09:31     LENOVO GROUP<00992> - Announcement & Resumption (4)                 

    Second Amendment Agreement will be included in the circular setting out   
    details the Share Repurchase.                                             
                                                                              
    INVESTMENT AGREEMENT                                                      
                                                                              
    On 30 March 2005, the Company entered into the Investment Agreement       
    with the Investors pursuant to which the Investors agreed to subscribe    
    for, and the Company has agreed to issue, 2,730,000 unlisted              
    Convertible Preferred Shares and unlisted Warrants to subscribe for       
    237,417,474 Shares for an aggregate cash consideration of US$350          
    million (approximately HK$2,730 million). The Company is not aware of     
    IBM's voting intention with respect to the extraordinary general          
    meeting to be held to consider and, if thought fit, approve the terms     
    of the Investment Agreement as set out in the Investment Circular,        
    although IBM consented to the closing of the Investment Agreement on 29   
    April 2005 as set out in the Second Amendment Agreement.                  
                                                                              
    A circular containing details of the terms of the Investment Agreement    
    ("Investment Circular"), the Convertible Preferred Shares, the Warrants   
    and the proposed amendments to the articles of association of the         
    Company, together with the notice of the extraordinary general meeting    
    of the Company to be held on 13 May 2005 and the form of proxy, was       
    distributed to the Shareholders on 20 April 2005. It is expected that     
    the closing of the Investment Agreement will occur shortly after          
    approval is obtained from the Company's Shareholders at the               
    extraordinary general meeting of the Company to be held to consider       
    and, if thought fit, approve the terms of the Investment Agreement.       
                                                                              
    MAJOR SHAREHOLDER VOTING UNDERTAKING                                      
                                                                              
    On 30 April 2005, the Major Shareholder and IBM entered into a voting     
    undertaking agreement pursuant to which the Major Shareholder has,        
    subject to any applicable laws or regulations, the Listing Rules and      
    the requirement and decisions of any applicable authority, undertaken     
    and agreed with IBM to vote (or procure to be voted) in favour of the     
    resolutions proposed at any general meeting of shareholders of the        
    Company to, inter alia, approve all agreements and other arrangements     
    entered into by IBM and the Company or either of their respective         
    subsidiaries or affiliates as of the Initial Closing and to refresh the   
    connected transaction approvals granted in respect of some or all of      
    such transactions. The agreement includes an undertaking to vote in       
    favour of any shareholder resolution that authorises the Company to       
    repurchase any of the Excess Shares.                                      
                                                                              
    INVESTOR VOTING UNDERTAKINGS                                              
                                                                              
    Following completion of the Investment Agreement, the Investors will      
    become the registered and/or beneficial owners of the Convertible         
    Preferred Shares and the Warrants. The Investors entered into various     
    investor voting undertakings with IBM on 29 April 2005 pursuant to        
    which the Investors covenanted and agreed to vote in favour of the        
    Repurchase Agreement at any general meeting of the Shareholders of the    
    Company subject to any applicable laws or regulations, the Listing        
    Rules and the requirements and decisions of any regulatory authority or   
    governmental authority. The entry into the voting undertakings was a      
    condition precedent the Second Amendment Agreement pursuant to which      
    IBM consented to the closing of the Investment Agreement as set out       
    above. The Investors are not parties to the Second Amendment Agreement.   
                                                                              
    REASONS FOR THE SHARE REPURCHASE                                          
                                                                              
    The Board considers that IBM having consented to the closing of the       
    Investment Agreement prior to the Company having obtained Shareholders'   
    approval for the Share Repurchase provides the Company with certainty     
    with respect to its fund raising activities and with respect to its       
    working capital requirements.                                             
                                                                              
    In consideration for IBM's consent and after arm's length negotiations    
    between the Company and IBM, the Company has agreed to a repurchase       
    price of the Excess Shares of HK$2.725. The Share Repurchase Price is     
    equivalent to the conversion price of the Convertible Preferred Shares    
    into Shares and represents a premium of HK$0.05 to the Issue Price of     
    the Excess Shares. The Company considers that the conversion price of     
    the Convertible Preferred Shares into Shares provides a useful            
    benchmark for determining the boundaries of the Share Repurchase Price.   
    Furthermore, the Company considers that as the Share Repurchase Price     
    is equivalent to the conversion price of the Convertible Preferred        
    Shares and that the agreement with IBM permits the timely closing of      
    the Investment Agreement, the Repurchase Agreement's terms and            
    conditions are in the best interests of the Company and the               
    Shareholders as a whole.                                                  
                                                                              
    The Board also considers that the Repurchase Agreement reduces the        
    dilution effect (on an earnings per share basis) resulting from the