CHINA UNITED INSURANCE SERVICE, INC. (OTCMKTS:CUII) Files An 8-K Entry into a Material Definitive Agreement
Item1.01. Entry into Material Definitive Agreement
On June 14, 2017, Action Holdings Financial Limited (AHFL), a
wholly-owned British Virgin Islands subsidiary of China United
Insurance Service, Inc. (the Company or CUIS), entered into an
Amendment 3 (the Third Amendment) to Strategic Alliance Agreement
(the Alliance Agreement) with AIA International Limited Taiwan
Branch (AIATW) to further revise certain provisions in the
Alliance Agreement and the previous amendments to the Alliance
Agreement entered into by and between AHFL and AIATW.
On June 10, 2013, AHFL entered into the Alliance Agreement with
AIATW. The purpose of the Alliance Agreement is to promote life
insurance products provided by AIATW within the territory of
Taiwan by insurance agency companies or insurance brokerage
companies affiliated with AHFL or CUIS. The term of the Alliance
Agreement is from April 15, 2013 to August 31, 2018. to the
Alliance Agreement, subject to certain terms and conditions
therein, AHFL is entitled to the payment of an execution fee by
AIATW which will be recorded as revenue upon fulfilling sales
target over the five-year period, including the satisfaction of
the performance targets and the threshold 13-month persistency
ratio. The execution fee may be required to be recalculated if
certain performance targets are not met by AHFL.
On July 25, 2013, AHFL entered into an Amendment to the Alliance
Agreement (the First Amendment) with AIATW. to the First
Amendment, AIATW paid the execution fees to AHFL in accordance
with Section 4 of the Alliance Agreement.
On September 30, 2014, AHFL entered into an Amendment 2 to the
Alliance Agreement (the Old Second Amendment) with AIATW, to
which the expiration date of the Alliance Agreement was extended
from May 31, 2018 to December 31, 2020. In addition, both AHFL
and AIATW agreed to adjust certain terms and conditions set forth
in the Alliance Agreement, including the downward adjustment of
the performance targets as well as the mechanism and formula
calculating the execution fee to be refunded, if any.
On January 6, 2016, AHFL entered into a new Amendment 2 to the
Alliance Agreement (the New Second Amendment) with AIATW to
further revise certain provisions in the Alliance Agreement and
the Old Second Amendment. to the New Second Amendment, the
expiration date of the Alliance Agreement was extended from May
31, 2018 to December 31, 2021, and the effect of the Alliance
Agreement during the period from October 1, 2014 to December 31,
2015 has been suspended. In addition, both AHFL and AIATW agree
to adjust certain terms and conditions set forth in the Alliance
Agreement to, among which: (i) expand the scope of services to be
provided by AHFL to AIATW to include, without limitation,
assessment and advice on suitability of cooperative partners,
advice on product strategies suitable for promotion channel
development, advice on promotion/sales channel improvement,
advice on promotion channel marketing and strategic planning, and
promotion channel talent training; and (ii) remove certain
provisions related to performance milestones and refund of
execution fees. On March 15, 2016, AHFL unilaterally issued a
confirmation letter to AIATW (the 2016 Letter), where it
emphasized its commitment to achieve certain sales targets within
a specific time frame and covenanted to refund certain portion of
execution fees calculated based on the formula therein upon
failure to achieve the applicable sales target, and the Old
Second Amendment was terminated.
to the Third Amendment, except for the first contract year (April
15, 2013 to September 30, 2014), the sales targets for the
remaining contract term under the Alliance Agreement shall be
changed by reference to (i) the amount of the value of new
business (VONB) and (ii) the 13-month persistency ratio as set
forth therein, provided that to the extent any underlying
insurance contract is revoked, invalid or terminated and premiums
is refunded to such policyholder, the amount of the related VONB
shall be correspondingly reduced. Both AHFL and AIATW agree to
calculate the business promotion fees (equivalent to the
execution fee referred above) to be returned in case of failure
to achieve the sales targets or the fees to be increased in case
of exceeding the sales targets, as the case may be, based on two
formulas specified in the Third Amendment. The primary factor
under formula one focuses on the annual and/or accumulated
achievement rate(s), while the primary factor under formula two
focuses on the 13-month persistency ratio(s), subject to terms
and conditions therein. The expanded scope of services to be
provided by AHFL to AIATW as set forth in Section 4 of New Second
Amendment is removed under the Third Amendment as well.
On June 14, 2017, with AIATW’s consent, the 2016 Letter has been
revoked in order to conform with the latest terms and conditions
regarding the cooperation between AHFL and AIATW as set forth in
the Third Amendment.
An English translation of the Third Amendment is included as
Exhibit 10.1 to this Current Report on Form 8-K and is the legal
document that governs the terms of the cooperation described
therein and the other actions contemplated by the Third
Amendment. The foregoing description of the cooperation does not
purport to be complete and is qualified in its entirety by
reference to the complete text of the Third Amendment, which is
filed as Exhibit 10.1 hereto, and incorporated herein by
reference.
Item9.01Financial Statements and Exhibits.
(d) |
Exhibits |
Exhibit |
Description | |
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Translation of Amendment 3 to the Strategic Alliance Agreement between Action Holdings Financial Limited and AIA International Limited Taiwan Branch dated June 14, 2017 |
China United Insurance Service, Inc. ExhibitEX-10.1 2 v469297_ex10-1.htm EXHIBIT 10.1 Exhibit 10.1 Amendment 3 to Strategic Alliance Agreement This Amendment 3 (“Amendment 3”) to Strategic Alliance Agreement dated 10th June,…To view the full exhibit click here About CHINA UNITED INSURANCE SERVICE, INC. (OTCMKTS:CUII)
China United Insurance Service, Inc. (China United) operates in Taiwan and China through its subsidiaries Action Holdings Financial Limited (AHFL) and ZLI Holdings Limited (CU Hong Kong), respectively. AHFL holds shares of Law Enterprise Co., Ltd. (Law Enterprise), a company based in Taiwan. Law Enterprise holds shares of Law Insurance Broker Co., Ltd. (Law Broker), Law Risk Management & Consultant Co., Ltd. (Law Management) and Law Insurance Agent Co., Ltd. CU Hong Kong owns Law Anhou Insurance Agency Co., Ltd. (Anhou), which provides insurance agency services in the People’s Republic of China. Law Broker and Anhou markets and sells insurance products: life insurance products, and property and casualty insurance products, both focused on meeting the particular insurance needs of individuals. The insurance products that Law Broker and Anhou sell are underwritten by certain insurance companies in Taiwan and China, respectively.