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): September 30, 2014
CHINA UNITED INSURANCE SERVICE, INC.
(Exact name of registrant as specified in its charter)
000-54884
(Commission File Number)
| Delaware | 98-6088870 | |
|
(State or other jurisdiction of incorporation) |
(I.R.S. Employer Identification No.) |
7F, No. 311 Section 3, Nan-King East Road, Taipei City, Taiwan
(Address of principal executive offices)
+8862-87126958
(Registrant’s Telephone Number, Including Area Code)
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 ( see General Instruction A.2. below):
| ¨ | 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)) |
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Item 1.01. Entry into Material Definitive Agreement
On September 30, 2014, 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 to Strategic Alliance Agreement (the “Amendment”) with AIA International Limited Taiwan Branch (“AIATW”).
The purpose of the Strategic 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. Pursuant to the Alliance Agreement, AHFL shall encourage any insurance agency company and insurance brokerage company owned by itself or the Company (the “Appointed Broker/Agent”), and duly approved by the competent government authorities of Taiwan, to execute the related insurance brokerage or agent agreements with AIATW and assist such Appointed Broker/Agent to negotiate the insurance contracts to be underwritten by the insurance company underlying such executed brokerage or agent agreements with AIATW.
Pursuant to the Amendment, the expiration date of the Strategic Alliance Agreement has been extended from May 31, 2018 to December 31, 2020. In addition, both AHFL and AIATW agree to adjust certain terms and conditions set forth in the Strategic 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.
In addition, AHFL agreed to refrain from selling, pledging or transferring more than 30% of its holdings in Law Broker. If such sale of Law Broker securities does take place, AIATW may unilaterally terminate the Strategic Alliance Agreement. Upon such a termination, the Execution Fee shall be recalculated based on formulas provided in the Alliance Agreement.
The 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 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 Amendment, which is filed as Exhibit 10.1 hereto, and incorporated, herein by reference.
Item 9.01 Financial Statements and Exhibits
| (d) | Exhibits |
| Exhibit | Description |
| 10.1 | Amendment to Strategic Alliance Agreement |
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SIGNATURE
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 hereunto duly authorized.
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CHINA UNITED INSURANCE SERVICE, INC.
|
||||
| Date: September 30, 2014 | ||||
| By: |
/s/ Mao Yi Hsiao |
|||
| Name: | Mao Yi Hsiao | |||
| Title: | Chief Executive Officer | |||
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EXHIBIT INDEX
| Exhibit | Description |
| 10.1 | Amendment to Strategic Alliance Agreement |
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Amendment to Strategic Alliance Agreement
This Amendment (“Amendment”) to Strategic Alliance Agreement dated 10 th 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 30 day of September, 2014 (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. This Amendment is made by mutual consent of the parties to amend the Agreement as set forth hereinafter.
NOW, THEREFORE, for good and sufficient consideration, AIATW and Action agree as follows:
| 1. | Section 3 of the Agreement shall be hereby deleted in its entirety and replaced by the term set forth herein below: |
This Agreement is effective from June 1, 2013 and to continue in full force and effect until December 31, 2020.
| 2. | Section 6.1 of the Agreement shall be amended as follows: |
The amount of AFYP, calculated based on the recognized portion, for each contract year of the new insurance contract negotiated by Appointed Broker/Agent and underwritten by AIATW according to Article 2 shall meet the sales targets as below.
| Contract Year | Sales Target |
|
First Year
( Aug. 1 st , 2013- Dec. 31 st ,2014 ) |
NT 350,000,000 |
|
Second Year
( Jan. 1 st , 2015- Dec. 31 st ,2015 ) |
NT 400,000,000 |
|
Third Year
( Jan. 1 st , 2016- Dec. 31 st ,2016 ) |
NT 450,000,000 |
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| Contract Year | Sales Target |
|
Fourth Year
( Jan. 1 st , 2017- Dec. 31 st ,2017 ) |
NT 550,000,000 |
|
Fifth Year
( Jan. 1 st , 2018- Dec. 31 st ,2018 ) |
NT 650,000,000 |
|
Sixth Year ( Jan. 1 st , 2019- Dec. 31 st ,2019 ) |
NT 750,000,000 |
|
Seventh Year ( Jan. 1 st , 2020- Dec. 31 st ,2020 ) |
NT 850,000,000 |
| 3. | Section 7.2 and 7.3 of the Agreement shall be amended to read as follows: |
7.2 The formula for calculating the returned Execution Fees to AIATW pursuant to Article 7.1 is agreed as follows:
(i) First Year
A. "Annual Target Achievement Rate" is 49% -0%. Action shall return NT 40 million to AIATW.
B. "Annual Target Achievement Rate" is 99% -50%. Action shall return certain amount to AIATW by the following formula: NT 40 million x (1 - Target Achievement Rate) (rounded to the nearest whole number; same as below)
C. The formula for calculating "Annual Target Achievement Rate" is:
AFYP of first year/Sale Target of first year
(ii) Second Year to Seventh year
From the end of the second contract year, AIATW will calculate and recognize the accumulated AFYP of the insurance contracts negotiated by each Appointed Broker/Agent and agreed by AIATW every year from the first contract year to the end of the current year (hereinafter referred to as "Cumulative Year") and calculate "Accumulated Annual Target Achievement Rate" as accumulated AFYP/accumulated Sales Target:
| A. | "Accumulated Annual Target Achievement Rate" is 49% -0%. Action shall return certain amount to AIATW by the following formula: NT 5 million + (NT 35 million x cumulative number of years) – the Execution Fees shall be returned to AIATW pursuant to Article 7.2 (i) A and B. |
| B. | "Accumulated Annual Target Achievement Rate" is 99% -50%. Action shall return certain amount to AIATW by the following formula: NT 5 million + (NT 35 million x cumulative number of years) x (1 - cumulative performance target achievement rate) - the Execution Fees shall be returned to AIATW pursuant to Article 7.2 (i) A and B. In case the value calculated as described above is less than zero, AIATW shall compensate Action the difference. |
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| C. | "Accumulated Annual Target Achievement Rate" is over 100%. AIATW shall pay back the returned Execution Fees which has be returned to AIATW pursuant to Article 7.2 (i) A and B. |
7.3 In the event at Action fails to meet the 13-Month Persistency Ratio (P) Indicators set forth in Article 7.1, the returned Execution Fees shall be calculated as NT 35.7 million x ratio (%) of returned Execution Fees. The aforementioned ratio (%) of returned Execution Fees is agreed as the following table:
| 13-Month Persistency Ratio (P) Indicators | Ratio of returned Execution Fees (%) |
| P >= 80% | 0% |
| 70% <= P < 80% | 10% |
| 60% <= P < 70% | 20% |
| P < 60% | 30% |
| 4. | It is agreed by the parties to add the following section into the Agreement. |
CUIS acquired all of the issued and outstanding shares (100% of voting equity interest) of Action together with its subsidiaries in Taiwan. Action, on April 30, 2012, acquired 65.95% ownership of Law Enterprise Co., Ltd. (“Law Enterprise”), a company held 100% of Law Insurance Broker Co., Ltd. (“Law Broker”). In the event that Action transfers above 30% of its shares or any sales, pledge or transferring above 30% of its holdings shares of Law Broker, AIATW may terminate this Agreement. Upon the termination of this Agreement due to this Section, both parties agree to recalculate the Execution Fees according to Section 8.3.
| 5. | Except as expressly stated herein, all other terms, conditions and attachments of the Agreement shall remain in full force and effect. |
| 6. | All initial capitalized terms used in this Amendment shall have the same meaning as set forth in the Agreement unless otherwise provided. |
| 7. | The terms and conditions herein contained constitute the entire agreement between the parties with respect to the subject matter hereof. This Amendment shall be deemed part of the Agreement and is incorporated therein and made a part thereof by this reference, but shall take precedence over and supersede any provisions to the contrary contained in the Agreement. |
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| 8. | 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: Tan, Kar-Hor
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: Mao, Yi-Hsio
Address: 7F., No.311, Sec. 3, Nanjing E. Rd., Songshan Dist., Taipei City 105, Taiwan (R.O.C.)
Tel:02-25455970
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