 expired on 31st December, 2002 pursuant to the terms thereof and in accordance with Rule 6.01 of the GEM Listing Rules.

4. LITIGATION

As at the Latest Practicable Date, no member of the Group was engaged in any litigation or arbitration of material importance and there was no litigation, arbitration or claim of material important known by the Directors to be pending or threatened against any member of the Group.

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GENERAL INFORMATION

APPENDIX

5. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the following interests of 10% or more of the share capital of the Company were recorded in the register of interests required to be kept by the Company pursuant to Section 16(1) of the SDI Ordinance:

		Percentage of
Name	Number of shares	issued share capital
chinadotcom corporation	3,361,828,000	81.37%

Saved as disclosed above, no person, other than the Directors, whose interests are set out in the section “DISCLOSURE OF INTERESTS” above, had registered an interest in the share capital of the Company that was required to be recorded pursuant to Section 16(1) of the SDI Ordinance.

6. SERVICE CONTRACTS

Each of the Executive Directors has entered into a service agreement with the Company. Save for the service agreements with Messrs. Zhou Shun Ao, Chan Kai Yu, Rudy and Ms. Kwok Yee Leen, Elaine, all the service agreements are for an initial term of two years commencing 25th November, 1999, which will continue thereafter for such further term (if any) unless terminated by either party by three months’ prior written notice. As at the Latest Practicable Date, none of these service agreements had been terminated by either party. Messrs. Zhou Shun Ao and Chan Kai Yu, Rudy, entered into service agreements with the Company for an initial term of two years commencing 7th December, 1999 and 3rd February, 2000 respectively, which will continue thereafter for such further term (if any) unless terminated by either party by three months’ prior written notice. As at the Latest Practicable Date, none of these service agreements had been terminated by either party. Ms. Kwok Yee Leen, Elaine entered into service agreement with the Company for an initial term of two years commencing 30th January, 2003, which will continue thereafter for such further term (if any) unless terminated by either party by three months’ prior written notice. During the year 31st December, 2001, the Board of Directors of the Company resolved that following the initial two years’ set term of office of the Executive Directors, each Executive Director should retire from office subject to rotational retirement provisions in accordance with the Company’s articles of association and each of the Executive Directors of the Company accepted such variation in their respective service agreements.

Apart from the foregoing, no Director has a service contract with the Company in respect of his/her service to the Company in the capacity of a director which is not determinable by the Company within one year without payment of compensation other than statutory compensation).

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GENERAL INFORMATION

APPENDIX

7. COMPETING INTEREST

As at the Latest Practicable Date, so far as the Directors are aware of, none of themselves or the management shareholders of the Company (as defined in the GEM Listing Rules) or their respective associates had any interest in a business which competes or may compete with the business of the Group.

8. GENERAL

• (a) The head office and principal place of business of the Company is at 34/F., Citicorp Centre, 18 Whitfield Road, Causeway Bay, Hong Kong. The Hong Kong branch share registrar and transfer office of the Company is Computershare Hong Kong Investor Services Limited, Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong.

• (b) The compliance officer and company secretary of the Company is Ms. Kwok Yee Leen, Elaine, an executive Director. Ms. Kwok is a member of the American Institute of Certified Public Accountants and the Hong Kong Society of Accountants.

• (c) The qualified accountant of the Company is Mr. Chan Wai Sze, Francis. Mr. Chan is a member of the Association of Certified Chartered Accountants and the Hong Kong Society of Accountants.

• (d) The Company has established an audit committee with written terms of reference in compliance with Rules 5.23 to 5.24 of the GEM Listing Rules. The primary duties of the audit committee are to review the Company’s annual reports and accounts, half-yearly reports and quarterly reports and to provide advice and comments thereon to the Directors. The audit committee comprises three independent non-executive Directors, namely Mr. Wong Sin Just, Mr. Chou Kei Fong, Silas and Mr. Wang Cheung Yue, Fred and an executive director, Mr. Yip Hak Yung, Peter. Mr. Wong Sin Just is the chairman of the audit committee.

Mr. Wong Sin Just possess over 11 years of investment banking and finance experience and has held positions with a number of premier international investment banks. Prior to establishing e2-Capital Limited (subsequently renamed as OpenIBN (HK) Limited), Mr. Wong was the managing director and the head of Equity Capital Markets at BNP Prime Peregrine Securities Limited. Mr. Wong is executive co-chairman and acting chief executive officer of E2-Capital (Holdings) Limited, executive director and chief executive officer of Softbank Investment International (Strategic) Limited and an independent non-executive director of Capital Strategic Investment Limited.

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APPENDIX

GENERAL INFORMATION

Mr. Chou Kei Fong, Silas is a director of Novel Holdings (BVI) Limited and Novel Enterprises Limited, a vertically integrated textile and apparel manufacturer. Mr. Chou is co-chairman of Tommy Hilfiger Corporation, a leading sportswear design and marketing company listed on the New York Stock Exchange in the US and chairman of Novel Denim Holdings Limited, a manufacturer of denim and chino garments and fabric, listed on the US NASDAQ National Market. Besides, Mr. Chou has since July 2000 served as co-chairman of Asprey & Garrard Limited, a designer and manufacturer of luxury goods in London and the British Crown Jeweller.

Mr. Wang Cheung Yue, Fred has been a director of Salon Films (Hong Kong) Limited since 1970. With over 30 years of film production experience, Mr. Wang has worked with various major Hollywood film and television companies in setting projects in Asia, including Hawaii Five-O, Shogun, Noble House, etc. Since 1985, Mr. Wang has been involved with various investment groups including Unifund S.A., a prominent investment fund company based in Geneva, the Anglo Chinese Group in Hong Kong, and the Pan Asia Development Corporation. Mr. Wang is a member of the Hong Kong Trade Development Council Media and Communications Services Advisory Committee and an advisor of the China Film Foundation expert committee.

Mr. Yip Hak Yung, Peter is a director and chief executive officer of chinadotcom corporation. Mr. Yip has international experience as an entrepreneur in the media and telecommunications industries and was the main force in listing chinadotcom corporation, Asia’s first Internet company on NASDAQ (NASDAQ: CHINA).

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