Sino Splendid Holdings Limited — Proxy Solicitation & Information Statement 2004

Mar 19, 2004

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

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.

* for identification purpose only

19th March, 2004

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-to-date information on GEM-listed issuers.

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Appendix – General information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12

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.; “17game” means Beijing 17game Network Technology Co. Ltd.;

• “Actual Net Profit” means the actual audited consolidated net profit, after all financial charges, interest, taxes, depreciation and amortization and minority interest of the Borrower and its subsidiaries calculated in accordance with US GAAP;

• “Board” means the board of directors of the Company;

• “Borrower” means Equity Pacific Limited;

• “Call Option” means a call option granted by Mr. Hong Dai and Mr. Steve Xiaoming Zhao to Prime Leader Holdings Limited whereby the latter shall have the right to progressively purchase some or all of the remaining shares subject to the terms and conditions of the Option Agreement provided that the Call Option shall not be exercised for more than three times;

• “Call Option Notice” means the Option Holder shall send notice pursuant to the Option Agreement of the exercise of the Call Option at least 10 days but not more than 20 days before the date specified in the Call Option Notice for purchase of the Called Shares to each Shareholder;

• “Called Share” means the Shareholders shall be bound to sell and the Option Holder shall be bound to buy all of the Option Shares called in the Call Option Notice;

• “Called Share %” means the number of Called Shares divided by the total number of shares of the Borrower on a fully diluted basis on the date of the call option notice;

• “Closing Date”

means the later of:

• (a) on or before 29th February, 2004, subject to the date the conditions precedent set out in Loan Agreement being satisfied as determined by the Lender or waived by the Lender; and

• (b) such other date as the Lender and the Borrower shall agree in writing;

– 1 –

DEFINITIONS

“Collateral”	means a pledge given to the Lender by the respective shareholders on
	50% of all the shares in Equity Pacific Limited, Hong Kong Online
	Games Investment Holding Limited and 17game, duly registered and
	perfected in the applicable jurisdictions subject to the Lender’s reasonable
	satisfaction;
“Company”	means hongkong.com Corporation, a company incorporated in the
	Cayman Islands, the shares of which are listed on GEM;
“Director(s)”	means the director(s) of the Company;
“Equity Cap Percentage”	means the total of any amount drawdown and unpaid loan portion plus
	the Option Consideration Cap divided by Total Actual Consideration,
	expressed as a % which shall not be less than 51% nor more than 100%;
	“Option Consideration Cap” means US$50 million less the aggregate
	amount of any drawdown on the Loan;
	“Total Actual Consideration” means at the time of payment of any option
	consideration, actual consideration payable in relation to the exercising
	of any Put Option or any Call Option is calculated in accordance with
	the terms of the Option Agreement;
“Equity Pacific Group”	means Equity Pacific Limited, its wholly owned subsidiaries, Hong Kong
	Online Games Investment Holding Limited and Beijing 17game Network
	Technology Co. Ltd;
“First Drawdown”	means drawing on the Closing Date in the amount of US$0.2 million;
“GEM”	means the Growth Enterprise Market of the Stock Exchange;
“GEM Listing Rules”	means The Rules Governing the Listing of Securities on GEM;
“Group”	means the Company and its subsidiaries;
“Hong Kong”	means the Hong Kong Special Administrative Region of the People’s
	Republic of China;
“Latest Practicable Date”	means 15th March, 2004 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;
“Lender”	means Prime Leader Holdings Limited;
“Loan”	means a loan to the Borrower made pursuant to First Drawdown and
	Subsequent Drawdown;

– 2 –

DEFINITIONS

“Loan Agreement”	means the senior secured convertible loan agreement dated as of 12th
	February, 2004, between Equity Pacific Limited, Beijing 17game Network
	Technology Co. Ltd, Hong Dai, Steve Xiaoming Zhao and Prime Leader
	Holdings Limited;
“Mr. Dai”	means Hong Dai;
“Mr. Zhao”	means Steve Xiaoming Zhao;
“Option Agreement”	means the legally binding agreement dated 27th February, 2004 entered
	into between Equity Pacific Limited, Mr. Hong Dai, Mr. Steve Xiaoming
	Zhao and hongkong.com Infrastructure Limited and such other
	shareholders of Equity Pacific Limited who shall from time to time
	execute an accession agreement to this agreement relating to certain
	shares in the capital of Equity Pacific Limited;
“PRC”	means the People’s Republic of China;
“Put Option”	means a put option granted by Prime Leader Holdings Limited to Mr.
	Hong Dai and Mr. Steve Xiaoming Zhao whereby the latter shall have
	the right to require former to purchase any remaining shares subject to
	the achievement by the Borrower if certain mutually agreed operational
	performance targets and other conditions for each of the 2004, 2005 and
	2006 fiscal years;
“Retained Equity Percentage”	means the difference between 100% and the Equity Cap Percentage;
“Second Drawdown”	means drawing on the Closing Date in the amount of US$1 million;
“Shareholders”	means the shareholders of the Company;
“Stock Exchange”	means The Stock Exchange of Hong Kong Limited;
“Subsequent Drawdown”	means subsequent to the Closing Date in the amount of US$2 million;
“Transactions”	means the transactions contemplated under the Loan Agreement and the
	Option Agreement;
“U.S.” or “US”	means the United States of America.

– 3 –

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) Xiao Xiangyang, John (Chief Executive Officer) Chan Kai Yu, Rudy Kwok Yee Leen, Elaine

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

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

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

19th March, 2004

To the Shareholders

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

1. INTRODUCTION

On 12th February, 2004, Prime Leader Holdings Limited, a wholly-owned subsidiary of the Company, has entered into a Senior Secured Convertible Loan Agreement with Equity Pacific Limited, Beijing 17game Network Technology Co. Ltd., Mr. Hong Dai and Mr. Steve Xiaoming Zhao pursuant to which the Lender has agreed to make available to the Borrower a loan in the aggregate principal amount of up to US$3.2 million convertible into shares of the Borrower. The Borrower has agreed to grant to the Lender a security interest over the Collateral as security for the repayment of the loan.

* for identification purpose only

– 4 –

LETTER FROM THE BOARD

On 27th February, 2004, Mr. Dai, Mr. Zhao and the other shareholders referred to in the Option Agreement, the Borrower and hongkong.com Infrastructure Limited have entered into an Option Agreement pursuant to which the Company shall have the right to progressively purchase some or all of the shares of the Borrower. The exercise price of any Call Option shall be payable in three installments. The exercise price of the Put Option shall be payable in three installments in the same manner as the Call Option. A cap of US$50 million has been set for the total consideration of the transactions contemplated under the Loan Agreement and the Option Agreement. The Transactions contemplated under the Loan Agreement and the Option Agreement were announced by the Board on 27th February, 2004.

The Transactions contemplated under the Loan Agreement and the Option Agreement constitute 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 said agreements.

2. THE LOAN AGREEMENT DATED 12TH FEBRUARY, 2004

Parties

Prime Leader Holdings Limited, a wholly owned subsidiary of the Company, a company duly incorporated under the laws of the British Virgin Islands (the “Lender”);

Equity Pacific Limited, a company duly incorporated under the laws of the British Virgin Islands (the “Borrower”);

Beijing 17game Network Technology Co. Ltd, a limited liability company incorporated in the People’s Republic of China and a wholly owned subsidiary of the Borrower (“17game”);

Hong Dai (“Mr. Dai”), a citizen of the People’s Republic of China and 86.7% ultimate beneficiary owner of the Borrower and 17game; and

Steve Xiaoming Zhao (“Mr. Zhao”), a citizen of the United States of America and 13.3% ultimate beneficiary owner of the Borrower and 17game.

Each of the Borrower, 17game, Mr. Dai and Mr. Zhao is not a connected person (as defined in the GEM Listing Rules).

Subject Matter

Subject to the terms and conditions of the Loan Agreement, the Lender agrees to make a loan to the Borrower pursuant to (i) a drawing on the Closing Date in the amount of US$0.2 million (the “First Drawdown”); (ii) a drawing on the Closing Date in the amount of US$1 million (the “Second Drawdown”); and (iii) subsequent to the Closing Date in the amount of US$2 million (the “Subsequent Drawdown”) convertible into shares of the Borrower.

– 5 –

LETTER FROM THE BOARD

Major Terms of the Convertible Loan

Facility Amount: A loan of up to US$3.2 million convertible into shares of the Borrower. Term: Until 30th June, 2004. Interest: 3.0% per annum payable quarterly. Default Interest: 5.0% per annum payable quarterly. Repayment: The Borrower shall have the right to repay the Loan in whole or in part, without premium or penalty, from time to time by giving the Lender at least 5 business days written notice prior to the date of such repayment and each partial repayment of any borrowing shall be in an aggregate principal amount of at least US$0.1 million.

• First Drawdown: Following fulfillment of the conditions precedent, the Borrower shall be entitled to make a drawdown of US$0.2 million.

• Second Drawdown: Following fulfillment of the conditions precedent, the Borrower shall be entitled to make a drawdown of US$1 million.

• Subsequent Following the making of the First and Second Drawdowns, and fulfillment Drawdown: of the conditions precedent, the Borrower may make an additional drawdown on the loan of US$2 million. The Parties shall have executed the Option Agreement.

• Use of Proceeds: The proceeds of the First Drawdown shall be used by the Borrower for general working capital. The proceeds of the Second Drawdown shall be used by the Borrower to acquire the exclusive PRC distribution rights for games. The proceeds of the Subsequent Drawdown may be used by the Borrower to acquire additional games licences and for general working capital purposes.

Conversion:

The loan will be converted into shares of the Borrower immediately following the making of the Subsequent Drawdown, or otherwise may be converted (at the Company’s sole option) into shares by the Company immediately before or concurrent with the following events:

• (i) The exercising of any call option that will be granted to the Company at the time of executing the loan;

• (ii) The exercising of the put option;

• (iii) The completion of the loan term;

– 6 –

LETTER FROM THE BOARD

• (iv) The occurrence of an un-remedied material breach of the loan.

Any loan principal and interest outstanding at the time of exercising any call option or the put option may be fully converted into shares of the Borrower at the time of the exercising of such options.

The number of conversion shares resulting from any conversion shall be calculated on a fully diluted basis with reference to an agreed pre-loan valuation of the Borrower of US$8 million.

Security:

The loan shall be secured by way of duly registered and perfected pledges over 50% of the shares of Equity Pacific Limited, the Borrower and 17game.

3. THE OPTION AGREEMENT DATED 27TH FEBRUARY, 2004

Parties

The Borrower, Mr. Dai, Mr. Zhao and any such other shareholders of the Borrower (together with Mr. Dai and Mr. Zhao, the “Shareholders”) and hongkong.com Infrastructure Limited, a wholly-owned subsidiary of the Company (the “Option Holder”).

Subject Matter

Subject to the terms and conditions of the Option Agreement, the Shareholders grant to the Option Holder an option to request the Shareholders to sell the Option Shares to the Option Holder (the “Call Option”) and the Option Holder grants to the Shareholders an option to request the Option Holder to purchase the Option Shares from the Shareholders (the “Put Option”).

– 7 –

LETTER FROM THE BOARD

Major Terms of the Call Option and Put Option

Call Option:

The Company shall have the right to progressively purchase some or all of the shares of the Borrower. The exercise price of any Call Option shall be payable in three installments:

Installment	Date of Payment	Installment Amount
First	Following the	Called Share % x 30% x 9.5 x
	finalization of	Actual Net Profit of the Equity
	an audit of First	Pacific Group for the most
	Earn-out Year	recently completed 12 months
		immediately before the month in
		which the option is exercised (the
		“First Earn-out Year”)
Second	Following the	Called Share % x 40% x 9.5 x
	finalization of	Actual Net Profit of the Equity
	a n a u d i t o f	Pacific Group for the 12 months
	Second Earn-out	immediately after the First Earn-
	Year	out Year (the “Second Earn-out
		Year”)
Third	Following the	Called Share % x 30% x 9.5 x
	finalization of	Actual Net Profit of the Equity
	an audit of Third	Pacific Group for the 12 months
	Earn-out Year	immediately after the Second
		Earn-out Year (the “Third Earn-
		out Year”)

A cap of US$50 million has been set for the total consideration of the Transactions (inclusive of any drawdown made through the loan agreement). It is determined on the basis of price/earning ratios of about 9.5 (according to market information) used in comparable transactions and was arrived at after arm’s length commercial negotiations between the parties. In the event the total consideration as calculated above exceeds US$50 million, Mr. Dai and Mr. Zhao will be granted a pro-rata retention equity in shares in the Borrower with a cap of the retention equity percentage at 49% (the “Retained Equity Percentage”). The Company will continue to be a majority shareholder.

The Company has sole discretion to pay the consideration by a combination of cash and the Company’s shares in which the share portion shall not exceed 50% of the consideration.

– 8 –

LETTER FROM THE BOARD

In the event that the Company exercises the Call Option before 31st December, 2004, the exercise price will be calculated on the basis of a minimum valuation of the Borrower of US$13 million for purposes of calculating the First Installment. It is arrived by taking into account of the estimated net profits of the Borrower x 9.5 plus a premium which is the expected minimum valuation of the Borrower based on its growth rate.

Call Option shall commence on 30th April, 2004 and expire on the earlier of (1) 31st December, 2006 or (2) on the date which falls ninety (90) days after the Borrower executes an engagement letter appointing a lead underwriter to an initial public offering of the Borrower’s shares on a recognized international stock exchange.

Put Option:

The Put Option will be exercisable for a ninety (90) day period after the earlier of (1) 31st December, 2006 or (2) the date at which the Company exercises a Call Option and gains a majority shareholding position in the Borrower or (3) the date which falls ninety (90) days after the Borrower executes an engagement letter appointing a lead underwriter to an initial public offering of the Borrower’s shares on a recognized international stock exchange.

The exercise price of the Put Option shall be payable in three installments in the same manner as the Call Option.

Completion

The closing date for the Transactions contemplated under the Loan Agreement and the Option Agreement (the “Closing Date”) shall take place on the later of:

• (a) On or before 29th February, 2004, subject to the date the conditions precedent set out in Loan Agreement being satisfied as determined by the Lender or waived by the Lender; and

• (b) such other date as the Lender and the Borrower shall agree in writing.

Conditions

The Transactions contemplated under the Loan Agreement and the Option Agreement are conditional upon the satisfaction (or waiver in accordance with the Loan Agreement) of, among others, the following conditions:

• Execution of an agreement relating to a put option and a call option.

• The Borrower shall have executed irrevocable exclusive licensing agreements for the games.

– 9 –

LETTER FROM THE BOARD

• The Borrower shall have granted the share pledge security.

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

• The Company shall have completed all necessary due diligence investigations to its complete satisfaction, determined at its sole discretion.

4. BUSINESS OF THE COMPANY

The Company currently operates a PRC-based mobile value added service provider, Newpalm (China) Information Technology Co. Ltd, Internet portals under the respective domain names of www.hongkong.com, www.china.com and a Singapore-based travel-trade publishing company, TTG Asia Media Pte Ltd. Through the Group’s editorial team, technology platform 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 through online, offline and wireless media.

5. EQUITY PACIFIC LIMITED

Equity Pacific Limited is a company incorporated in the British Virgin Islands. Hong Kong Online Games Investment Holding Limited is a company incorporated in Hong Kong. The entire issued share capital of both companies are ultimate beneficially owned by Mr. Hong Dai and Mr. Steve Xiaoming Zhao.

Equity Pacific Limited along with its subsidiaries, Hong Kong Online Games Investment Holding Limited and Beijing 17game Network Technology Co. Ltd. are principally engaged in the business of providing online game services in the PRC. Equity Pacific Limited has about 53 employees. It is running an online game call Droiyan, which has around 15,000 daily average concurrent users.

6. REASONS FOR THE INVESTMENT

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

• Online game is a huge and growing market in the PRC.

• The Borrower has around 5 million registered users and 15,000 daily average concurrent users.

• The Borrower has pitched two new games, which are expected to generate significant sales revenue from the market.

• The Company has Call Option to buy 100% shares of the Borrower based on earn-out structure.

– 10 –

LETTER FROM THE BOARD

7. FINANCIAL EFFECT OF THE TRANSACTIONS TO THE GROUP

Given that the Transactions are structured in a form of a loan with an option to buy at a later stage, it is anticipated that upon closing, there is no material impact on the assets and liabilities of the Group.

8. GENERAL

The Transactions contemplated under the Loan Agreement and the Option Agreement constitute a discloseable transaction of the Company under the GEM Listing Rules. On 27th February, 2004, the Board announced the entering into of the Loan Agreement and the Option Agreement. This circular is to provide additional information relating to the Loan Agreement and the Option Agreement.

9. ADDITIONAL INFORMATION

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

By Order of the Board hongkong.com Corporation Chan Kai Yu, Rudy Executive Director

– 11 –

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. DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SHARES, UNDERLYING SHARES AND DEBENTURES

As at the Latest Practicable Date, the interest or short position of each of the Directors, chief executives and their associates in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (the “SFO”) as required to be recorded in the register maintained by the Company pursuant to section 352 of the SFO, to be entered in the register referred to therein, or which were required pursuant to Rules 5.40 to 5.58 of the GEM Listing Rules, to be notified to the Company and the Stock Exchange, were as follows:

(A) The Company

Long positions in ordinary shares and the underlying shares of equity derivatives

				Nature of
			Number of	interests/	Appropriate
	Number		underlying	holding	percentage of
Name of Directors	of shares		shares	capacity	interests
					(%)
Ch’ien Kuo Fung, Raymond	3,274,000		17,000,000	Personal/	0.49%
				beneficiary
Chan Kai Yu, Rudy	3,416,000		94,000,000	Personal/	2.36%
				beneficiary
Chou Kei Fong, Silas		–	2,600,000	Personal/	0.06%
				beneficiary

– 12 –

APPENDIX

GENERAL INFORMATION

			Nature of
		Number of	interests/	Appropriate
	Number	underlying	holding	percentage of
Name of Directors	of shares	shares	capacity	interests
				(%)
Wang Cheung Yue, Fred	–	2,000,000	Personal/	0.05%
			beneficiary
Wong Sin Just	–	4,100,000	Personal/	0.10%
			beneficiary
Yip Hak Yung, Peter	3,416,000	–	Corporate	0.08%
			(note 1)
Yip Hak Yung, Peter	–	12,400,000	Personal/	0.30%
			beneficiary
Zhou Shun Ao	5,000,000	8,400,000	Personal/	0.32%
			beneficiary
Kwok Yee Leen, Elaine	–	1,500,000	Personal/	0.04%
			beneficiary
Xiao Xiangyang, John	–	4,000,000	Personal/	0.10%
			beneficiary

Note:

• (1) These shares were beneficially owned by Asia Internet Holdings Limited in which Mr. Yip Hak Yung, Peter is deemed to be entitled to exercise, or control the exercise of, one third or more of the voting power of general meetings and, accordingly Mr. Yip has an interest in such shares under the SFO.

Options to subscribe for ordinary shares in the Company

				Number of share
				options outstanding
				as at the Latest
Name	of Directors	Date of grant	Exercise price	Practicable Date
			HK$
Ch’ien	Kuo Fung, Raymond	9th March, 2000	1.880	10,000,000
		10th April, 2001	0.286	*3,000,000
		5th June, 2003	0.626	4,000,000

• (1,000,000 was exercised during 2003)

– 13 –

APPENDIX

GENERAL INFORMATION

			Number of share
			options outstanding
			as at the Latest
Name of Directors	Date of grant	Exercise price	Practicable Date
		HK$
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
	5th June, 2003	0.626	4,000,000
Chou Kei Fong, Silas	9th March, 2000	1.880	1,000,000
	10th April, 2001	0.286	600,000
	5th June, 2003	0.626	1,000,000
Wang Cheung Yue, Fred	5th June, 2003	0.626	2,000,000
Wong Sin Just	9th March, 2000	1.880	1,000,000
	10th April, 2001	0.286	600,000
	5th June, 2003	0.626	2,500,000
Yip Hak Yung, Peter	9th March, 2000	1.880	6,000,000
	10th April, 2001	0.286	2,400,000
	5th June, 2003	0.626	4,000,000
Zhou Shun Ao	9th March, 2000	1.880	6,000,000
	10th April, 2001	0.286	2,400,000
Kwok Yee Leen, Elaine	5th June, 2003	0.626	1,500,000
Xiao Xiangyang, John	5th June, 2003	0.626	4,000,000

Notes:

1. All the above outstanding share options may be exercised in accordance with the terms of the relevant share option schemes at any time during the period commencing from one year after the date of grant and ending 10 years after the date of grant of the share options. The consideration for the grant was HK$1.00. These share options vest over a period of four years commencing on the first anniversary at the date of grant.

1. Save as disclosed above, none of the share options were exercised or lapsed as at the Latest Practicable Date.

– 14 –

GENERAL INFORMATION

APPENDIX

(B) Associated Corporation

Long positions in Class A common shares in chinadotcom corporation and the underlying shares of equity of derivatives

			Nature of
		Number of	interests/	Appropriate
	Number	underlying	holding	percentage of
Name of Directors	of shares	shares	capacity	interests
				(%)
Ch’ien Kuo Fung, Raymond	891,773	896,667	Personal/	1.72%
			beneficiary
Chan Kai Yu, Rudy	–	154,265	Personal/	0.15%
			beneficiary
Yip Hak Yung, Peter	16,280,586	2,381,442	Interest of	17.98%
			children
			or spouse
			(note 1)
Yip Hak Yung, Peter	–	90,000	Personal/	0.09%
			beneficiary
Zhou Shun Ao	17,794	108,000	Personal/	0.12%
			beneficiary
Zhou Shun Ao	–	60,000	Corporate	0.06%
			(note 2)
Kwok Yee Leen, Elaine	–	29,000	Personal/	0.03%
			beneficiary
Xiao Xiangyang, John	–	319,000	Personal/	0.31%
			beneficiary

Notes:

• (1) 11,835,686 Class A common shares and 2,381,442 share options were held under the name of Asia Pacific Online Limited (“APOL”), 1 share in APOL representing 50% of its issued share capital, is owned by the spouse of Mr. Yip Hak Yung, Peter. The remaining 50% of APOL is owned by a trust established for the benefit of Mr. Yip’s spouse and his children under the age of 18. 4,444,900 Class A common shares are held by the spouse of Mr. Yip.

• (2) These share options were granted to Golden Tripod Technology Limited in which Mr. Zhou Shun Ao is deemed to be entitled to exercise, or control the exercise of, one third or more of the voting power of general meetings and, accordingly Mr. Zhou has an interest in such shares options under the SFO.

– 15 –

APPENDIX

GENERAL INFORMATION

Options to subscribe for Class A common shares in chinadotcom corporation

					Number of share
					options outstanding
			Option		as at the Latest
Name of Directors		Date of grant	exercise period	Exercise price	Practicable Date
				US$
Ch’ien Kuo Fung,		22nd June, 1999	Note (1)	3.3750	66,667
Raymond
		17th October, 2000	Note (3)	6.8125	100,000
		9th January, 2001	Note (2)	4.2813	30,000
		27th April, 2001	Note (3)	2.7400	300,000
					Note (7)
		13th July, 2001	Note (3)	2.9700	400,000
Chan Kai Yu,	15th November, 1999		Note (4)	14.5000	38,000
Rudy
		15th April, 2000	25th February, 2001	14.2375	4,500
			to 14th April, 2005
		29th July, 2000	Note (5)	15.7500	4,500
		17th October, 2000	25th November, 2000	6.8125	8,265
			to 14th November, 2009
		11th July, 2001	Note (3)	2.3810	20,000
					Note (9)
		2nd January, 2004	28th January, 2005	8.0700	39,500
			to 1st January, 2014
		2nd January, 2004	1st January, 2006	8.0700	39,500
			to 1st January, 2014

– 16 –

APPENDIX

GENERAL INFORMATION

					Number of share
					options outstanding
			Option		as at the Latest
Name of Directors		Date of grant	Exercise period	Exercise price	Practicable Date
				US$
Yip Hak Yung, Peter		22nd June, 1999	Note (1)	3.3750	60,000
		12th July, 1999	Note (1)	5.0000	*1,881,442
		9th January, 2001	Note (2)	4.2813	30,000
		6th June, 2002	Note (2)	2.8200	*200,000
		3rd June, 2003	30th June, 2003	4.9500	*200,000
			to 2nd June, 2013
		16th June, 2003	16th September, 2003	5.1600	*100,000
			to 15th June, 2013
Zhou Shun Ao		22nd June, 1999	(Note 1)	3.3750	**60,000
		15th April, 2000	15th January, 2001	14.2375	9,000
			to 14th April, 2005
		29th July, 2000	Note (6)	15.7500	9,000
		20th October, 2000	Note (3)	8.1250	60,000
		9th January, 2001	Note (2)	4.2813	30,000
Kwok Yee Leen,	11th September, 2002		Note (1)	2.0600	9,500
Elaine					Note (10)
		11th October, 2002	Note (3)	1.9500	5,500
					Note (10)
		16th June, 2003	Note (1)	5.1600	9,000
		16th June, 2003	16th September, 2003	5.1600	5,000
			to 15th June, 2013
Xiao Xiangyang,		16th June, 2003	Note (1)	5.1600	19,000
John
		2nd January, 2004	28th January, 2004	8.0700	300,000
			to 1st January, 2014
			Note (8)

– 17 –

GENERAL INFORMATION

APPENDIX

• These share options were granted to APOL.

• ** These share options were granted to Golden Tripod Technology Limited in which Mr. Zhou Shun Ao is deemed to be entitled to exercise, or control the exercise of, one third or more of the voting power of general meetings and, accordingly Mr. Zhou has an interest in such options under the SFO.

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

• (7) Dr. Ch’ien Kuo Fung, Raymond exercised his right to subscribe for a total of 100,000 Class A common shares at an exercise price of US$2.74 each during the year 2004.

• (8) The vesting of these 300,000 options were subject to certain performance criteria specified in the option award agreement.

• (9) Mr. Chan Kai Yu, Rudy exercised his right to subscribe for a total of 50,000 Class A common shares at an exercise price of US$2.3810 during the year 2003.

• (10) Ms. Kwok Yee Leen, Elaine exercised her right to subscribe for 3,000 and 4,500 Class A common shares at an exercise price of US$2.060 and US$1.950 respectively during the year 2003.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors, chief executives and their associates had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations.

3. 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.

– 18 –

GENERAL INFORMATION

APPENDIX

4. SUBSTANTIAL SHAREHOLDERS

As at the Latest Practicable Date, the interests and short positions of the substantial shareholders in the shares and underlying shares of the Company as recorded in the register maintained by the Company pursuant to section 336 of the SFO:

Long positions in ordinary shares

		Percentage of
Name	Number of shares	issued share capital
China M Interactive (BVI) Limited	3,361,828,000	81.30%

China M Interactive (BVI) Limited is a wholly owned subsidiary of chinadotcom Mobile Interactive Corporation. chinadotcom Mobile Interactive Corporation is a wholly owned subsidiary of chinadotcom corporation, the ultimate holding company of the Company.

Saved as disclosed above, as at the Latest Practicable Date, the Company had not been notified of any substantial shareholders’ interests or short positions representing 5% or more of the Company’s issued share capital.

5. SERVICE CONTRACTS

Each of the executive directors has entered into a service agreement with the Company.

Each of Dr. Ch’ien Kuo Fung, Raymond and Mr. Yip Hak Yung, Peter has entered into a service agreement with the Company for an initial term of two years commencing 25th November, 1999 for which will continue thereafter for such further term (if any) unless terminated by either party by three months’ prior written notice to the others. As at the Latest Practicable Date, none of these service agreements had been terminated by either party.

Each of Mr. Zhou Shun Ao, Mr. Chan Kai Yu, Rudy, Ms. Kwok Yee Leen, Elaine and Mr. Xiao Xiangyang, John has entered into a service agreement with the Company for an initial term of two years commencing 7th December, 1999, 3rd February, 2000, 30th January, 2003 and 21st November, 2003 respectively, which will continue thereafter for such further term (if any) unless terminated by either party by three months’ prior written notice to the others. As at the Latest Practicable Date, none of these service agreements had been terminated by either party.

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

– 19 –

GENERAL INFORMATION

APPENDIX

6. 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.

7. 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 Center, 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 Ms. Ho Yi Man, Agnes. Ms. Ho is a fellow member of Association of Chartered Certified Accountants and an associate member of 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 10 years of investment banking and venture capital experience and has held positions with a number of premier international investment banks. Prior to establishing e2-Capital Limited (subsequently renamed as OpenOffering Capital Limited), Mr. Wong was the Managing Director and the Head of Equity Capital Markets at BNP Prime Peregrine Securities Limited. Mr. Wong holds a Bachelor Degree in Engineering from Imperial College, University of London and was qualified with the Association of Chartered Accountants, England and Wales. Mr. Wong is Executive Co-Chairman and Acting Chief Executive Officer of E2-Capital (Holdings) Limited, Vice Chairman and Chief Executive Officer of Softbank Investment International (Strategic) Limited, Chairman of SBI E2 Capital Holdings Limited and an Independent Non-executive Director of Capital Strategic Investment Limited.

– 20 –

GENERAL INFORMATION

APPENDIX

Mr. Chou Kei Fong, Silas is a Director and the President & Chief Executive Officer of Novel Holdings (BVI) Limited and Novel Enterprises Limited, a vertically integrated textile and apparel manufacturer. He is also Co-Chairman of A & G Group Limited, which operates in London and New York a group of companies engaged in the design and manufacture of luxury goods and jewellery under the Asprey and Garrard brands. Mr Chou is also CoChairman of Michael Kors Inc., headquartered in New York, which designs, manufactures, and markets the Michael Kors line of apparel.

Mr. Wang Cheung Yue, Fred has been a director of Salon since 1970. With over 30 years of film production experience, Mr. Wang has worked with various major Hollywood film and television companies in setting up 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 Entertainment Industry Advisory Committee and an advisor of the China Film Foundation expert committee.

Mr. Yip Hak Yung, Peter is the Chief Executive Officer and Vice Chairman of the Board of chinadotcom corporation and a director of chinadotcom Mobile Interactive Corporation. Mr. Yip has international experience as an entrepreneur in the media and telecommunications industries. He received his M.B.A from Wharton School and M.S.E.E. and B.S.E.E. from University of Pennsylvania.

– 21 –