Aegon engagement letter and Appendices.docx

Aegon engagement letter and Appendices.docx

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AegonengagementletterandAppendices

PRIVATE&CONFIDENTIAL

Mr.MarcA.vanWeede

SeniorVicePresident

GroupBusinessDevelopment

AEGONN.V.

50,Mariahoeveplein

2591TVTheHague

TheNetherlands

June7,2001

DearMr.MarcA.vanWeede

ProposedChinainsurancejointventurepartnersearch

ThankyouforappointingPricewaterhouseCooperstoassistyouwithyourfinancialandmarketduediligenceinvestigationinconnectionwithyoursearchforajointventurepartnerinChina.ThisEngagementLetteranditsappendicessetouttheServicesthatwehaveagreedtoprovideandthetermsofourengagement.

1.TheServicestobeprovided

1.1PhaseOne:

Partnerassessmentreport

1.1.1WewillconductaquickreviewofAegon’sshort-listcompaniestoseeifthelistincludestherightcompanies.WewillalsoreviewtheprocessesandcriteriausedbyAegonduringitspreliminaryselectionofthecandidatecompaniesandprovideourcommentsonthesuitabilityaccordingtoourunderstandingoftheChinamarketenvironment.ThisreviewwillbebasedonalimiteddesktopresearchanddiscussionsbetweenPwCandAegon.

1.1.2Wewillprepareawrittenreportandpresentationonthebusinessandfinancialaffairsof4-5partnertargetsselectedfromAegon’sshortlistofcompaniesincludingrankingofthecompaniesbasedonAegonacceptedcriteriaandPwCduediligence.TheareasourworkwillcoverandthemainprocedureswewillcarryoutaresetoutinAppendixAtothisletter.

1.1.3WeunderstandthatAegonwillmakeeveryefforttosecurefullaccessforPwCtoeachpartnertarget’sseniormanagement,itsfinancialrecordsanditsoperationsattheconcernedlocation.Wemayvisiteachtarget’soperationsattheconcernedlocationorlocationsorusingonlytheinformationsuppliedbythetargetdependingontheactualcircumstancesandduediligenceneeds.

1.1.2Wewillprovidethemanagementofthetargetswithanopportunitytoreconsiderthefactualaccuracyandappropriatenessofinformationandexplanationsthathavebeenprovidedtoorfoundbyusandgivetheircommentsonissuesofmajorsignificance.

1.1.3Ifyouprovideanydraftjointventureagreementstousexpresslyforourcomment,wewillcommentinthelightoftheknowledgewehavegainedfromtheduediligenceservicesonmatterswhichinourviewmaybesignificanttoyourdiscussionswithyourlegaladvisersrelatingtothesubstanceofanyaccountingprovisionsoraccountingwarranties.

1.1.4Inconnectionwithourtaxadviceonsettingupthejointventure,wewillalso,ifrequested,reviewdraftsofthejointventureagreement/shareholderagreementandcommentonthesamebasisasdescribedat1.1.4aboveonsignificanttaxmattersthatcometoourattention.However,wewoulddosoastaxadvisersandnotaslawyersorlegaldraftsmenandresponsibilityforensuringthatthetaxstructureyouintendtoadoptisproperlyreflectedintheagreementremainswithyouandyourlegaladvisers.

1.2PhaseTwo:

Uponreceivingourfinalpartnerassessmentreport,PwCwillbeinthepositiontofurtherassistAegoninthefollowingareas:

1.ConductingbusinessnegotiationwiththerespectiveChinesepartners;

2.Providinginsuranceregulatoryandjointventureinvestmentlawassistance;

3.OfferingsuggestionstotheAegonnegotiationteamonbestpracticesinsettingupthejointventurevehicle;

4.Assistinginnegotiationofrelevantcommercialtermsinthejointventurecontractandinthearticlesofassociation;

5.AttendingmeetingswithrelevantCIRCofficialstofurtherexplainthebackgroundofthetargetjointventurepartner;

2.Timetable

PhaseOne

WewillbeabletocommencetheprojectpreparationworkonJune9,2001collectingandexchanginginformationwithAegonteaminBeijing.WeexpecttostarttheduediligenceworksaroundJune20andcompleteourreportinapproximately52or60workingdaysfromthedateofsigningthisengagementletterdependingonthetotalnumberoftargetcompanies.

Weanticipatebeingabletoissueadraftreportandmakingapreliminarypresentationonthe48thor55thworkingdayfromthedateofthisengagementletterbeingsigneddependingonthetotalnumberoftargetcompanies.

PhaseTwo

CommencementofthesecondphasewilldependonthetimewecompletethefinalpartnerassessmentreportandwhenAegonplanstostartitsnegotiationswiththefinalcandidateorcandidates.Underthecircumstances,thesecondphaseinvolvementandtimerequiredofthePwCprofessionalsaresubjecttofurtherdiscussionbetweenPwCandAegonatalatertime.

3.Theteam

3.1WecurrentlyenvisagethatourteamwillbeledbyJohnnyChen,whowillbetheEngagementPartnerresponsiblefortheServiceswearetoprovidetoyou.AlexWong,Director,willbetheleadinsuranceindustryadvisor.Mr.YingXiao,SeniorManagerofMarketDueDiligence,willberesponsibleforthemarketduediligenceservices;ChrisBoddingtonandTeddyTang,SeniorManagersofFinancialDueDiligencewillbeinchargeofthefinancialduediligence.OthersupportstaffofPwCwillalsobeassignedtoassistintheengagement.

4.Fees

Ourfeesarebaseduponthedegreeofresponsibility,staffinvolved,skillsrequired,thetimenecessarilyoccupiedontheassignmentandourstandardchargerates.Aswehaveagreedupon,ourtotalprofessionalfeeforPhaseOnewillbefixedatUS$110,000.

ForPhaseTwo,ourfeeswillbechargedonanactualtimebasis.Thetotalestimatedfeeis

US$63,000asfollows:

Staff

Hours

Standard

Rate

Total

FeeUS$

Partner

60

630

37,800

Director

100

525

52,500

TOTAL

160

90,300

At30%discount

63,210

PleasebearinmindthattheinvolvementofPwCprofessionalsforthemostpartdependsontheAegon’snegotiationteamastothenatureandextentofourparticipation.TheabovetimecommitmentshallbesubjecttofurtherconfirmationbetweenPwCandAegon.

WewillprovideAegonwithaquoteandaskforawrittenapprovalbeforestartinganyworkiftheprofessionalfeesareinexcessoftheabovequotedfeeestimates.

WewillimmediatelyhaltresearchonaJVcandidatewhenitbecomescleartousthattheconcernedcandidatedoesnotmeetthekeyAegonselectioncriteria.Inthiscase,wewillonlychargeAegonbasedontheactualhoursspentonthiscandidate.

Out-of-pocketexpenseswillincludemainlytransportation,accommodation,telecommunications,postage,copyingandprintingexpenseswhichwillbechargedonanactualbasis.Ourfeesdonotincludebusinesstaxwhichwillalsobechargedtoyouontotalbillings（includingbusinesstax）atarateof5.263%,togetherwiththeexpensesreferredtoabove.

4.2ForbothPhaseOneandTwo,ourfeesandexpenseswillbeinvoicedonamonthlybasisfortheactualtimeandoutofpocketexpensesincurred.

5.TermsofBusiness

5.1.1ThislettershouldbereadinconjunctionwiththeenclosedAppendixB:

TermsofBusiness.

5.1.2AllPwCstaffwhoprovideservicesontheAegonengagementwillnotengageasimilarinsuranceJVpartnersearchinChinafromthedateofthesigningofthisengagementletteruntilAegonhassignedaLetterofIntentwithapartnercandidateontheestablishmentoftheJVoruntilAegonhasreleasedPwCfromitsobligation.SuchreleaseshallbeautomaticthreemonthsaftercompletionofthisengagementforAegon.

5.1.3TheinformationprovidedbyAegonandreportsissuedduringthisexercisewillbekeptconfidentialtoAegononly,withouttimelimitation,exceptthatPwCmayuseorrefertoinformationthatareotherwisepubliclyavailableinotheroccasions.

6.Acknowledgementandacceptance

6.1ThisEngagementLetteranditsappendicestogetherformtheContractbetweenus.

6.2PleaserecordyouragreementtothetermsofthisContractbysigningtheenclosedcopyofthisletterinthespaceprovidedandreturningittous.

Yoursfaithfully

PricewaterhouseCoopers

ConfirmationoftheContract

IhavereadtheContracttermssetoutintheEngagementLetterdatedJune6,2001anditsappendicesprovidedwiththatletter.IacceptthoseContracttermsonbehalfofAegonandrepresentthatIamauthorisedbyAegontodoso.

Signed:

……………………………………………

Nameandposition:

……………………………….

OnbehalfofAegon

Date:

………………………..

APPENDIXA

PartI–Matterstobecovered

TheobjectiveofourduediligencereviewistoassistAegoninitsassessmentofthefinancialandmarketstrengthoftheTargetsandtheirsuitabilityasapartnerwithAgeontoestablishanewjointventureforinsurancebusiness,whichisnottheexistingbusinessoftheTargets.ThedepthofourduediligencereviewwillbethereforelessthanthatrequiredforaninvestmentintheexistingbusinessoftheTargets.

1.Financialduediligence

Ourworkwillcoverthematterssetoutbelow,butourreportwillnotnecessarilyincludecommentsonallofthosemattersbecause,intheinterestsofclearerreporting,wewillnotreportonmattersthatwedonotbelievetobesignificant.Wewillfocuson:

∙Ownershipandcorporatestructureanalysiswithinformationofmajorshareholders,ownershipstructure,grouporganisationstructure,managementcontrol,businessandotherrelationshipwithshareholdersandothergroupmembers;

∙Currentfinancialpositionanalysisincludingreviewofcashflowposition,qualityofassets,sourcesoffundingandinvestmentindistributionandotherrelatedassets,arrangementsandresultsofinvestedjointventures,ifany;

∙Historicaltradingperformancereviewincludinganalysisofrevenueandmargininthepastthreeyears,reviewofqualityofearnings,trendanalysis,IAS/USGAAPadjustments;

∙Prospectsdiscussioncovering2001budget,resultsoftheperiodtodate,managementviewofprospectsinthe