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DIRECTORS’ REPORT (Continued)
2008/09 Annual Report Lenovo Group Limited
72
Connected transactions
During the year, the following transactions constitute continuing connected transactions of the Company and require disclosure in
the annual report pursuant to rule 14A.45 of the Listing Rules.
Continuing connected transactions
1. On May 23, 2007, the Company entered into a service agreement (the “Service Agreement”) with Mr. Wong Wai Ming (“Mr.
Wong”) for an initial term of 3 years in respect of the appointment of Mr. Wong as its chief financial officer and senior vice
president with effect from July 15, 2007. Pursuant to the Service Agreement, the total annual compensation of Mr. Wong
shall not exceed HK$40,000,000. Mr. Wong was an independent non-executive director of the Company within the preceding
12 months prior to May 23, 2007 thus a connected person within the meaning of the Listing Rules. Details of the Service
Agreement are set out in the Company’s announcement dated May 23, 2007.
2. On January 30, 2008, Lenovo Manufacturing Limited (“Lenovo Manufacturing”) and Lenovo Beijing Limited (“Lenovo Beijing”),
the Company’s wholly-owned subsidiaries (collectively the “Vendors”), entered into a conditional agreement (the “S&P
Agreement”) with Jade Ahead Limited (“Jade Ahead”), Ample Growth Enterprises Limited (“Ample Growth”) and others
(collectively the “Purchasers”), pursuant to which the Vendors agreed to dispose of and the Purchasers agreed to purchase
the entire registered capital of 聯想移動通信科技有限公司 (Lenovo Mobile Communication Technology Ltd.) (“Lenovo Mobile”)
at an aggregate consideration of US$100,000,000 subject to adjustment (the “Consideration”) (the “Disposal”). Both Jade
Ahead and Ample Growth are regarded as associates of the controlling shareholder of the Company and thus connected
persons within the meaning of the Listing Rules. Details of the Disposal are set out in the Company’s announcement dated
January 30, 2008 and circular dated February 20, 2008. The S&P Agreement and the transactions contemplated thereunder
were approved by the independent shareholders at an extraordinary general meeting of the Company on March 17, 2008. The
Disposal was completed on March 31, 2008 (the “Completion”).
Pursuant to the S&P Agreement, the Purchasers and the Vendors have agreed to, inter alia, the following:
(a) Lenovo Manufacturing or its designee shall have a right to subscribe from Lenovo Mobile for up to 5% of its total
registered capital on a fully-diluted basis (the “Option”) exercisable at any time within four years following the Completion
of the Disposal, provided that the Option shall be terminated upon the listing of the business or operations of Lenovo
Mobile on a PRC or an internationally recognized stock exchange. The exercise price of the Option shall equal to
the pro rata portion of the Consideration subject to adjustment for the interest to be purchased or subscribed. The
Option was granted to Lenovo Manufacturing as part of the transactions contemplated under the S&P Agreement at nil
consideration.
(b) Lenovo Beijing agreed to grant an entrusted loan in the principal amount of US$25,000,000 to Lenovo Mobile at the
prevailing base lending rate published by the People’s Bank of China as at the date of entering into of the relevant loan
agreement(s) for a term of up to three years as its working capital after Completion (the “Entrusted Loan”). The Entrusted
Loan will be secured by a charge over the assets (including the receivables and inventories) of Lenovo Mobile equivalent
to principal amount of the Entrusted Loan.
(c) Lenovo Beijing agreed to provide certain transition services include sharing of office spaces, provision of logistic,
administrative and information technology services to Lenovo Mobile on an allocated fee plus tax basis up to March
31, 2009 pursuant to the transition services agreement entered on March 25, 2008 (the “TSA”). It was estimated that
the aggregate annual transaction amount for the provision of the transition services under the TSA will not exceed
HK$40,000,000.