Exhibit 10.5
Asset Management Agreement
between
China Life Insurance (Group) Company
and
China Life Insurance Asset Management
Company Limited
Table of Contents
1. APPOINTMENT...............................................................3
2. INVESTMENT MANAGEMENT SERVICES............................................3
3. METHODS OF INVESTMENT MANAGEMENT SERVICES.................................4
4. CONFLICTS OF INTEREST.....................................................8
5. INVESTMENT MANAGEMENT SERVICES FEES AND PERFORMANCE-
BASED BONUSES AND REBATES.................................................9
6. THIRD PARTY COSTS AND EXPENSES...........................................18
7. TAXES....................................................................18
8. REPRESENTATIONS, WARRANTIES AND COMMITMENTS..............................19
9. TERM.....................................................................21
10. INDEMNIFICATION..........................................................21
11. LIABILITIES FOR BREACH OF THE AGREEMENT..................................21
12. TERMINATION..............................................................22
13. FORCE MAJEURE............................................................23
14. CONFIDENTIALITY..........................................................23
15. ASSIGNMENT...............................................................24
16. NON-WAIVER...............................................................24
17. NOTICES..................................................................24
18. PERFORMANCE..............................................................25
19. FURTHER ACTIONS..........................................................25
20. GOVERNING LAW AND DISPUTE RESOLUTION.....................................26
21. EFFECTIVENESS, COPIES AND MODIFICATIONS..................................26
2
This Asset Management Agreement ("Agreement") is signed by the following parties
in Beijing, People's Republic of China ("PRC") on November 27, 2003:
.. China Life Insurance (Group) Company ("Party A")
Address: 5 Xxxx Xxxx Yuan Xi Qu, Xicheng District, Beijing
Legal Representative: Wang Xxxx Xxxxx
.. China Life Insurance Asset Management Company Limited ("Party B")
Address: 0/X Xxxxx X, Xxxxxxx Xxxxxxxx, Xx. 00 Financial Street, Xicheng
District, Beijing
Legal Representative: Wang Xxxx Xxxxx
WHEREAS,
(1) Party A is legally established and duly organized as a wholly state-owned
insurance company.
(2) Party B is a legally established and duly organized company, which is
qualified to carry out the investment management of insurance funds as
approved by the China Insurance Regulatory Commission.
(3) Party A intends to entrust Party B with the investment management of its
insurance assets.
(4) Party A and Party B wish to make appropriate arrangements on matters
relating to Party A entrusting Party B with the investment management of
insurance funds.
THEREFORE, based upon the principle of mutual benefit, both parties agree,
through friendly negotiation, on the following terms:
1. Appointment
Subject to the terms and conditions provided in this Agreement, Party A
hereby appoints Party B, and Party B hereby accepts such appointment and
agrees, to perform investment management services with respect to the
Entrusted Assets described in Section 2.1.
2. Investment Management Services
2.1. The Entrusted Assets are the insurance funds entrusted by Party A to
Party B for the purpose of investment management under the
Agreement, which include such assets entrusted by Party A to Party B
as of the effective date of this agreement (within thirty (30)
business days after the date of this Agreement, Party A shall
provide Party B in writing a checklist of the Entrusted Assets as of
the date of this Agreement), the funds remitted to the Settlement
Account (as defined
3
below) by Party A under this Agreement from time to time during the
term of this Agreement, and the profits arising from the investment
management of such funds, but which exclude the funds remitted by
Party B to the designated account of Party A upon Party A's
instructions according to this Agreement.
2.2. The Investment Management Services are the professional services to
be provided by Party B, and in the name of Party A, in accordance
with the Agreement with respect to the investment of the Entrusted
Assets, and the Investment Guidelines (as defined below) provided in
writing, revised from time to time, by Party A, and subject to any
limitation on the investment scope of insurance funds provided in
the PRC Insurance Law, other PRC laws and regulations, and relevant
provisions promulgated by insurance regulatory authorities.
3. Methods of Investment Management Services
3.1. Authorization
3.1.1. The Investment Management Services shall not involve the
transfer or delivery of the Entrusted Assets. For the
duration of the Agreement, Party A shall retain the
ownership of the Entrusted Assets and shall be entitled to
investment gains of, and be responsible for the investment
losses of, the Entrusted Assets.
3.1.2. Party A shall, within 30 business days following the
execution of this Agreement or at any other time mutually
agreed by the parties, carry out such authorization
procedures necessary to enable Party B to conduct investment
management for the bank accounts and shareholders' accounts
relating to Entrusted Assets (the "Special Accounts"). The
Special Accounts shall be used only for the investment
management of the Entrusted Assets and shall be segregated
from all other accounts in the name of Party A covering all
assets other than the Entrusted Assets.
3.1.3. Upon Party A's approval or acknowledgement and after
carrying out necessary authorization procedures, Party B may
employ auditors, actuaries, attorneys and other
professionals in the name of Party A or in its own name for
the purpose of carrying the objects of this Agreement.
3.1.4. Party A shall, within 30 business days following the date of
this Agreement or at any other time mutually agreed by the
parties, carry out all other necessary authorization
procedures to enable Party B to represent Party A and, in
the name of Party A,
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coordinate, negotiate and sign documents with third parties
for the purposes of the Agreement.
3.1.5. During the term of the Agreement, Party A shall take all
actions necessary to assist Party B in performing its
obligations under Section 2.2, including but not limited to
execution of necessary documents.
3.2. Funds Transfer-in
3.2.1. Party A shall, within 30 business days following the date of
this Agreement or at any other time mutually agreed by the
parties, designate an account or open an account for the
purpose of transferring funds in Party A's name (such
designated account or newly opened account, a "Settlement
Account") at a bank mutually agreed upon by Party A and
Party B and take necessary steps to grant Part B appropriate
authorization to give, from time to time, instructions to
the bank where the Settlement Account is opened. Party A
shall inform Party B of the account information in writing
on the date the account is opened.
3.2.2. During the term of this Agreement, Party A may remit funds
to the Settlement Account from time to time. Party A shall
confirm with Party B in writing any remittance it makes to
the account of Party B on the date of such remittance. Such
funds shall become part of the Entrusted Assets on the date
of remittance unless Party B raises objections within 3
business days of the receipt of such confirmation.
3.2.3. The Settlement Account shall only be used for purposes of
this Agreement and shall be segregated from all other
accounts of Party A.
3.3. Funds Transfer-out
3.3.1. Party A's authorized representatives may give Party B
written instructions on fund transfers ("Fund Transfer
Instructions") and Party B shall carry out such instructions
with no obligation to check if such representatives have
appropriate authorization to issue such instructions on
behalf of Party A. Such instructions shall state the amount
and the date of transfer, but shall not dictate the specific
assets to be disposed of. For any transfer of funds in an
amount less than 500 million yuan, the Fund Transfer
Instructions shall be given one business day before such
transfer is made. For any transfer of funds in an amount of
more than 500 million yuan but less than 1 billion yuan, the
Fund Transfer Instructions shall be given two
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business days before such transfer is made. For any transfer
of funds in an amount of more than 1 billion yuan, the Fund
Transfer Instructions shall be given three business days
before such transfer is made. If for any special reason the
Fund Transfer Instructions cannot be given in accordance
with the above requirements, both parities shall agree upon
another time in advance. Party B, after receiving such Fund
Transfer Instructions, shall remit funds to the designated
account of Party A in accordance with the instructions.
Party B shall confirm with Party A in writing such
remittance on the date such remittance is made to the
designated account of Party A. Such funds shall no longer
constitute part of the Entrusted Assets once Party B issues
the written confirmation that the funds have been
transferred into the Transfer-out Account, unless Party A,
within 3 business days after receiving such written
confirmation, raises an objection.
3.4. Scope of Authority
3.4.1. Party A shall, before the Agreement is signed, formulate and
submit to Party B in writing Investment Guidelines
("Investment Guidelines"), pursuant to Section 8.2.2 of this
Agreement.
3.4.2. The Investment Guidelines may provide, among other things:
3.4.2.1. the principles governing the investment of the
Entrusted Assets;
3.4.2.2. the liquidity requirements for the Entrusted Assets
for a particular period;
3.4.2.3. the limitations on investment types and portfolios
for a particular period;
3.4.2.4. the requirements on asset/liability matching and
risk control for a particular period; and
3.4.2.5. the asset addition and liquidation plan for a
particular period.
3.4.3. During the term of this Agreement, Party A may revise the
Investment Guidelines for the next investment year before
such investment year starts, and submit the revised
Investment Guidelines to Party B, pursuant to Section 8.2.2
of this Agreement. Where no revision is made to the
Investment
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Guidelines for the next investment year, the Investment
Guidelines of the current year shall remain in effect.
3.4.4. During the term of this Agreement, Party A may revise the
Investment Guidelines from time to time as it deems
necessary and shall notify Party B of any revision to the
Investment Guidelines in writing.
3.4.5. Party A may consult with Party B for its professional
opinion in formulating and/or revising the Investment
Guidelines in accordance with Section 3.4.1 and Section
3.4.3 of the Agreement.
3.4.6. Party B's implementation of the investment management of
Entrusted Assets shall comply with laws, regulations,
provisions and requirements of the applicable insurance
regulatory authorities, as well as the Investment Guidelines
formulated and/or revised by Party A in accordance with this
Agreement. Party B shall owe a fiduciary obligation to Party
A. Party shall conduct the investment management of
Entrusted Assets with due care and with the same degree of
experience, skills, judgment and care as those used for its
own funds. Notwithstanding the above provisions, Party B
shall have discretion over the decision-making and
operations of the Entrusted Assets.
3.4.7. During the term of this Agreement, except for giving Fund
Transfer Instructions to Party B and formulating and/or
revising and delivering the Investment Guidelines to Party B
pursuant to the terms of the Agreement, Party A shall not
directly engage in the investment management of the
Entrusted Assets.
3.5. Reports and Monitoring
3.5.1. Party B shall, within 90 days following the end of each
calendar year, make and submit to Party A an annual report
with regard to the Investment Management Services ("Annual
Report"). The Annual Report shall include information on
profits of the various investments of Entrusted Assets and
the average investment rate of return for the Entrusted
Assets for that year.
3.5.2. Party B shall, within 15 days following the end of each
calendar quarter, make and submit to Party A a written
report setting forth the investment management results and
asset structure for such quarter.
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3.5.3. Party B shall, according to Party A's requirements, provide
to Party A such other statements and information as required
by Party A about the Investment Management Services.
3.5.4. Party B shall ensure the truthfulness, completeness, and
accuracy of the reports, statements and information provided
pursuant to the above Sections 3.5.1 and 3.5.3.
3.5.5. Party A shall have the right to monitor the investment
management of Party B.
3.6. Examination of books
3.6.1. Party A and Party B shall, within 10 business days following
each calendar month, cross-check the statements of the
Special Accounts and the Settlement Account.
3.6.2. Party B shall maintain complete files of all records,
accounting certificates, books, statements and other
materials relating to the Investment Management Services for
at least 15 years.
4. Conflicts of Interest
4.1. Party A hereby recognizes that, when Party B conducts investment
management services in regard to Entrusted Assets and, at the same
time, in regard to its own assets or the assets of any third party,
conflicts of interest may arise in respect of (but not limited to)
the distribution of resources, provision of services and
distribution of investment opportunities.
4.2. When Party B determines in its professional judgment that there is
an existing or possible conflict of interest, Party B shall inform
Party A of such conflict of interest.
4.3. Party B shall have full discretion in taking any such action or
measure as it deems in its professional judgment to be fair,
reasonable and necessary to deal with such conflicts of interest.
4.4. Party B shall not take any of the following actions:
4.4.1. trading the Entrusted Assets with itself, or with the assets
entrusted by other parties, without Party A's advance
written approval; or
4.4.2. using Entrusted Assets to pursue its own interests or the
interests of any third party at the expense of Party A's
interests.
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4.5. Party B shall formulate, establish and enhance relevant rules and
systems (including but not limited to business operation procedures,
staff conduct codes, accounting and financial systems, internal
controls and inspection rules), so as to ensure the effective
implementation of the provisions of Article 4 of the Agreement.
Party B shall establish necessary internal control systems in regard
to (but not limited to) personnel, finances and accounts so as to
ensure the fairness, equity and independence of the investment
management operations associated with the Entrusted Assets and the
assets owned by Party B or entrusted by other parties. Party B
shall, upon Party A's request, appoint special account managers for
the Entrusted Assets.
4.6. Party B's obligations under Section 4.5 shall not affect its full
discretion under the foregoing Section 4.3 and the actions and
measures taken in accordance with Section 4.3.
5. Investment Management Services Fees and Performance-based Bonuses and
Rebates
5.1. Party A shall pay to Party B, and Party B is entitled to receive,
such investment management service fees and performance bonus fees
as provided under this Agreement. Party B shall rebate a portion of
its fees according to its performance, and Party A is entitled to
receive such rebate, pursuant to the provisions of the Agreement.
5.2. The Investment Management Service Fees shall be determined according
to the following provisions:
5.2.1. Each calendar month shall be a Billing Period.
5.2.2. The Investment Management Service Fees for each Billing
Period shall be the aggregate of the monthly investment
management service fees for each category of assets under
management, plus additional service fees for investment
management services for that particular month, pursuant to
Section 5.2.6 of the Agreement.
5.2.3. The monthly investment management service fee for each
category of the assets under management shall be the average
of the net value of such category at the end of the relevant
month and the previous month, multiplied by the applicable
annual rate for the relevant month, and then divided by
twelve.
5.2.3.1. The applicable annual rate for each category of the
assets under management for a particular month
shall be calculated according to the following:
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(1) The annual rate applicable to each category of assets
under management for the relevant month is:
(i) when the total amount of Entrusted Assets is
equal to or below XXX 00 billion at the end of
the relevant month:
Bank balances and cash...................... 0%
Existing term deposits...................... 0.00400%
Securities purchased under
agreement to resell......................... 0.01500%
Fixed maturity securities, financial
instruments issued by the central bank...... 0.11240%
Equity investments.......................... 0.38500%
(ii) when the total amount of Entrusted Assets is more
than RMB 10 billion but less than or equal to XXX
00 billion at the end of the relevant month:
Bank balances and cash...................... 0%
Existing term deposits...................... 0.00400%
Securities purchased under
agreement to resell......................... 0.01425%
Fixed maturity securities, financial
instruments issued by the central bank...... 0.10390%
Equity investments.......................... 0.35575%
(iii) when the total amount of Entrusted Assets is more
than RMB 30 billion but less than or equal to XXX
00 billion at the end of the relevant month:
Bank balances and cash...................... 0%
Existing term deposits...................... 0.00400%
Securities purchased under
agreement to resell......................... 0.01350%
Fixed maturity securities, financial
instruments issued by the central bank...... 0.09540%
Equity investment........................... 0.32650%
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(iv) when the total amount of Entrusted Assets is more
than RMB 50 billion but less than or equal to RMB
100 billion at the end of the relevant month:
Bank balances and cash...................... 0%
Existing term deposits...................... 0.00400%
Securities purchased under
agreement to resell......................... 0.01275%
Fixed maturity securities, financial
instruments issued by the central bank...... 0.08690%
Equity investments.......................... 0.29725%
(v) when the total amount of Entrusted Assets is more
than RMB 100 billion at the end of the relevant
month:
Bank balances and cash...................... 0%
Existing term deposits...................... 0.00400%
Securities purchased under
agreement to resell......................... 0.01200%
Fixed maturity securities, financial
instruments issued by the central bank...... 0.07840%
Equity investments.......................... 0.26800%
(2) The total amount of Entrusted Assets at the end of
the relevant month shall be the aggregate of the net
value of each category of the assets under management
at the end of the relevant month.
(3) During the term of this Agreement, within one month
following the end of each year, Party A and Party B
may, in accordance with the principle of fair market
dealings, negotiate to modify, and confirm in
writing, the monthly applicable annual rate of each
category of assets under management for each Billing
Period of that year. If no such agreement is reached,
the monthly applicable annual rate of each category
of assets under management for the last Billing
Period of the preceding year shall remain in force.
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5.2.3.2. The net value of each category of assets under
management at the end of the relevant month shall
be calculated according to the following methods:
(1) For any bond listed on the stock exchange, the
closing price (full price) on the stock exchange on
the last trading day of the relevant month or, if
there is no trading during such month, the closing
price (full price) on the nearest trading day of such
month, multiplied by the amount of the security;
(2) For any bond traded on the inter-bank bonds market,
the fair price of such security on the last trading
day of the relevant month multiplied by the amount of
such security. The aforementioned fair price shall be
determined in accordance with the following method:
(i) if there is a transaction price for such security
during the relevant month, the fair price shall
be the weighted average price of such security as
announced by the inter-bank bonds market on the
last trading day of the relevant month;
(ii) if there is no trade for such security during the
relevant month, the fair price shall be the
average price of the offering prices from the
two-side bid for such security on the last
trading day of the relevant month;
(iii) if there is neither a weighted average price nor
offering prices for such security during the
relevant month, the fair price shall be the
corresponding price of such security as quoted in
the yield curve of the "alpha" system as of the
end of such month;
(3) For any closed-end fund listed on a stock exchange,
the closing price on the stock exchange on the last
trading day of the relevant month or, if there is no
trading during such month, the closing price on the
latest trading day preceding such month, multiplied
by the number of units of the closed-end fund;
(4) For any open-end fund, the net value of such fund as
publicized on the last day of repurchasing in the
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relevant month multiplied by the number of units of
such fund.
(5) For any bank deposits, the principal of the deposit
plus the interest payable as of the last day of the
relevant month;
(6) For any security purchased under agreement to resell,
the principal plus the interest payable as of the
last day of the relevant month;
(7) For any repurchase arrangement, the amount of total
assets minus the sum of the principal and interest
payable as of the last day of the relevant month,
with the deduction to be performed in the following
order: security sold under agreement to repurchase
and then current account deposits;
(8) For any unlisted bond or unlisted security investment
fund, the cost of such security plus dividends or
interest payable as of the last day of the relevant
month;
(9) For any interest receivable on bonds or dividends on
security investment funds, if the interest or the
dividend has not been actually distributed, it shall
be included in the net asset value of the relevant
bond or security investment fund pursuant to Section
5.2.3.2 of the Agreement; and once such bond interest
or dividend has been actually distributed, it shall
be counted as cash.
(10) For any kind of financial instruments issued by the
central bank, the calculation method for bonds shall
equally apply.
5.2.3.3. For any category of investment that is not
currently provided under section 5.2.3 of the
Agreement but may be permitted by laws, regulations
and the insurance regulatory authority and thus may
become available from time to time in the future,
Party A and Party B shall, through timely
negotiations, and in accordance with the principles
of fairness and reasonableness, determine the
calculation methods for the applicable annual rate
and net value. Where conditions for calculation of
net asset value on a daily basis become
13
available, the parties shall mutually discuss and
agree upon in writing a calculation method.
5.2.4. When the effective date of this Agreement is not the first
day of the relevant month, the monthly service fee for each
category of the assets under management of the first Billing
Period after the Agreement comes into effect shall be the
net value of the assets under management at the end of the
month, multiplied by the annual rate applicable to that
month, divided by 12 and then divided by the total number of
days of the relevant month and then multiplied by the number
of days left in the relevant month after the effective date
(including the effective date).
5.2.5. When the Agreement is terminated under Article 12, and the
date of termination is not the last day of the month, the
monthly service fee for each category of assets under
management shall be the net value of assets under management
at the end of the relevant month, multiplied by the annual
rate applicable to the relevant month, divided by 12 and
then divided by the total number of days of the relevant
month, and then multiplied by the number of days in the
relevant month prior to the date of termination (including
the effective date).
5.2.6. Monthly additional fees for Investment Management Services
comprise the service fees for additional term deposits and
additional securities purchased in primary markets during
the relevant month, in which:
5.2.6.1. Service fees for monthly additional term deposits
shall be calculated by multiplying the net value
of additional term deposits made during the
relevant month by the rate set forth in Section
5.2.6.3.
5.2.6.2. Service fees for monthly securities purchased in
primary markets shall be calculated by multiplying
the net total value of securities purchased in
primary markets during the relevant month by the
rate set forth in Section 5.2.6.3.
5.2.6.3. The applicable rate is:
(i) when the total amount of Entrusted Assets is
equal to or below XXX 00 billion at the end of
the relevant month:
Additional term deposits.................... 0.01100%
Securities purchased in primary markets..... 0.02600%
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(ii) when the total amount of Entrusted Assets is more
than RMB 10 billion but less than or equal to XXX
00 billion at the end of the relevant month:
Additional term deposits.................... 0.01025%
Securities purchased in primary markets..... 0.02350%
(iii) when the total amount of Entrusted Assets is more
than RMB 30 billion but less than or equal to XXX
00 billion at the end of the relevant month:
Additional term deposits.................... 0.00950%
Securities purchased in primary markets..... 0.02100%
(iv) when the total amount of Entrusted Assets is more
than RMB 150 billion but less than or equal to
RMB 100 billion at the end of the relevant month:
Additional term deposits.................... 0.00875%
Securities purchased in primary markets..... 0.01850%
(v) when the total amount of Entrusted Assets is more
than RMB 100 billion at the end of the relevant
month:
Additional term deposits.................... 0.00800%
Securities purchased in primary markets..... 0.01600%
5.3. Payment of Investment Management Services fees:
5.3.1. Party B shall, within 7 business days following the end of
each Billing Period, provide Party A with a report on the
net asset value and Investment Management Services fees for
such Billing Period, together with all relevant bills and
particulars.
5.3.2. Unless Party A produces, within 10 business days following
receipt of the aforementioned report, bills and particulars,
sufficient evidence showing that the amount of Investment
Management Services Fees for such period are unreasonable,
Party B has the right, upon written confirmation by Party
A,to
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transfer from the cash portion of the Entrusted Assets the
amount of the Investment Management Service Fees as stated
in such report, bills and particulars directly to Party B's
account within 15 business days after the end of each
billing period. Party B shall deliver a written notice to
Party A on the date such transfer is made. On the date such
written notice is delivered to Party A from Party B, the
funds so transferred shall no longer be a part of the
Entrusted Assets.
5.4. Performance-based bonus and rebate:
5.4.1. During the term of this Agreement, Party A shall not be
obligated to pay Party B any performance-based bonus if the
average investment rate of return for Entrusted Assets for a
particular year, as stated in the Annual Report for that
year, does not exceed the ceiling of the floating range of a
benchmark agreed upon by both parties in accordance with
section 5.4.6 for the purpose of determining any reward or
penalties (the "Benchmark"). The ceiling of the floating
range of the Benchmark equals to the sum of the Benchmark
and 0.10% for any given year.
5.4.2. During the term of this Agreement, Party B shall not be
obligated to pay any performance-based penalty if the
average investment rate of return of Entrusted Assets for a
particular year, as stated in the Annual Report for that
year, does not fall below the Benchmark by at least 0.10%,
being the floor of the Benchmark range.
5.4.3. During the term of this Agreement, if the average investment
rate of return of Entrusted Assets for a particular year, as
stated in the Annual Report for that year, exceeds the cap
of the Benchmark range for that same year, Party A shall be
obligated to pay Party B an appropriate performance-based
bonus, the specific amount of which shall be determined by
Party A and Party B through negotiations. Notwithstanding
the foregoing provision, Party A and Party B agree that the
amount of performance-based bonus shall be capped at 50% of
the annual Investment Management Services fees for that
particular year, which means that under no circumstances
shall the amount of performance-based bonus agreed upon by
both parties exceed 50% of the annual Investment Management
Services Fees for such year.
5.4.4. During the term of this Agreement, if the average investment
rate of return of Entrusted Assets for a particular year, as
stated in the Annual Report for that year, falls below the
floor of the
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Benchmark range for that same year, Party B shall be
obligated to rebate an appropriate amount of its fees paid
by Party A, the specific amount of which shall be determined
by Party A and Party B through negotiations. Notwithstanding
the foregoing provision, Party A and Party B agree that such
rebate amount shall be capped at 25% of the annual
Investment Management Service Fees, which means that under
no circumstance shall the rebated amount agreed upon by both
parties exceed 25% of the annual investment management
service fees for such year.
5.4.5. The annual Investment Management Service fees for the
relevant year shall be the aggregate of the Investment
Management Services Fees paid by Party A to Party B
according to the calculation method set forth in Article 5.2
hereof for all of the Billing Periods of such relevant year.
5.4.6. During the term of this Agreement, Party A and Party B shall
determine, through negotiations, the Benchmark for a
particular year within 5 business days after Party B submits
to Party A the Annual Report for that year in accordance
with Section 3.5.1. In determining the Benchmark, Party A
and Party B may refer to the average investment rate of
return of Chinese insurance industry for that year, as
announced by the insurance regulatory authority of PRC, to
the extent it is available.
5.5. Payment of performance-based bonus or rebate:
5.5.1. During the term of this Agreement, Party A and Party B shall
determine and confirm in writing, in addition to the
Benchmark for a particular year pursuant to Section 5.4.6,
the amount of the performance-based rebate or bonus pursuant
to Section 5.4 of the Agreement.
5.5.2. Within 10 business days following the date Party A and Party
B determine and confirm in writing the amount of the
performance-based bonus pursuant to Section 5.5.1, and upon
written confirmation by Party A, Party B has the right to
transfer from the cash portion of the Entrusted Assets, the
amount of such performance-based bonus as determined above
directly to Party B's account. Party B shall deliver a
written notice to Party A on the date such transfer is made.
On the date such written notice is delivered to Party A from
Party B, the fund so transferred shall no longer be a part
of the Entrusted Assets.
5.5.3. Party B shall, within 10 business days following the date
Party A and Party B determine and confirm in writing the
amount of
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the performance-based rebate pursuant to Section 5.5.1,
remit the aforementioned rebated amount to an account
designated by Party A in writing.
5.6. Provided that this Agreement is renewed pursuant to Section 9.2,
Party A and Party B may, before the renewed term commences, redefine
the calculation method of the Investment Management Services Fees
and the stipulations on performance-based bonuses and rebates during
the renewal term in accordance with the principle of fair market
dealings, and enter into written agreement pursuant to Section 21.3.
If no such agreement is reached, the Investment Management Services
Fees and performance-based bonuses and rebates during the renewal
term shall be calculated based on the calculation method used before
the renewal.
6. Third Party Costs and Expenses
6.1. Third Party Costs and Expenses shall mean the costs and expenses
charged by a third party and incurred by Party B in performing the
Investment Management Services pursuant to the Agreement, and
approved or verified by Party A, except for the Investment
Management Services Fees and performance-based bonus to be paid by
Party A pursuant to Article 5 and the taxes and other expenses under
section 7. Third Party Costs and Expenses shall include, but not be
limited to, any expense arising from the engagement by Party B (in
its own name or in the name of Party A), and approved or verified by
Party A, of any outside auditors, actuaries, lawyers or other
professionals for the purpose of the Agreement, and any transaction
fees or bank expenses incurred in connection with the Agreement.
6.2. Third Party Costs and Expenses shall be borne by Party A to the
extent of the actual amounts incurred. Party B shall under no
circumstances be obligated to pay Third Party Costs and Expenses
with its own funds unless it volunteers to do so. Subject to
different situations, the payments of Third Party Costs and Expenses
may, in accordance with the written instructions of Party B, be made
by Party A or withdrawn directly by the third party.
6.3. Party A shall not be obligated to bear any costs and expenses
relating to the Investment Management Services other than those
stipulated in the Agreement.
7. Taxes
7.1. Business taxes and surcharges, if any, relating to the investment
yields arising from the entrusted investment assets shall be
calculated and borne by Party A, while Party B shall provide the
details of the transactions. Income taxes, if any, relating to
Entrusted Assets shall be
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borne by Party A and calculated by it alone in accordance with tax
laws and regulations. Stamp duties relating to investment
transactions shall be directly deducted by relevant authorities, and
accounted for as deductions from investment yields.
7.2. Party A shall bear all statutory tax obligations arising from its
status as a tax obligor under relevant tax laws and regulations.
Party A shall be responsible for any expenses arising from
performing such duties.
7.3. Party B shall give necessary reasonable assistance to Party A in
performing the duties as provided in Section 7.1 and Section 7.2.
7.4. Party B shall bear all statutory tax obligations arising from its
status as a tax obligor under relevant tax laws and regulations.
8. Representations, Warranties and Commitments
8.1. Each Party to this Agreement makes the following representations,
warranties and commitments to the other Party:
8.1.1. It has full rights and authorization, including but not
limited to approvals, consents or licenses from relevant
governmental departments, as well as the internal
authorizations of the company, to enter into this Agreement;
8.1.2. This Agreement shall become binding and enforceable upon it
after it comes into effect by the means stipulated in the
Agreement; and
8.1.3. No terms of the Agreement are in violation of its bylaws or
PRC laws and regulations.
8.2. Party A makes the following additional representations, warranties
and commitments to Party B:
8.2.1. The Entrusted Assets are legally obtained and can be legally
invested according to laws, regulations and relevant
requirements of the insurance regulatory authorities and
other regulatory authorities;
8.2.2. The Investment Guidelines and Fund Transfer Instructions to
be submitted to Party B in accordance with the Agreement
comply with laws, regulations and provisions and with the
requirements of the insurance regulatory authorities and
other authorities; and
8.2.3. It shall bear any losses in regard to the Entrusted Assets
or other funds of Party A arising from the credit risks,
including
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but not limited to liquidation risk, of the relevant banks
where it opens any account, including Special Accounts and
the Settlement Account.
8.3. Party B makes the following additional representations, warranties
and commitments that during the term of this Agreement, it will not:
8.3.1. misappropriate or seize the Entrusted Assets or the
investment yields; or
8.3.2. conduct investment services in violation of the Investment
Guidelines or the scope regarding the use of insurance funds
as permitted by laws, regulations and the insurance
regulatory authority.
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9. Term
9.1. The term of the Agreement shall end on December 31, 2005.
9.2. Both parties hereby agree that unless either party gives a written
notice to the other party of its intent not to renew the Agreement
at least 90 days prior to the expiration of the current term of the
Agreement or the renewal term, the Agreement shall be automatically
renewed for successive three-year terms, provided that such renewal
does not violate the listing rules where Party B is listed.
10. Indemnification
10.1. Party A shall indemnify and hold harmless Party B, its affiliates,
their directors, management, employees, agents and representatives
(collectively "Indemnified Parties") from and against any claims,
litigation losses, judgment, damages, penalties or expenses
(collectively "Losses") and /or liabilities arising out of or in
connection with the performance of any duty by the Indemnified
Parties hereunder, other than Losses and/or liabilities that are
caused by the fault of the Indemnified Parties, as determined by a
final judicial judgment.
10.2. Notwithstanding other provisions of the Agreement, the Indemnified
Parties shall not be responsible for any Losses incurred by Party A
or any third party as result of the acts or failures to act or any
errors of judgment in performing their obligations under the
Agreement, unless the losses are caused by the fault of Party B.
10.3. This indemnification clause shall remain in effect regardless of the
manner in which the Agreement is terminated.
11. Liabilities for Breach of the Agreement
11.1. If Party A fails to pay Party B when it becomes due under the
Agreement, any Investment Management Services fee, performance-based
bonus or Third Party Cost and Expense incurred by Party B while
engaging a third party in Party B's own name in accordance with
Section 6.1, Party A shall pay to Party B a sum equal to 0.05% of
such amount due for each day that such amount is outstanding until
it is paid in full.
11.2. Without prejudice to the validity and enforceability of the above
sections, if the Entrusted Assets are not sufficient to cover the
Investment Management Services fees, performance-based bonus and
Third Party Costs and Expenses, Party B is entitled to give Party A
a notice in writing to terminate this Agreement. This Agreement
shall be
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terminated on the thirtieth day following the receipt of such
written notice by Party A, unless otherwise waived by Party B.
11.3. Party A's violation of its representations, warranties or
undertakings, or of any term of the Agreement, unless caused by
events described in Section 13, shall constitute Party A's breach of
the Agreement. Party A shall compensate Party B for losses sustained
by Party B as a result of such breach. Party B is entitled to give
Party A written notice to terminate this Agreement in the case of
substantial losses caused by Party A's breach. The Agreement shall
be terminated on the thirtieth day following the receipt of such
written notice by Party A, unless otherwise waived by Party B.
11.4. Party B's violation of its representations, warranties or
undertakings, or of any other term of the Agreement, or of the
written requirements and written instructions made by Party A
pursuant to the Agreement, shall constitute Party B's breach of the
Agreement pursuant to Section 10.2 of the Agreement, unless caused
by events described in Section 13. Party B shall compensate Party A
for losses sustained by Party A as a result of such breach pursuant
to Section 10.2 of the Agreement to the extent of the total amount
of the Investment Management Services fees and performance-based
bonus collected by Party B under the Agreement as of the day when
Party B's default is established. Party A is entitled to give Party
B a written notice to terminate this Agreement in the case of
substantial losses caused by Party B's breach. The Agreement shall
be terminated on the thirtieth day following the receipt of such
written notice by Party B, unless otherwise waived by Party A.
12. Termination
The Agreement shall be terminated upon occurrence of any of the following
events:
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12.1. The term of the Agreement expires or a renewal term expires without
further renewal;
12.2. Party B terminates the Agreement according to Section 11.2 or
Section 11.3, and such termination comes into effect;
12.3. Party A terminates the Agreement according to Section 11.4 and such
termination comes into effect; or
12.4. Any party becomes insolvent or becomes subject to bankruptcy,
liquidation, compulsory dissolution or receivership.
13. Force Majeure
13.1. If either party fails to perform in whole or in part its duties
under this Agreement due to an event of force majeure, the
performance of such duties shall be suspended during the period of
such event of force majeure.
13.2. A party that claims that it has been affected by an event of force
majeure shall notify the other party of such event of force majeure
in writing in the shortest period possible, and shall provide
appropriate evidence of the existence and period of the event of
force majeure to the other party within fifteen (15) days after its
occurrence. A party that claims that the performance of this
Agreement is objectively impossible and impractical due to such
event of force majeure shall take any reasonable measures to lessen
the losses caused by such event of force majeure.
13.3. When the event of force majeure occurs, the parties shall consult
with each other regarding the performance of this Agreement. Once
the event of force majeure or its effects ceases, both parties shall
immediately resume the performance of their respective obligations
herein.
13.4. An event of force majeure refers to any circumstances that cannot be
reasonably controlled, predicted, avoided or overcome, and occurs
after the execution of this Agreement, which make the performance of
this Agreement in whole or in part impossible or impracticable as a
matter of fact, including but not limited to any situation where
performance is impossible without unreasonable expenditure. Such
circumstances include but are not limited to floods, fires,
droughts, typhoons, earthquakes, and other acts of God, traffic
accidents, strikes, riots, turmoil and wars (declared or not) and
any act or omission of a governmental authority.
14. Confidentiality
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In the absence of the advance written consent by the other party, neither
party may provide or disclose to other companies, enterprises, institutes
or persons any materials or information relating to the business of the
other party unless the laws or relevant regulatory authorities otherwise
provide, or unless such disclosure is necessary to satisfy the legal
requirements in regard to information disclosure by listed companies.
15. Assignment
Unless otherwise provided by the Agreement, without the written consent of
the other party, a party may assign any of its rights or obligations under
the Agreement.
16. Non-waiver
Unless otherwise provided by law, no failure to exercise and no delay in
exercising any right, power, or privilege hereunder shall constitute a
waiver of such right, power or privilege; nor shall any single or partial
exercise of any right, power, or privilege preclude the exercise of any
other rights, powers or privileges.
17. Notices
All notices relating to the Agreement shall be in writing and shall be
delivered by overnight courier, fax or mail. Notices delivered by overnight
courier shall take effect upon delivery. Notices sent by fax shall take
effect upon successful transmission, provided that a fax confirmation
report produced by the fax machine showing the successful transmission of
the notice is provided by the sending party. Notices sent by mail shall
take effect on the third (3/rd/) day after having been posted (if the last
day is a Sunday, or statutory holiday, such day shall be the next working
day).
The addresses of the parties for the delivery of notices are as follows:
China Life Insurance (Group) China Life Insurance Asset Management
Company Company Limited
Address: No.5 Xxxx Xxxx Yuan Xi Address: 0/X Xxxxx X, Xxxxxxx Xxxxxxxx,
Xx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xx. 00 Xxxxxxxxx Xxxxxx,
Xxxxxxx Xxxxxxxx, Xxxxxxx
Telephone: 000-0000 0000 Telephone: 000-00000000
Fax: 000-0000 0000 Fax: 000-00000000
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18. Performance
18.1. After Party B has listed on the Hong Kong Stock Exchange (the
"HKSE"), the transactions under this Agreement shall constitute
connected transactions as described by the Listing Rules. According
to the Listing Rules, such transactions shall be conducted only
after obtaining an exemption from the HKSE or upon the approval by
independent shareholders, or on the condition of conforming with any
other provisions concerning connected transactions in the Listing
Rules. Therefore, the performance of this Agreement related to such
connected transactions shall be subject to the obtaining of the
approval of the HKSE or conformance with any other stipulations
concerning connected transactions in the Listing Rules. Both Party A
and Party B agree to observe the relevant stipulations of the
Listing Rules.
18.2. If the exemption from the HKSE contains additional conditions, this
Agreement shall be performed in accordance with such additional
conditions. Both Party A and Party B agree to strictly observe such
conditions.
19. Further Actions
Both parties shall take such further actions and measures as to fully and
effectively enforce this Agreement, including but not limited to
determining the implementation plan or detailed measures based on the
principles provided herein and on the condition of not violating the
provisions agreed upon herein.
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20. Governing Law and Dispute Resolution
20.1. This agreement shall be governed by, and interpreted and construed
in accordance with the laws of PRC.
20.2. Any disputes arising from and related to this Agreement shall be
settled by both parties through friendly negotiations. If a dispute
cannot be resolved through friendly negotiations within ninety (90)
days, either party may submit such dispute to the China
International Economic and Trade Arbitration Commission for
arbitration in accordance with arbitration rules then in effect. The
arbitration award shall be final and binding on both parties.
21. Effectiveness, Copies and Modifications
21.1. This Agreement shall come into effect when it is signed and sealed
by the authorized representatives of both parties on November 30,
2003.
21.2. This Agreement is executed in four (4) originals, with two for each
party. Each of these four originals has the same legal effect.
21.3. The modification of this Agreement can only be made pursuant to a
written agreement duly executed by the authorized representatives of
both parties and upon the approval of both parties after the
appropriate actions of their legal representatives. If such
modification constitutes a material and significant change to this
Agreement, it shall become effective only upon the notification of
and procurement of approval from the HKSE, subject to the relevant
provisions of the Listing Rules of the HKSE as in effect from time
to time and the requirements of HKSE, and/or a general shareholders'
meeting of Party B, if applicable.
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Party A: Party B:
China Life Insurance (Group) Company China Life Insurance Asset Management
Company Limited
(Seal) (Seal)
Legal Representative/ Legal Representative/
Authorized Representative (Signature) Authorized Representative (Signature)
27
