Item 1.01 Entry into a Material Definitive Agreement.
On February 25, 2022, Law Anhou Insurance Agency Co., Ltd., a Chinese
corporation ("Law Anhou") and a contract controlled entity of China United
Insurance Service, Inc., a Delaware corporation (the "Company") entered into a
Share Purchase Agreement (the "Agreement") with Jiangsu Law and Buyers (as
defined below), pursuant to which Law Anhou shall sell and transfer 100% of its
equity ownership in Jiangsu Law Insurance Brokerage Co., Ltd., a Chinese
corporation and a wholly owned subsidiary of Law Anhou ("Jiangsu Law") for a
total consideration of RMB 21,000,000 (the "Purchase Price", equivalent to
approximately $3,327,028 USD based on the currency exchange ratio of 1 USD=
6.31194 RMB) in cash to the following buyers: Xuzhou Guosheng Furui Asset
Management Co., Ltd. ("XGF Asset Management"), a Chinese corporation, Jiangsu
Zhongbozhixin Financial Service Outsourcing Co., Ltd. ("ZBZX"), a Chinese
corporation, and Xuzhou Xinrui Service Outsourcing Co., Ltd. ("XZXR"), a Chinese
corporation (collectively with XGF Asset Management and ZBZX, the "Buyers," and
each a "Buyer"). The Company, via one of its wholly-owned subsidiary, controls
Law Anhou through a series of variable interest entity agreements (the "VIE
Agreements").
In accordance with the Agreement, the Buyers shall jointly pay to Law Anhou the
Purchase Price in three installments as follows: 70% of the Purchase Price in
the amount of RMB 14,700,000 shall be paid within five (5) days of the execution
of the Agreement, 20% of the Purchase Price in the amount of RMB 4,200,000 shall
be paid five (5) days after Jiangsu Law is registered to reflect the Buyers'
names as new shareholders thereof, and the remaining 10% of the Purchase Price
in the amount of RMB 2,100,000 shall be paid within five (5) days after Jiangsu
Law finalizes the filing with the Jiangsu Regulatory Bureau of the China Banking
and Insurance Regulatory Commission (the "CBIRC Jiangsu Regulatory Bureau")
regarding the changes of the shareholders of Jiangsu Law.
Pursuant to the Agreement, XGF Asset Management will hold 42% equity interest in
Jiangsu Law, ZBZX will hold 45% equity interest in Jiangsu Law, and XZXR will
hold 13% equity interest in Jiangsu Law upon closing of the transaction set
forth therein.
In addition, the Agreement provides that the Purchase Price shall be paid to Law
Anhou by the Buyers in the pro rata amounts corresponding to the respective
equity percentage each Buyer shall hold in Jiangsu Law except that ZBZX may
deduct RMB 100,000 from its proportional payment of the Purchase Price due to
the fact that ZBZX paid RMB 100,000 as part of the payment towards the Purchase
Price to Law Anhou when the parties entered into the Letter of Intent (the
"Letter of Intent") regarding this transaction. In the event that any Buyer
fails to pay Law Anhou its portion of the Purchase Price, Law Anhou may claim
ZBZX to be jointly and severally responsible for the unpaid Purchase Price.
Because Jiangsu Law shall retain its insurance intermediary license as the only
asset pursuant to this Agreement, the Buyers shall pay Law Anhou the agreed
value of any additional asset in cash in addition to the Purchase Price should
Jiangsu Law retain any additional Assets other than the insurance intermediary
license.
In accordance with the Agreement, Law Anhou and the Buyers shall create a
management transition team (the "Transition Team") where the Transition Team
will work to transfer all documents, seals, and licenses belonging to Jiangsu
Law to the Buyers. The Agreement provides that the Accounts Receivables of
Jiangsu Law described in the Agreement will be transferred to Law Anhou and
unfulfilled contracts of Jiangsu Law will be transferred to Law Anhou, except
certain circumstances may prevent such transfer. In addition, all debts (the
"Debts") and liabilities (the "Liabilities") of Jiangsu Law will be assumed by
Law Anhou and Law Anhou shall compensate the Buyers for any loss they suffer as
a result of the Debts and Liabilities of Jiangsu Law if Law Anhou fails to
assume any of such Debts or Liabilities in accordance with the Agreement.
Furthermore, pursuant to the Agreement, Law Anhou shall be relieved of all
capital contributions to Jiangsu Law while the Buyers shall provide all capital
contributions to Jiangsu Law. The Agreement also provides that Law Anhou and
Jiangsu Law will be responsible for the arrangement of current employees of
Jiangsu Law.
If the China Banking and Insurance Regulatory Commission (the "CBIRC") or the
CBIRC Jiangsu Regulatory Bureau requires Jiangsu Law to increase its capital in
accordance with the provisions of Section III of the Implementation Measures for
Administrative Licensing and Filing of Insurance Intermediaries (the "Measures")
that have been implemented on February 1, 2022, Law Anhou shall adopt the
necessary procedures in accordance with the Measures and other Chinese laws, as
applicable, to require the Buyers to make capital contributions in cash and the
Buyers have agreed to make additional capital contribution of not less than RMB
10,000,000 in cash to increase Jiangsu Law's registered capital so that Jiangsu
Law's registered capital meets the requirements of the Measures. According to
the Agreement, Law Anhou, the Buyers, and Jiansgu Law will each be responsible
for their own taxes as a result of the transaction contemplated in the
Agreement.
The foregoing description of the Agreement is qualified by reference to the full
text of the translation copy of the Agreement, 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 Share Purchase Agreement (the English translation) dated February
25, 2022, by and among, Law Anhou Insurance Agency Co., Ltd., Jiangsu
Law Insurance Brokerage Co., Ltd., Xuzhou Guosheng Furui Asset
Management Co., Ltd., Jiangsu Zhongbozhixin Financial Service
Outsourcing Co., Ltd., and Xuzhou Xinrui Service Outsourcing Co.,
Ltd.
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