UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 15, 2022
CHINA UNITED INSURANCE SERVICE, INC.
(Exact Name of Registrant as Specified in its Charter)
| Delaware | 000-54884 | 30-0826400 | ||
| (State or other jurisdiction of incorporation) |
Commission File Number | (I.R.S. Employer Identification number) |
7F, No. 311 Section 3, Nan-King East Road, Taipei City, Taiwan
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: +8862-87126958
______________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Ticker symbol(s) |
Name
of each exchange on which registered | ||
| N/A | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
Item 1.01 Entry into a Material Definitive Agreement.
On March 15, 2022, Action Holdings Financial Limited (“AHFL”), a British Virgin Islands company and wholly-owned subsidiary of China United Insurance Service, Inc. (the “Company” or “CUIS”), entered into Amendment 4 (“Amendment 4”) to the 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.
On June 10, 2013, AHFL entered into the Alliance Agreement with AIATW, which was later amended by three amendments thereto (the “Former Amendments”). In accordance with the Alliance Agreement and Former Amendments, AHFL and other insurance agency companies or insurance brokerage companies affiliated with AHFL or CUIS have been promoting life insurance products provided by AIATW within the territory of Taiwan and received execution fees from AIATW subject to certain terms and conditions set forth therein, including reaching certain performance targets and threshold 13-month persistency ratios. In accordance with the Alliance Agreement and Former Amendments, the execution fees may be recalculated if certain performance targets are not met by AHFL. The original term of the Alliance Agreement is from April 15, 2013 to August 31, 2018, which was extended to December 31, 2021 by one of the Former Amendments.
On March 15, 2022, AHFL entered into Amendment 4, which, among other things, extended the expiration date of the Alliance Agreement to December 31, 2031. Pursuant to Amendment 4, 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, invalidated or terminated and premiums are refunded to such policyholder, the amount of the related VONB shall be correspondingly reduced. Amendment 4 provides that AIATW shall pay the strategic alliance business promotion fee of NTD 50,000,000; however, AHFL shall be required to return certain portions of or all of the business promotion fees within thirty (30) days of receipt of notice provided by AIATW if AFHL fails to meet certain goals set in Table 2 and Table 3 of Amendment 4. 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), among others.
An English translation of Amendment 4 is included as Exhibit 10.1 to this Current Report on Form 8-K. The foregoing description of Amendment 4 does not purport to be complete and is qualified in its entirety by reference to the complete translation of Amendment 4, which is filed as Exhibit 10.1 hereto, and incorporated herein by reference.
Item 9.01 Financial Statements and Exhibits.
| Exhibit No. | Description |
| 10.1 | Translation of Amendment 4 to the Strategic Alliance Agreement between Action Holdings Financial Limited and AIA International Limited Taiwan Branch dated March 15, 2022. |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
|
China United Insurance Service, Inc. (Registrant) | |||
| Dated: March 18, 2022 |
/s/ Yi-Hsiao Mao Yi-Hsiao Mao Chief Executive Officer | ||
Exhibit 10.1
Amendment 4 to Strategic Alliance Agreement
This Amendment 4 (“Amendment 4”) to Strategic Alliance Agreement dated 10th June, 2013 (“Agreement”) by and between AIA International Limited Taiwan Branch (“AIATW”), and Action Holdings Financial Limited (“Action”) is made and effective as of the 15th day of March, 2022 (the “Effective Date”) by and between AIATW and Action.
WHEREAS:
| A. | AIATW and Action have entered into the Agreement for the purpose of promotion of life insurance business provided by AIATW in the territory of Taiwan; and |
| B. | The Agreement should be expired December 31, 2021, but the Parties would like to extend the cooperation between the Parties in order to promote the business development and business relationship. |
| C. | AIATW and Action have entered into several amendments to the Agreement. |
| D. | This Amendment 4 is made by mutual consent of the parties to amend the Agreement and amendments as set forth hereinafter. This Amendment 4 and other effective amendments are collectively referred as the “Amendments”. If any inconsistence between the Amendments, this Amendment 4 shall prevail. |
NOW, THEREFORE, for good and sufficient consideration, AIATW and Action agree as follows:
| 1. | The effective period of the Agreement shall be extend ten years to December 31, 2031 and be expired accordingly. |
| 2. | The sales target of the alliance between the parties shall be changed as follows: |
| 1 |
Table 1 |
NT Dollars | |||||
| Extended Contract Year | Period | VONB | Accumulated VONB | Basic Business Promotion Fees | Accumulated Basic Business Promotion Fees | 13-Month Persistency Ratio |
| 1 | 111/01/01~111/12/31 | 160,000,000 | 160,000,000 | 5,000,000 | 5,000,000 | 80% |
| 2 | 112/01/01~112/12/31 | 160,000,000 | 320,000,000 | 5,000,000 | 10,000,000 | 80% |
| 3 | 113/01/01~113/12/31 | 160,000,000 | 480,000,000 | 5,000,000 | 15,000,000 | 80% |
| 4 | 114/01/01~114/12/31 | 200,000,000 | 680,000,000 | 5,000,000 | 20,000,000 | 80% |
| 5 | 115/01/01~115/12/31 | 200,000,000 | 880,000,000 | 5,000,000 | 25,000,000 | 80% |
| 6 | 116/01/01~116/12/31 | 200,000,000 | 1,080,000,000 | 5,000,000 | 30,000,000 | 80% |
| 7 | 117/01/01~117/12/31 | 200,000,000 | 1,280,000,000 | 5,000,000 | 35,000,000 | 80% |
| 8 | 118/01/01~118/12/31 | 240,000,000 | 1,520,000,000 | 5,000,000 | 40,000,000 | 80% |
| 9 | 119/01/01~119/12/31 | 240,000,000 | 1,760,000,000 | 5,000,000 | 45,000,000 | 80% |
| 10 | 120/01/01~120/12/31 | 240,000,000 | 2,000,000,000 | 5,000,000 | 50,000,000 | 80% |
Note:
| 2.1 | “VONB” means the value of new business. |
| 2.2 | The calculation of VONB in this Agreement shall mean the total new insurance contract solicited by Action and Action’s related insurance brokerage companies and agreed by AIATW during each contract year. The VONB in the insurance contract agreed in this Agreement shall be deducted from premiums returned to the policyholder due to the insurance contract is revoked, invalid or terminated; in the event of any fees returned because of termination, suspension and reduce of the sum insured, then the actual VONB shall be calculated according to the portion of premium received by AIATW actually. |
| 2.3 | Settlement time: Settlement will be made at the end of March of the following year of each extended contract year. |
| 3. | Strategic Alliance Business Promotion Fees |
After this Amendment 4 is effective, AIATW shall pay the strategic alliance business promotion fee at NTD 50 million to Action as the promotion fee for the strategic alliance business promotion during the extension period of the Agreement. The date of the payment shall be negotiated by both Parties then.
| 2 |
| 4. | Settlement and Reimbursement |
The services provided by Action shall achieve the objectives set forth in Section 2 of Amendment 4. AIATW shall calculate the settlement in accordance with the Section 2 of Amendment 4 every year, and notify Action of the settlement result. Both Parties agree:
| 4.1 | The settlement result will be calculated according to the following Table 2 and Table 3 to generate the annual return or reissue of the strategic alliance business promotion fee. |
| 4.2 | The Table 2 and Table 3 shall be calculated separately. The values in each table are independent and shall not be used to each other. If the calculation results of Table 2 and Table 3 are both required to return the alliance business promotion fee, Action shall return the higher value of Table 2 and Table 3 to AIATW. |
| 4.3 | Action agrees to return the alliance business promotion fees to AIATW within thirty days of receipt of the notice sent by AIATW if Action shall return the alliance business promotion fees according to Section 4.2. AIATW reserves the right to offset such amount against the amount payable by it to Action. In the event that Action fails to return such amount to AIATW, AIATW could claim interest accrued for overdue payment and terminate the Agreement. |
| 4.4 | If Action achieves the total accumulated VONB early within the contract extension period, the settlement-related matters shall only be settled in accordance with Table 3 in the year following the reached year. Both parties agree to re-negotiate the business promotion fee for the future contract year and the related goals to be achieved. |
| 3 |
Table 2 |
| Annual Achievement Rate for each extended contract year |
Alliance business promotion fees returned/repaid Formula (round to the nearest whole number ) |
| Achievement Rate “A” (Note 1) <40% | Amount shall be returned ： Basin business promotion fees NT 5,000,000. |
| 40%≦A<100% | Amount shall be returned:
Basin business promotion fees NT 5,000,000×(1 －A) |
| A≧100% |
Amount shall be repaid:
1. Accumulated returned amounts(Note 2)－[ Accumulated basic business promotion fees(Note 3)×(1－Accumulated achievement rate (Note 4)) ]。
2. Accumulated achievement rate (Note 4)≧1. The amount shall be repaid is the accumulated returned amounts (Note 2).
3. The amount shall be repaid will not be higher than the accumulated returned amounts.
4. AIATW will not have the obligation to repay the amount to Action if there is accumulated repaid amount when the Agreement expired or terminated.
|
| Note 1： | Annual Achievement Rate = The actual VONB of each extended contract year ÷ The target of VONB of the extended contract year×100% |
| Note 2： | The accumulated returned amount = the total amount of returned business promotion fees of each extended contract year. If any amount shall be repaid according to above Table 2, then such amount shall be the sum after deducting the reissue amount. |
| Note 3： | The accumulated basic business promotion fees = the total amount of alliance basic business promotion fees of the current extended contract year and its prior extended contract years. |
| Note 4： | The accumulated achievement rate = The accumulated actual VONB÷the accumulated VONB target. Each amount shall cover the accumulate amount of current extended contract year and its prior contract years. |
| 4 |
Table 3 |
| 13-Month Persistency Ratio “P” | The alliance basic business promotion fees shall be returned |
| P≧80% | 0% |
| 70%≦P<80% | Basic business promotion fees NT 5,000,000 x 10% |
| 60%≦P<70% | Basic business promotion fees NT 5,000,000 x 20% |
| P<60% | Basic business promotion fees NT 5,000,000 x 30% |
| 5. | The VONB in the insurance contract agreed in above Table 2 shall be deducted from premiums returned to the policyholder due to the insurance contract is revoked, invalid or terminated; in the event of any fees returned because of termination, suspension and reduce of the sum insured, then the actual VONB shall be calculated according to the portion of premium received by AIATW actually. |
| 6. | Upon this Amendment Secton 4, Action agrees to return the basic business promotion fees to AIATW within thirty days of receipt of the notice sent by AIATW. If Action fails to meet the targets set forth in Table 1, AIATW reserves the right to offset such amount against the amount payable by it to Action. In the event that Action fails to return such amount to AIATW, AIATW could claim interest accrued for overdue payment and terminate the Agreement and its Amendments according to the Section 8.2 of the Agreement. |
| 7. | Upon the termination of the Agreement and its Amendments pursuant to the Section 8.2 of the Agreement, both parties agree to calculate the amount to be returned or repaid, as applicable, based on the past and current contract years. Action shall return the basic business promotion fees at NT 5,000,000 for each remained contract years within thirty days after the termination at one-time payment. If any party fails to return or repay, as applicable, the amount pursuant to this Amendment, the other party could claim interest accrued for overdue payment according to the civil laws. |
| 8. | In the event that Action fail to comply with this Amendment 4, AIATW reserves the right to seek indemnification against Action for its breach in accordance with the Section 13 of the Agreement. |
| 9. | AIATW may terminate the Agreement and its amendments when Action's shareholding changes accumulatively exceeds 51%, or its holdings in other companies sold, pledged, or transferred reach more than 40% of its original shareholding. Both Parties shall settle the return or reissue of the alliance business promotion fee according to Section 8 of the Amendment 4. |
| 5 |
| 10. | The provision of Section 8.2, 8.4, 8.5, 10, 11, 13 and Section 4, 5, 7, 8, and 9 of this Amendment 4 shall survive expiration or termination of the Agreement for any reason. |
| 11. | This Amendment shall be executed in two identical counterparts, each of which shall be an original and all of which shall together constitute one and the same instrument. |
IN WITNESS WHEREOF, the parties, being duly authorized to do so, have executed this Amendment as of the date set forth above.
AIA International Limited Taiwan Branch
By: Vincent Hou
Title: General Manager
VAT number:
Address: 17F., No.333, Sec. 2, Dunhua S. Rd., Da’an Dist., Taipei City 106, Taiwan (R.O.C.)
Action Holdings Financial Limited
By: Yi-Hsiao Mao
Address: 7F., No.311, Sec. 3, Nanjing E. Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.)
Tel:*
| 6 |