10:07 LENOVO GROUP<00992> - Announcement (2) total voting rights of the Company. Pursuant to the Listing Rules, IBM has been deemed to be a connected person of the Company by the Stock Exchange following the Initial Closing. Undertakings In the Company Agreement and as disclosed in the Circular, IBM has undertaken not to, without the prior written consent of the Board, transfer any of the Excess Shares for a period of six months following the date of the Initial Closing or transfer any of the Base Consideration Shares for a period of up to three years following the date of the Initial Closing, except to the extent permitted by the Company Agreement. IBM may transfer up to such percentage of the Base Consideration Shares equal to the greater of: (a) the percentage determined by dividing the number of Shares disposed of by the Major Shareholder during the period between 27 January 2005 (the date on which the Extraordinary General Meeting approving, among others, the Asset Acquisition was held) and up to the date of the relevant transfer by the total number of Shares held by the Major Shareholder on 27 January 2005; and (b) the following applicable percentage or fraction of the Base Consideration Shares as at the relevant time: Period Percentage/fraction Until the first anniversary of the Initial Closing 0% From the day after the first anniversary of the Initial Closing One-third (1/3) From the day after the second anniversary of the Initial Closing Two-thirds (2/3) After the third anniversary of the Initial Closing 100% The above transfer restrictions do not apply to a transfer by IBM of the Consideration Shares to any of its affiliates or a transfer of such number of the Consideration Shares necessary to enable IBM to qualify for the cost method of accounting under US GAAP with respect to its holding of the Consideration Shares. Among the Consideration Shares, 435,717,757 Consideration Shares represent the Excess Shares which IBM took up as part of the consideration for the Asset Acquisition. The Company is currently in active discussions with IBM in relation to a possible repurchase of the Excess Shares from IBM following the Initial Closing. So far, no definitive agreement has been reached and the repurchase may or may not proceed. The Company will ensure that the repurchase, if proceeded, will be carried out in compliance with the Listing Rules and all applicable rules and regulations and that all applicable consents and approvals will be obtained from the relevant authorities. Should the Company and IBM reach an agreement for such repurchase, the Company will issue a further announcement in respect of such repurchase. Adjustment to Consideration Pursuant to the terms of the Asset Purchase Agreement and as stated in the Circular, the total amount of the consideration will be adjusted by subtracting the target net working capital from the actual net working capital. The target net working capital will be determined based on the historical patterns of the relationship between (a) accounts receivable, inventory and accounts payable, and (b) revenue, in each case, of the Business. It is not possible to determine the target net working capital at this stage. If the adjustment amount is less than zero by an amount in excess of US$25 million, IBM will pay the Company an amount equal to the adjustment amount minus US$15 million. If the adjustment amount is greater than zero by an amount in excess of US$25 million, the Company will pay IBM an amount equal to the adjustment amount minus US$15 million. The Directors expect that the target net working capital amount and the amount of the adjustment to the consideration will be determined at around 150 days following the Initial Closing. The Company will make a further announcement in relation to the "target net working capital" amount and the adjustment amount once they are determined. Subsequent Closings As stated in the Announcements and the Circular, with respect to the Remaining Assets which have not been transferred to the Company as of the Initial Closing, they will be transferred from time to time in one or more Subsequent Closings to be agreed between the Company and IBM. The Company will make a further announcement when the final Subsequent Closing takes place and further announcements in respect of other Subsequent Closings, if appropriate.