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internet-related

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    The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, 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 announcement.

    DONG-JUN (HOLDINGS) LIMITED

     峻;集 團;有 *

    (Incorporated in Bermuda with limited liability)

    DISCLOSEABLE TRANSACTION

    ESTABLISHMENT OF A JOINT VENTURE COMPANY

    ENGAGED IN INTERNET-RELATED BUSINESSES

    On 18th April, 2000, the Company entered into a deed of undertaking with China United to subscribe for 30 per cent. interest in a new joint venture company to be established to engage in internet business for a cash consideration of HK$60 million.

    Under the Deed, the balance of 70 per cent. interest in the JV Company will be held by China United, a company listed on the Stock Exchange. China United will contribute its share of 70 per cent. interest in the JV Company in the form of shareholding interests in three internet-related companies (representing its entire interests in each of them) at a consideration of HK$140 million.

    Under the Listing Rules, the Subscription constitutes a discloseable transaction for the Company. A circular containing details of the terms of the Deed will be despatched to the Shareholders as soon as practicable.

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THE DEED

Date : 18th April, 2000

Parties

Party A : The Company

Party B : China United

     China United is an independent third party not connected

    with the Company, the chief executives, directors, substantial

    shareholders of the Company or any of its subsidiaries or any

    of their respective associates (as defined under the Listing

    Rules).

     At present, Mr. Andrew Lam Ping Cheung is a non-executive

    director of both China United Holdings Limited and the

    Company.

Assets to be subscribed by the Company under the Deed:

    The Company agreed that it will subscribe for 60,000,000 shares in the JV Company, representing 30 per cent. of the issued share capital of the JV Company as enlarged by the shares

    so subscribed as at the date of Completion.

Consideration payable by the Company under the Deed

    The consideration payable by the Company for the Subscription is HK$60 million in cash, of which:-

    (i) HK$6 million was paid as deposit upon signing of the Deed; and

    (ii) the balance of HK$54 million to be paid on or before 5th May, 2000 (or such date as

    mutually agreed by the Company and China United).

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    The said consideration is payable by the Company to China United (as custodian) who undertakes, under the Deed, to pay to the JV Company (on behalf of the Company) for the purpose of the Subscription at the date of Completion (subject to receiving the said sums of consideration from the Company).

    The Directors intend to fund the said consideration by way of internal resources of the Group.

Basis for determining the consideration:

    Under the Deed, China United warranted and undertaken that the cost of acquiring its interests in SIL, DBZ and Infocast (comprising cost of acquisition and directly related costs such as legal fee and stamp duty) for transfer to the JV Company amonut to approximately HK$140 million. Such amount of HK$140 million served as a basis to represent 70 per cent. of the total injection amount (to which China United is attributable) agreed for the establishment of the JV Company. On such basis, the total injection amount agreed for the establishment of the JV Company by the two joint venture parties, namely China United and the Company, is HK$200 million.

    Under the Deed, China United will provide to the Company copies of (i) the documents executed by China United relating to its previous acquisition of interests in SIL, DBZ and Infocast; and (ii) the relevant completion documents. The Company will carry out a due dilligence to, inter alia, inspect and investigate the level of the cost of China United's interests in SIL, DBZ and Infocast for transfer to the JV Company to be approximately HK$140 million.

    The consideration of HK$60 million payable by the Company under the Deed is determined as equivalent to 30 per cent. of the said total injection amount of HK$200 million which is mutually agreed, and based on arm's length negotiation, between the Company and China United for the establishment of the JV Company.

    Under the Deed, the Company has no obligation to make further investment or contribution to the JV Company in whatsoever form or manner. However, the JV Company may issue new shares to its existing shareholders or to any parties for the financing of its businesses and in such case, the Company's interest in the JV Company will be diluted.

Conditions of the Deed

Completion is conditional upon the following:-

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    (a) all approvals, consents (including consents by all the shareholders of SIL, DBZ and Infocast

    to the transfer of China United's interest in the said companies as contemplated under the

    Deed, if so required), required by any party(ies) (including but not limited to approval by

    the board of directors and/or shareholders of any or all of China United, the Company and

    the JV Company);

    (b) all requirements under any applicable laws, rules, regulations (including but not limited to

    those pursuant to the Listing Rules) (if applicable) being fulfilled or complied with prior to

    Completion;

    (c) the completion of due diligence on the legal status of China United in respect of its interests

    in SIL, DBZ and Infocast to the reasonable satisfaction of the Company; and

    (d) the completion of the transfer of China United's interests in SIL, DBZ and Infocast to the JV

    Company or China United's Subscription (as the case may be).

    In the event that (i) the JV Company is not incorporated by the date of Completion (which is 7 days after the date on which all conditions under the Deed have been fulfilled); (ii) any of the conditions under the Deed are not fulfilled; or (iii) if the China United's interest in SIL, DBZ and Infocast are not transferred to the JV Company within 90 days from the date of the Deed (subject however to China United's right to effect China United's Subscription), the subscription monies previously paid by the Company will be returned to the Company without interest.

    If the legal status of China United in respect of SIL, DBZ and Infocast is not to the reasonable satisfaction of the Company upon completion of due diligence (which constitutes a condition precedent to the Deed), China United is obliged under the Deed at its sole option either to:

    (i) return all sums of consideration previously paid by the Company to the Company without

    interest and compensation; or

    (ii) inject HK$140,000,000 or part thereof in cash to the JV Company for the purpose of the

    China United's Subscription provided that where part of its interests in SIL, DBZ and

    Infocast is transferred to the JV Company, China United shall only be obliged to inject such

    amount as representing that portion of its interest not transferred into the JV Company.

Completion

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    Completion shall take place within 7 days after the date on which all conditions under the Deed have been fulfilled, and in any event no later than 97 days from the date of the Deed (ie. 24th July, 2000) (unless otherwise agreed in writing by the parties to the Deed).

    Upon Completion, the Company will appoint one director to the board of directors of the JV Company whereas China United will appoint three directors therein (on the basis of a total of four directors). The Directors confirm that the Company is entitled to a share of the profits of JV Company (in proportion to its attributable interest in the JV Company).

Information on the JV Company

    The JV Company will be incorporated in Bermuda for the purpose of acting as the immediate holding company of 29.51 per cent. interest in SIL, 22 per cent. interest in DBZ and 4.02 per cent. interest in Infocast, all of which are currently held by China United and are to be injected into the JV Company under the Deed.

    Under the Deed, China United has warranted and undertaken that a part of the consideration receivable from the Company (amounting to HK$20,400,000) will be applied by China United (on 1st June, 2000 or such other date as the parties under a separate agreement (as described below) may agree) to subscribe for additional 850,000 shares in Infocast, representing 3.86 per cent. of the enlarged issued capital of Infocast (which, when aggregate with the existing interest of China United in Infocast, represents a total of 7.73 per cent. of the enlarged issued share capital of Infocast), when the same are allotted and issued to China United in accordance with the previous separate agreement dated 16th March, 2000 between, inter alia, China United and Infocast. Such additional 3.86 per cent. interest in Infocast is not included nor reflected in the total cost of previous acquisition by China United of HK$140 million in its interests in SIL, DBZ and Infocast for transfer to the JV Company.

Information on SIL, DBZ and Infocast

    SIL (formerly known as TCM-Online Incorporated) was incorporated in British Virgin Islands on 9th March, 1999. SIL is providing, through its own websites on the internet, traditional Chinese medicine and health care content, consultation with medicine professionals, a conduit for interaction between communities, and a forum for exchange of information and for trading of products like hospital administration software, rehabilitation courses, health products and related equipment. One of the websites of SIL in the name of "CINTCM.AC.CN" has been in operation since January 2000. The second website is targeted to be launched on 22nd April, 2000 as a Chinese medicine portal and the third website is also targeted to be launched at the end of 2000. As stated in the announcement of China United dated 8th March, 2000, currently SIL owns

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48.45 per cent. interest in Beijing TCM-Online Company Limited (北京中研中醫藥信息網絡有

    限公司) which was established on 22nd September, 1999. SIL has also entered into a contract with 中國藥材公司 on 13th January, 2000 to establish TCM-Online Mall Limited, of which SIL will own 90 per cent. interest and 中國藥材公司 will own 10 per cent.. As stated in the

    announcement of China United dated 8th March, 2000, SIL did not have its profit and loss nor net asset value ascertained as at 8th March, 2000.

    DBZ was incorporated in Hong Kong on 5th January, 1995. It is principally engaged in the interactive communications consultant business. As stated in the announcement of China United dated 3rd January, 2000, for the year ended 31st March, 1999, DBZ has an unaudited turnover of approximately US$1,000,000 (approximately HK$7,765,000) and an unaudited loss of approximately US$500,000 (approximately HK$3,882,500).

    Infocast was incorporated in Hong Kong on 23rd May, 1996. It is principally engaged in the licensing of computer installations for online supply of financial and other information from database, software system development and provision of system integration services. The audited net losses of Infocast after taxation for the period from its date of incorporation to 31st December, 1997 and for the year ended 31st December, 1998 were approximately HK$15.9 million and HK$14.7 million respectively. The audited net deficit of Infocast as at 31st December, 1998 was approximately HK$3.6 million.

    The Directors confirm that the Company, the chief executives, directors, substantial shareholders of the Company or any of its subsidiaries or any of their respective associates (as defined under the Listing Rules) are not connected with all existing shareholders of each of SIL, DBZ and Infocast.

Reasons for and benefits of the Subscription

    The Directors that the Subscription will allow the Company to capture an opportunity to diversify its business into information technology and e-commerce arena which is expected to have high growth potential, particularly in view of Hong Kong government's long term dedicated efforts in establishing Hong Kong as a high-tech hub.

    The Directors further consider that setting up a joint venture company is not only a feasible way for the Group to tap into the information technology field but is also a channel for the Group to capitalise on the strength and support from a joint venture partner.

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GENERAL

Under the Listing Rules, the Subscription constitutes a discloseable transaction for the Company.

    A circular containing details of the terms of the Deed will be despatched to the shareholders of

    the Company as soon as practicable.

    In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

    "Subscription" the subscription by the Company (or its wholly-owned

    subsidiary) of a 30 per cent. interest in the JV Company

    pursuant to the Deed

    "China United" China United Holdings Limited, a company incorporated in

    Bermuda with limited liability whose securities are listed on

    the Stock Exchange of Hong Kong

    "China United's Subscription" (if so applicable) the subscription by China United for 70 per

    cent. interest in the JV Company for a cash consideration of

    up to HK$140 million pursuant to the Deed (to the extent that

    part of its interest in SIL, DBZ and Infocast is not transferred

    to the JV Company)

    "Company" Dong-Jun (Holdings) Limited, a company incorporated in

    Bermuda, the shares of which are listed and dealt in on the

    Stock Exchange

"Completion" Completion of the Deed

    "DBZ" DBZ Limited, a company with limited liability incorporated

    in Hong Kong

"Deed" the Deed of Undertaking dated 18th April, 2000, as

    supplemented by a supplemental deed of undertaking dated

    19th April, 2000, entered into between the Company and

    China United in relation to the Subscription

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"Director(s)" the director(s) of the Company

    "Hong Kong" the Hong Kong Special Administrative Region of the PRC

"Group" the Company and its subsidiaries

    "Infocast" Infocast Limited, a company with limited liability

    incorporated in Hong Kong

    "JV Company" Cupac Technology Limited, a company with limited liability

    which will be incorporated under the laws of Bermuda

    "Listing Rules" the Rules Governing the Listing of Securities on the Stock

    Exchange

"PRC" the People's Republic of China

    "Shares" ordinary shares of HK$0.01 each in the share capital of the

    Company

"Shareholders" Shareholders of the Company

    "SIL" SinoMD International Incorporated (formerly known as

    TCM-Online Incorporated), a company with limited liability

    incorporated in British Virgin Islands

    "Stock Exchange" The Stock Exchange of Hong Kong Limited

"HK$" Hong Kong dollars

"US$" United States dollars

     By Order of the Board

     Wong Chun Hung, Vincent

     Chairman

    Hong Kong, 19th April, 2000

    * The Chinese name is for identification purpose only.

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