Non-Competition Agreement - China Life Insurance (Group) Co. and China Life Insurance Co. Ltd.
ENGLISH TRANSLATION OF CHINESE LANGUAGE ORIGINAL
Non-Competition Agreement
between
China Life Insurance (Group) Company
and
China Life Insurance Company Limited
<PAGE>
This Agreement is entered into on September 30, 2003 by and between the
following two parties:
Party A: China Life Insurance (Group) Company, a wholly state-owned company duly
organized and existing under the laws of the People's Republic of China.
Registered Address: No. 5 Guang Ying Yuan Xi Qu, Xicheng District, Beijing
Business License No.: 1000001002372
Legal Representative: Wang Xian Zhang
Party B: China Life Insurance Company Limited, a joint stock company with
limited liability duly organized and existing under the laws of the People's
Republic of China.
Registered Address: China Life Building, No. 16 Chao Wai Avenue, Chaoyang
District, Beijing
Business License No.: 1000001003796
Legal Representative: Wang Xian Zhang
WHEREAS: (1) Party A is an insurance company, the primary business scope of
which is life insurance business; (2) Party A, in its capacity as the sole
promoter, incorporated Party B on June 30, 2003 and Party B's primary business
is also life insurance; (3) Party B plans to publicly offer its shares both in
China and abroad and expects that upon completion of such offering Party A will
remain as its controlling shareholder; (4) both parties acknowledge that their
primary businesses compete with each other. NOW, THEREFORE, to avoid competition
between the parties, Party A and Party B, agree as follows on certain matters
concerning the business relationship between them:
1. Scope of Non-competition
The scope of non-competition referred to in this agreement includes: life,
health and accident insurance and other businesses that may compete with
the insurance business of Party B.
Any change to the scope of non-competition of this agreement shall only be
made in an agreement entered into by the parties.
2. Party A's Commitments
2.1. Except as stated in Articles 3, 4 and 5 herein, during the term of
this Agreement, Party A agrees that unless prior written consent is
received from Party B, it will not, and will use its best endeavors to
cause each of its affiliates not to, directly or indirectly, engage
in, participate, or
2
<PAGE>
operate, within the territory of China, any business that is within
the business scope of Party B and its affiliates as set forth in
Article 1 above.
2.2. If Party A is offered any business opportunity which involves business
that is similar to or the same as the life, health and accident
insurance business of Party B or its affiliates and if such business
opportunity may directly or indirectly compete or lead to competition
with the business of Party B, it shall immediately notify Party B in
writing upon such opportunity becoming available and shall use its
best efforts to make such business opportunity first offered to Party
B on the terms and conditions that are no less favorable to that
offered to Party A, its affiliates and any independent third parties.
2.3. Party A undertakes that it will grant Party B a right of first refusal
under the same condition to purchase any legitimate new business
developed by Party A.
3. Shares of China Life CMG currently held by Party A
Party A undertakes that within three years of Party B's listing on the
Stock Exchange of Hong Kong Limited (the "Buyout Period"), it shall assign
all the 51% shares it currently holds in China Life CMG Life Insurance
Company Ltd. (hereinafter referred to as "China Life CMG") to a third
party, or it shall seek other means to avoid any possible competition
between the business of China Life CMG and Party B.
4. Party A's Non-transferred Policies
4.1. Party B agrees that Party A shall retain the insurance business under
non-transferred policies, including day-to-day insurance
administration services, customer services, statistics and file
management, invoice and receipt management, reinstatement of old
policies, applications for and renewal of riders to the old policies,
reinsurance, handling of disputes relating to the old policies and
operation of insurance funds. Party A undertakes that such business
shall not cause any material effect on the business of Party B and its
affiliates.
4.2. Party A agrees that it will delegate Party B to manage on behalf of it
the insurance business under non-transferred policies and pay a
service fee to Party B for this purpose and Party B agrees to accept
such delegation from Party A. Both parties agree that they will
separately enter into a Policy Management Agreement regarding these
service.
4.3. Party A agrees that it will delegate to Party B to provide investment
management services for its insurance funds and will pay a service fee
to Party B for this purpose and Party B agrees to accept such
3
<PAGE>
delegation from Party A. Both parties agree that they will separately
enter into an Asset Management Agreement regarding these service.
4.4. Party B shall have a right of first refusal on the same conditions if
Party A decides to assign its business under non-transferred policies.
5. Both parties agree that Party B shall have a right of first refusal with
regard to the Converted Policies Business, as defined herein, relating to
Party A's Old Version Policies Business, as defined herein. If Party B
chooses not to exercise such right of first refusal or the holders of such
policies object to the underwriting by Party B of the Converted Policies
Business, Party B agrees that Party A shall retain such business.
6. Term
This Agreement shall become effective upon signing by both parties and
shall remain effective until one of the followings occurs, whichever is
earlier: (a) Party A holds, directly or indirectly, less than 30% of the
voting power, as represented by the ownership interests of Party B, which
Party A may exercise, or cause to be exercised, at Party B's shareholders
meeting, and ceases to control the majority of Party B's board of
directors; or (b) Party B's shares cease to be listed on the Stock Exchange
of Hong Kong Limited or any other stock exchange.
7. Representations and Warranties of Both Parties
Each party of this Agreement represents, warrants and undertakes to the
other party that:
(a) It has obtained all government approvals (if applicable) and internal
delegations of authority for the valid execution of this Agreement and
that the Agreement will be executed by its authorized representative
to the effect that upon such execution, this Agreement will have a
legally binding effect on such party.
(b) The execution of this Agreement and the performance of the obligations
hereunder will not violate any laws, regulations and other agreements
and bylaws of such party.
8. Miscellaneous
8.1. All of the notifications, demands or other forms of communications
made according to this Agreement shall be delivered by hand,
registered mail or fax to the other party in writing at the following
addresses or fax numbers (or other addresses or fax numbers that the
recipient has informed the other party in writing 5 days in advance):
If to Party B:
4
<PAGE>
Address: China Life Building, No.16 Chao Wai Avenue, Chaoyang
District, Beijing
Fax Number: 010-8565 2232
Telephone Number: 010-8565 9999
If to Party A:
Address: No. 5 Guang Ying Yuan Xi Qu, Xicheng District, Beijing
Fax Number: 010-6611 1567
Telephone Number: 010-6611 4433
Any notification, demand or other communication with above stated
recipient's details should be deemed effectively given upon (a) the
date when it is delivered by hand; or (b) the 3rd day (if such 3rd day
is a Sunday or public holiday, then the first business day immediately
following such date) after the date on which a registered mail is sent
(as indicated by the postmark); or (c) the time when a fax is sent
out, provided that a fax confirmation report produced from the fax
machine showing the successful transmission of the relevant documents
is provided by the sending party.
8.2. Any modification of this Agreement shall be made in writing and signed
by both parties.
8.3. Both parties shall take, cause to be taken, such further actions and
execute, or cause to be executed, such other instruments and documents
that are necessary to render the terms and conditions of this
Agreement effective.
9. Governing Laws and Jurisdiction
This Agreement should be governed by, and interpreted in accordance with
the laws of People's Republic of China. Both parties hereby irrevocably
submit to the jurisdiction of the courts of the People's Republic of China.
5
<PAGE>
10. The following terms shall have the following respective meanings in this
Agreement/1/:
Converted Policies Business shall mean the business relating to the Old
Version Policies which, for conversion purposes, shall be treated as
surrenders or withdrawals first so that they can be converted on a
favorable term, using the actual benefits received from such surrenders or
withdrawals as single payment premium for products that have their terms
approved by or filed with the CIRC on or after June 10, 1999.
Non-transferred policies shall mean all the policies that are insured or
reinsured by Party A, including stand-alone policies and riders
supplemental to policies, which are still performing or are not being
performed but can be reinstated and are other than Transferred Policies (as
defined in the Restructuring Agreement).
Old Version Policies Business shall mean business under the policies of
1996 or pre-1996 versions that were not sold by individual agents and the
length between the date of surrender and the date of expiration is more
than five years.
Party A's Affiliate shall mean (a) a wholly-owned subsidiary of Party A;
(b) a subsidiary over which Party A holds 51% or above of the equity
interest; (c) any entity, over which Party A, alone or acting with others
in concert, holds at least 30% (including 30%) of the issued share capital
or exercises at least 30% of the voting power or controls the exercise of
at least 30% of the voting power or has the power to elect a majority of
the board of directors or otherwise exercise de facto control. Party's A's
Affiliate shall not include Party B or Party B's Affiliate.
Party B's Affiliate shall mean (a) a wholly-owned subsidiary of Party B;
(b) a subsidiary over which Party B holds 51% or above of the equity
interest; (c) any entity, over which Party B, alone or acting with others
in concert, holds at least 30% (including 30%) of the issued share capital
or exercises at least 30% of the voting power or controls the exercise of
at least 30% of the voting power or has the power to elect a majority of
the board of directors or otherwise exercise de facto control.
----------
/1/ Translator's Note: The order of the terms defined hereunder have been
re-arranged to English alphabetical order for the convenience of English
readers.
6
<PAGE>
11. Unless otherwise provided herein, the "articles" referred to this Agreement
shall mean the articles in this Agreement.
IN WITNESS WHEREOF, both parties hereto have caused this Agreement to be
executed on the date first above written.
7
<PAGE>
Signature page followed
(There is no text on this page)
Party A: Party B:
China Life Insurance (Group) Company China Life Insurance Company Limited
(Seal) (Seal)
Legal Representative/ Legal Representative/
Authorized Representative (Signature) Authorized Representative (Signature)
8