o | Registration statement pursuant to Section 12(b) or 12(g) of the Securities Exchange Act of 1934 |
þ | Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
o | Shell company report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Date of event requiring this shell company report |
Title of Each Class | Name of Each Exchange on Which Registered | |
Ordinary shares, par value US$0.001 per share* | The NASDAQ Stock Market LLC | |
American depositary shares, each representing | (The NASDAQ Global Select Market) | |
20 ordinary shares |
* | Not for trading, but only in connection with the listing on The NASDAQ
Global Select Market of American depositary shares, each representing 20
ordinary shares. |
Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o |
1 | ||||||||
3 | ||||||||
3 | ||||||||
3 | ||||||||
3 | ||||||||
26 | ||||||||
50 | ||||||||
51 | ||||||||
72 | ||||||||
82 | ||||||||
83 | ||||||||
84 | ||||||||
85 | ||||||||
93 | ||||||||
93 | ||||||||
95 | ||||||||
95 | ||||||||
95 | ||||||||
96 | ||||||||
98 | ||||||||
98 | ||||||||
98 | ||||||||
98 | ||||||||
98 | ||||||||
99 | ||||||||
99 | ||||||||
99 | ||||||||
99 | ||||||||
99 | ||||||||
99 | ||||||||
Exhibit 4.18 | ||||||||
Exhibit 4.19 | ||||||||
Exhibit 4.20 | ||||||||
Exhibit 4.21 | ||||||||
Exhibit 4.22 | ||||||||
Exhibit 4.23 | ||||||||
Exhibit 4.24 | ||||||||
Exhibit 4.25 | ||||||||
Exhibit 4.26 | ||||||||
Exhibit 4.27 | ||||||||
Exhibit 4.28 | ||||||||
Exhibit 4.29 | ||||||||
Exhibit 4.30 | ||||||||
Exhibit 4.31 | ||||||||
Exhibit 4.32 | ||||||||
Exhibit 4.33 | ||||||||
Exhibit 4.34 | ||||||||
Exhibit 4.35 | ||||||||
Exhibit 4.36 | ||||||||
Exhibit 4.37 | ||||||||
Exhibit 8.1 | ||||||||
Exhibit 12.1 | ||||||||
Exhibit 12.2 | ||||||||
Exhibit 13.1 | ||||||||
Exhibit 13.2 | ||||||||
Exhibit 15.1 | ||||||||
Exhibit 15.2 | ||||||||
Exhibit 15.3 |
| we, us, our company, our or CNinsure refer to CNinsure Inc., its subsidiaries
and any entity carrying on CNinsures current business prior to the restructuring
transactions in July 2007, through which CNinsure became the listing vehicle in our
initial public offering, and their respective subsidiaries and consolidated affiliated
entities; |
| China or PRC refers to the Peoples Republic of China, excluding, solely for the
purpose of this annual report, Taiwan, Hong Kong and Macau; |
| provinces of China refers to the 22 provinces, the four municipalities directly
administered by the central government (Beijing, Shanghai, Tianjin and Chongqing) and the
five autonomous regions (Xinjiang, Tibet, Inner Mongolia, Ningxia and Guangxi); |
| shares or ordinary shares refers to our ordinary shares, par value US$0.001 per
share; |
| ADSs refers to
our American depositary shares, each of which represents 20 ordinary shares; |
| all references to RMB or Renminbi are to the legal currency of China and all
references to $, dollars, US$ and U.S. dollars are to the legal currency of the
United States; and |
| all discrepancies in any table between the amounts identified as total amounts and the
sum of the amounts listed therein are due to rounding. |
| our anticipated growth strategies; |
| the anticipated growth of our life insurance business; |
| our future business development, results of operations and financial condition; |
| factors that affect our future revenues and expenses; |
| the future growth of the Chinese insurance industry as a whole and the professional
insurance intermediary sector in particular; |
| trends and competition in the Chinese insurance industry; and |
| economic and demographic trends in the PRC. |
-1-
-2-
Item 1. | Identity of Directors, Senior Management and Advisers |
Item 2. | Offer Statistics and Expected Timetable |
Item 3. | Key Information |
A. | Selected Financial Data |
-3-
For the Year Ended December 31, | ||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||
(in thousands, except shares, per share and per ADS data) | ||||||||||||||||||||||||
Consolidated Statement of Operations Data |
||||||||||||||||||||||||
Net revenues: |
||||||||||||||||||||||||
Commissions and fees |
245,652 | 446,929 | 843,107 | 1,154,090 | 1,484,389 | 224,907 | ||||||||||||||||||
Other service fees |
897 | 1,216 | 855 | 761 | 640 | 97 | ||||||||||||||||||
Total net revenues |
246,549 | 448,145 | 843,962 | 1,154,851 | 1,485,029 | 225,004 | ||||||||||||||||||
Operating costs and expenses: |
||||||||||||||||||||||||
Commissions and fees |
(133,076 | ) | (232,550 | ) | (436,803 | ) | (579,911 | ) | (708,403 | ) | (107,333 | ) | ||||||||||||
Selling expenses |
(11,288 | ) | (9,514 | ) | (17,328 | ) | (49,498 | ) | (73,567 | ) | (11,147 | ) | ||||||||||||
General and administrative expenses(1) |
(52,119 | ) | (68,177 | ) | (180,031 | ) | (199,246 | ) | (271,444 | ) | (41,128 | ) | ||||||||||||
Total operating costs and expenses |
(196,483 | ) | (310,241 | ) | (634,162 | ) | (828,655 | ) | (1,053,414 | ) | (159,608 | ) | ||||||||||||
Income from operations |
50,066 | 137,904 | 209,800 | 326,196 | 431,615 | 65,396 | ||||||||||||||||||
Other income (expense), net: |
||||||||||||||||||||||||
Gain on disposal of investment in a subsidiary |
| | 525 | | | | ||||||||||||||||||
Investment income |
| | | 18,905 | 41,244 | 6,249 | ||||||||||||||||||
Interest income |
5,364 | 16,235 | 47,967 | 33,299 | 26,924 | 4,080 | ||||||||||||||||||
Interest expense |
(34 | ) | (25 | ) | (95 | ) | (4 | ) | (5 | ) | (1 | ) | ||||||||||||
Others, net |
5 | (2 | ) | (28 | ) | 1,408 | 391 | 59 | ||||||||||||||||
Changes in fair value of contingent consideration
payables |
| | | (5,946 | ) | | | |||||||||||||||||
Net income before income taxes and income of
affiliates |
55,401 | 154,112 | 258,169 | 373,858 | 500,169 | 75,783 | ||||||||||||||||||
Income tax benefit (expense) |
573 | (3,178 | ) | (62,438 | ) | (95,618 | ) | (96,743 | ) | (14,658 | ) | |||||||||||||
Share of income of affiliates |
| | 135 | 774 | 12,904 | 1,955 | ||||||||||||||||||
Net income |
55,974 | 150,934 | 195,866 | 279,014 | 416,330 | 63,080 | ||||||||||||||||||
Less: Net income (loss) attributable to the
noncontrolling interests |
(1,421 | ) | (2,424 | ) | 4,129 | (21,827 | ) | (5,978 | ) | (906 | ) | |||||||||||||
Net income attributable to the CNinsure Inc.s
shareholders |
57,395 | 153,358 | 191,737 | 300,841 | 422,308 | 63,986 | ||||||||||||||||||
Net income per share (giving effect to the
10,000-for-1 share exchange in 2007): |
||||||||||||||||||||||||
Basic |
0.0883 | 0.2178 | 0.2101 | 0.3297 | 0.4408 | 0.0668 | ||||||||||||||||||
Diluted |
0.0875 | 0.2143 | 0.2090 | 0.3241 | 0.4264 | 0.0646 | ||||||||||||||||||
Net income per ADS: |
||||||||||||||||||||||||
Basic |
1.7660 | 4.3551 | 4.2025 | 6.5938 | 8.8162 | 1.3358 | ||||||||||||||||||
Diluted |
1.7500 | 4.2858 | 4.1803 | 6.4815 | 8.5288 | 1.2922 | ||||||||||||||||||
Shares used in calculating net income per share
(giving effect to the 10,000-for-1 share exchange
in 2007): |
||||||||||||||||||||||||
Basic |
650,000,000 | 704,273,232 | 912,497,726 | 912,497,726 | 958,029,717 | 958,029,717 | ||||||||||||||||||
Diluted |
655,970,000 | 715,649,950 | 917,335,390 | 928,312,312 | 990,318,528 | 990,318,528 | ||||||||||||||||||
Dividends declared per share(2) |
585 | 0.1023 | | 0.075 | 0.089 | 0.013 |
(1) | Including (i) share-based compensation expenses of RMB45.7 million, RMB7.6 million and
RMB22.2 million (US$3.4 million) for the years ended December 31, 2008, 2009 and 2010,
respectively; and (ii) impairment loss on intangible assets of nil, nil and RMB4.6 million
(US$0.7 million) for the years ended December 31, 2008, 2009 and 2010, respectively. |
|
(2) | The 2004 and 2005 dividends were declared in 2006 and the 2006 and 2007 dividends were
declared in 2007. These dividends were not paid at the time they were declared. In 2007, we
paid all of the previously declared but unpaid dividends totaling approximately RMB140.0
million. The per-share amount for 2006 was determined based on the number of shares of CISG
Holdings Ltd., or CISG Holdings, outstanding as of the record date for the
dividends declared, without giving effect to the 10,000-for-1 share exchange in July 2007.
Dividend of US$0.22 per ADS was declared on May 21, 2009, payable to our shareholders of
record as of the close of business on
June 26, 2009. Dividend of US$0.26 per ADS was declared on April 23, 2010, payable to our
shareholders of record as of the close of business on May 20, 2010. |
-4-
As of December 31, | ||||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | US$ | |||||||||||||||||||
(in thousands) | ||||||||||||||||||||||||
Consolidated Balance Sheet Data: |
||||||||||||||||||||||||
Cash and cash equivalents |
223,926 | 1,544,817 | 1,510,432 | 1,457,890 | 1,924,884 | 291,649 | ||||||||||||||||||
Total current assets |
355,703 | 1,608,256 | 1,876,883 | 1,727,499 | 2,302,425 | 348,852 | ||||||||||||||||||
Total assets |
379,622 | 1,640,164 | 2,046,515 | 2,545,965 | 3,854,456 | 584,008 | ||||||||||||||||||
Total current liabilities |
75,524 | 53,337 | 190,222 | 337,648 | 288,361 | 43,691 | ||||||||||||||||||
Total liabilities |
76,321 | 54,928 | 200,444 | 359,260 | 337,393 | 51,120 | ||||||||||||||||||
Noncontrolling interests |
13,717 | 18,324 | 94,423 | 194,897 | 456,079 | 69,103 | ||||||||||||||||||
Total equity |
303,301 | 1,585,236 | 1,846,071 | 2,186,705 | 3,517,063 | 532,888 | ||||||||||||||||||
Total liabilities and shareholders equity |
379,622 | 1,640,164 | 2,046,515 | 2,545,965 | 3,854,456 | 584,008 |
Noon Buying Rate | ||||||||||||||||
(RMB per US$1.00) | ||||||||||||||||
Period | ||||||||||||||||
Period | End | Average(1) | Low | High | ||||||||||||
2006 |
7.8041 | 7.9579 | 8.0702 | 7.8041 | ||||||||||||
2007 |
7.2946 | 7.5806 | 7.8127 | 7.2946 | ||||||||||||
2008 |
6.8225 | 6.9193 | 7.2946 | 6.7800 | ||||||||||||
2009 |
6.8259 | 6.8295 | 6.8470 | 6.8176 | ||||||||||||
2010 |
6.6000 | 6.7603 | 6.8330 | 6.6000 | ||||||||||||
November |
6.6670 | 6.6538 | 6.6892 | 6.6330 | ||||||||||||
December |
6.6000 | 6.6497 | 6.6745 | 6.6000 | ||||||||||||
2011 |
||||||||||||||||
January |
6.6017 | 6.5964 | 6.6364 | 6.5809 | ||||||||||||
February |
6.5713 | 6.5761 | 6.5965 | 6.5520 | ||||||||||||
March |
6.5483 | 6.5645 | 6.5743 | 6.5483 | ||||||||||||
April (through April 29) |
6.4900 | 6.5267 | 6.5477 | 6.4900 |
Source: Federal Reserve Bank of New York |
||
(1) | Annual averages are calculated from month-end rates. Monthly averages are calculated using
the average of the daily rates during the relevant period. |
B. | Capitalization and Indebtedness |
-5-
C. | Reasons for the Offer and Use of Proceeds |
D. | Risk Factors |
-6-
-7-
-8-
-9-
| making misrepresentation when marketing or selling insurance products to customers; |
| hindering insurance applicants from making full and accurate mandatory disclosures or
inducing applicants into make misrepresentations; |
| hiding or falsifying material information in relation to the insurance contracts; |
-10-
| fabricating or altering insurance contracts without authorization from relevant
parties, selling false policies, or providing false documents on behalf of the applicants; |
| falsifying insurance agency business or fraudulently returning insurance policies to
obtain commissions; |
| colluding with applicants, insured, or beneficiaries to obtain insurance benefits; |
| engaging in false claims; or |
| otherwise not complying with laws and regulations or our control policies or
procedures. |
-11-
-12-
-13-
| The effectiveness of our marketing campaign to build brand recognition among consumers
and our ability to attract and retain customers; |
| The acceptance of third party e-commerce platform as an effective channel for
underwriters to distribute their insurance products; |
| Public concerns over security of e-commerce transactions and confidentiality of
information; |
| Increased competition from insurance companies which directly sell insurance products
through their own websites and call centers, portal websites which provide insurance
product information and links to insurance companies websites and other professional
insurance intermediary companies which may launch independent online insurance
distribution in the future; and |
| Further development and changes in applicable rules and regulations which may increase
our operating costs and expenses, impede the execution of our business plan or change the
competitive landscape. |
-14-
| exercise effective control over Meidiya Investment, Yihe Investment, Xinbao Investment
and their subsidiaries; |
| receive a substantial portion of the economic benefits of the subsidiaries of Meidiya
Investment, Yihe Investment and Xinbao Investment in consideration for the services
provided by our wholly-owned subsidiaries in China; and |
| have an exclusive option to purchase all or part of the equity interests in each of
Meidiya Investment, Yihe Investment, Xinbao Investment and their subsidiaries when and to
the extent permitted by PRC law. |
-15-
| revoking the business and operating licenses of our PRC subsidiaries and consolidated
affiliated entities; |
| restricting or prohibiting any related-party transactions among our PRC subsidiaries
and consolidated affiliated entities; |
| imposing fines or other requirements with which we, our PRC subsidiaries or our
consolidated affiliated entities may not be able to comply; |
| requiring us, our PRC subsidiaries or our consolidated affiliated entities to
restructure the relevant ownership structure or operations; or |
| restricting or prohibiting us from providing additional funding for our business and
operations in China. |
-16-
-17-
-18-
-19-
-20-
-21-
| the CSRC had jurisdiction over our offering; |
| the CSRC by then had not issued any definitive rule or interpretation concerning
whether offerings like our initial public offering were subject to this new procedure; and |
| despite the above, given that we had completed our inbound investment before September
8, 2006, the effective date of the M&A Rule, an application was not required under the M&A
Rule to be submitted to the CSRC for its approval of the listing and trading of our ADSs
on the Nasdaq Global Market, unless we were clearly required to do so by subsequent rules
of the CSRC. |
-22-
| actual or anticipated fluctuations in our quarterly operating results; |
| changes in financial estimates by securities research analysts; |
| conditions in the Chinese insurance industry; |
| changes in the economic performance or market valuations of other insurance
intermediaries; |
| announcements by us or our competitors of new products, acquisitions, strategic
partnerships, joint ventures or capital commitments; |
| addition or departure of key personnel; |
| fluctuations of exchange rates between the RMB and U.S. dollar or other foreign
currencies; |
| potential litigation or administrative investigations; |
| sales of additional ADSs; and |
| general economic or political conditions in China. |
-23-
-24-
-25-
Item 4. | Information on the Company |
A. | History and Development of the Company |
-26-
% of Equity | ||||||||||
Interests | ||||||||||
Date of Acquisition(1) | Name of Established or Acquired | Attributable to | Main Insurance Products Distributed | Location | ||||||
or Establishment(2) | Company | Us | or Services Provided | (Province) | ||||||
January 1, 2010(1)
|
Hebei Fanlian Insurance Agency Co., Ltd. | 51 | % | Distribution of property and casualty insurance products | Hebei | |||||
January 1, 2010(1)
|
Litian Zhuoyue Software (Beijing) Co., Ltd. | 100 | % | Operating platform management and maintenance | Beijing | |||||
March 30, 2010(1)
|
Fujian Fanhua Investment Co., Ltd. (3) | 45 | % | Holding Company | Fujian | |||||
April 1, 2010(1)
|
Shandong Fanhua Mintai Insurance Agency Co., Ltd. | 51 | % | Distribution of property and casualty insurance products | Shandong | |||||
April 1, 2010(1)
|
Ningbo Fanhua Baolian Insurance Agency Co., Ltd. | 51 | % | Distribution of property and casualty insurance products | Zhejiang | |||||
October 1, 2010(1)
|
Shenyang Fangda Insurance Agency Co., Ltd. | 51 | % | Distribution of property and casualty insurance products | Liaoning | |||||
November 1, 2010(1)
|
Shenzhen InsCom E-commerce Co., Ltd (4) | 65.1 | % | Distribution of insurance products online | Guangdong | |||||
November 19, 2010(2)
|
Fanhua Puyi Investment Management Co., Ltd. | 19.48 | % | Offering wealth management services | Sichuan | |||||
February 17, 2011(2)
|
Fanhua Lianxing Insurance Sales Co., Ltd. | 100 | % | Distribution of life insurance products | Beijing | |||||
March 2, 2011(2)
|
Shenzhen Bangbang Auto Services Co., Ltd. | 100 | % | Automobile services | Guangdong |
(1) | Refers to the date on which we acquired and began to consolidate the acquired entity. |
|
(2) | Refers to the date on which we obtained business licenses for the newly established company. |
|
(3) | We acquired additional 45%
equity interests in Fujian Fanhua Investment Co., Ltd. in which we previously held 55% equity interests. |
|
(4) | As of November 1, 2010, we held 65.1% of the equity interest in InsCom Holding, which
beneficially owned 100% of the equity interest in Shenzhen InsCom. |
-27-
-28-
-29-
| nine of Chinas top 20 insurance agencies, accounting for approximately 11.96% of total
insurance agency revenue in China in 2010; |
| one of Chinas top 20 insurance brokerage, accounting for approximately 0.9% of total
insurance brokerage revenue in China in 2010; and |
| two of Chinas top 20 insurance claims adjusting firms, accounting for approximately
14.94% of total claims adjusting firm revenue in China in 2010. |
| Automobile Insurance. Automobile insurance is the largest segment of property and
casualty insurance in the PRC in terms of gross written premiums. We distribute both
standard automobile insurance policies and supplemental policies, which we refer to as
riders. The standard automobile insurance policies we sell generally have a term of one
year and cover damages caused to the insured vehicle by collision and other traffic
accidents, falling or flying objects, fire, explosion and natural disasters. We also sell
standard third party liability insurance policies, which cover bodily injury and property
damage caused by an accident involving an insured vehicle to a person not in the insured
vehicle. The riders we distribute cover additional losses, such as liability to
passengers, losses arising from vehicle theft and robbery, broken glass and vehicle body
scratches. |
-30-
| Individual Accident Insurance. The individual accident insurance products we distribute
generally provide a guaranteed benefit during the coverage period, which usually is one
year or a shorter period, in the event of death or disability of the insured as a result
of an accident, or a reimbursement of medical expenses to the insured in connection with
an accident. These products typically require only a single premium payment for each
coverage period. Because most of the individual accident insurance products we distribute
are underwritten by property and casualty insurance companies, we classify individual
accident insurance products as property and casualty insurance products. |
| Commercial Property Insurance. The commercial property insurance products we distribute
include basic, comprehensive and all risk policies. Basic commercial property insurance
policies generally cover damage to the insured property caused by fire, explosion and
thunder and lightning. Comprehensive commercial property insurance policies generally
cover damage to the insured property caused by fire, explosion and certain natural
disasters. All risk commercial property insurance policies cover all causes of damage to
the insured property not specifically excluded from the policies. |
| Homeowner Insurance. The homeowner insurance products we distribute are primarily home
mortgage-based insurance policies. Home mortgage-based policies cover damage to mortgaged
property caused by a number of standard risks such as fire, flood and explosion. Some
policies also provide mortgage repayment protection in the event the policyholder is
unable to make mortgage payment due to death or injury. |
| Cargo Insurance. The cargo insurance products we distribute cover damage to or loss of
goods in transit by sea, land or air. |
| Hull Insurance. The hull insurance products we distribute cover vessels against losses,
liabilities and expenses caused by natural calamities, negligence of crew members and
marine accidents, as well as collision liability. |
| Liability Insurance. The liability insurance products we distribute are primarily
product liability and employers liability insurance products. These products generally
cover losses to third parties due to the misconduct or negligence of the insured party,
but exclude losses due to fraud or the willful misconduct of the insured party. |
| Construction Insurance. The construction insurance products we distribute cover
property damages and personal injury losses caused by natural disasters and accidents in
connection with construction projects in China. |
| Individual Whole Life Insurance. The individual whole life insurance products we
distribute provide insurance for the insured persons entire life in exchange for the
periodic payment of fixed premiums over a pre-determined period, generally ranging from
five to 20 years, or until the insured reaches a certain age. The face amount of the
policy or, for some policies, the face amount plus accumulated interests is paid upon the
death of the insured. |
| Individual Term Life Insurance. The individual term life insurance products we
distribute provide insurance for the insured for a specified time period or until the
attainment of a certain age, in return for the periodic payment of fixed premiums over a
pre-determined period, generally ranging from five to 20 years. Term life insurance
policies generally expire without value if the insured survives the coverage period. |
-31-
| Individual Endowment Life Insurance. The individual endowment products we distribute
generally provide maturity benefits if the insured reaches a specified age, and provide to
a beneficiary designated by the insured guaranteed benefits upon the death of the insured
within the coverage period. In return, the insured makes periodic payment of premiums over
a pre-determined period, generally ranging from five to 25 years. |
| Individual Education Annuity. The individual annuity products we distribute are
primarily education related products. They provide annual benefit payments after the
insured attains a certain age, e.g., 18, for a fixed time period, or e.g., four years, and
a lump payment at the end of the coverage period. In addition, the beneficiary designated
in the annuity contract will receive guaranteed benefits upon the death of the insured
during the coverage period. In return, the purchaser of the annuity products makes
periodic payment of premiums during a pre-determined accumulation period. |
| Universal Insurance. We distribute certain universal insurance products that provide
not only insurance coverage but also a minimum guaranteed return on the amount the insured
puts into an individual investment account. In return the insured makes periodic payment
of premiums over a pre-determined period. |
| Individual Health Insurance. The individual health insurance products we distribute
primarily consist of dread disease insurance products, which provide guaranteed benefits
for specified dread diseases during the coverage period. In return, the insured makes
periodic payment of premiums over a pre-determined period. |
| Group Life Insurance. We distribute several group life insurance products, including
group health insurance. These group products generally have a policy period of one year
and require a single premium payment. |
| Pre-underwriting Survey. Before an insurance policy is sold, we conduct a survey of the
item to be insured to assess its current value and help our clients determine the
insurable value and the amount to be insured. We also help our clients assess the
underwriting risk with respect to the item to be insured through survey, appraisal and
analysis. |
| Claims Adjusting. When an accident involving the insured subject matter has occurred,
we conduct onsite survey to determine the cause of the accident and assess damage. We then
determine the extent of the loss to the insured subject matter and prepare and submit a
report to the insurance company summarizing our preliminary findings. Upon final
conclusion of the case, we prepare and submit a detailed report to the insurance company
setting forth details of the accident, cause of the loss, details of the loss, adjustment
and determination of loss, indemnity proposal and, where appropriate, request for payment. |
-32-
| Disposal of Residual Value. In the course of providing claims adjusting services, we
also can appraise the residual value of the insured property and offer suggestions on the
disposal of such property. Upon appointment by the insurance company, we can handle the
actual disposal of the insured property through auction, discounted sale, lease or other
means. |
| Loading and Unloading Supervision. Upon appointment by ship owners, shippers,
consignees or insurance companies, we can monitor and record the loading and unloading
processes of specific cargos. |
| Consulting Services. We provide consulting services to both the insured and the
insurance companies on risk assessment and management, disaster and damage prevention,
investigation, and loss assessment. |
-33-
| Standardized operating procedures; |
| A Core Business System, which encompasses our property and casualty insurance unit,
life insurance unit, and claims adjusting unit, that will better support business
operations and facilitate risk control; |
| A centralized and computerized accounting and financial management system; |
| A human resources management system; |
| An office automation system; |
| An e-learning system to provide online training to sales agents; and |
| A nationwide IT network and data center to support front-office operations. |
-34-
Number of | ||||||||||||||||
Number of Sales and | In-house Sales | Number of Sales | Number of In-house | |||||||||||||
Province | Service Outlets(1) | Representatives | Agents(1) | Adjustors | ||||||||||||
Guangdong |
115 | 114 | 8,325 | 689 | ||||||||||||
Hebei |
123 | | 7,928 | 102 | ||||||||||||
Shandong |
28 | | 7,895 | 11 | ||||||||||||
Sichuan |
61 | | 4,750 | 94 | ||||||||||||
Beijing |
17 | 10 | 3,311 | 8 | ||||||||||||
Hunan |
14 | | 2,915 | 10 | ||||||||||||
Fujian |
32 | | 2,301 | 5 | ||||||||||||
Henan |
15 | | 2,105 | 7 | ||||||||||||
Zhejiang |
30 | | 1,541 | 41 | ||||||||||||
Liaoning |
33 | | 1,393 | 74 | ||||||||||||
Jiangsu |
12 | | 1,127 | 28 | ||||||||||||
Jiangxi |
11 | | 657 | 5 | ||||||||||||
Hubei |
12 | | 607 | 14 | ||||||||||||
Tianjin |
4 | | 424 | 18 | ||||||||||||
Jilin |
2 | | 356 | | ||||||||||||
Shanghai |
10 | | 279 | 162 | ||||||||||||
Yunnan |
4 | | | 47 | ||||||||||||
Shaanxi |
1 | | | 9 | ||||||||||||
Hainan |
2 | | | 12 | ||||||||||||
Guangxi |
2 | | | 8 | ||||||||||||
Anhui |
2 | | | 8 | ||||||||||||
Chongqing |
1 | | | 1 | ||||||||||||
Guizhou |
2 | | | 14 | ||||||||||||
Total |
533 | 124 | 45,914 | 1,367 | ||||||||||||
(1) | Excludes 124 sales outlets and 6,412 sales agents of Datong as of the date of disposal on
March 25, 2011. |
-35-
| Professional insurance intermediaries. The professional insurance intermediary sector
in China is at an early stage of development and highly fragmented, accounting for only
5.8% of the total insurance premiums generated in China in 2010. Several insurance
intermediary companies have received private equity or venture capital funding in recent
years and are actively pursuing expansion, including China Zhonghe Ltd. and HuaKang
Financial Service Inc. We believe that we can compete effectively with these insurance
intermediary companies because we have a longer operational history and over the years
have assembled a strong and stable team of managers and sales professionals and built a
unified operating platform. With increasing consolidation expected in the insurance
intermediary sector in the coming years, we expect competition within this sector to
intensify. |
| Insurance companies. The distribution of individual life insurance products in China
historically has been dominated by insurance companies, which usually use both in-house
sales force and exclusive sales agents to distribute their own products. We believe that
we can compete effectively with insurance companies because we focus only on distribution
and offer our customers a broad range of insurance products underwritten by multiple
insurance companies. |
| Entities that offer insurance products online. In recent years, domestic insurance
companies, portal websites and professional insurance intermediaries have begun providing
online shopping experience for consumers interested in purchasing insurance products.
However, each of their insurance e-commerce operations has its own limitations. The
insurance products offered on an insurance companys website are usually confined to those
under its own brand. Most portal websites provide separate product information with little
comparison function and none of the professional insurance intermediaries that organize
online product distribution has a nation-wide sales and service network to support
after-sale service. We believe we can compete effectively with these business entities
because our e-commerce insurance platform offers a broad range of insurance products
underwritten by multiple insurance companies, price comparison for similar products and
good after-sale services that are backed by our call center and nation-wide service
network. |
| Other business entities. In recent years, business entities that distribute insurance
products as an ancillary business, primarily commercial banks and postal offices, have
been playing an increasingly important role in the distribution of insurance products,
especially life insurance products. However, the insurance products distributed by these
entities are usually confined to those related to their main lines of business, such as
investment-related life insurance products. We believe that we can compete effectively
with these business entities because we offer our customers a broader variety of products. |
-36-
| Licensing of insurance companies and insurance intermediaries, such as agencies and
brokerages. The 1995 Insurance Law established requirements for minimum registered capital
levels, form of organization, qualification of senior management and adequacy of the
information systems for insurance companies and insurance agencies and brokerages. |
| Separation of property and casualty insurance businesses and life insurance businesses.
The 1995 Insurance Law classified insurance between property, casualty, liability and
credit insurance businesses, on the one hand, and life, accident and health insurance
businesses on the other, and prohibited insurance companies from engaging in both types of
businesses. |
| Regulation of market conduct by participants. The 1995 Insurance Law prohibited
fraudulent and other unlawful conduct by insurance companies, agencies and brokerages. |
| Substantive regulation of insurance products. The 1995 Insurance Law gave insurance
regulators the authority to approve the policy terms and premium rates for certain
insurance products. |
| Financial condition and performance of insurance companies. The 1995 Insurance Law
established reserve and solvency standards for insurance companies, imposed restrictions
on investment powers and established mandatory reinsurance requirements, and put in place
a reporting regime to facilitate monitoring by insurance regulators. |
| Supervisory and enforcement powers of the principal regulatory authority. The principal
regulatory authority, then the Peoples Bank of China, was given broad powers under the
1995 Insurance Law to regulate the insurance industry. |
-37-
| Authorizing the CIRC to be the insurance supervisory and regulatory body nationwide.
The 2002 Insurance Law expressly grants the CIRC the authority to supervise and administer
the insurance industry nationwide. |
| Expanding the permitted scope of business of property and casualty insurers. Under the
2002 Insurance Law, property and casualty insurance companies may engage in the short-term
health insurance and accident insurance businesses upon the CIRCs approval. |
| Providing additional guidelines for the relationship between insurance companies and
insurance agents. The 2002 Insurance Law requires an insurance company to enter into an
agent agreement with each insurance agent that will act as an agent for that insurance
company. The agent agreement sets forth the rights and obligations of the parties to the
agreement as well as other matters pursuant to law. An insurance company is responsible
for the acts of its agents when the acts are within the scope authorized by the insurance
company. |
| Relaxing restrictions on the use of funds by insurance companies. Under the 2002
Insurance Law, an insurance company may use its funds to make equity investments in
insurance-related enterprises, such as asset management companies. |
| Allowing greater freedom for insurance companies to develop insurance products. The
2002 Insurance Law allowed insurance companies to set their own policy terms and premium
rates, subject to the approval of, or a filing with, the CIRC. |
| Strengthening protection of the insureds interests. The 2009 Insurance Law added a
variety of clauses such as incontestable clause, abstained and estoppels clause, common
disaster clause and amending immunity clause, claims-settlement prescription clause,
reasons for claims rejection and contract modification clause. |
| Strengthening supervision on the qualification of the shareholders of the insurance
companies and setting forth specific qualification requirements for the major
shareholders, directors, supervisors and senior managers of insurance companies. |
| Expanding the business scope of insurers and further relaxing restriction on the use of
fund by insurers. |
| Strengthening supervision on solvency of insurers with stricter measures. |
| Tightening regulations governing the administration of insurance intermediary
companies, especially those relating to behaviors of insurance agents. |
-38-
| promulgate regulations applicable to the Chinese insurance industry; |
| investigate insurance companies and insurance intermediaries; |
| establish investment regulations; |
| approve policy terms and premium rates for certain insurance products; |
| set the standards for measuring the financial soundness of insurance companies and
insurance intermediaries; |
| require insurance companies and insurance intermediaries to submit reports concerning
their business operations and condition of assets; |
| order the suspension of all or part of an insurance company or an insurance
intermediarys business; |
| approve the establishment, change and dissolution of an insurance company, an insurance
intermediary or their branches; |
| review and approve the appointment of senior managers of an insurance company, an
insurance intermediary or their branches; and |
| punish improper behaviors or misconducts of an insurance company or an insurance
intermediary. |
| selling insurance products on behalf of the insurer principal; |
| collecting insurance premiums on behalf of the insurer principal; |
-39-
| conducting loss surveys and handling claims of insurance businesses on behalf of the
insurer principal; and |
| other business activities specified by the CIRC. |
| making insurance proposals, selecting insurance companies and handling the insurance
application procedures for the insurance applicants; |
| assisting the insured or the beneficiary to claim compensation; |
| reinsurance brokering business; |
| providing consulting services to clients with respect to disaster and damage
prevention, risk assessment and risk management; and |
| other business activities specified by the CIRC. |
-40-
| inspecting, appraising the value of and assessing the risks of the subject matter
before it is insured; |
| surveying, inspecting, estimating the loss of and adjusting the insured subject matter
after loss has been incurred; |
| risk management consulting; and |
| other business activities approved by the CIRC. |
-41-
| Foreign Currency Administration Rules (1996), as amended, or the Exchange Rules; and |
| Administration Rules of the Settlement, Sale and Payment of Foreign Exchange (1996), or
the Administration Rules. |
-42-
| Wholly Foreign-Owned Enterprise Law (1986), as amended; and |
| Wholly Foreign-Owned Enterprise Law Implementing Rules (1990), as amended. |
| the CSRC had jurisdiction over our initial public offering; |
| the CSRC had not issued any definitive rule or interpretation concerning whether
offerings like our initial public offering are subject to the M&A Rule; and |
| despite the above, given that we had completed our inbound investment before September
8, 2006, the effective date of the M&A Rule, an application was not required under the M&A
Rule to be submitted to the CSRC for its approval of the listing and trading of our ADSs
on the Nasdaq Global Market, unless we are clearly required to do so by subsequent rules
of the CSRC.
|
-43-
-44-
| exercise effective control over Meidiya Investment, Yihe Investment, Xinbao Investment
and their subsidiaries; |
| receive a substantial portion of the economic benefits of the subsidiaries of Meidiya
Investment, Yihe Investment and Xinbao Investment in consideration for the services
provided by our subsidiaries in China; and |
| have an exclusive option to purchase all or part of the equity interests in each of
Meidiya Investment, Yihe Investment and Xinbao Investment when and to the extent permitted
by PRC law. |
-45-
(1) | Direct or indirect ownership attributable to Yihe Investment and Meidiya Investment. |
|
(2) | Direct or indirect ownership attributable to Xinbao Investment. |
|
(3) | The remaininig equity interest are held by one of our executive officers on behalf of our company. |
-46-
| not transfer, pledge or otherwise dispose of or encumber his equity interests in
Meidiya Investment without the prior written consent of Xinlian Information, except for
equity pledge for the benefit of Xinlian Information. |
| not take any action without the prior written consent of Xinlian Information, if the
action will have a material impact on the assets, business and liabilities of Meidiya
Investment. |
| not vote for, or execute any resolutions to approve, the sale, transfer, mortgage, or
disposal of, or the creation of any encumbrance on, any legal or beneficial interests in
the equity of Meidiya Investment without the prior written consent of Xinlian Information,
except to Xinlian Information or its designee. |
| not vote for, or execute any resolutions to approve, any merger or consolidation with
any person, or any acquisition of or investment in any person by Meidiya Investment
without the prior written consent of Xinlian Information. |
| vote to elect the directors candidates nominated by Xinlian Information. |
| cause Meidiya Investment not to supplement, amend or modify its articles of association
in any manner, increase or decrease registered capital or change the capital structure in
any way without the prior written consent of Xinlian Information. |
| cause Meidiya Investment not to execute any contract with a value exceeding RMB100,000
without the prior written consent of Xinlian Information, except in the ordinary course of
business. |
-47-
-48-
-49-
| the ownership structures of Meidiya Investment, Yihe Investment and Xinbao Investment,
their subsidiaries and our subsidiaries in China comply with all existing PRC laws and
regulations; |
| the contractual arrangements among our PRC subsidiaries, Meidiya Investment, Yihe
Investment, Xinbao Investment, their individual shareholders and their subsidiaries
governed by PRC law are valid, binding and enforceable, and will not result in any
violation of PRC laws or regulations currently in effect; and |
| the business operations of our PRC subsidiaries, Meidiya Investment, Yihe Investment
and Xinbao Investment and their subsidiaries comply in all material respects with existing
PRC laws and regulations. |
-50-
| the overall premium growth of the Chinese insurance industry; |
| the extent to which insurance companies in the PRC outsource the distribution of their
products and claims adjusting functions; |
| premium rate levels and commission and fee rates; |
| the size and productivity of our sale force; |
| acquisitions; |
| commission rates for individual sales agents; |
| product and service mix; |
| share-based compensation expenses; |
| seasonality; and |
| fee-based revenue scheme. |
-51-
-52-
-53-
| commissions and fees paid by insurance companies, which accounted for 99.9%, 99.9% and
99.96% of our net revenues for 2008, 2009 and 2010, respectively; and |
| other service fees, which refers to fees paid by insurance companies for certain
insurance-related services provided by us to the insured on behalf of the insurance
companies and accounted for 0.1%, 0.1% and 0.04% of our net revenues for 2008, 2009, and
2010, respectively. |
Year Ended December 31, | ||||||||||||||||||||||||||||
2008 | 2009 | 2010 | ||||||||||||||||||||||||||
RMB | % | RMB | % | RMB | US$ | % | ||||||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||||||
Property and casualty
insurance products |
634,385 | 75.1 | 783,220 | 67.8 | 821,259 | 124,433 | 55.3 | |||||||||||||||||||||
Life insurance products |
120,565 | 14.3 | 230,961 | 20.0 | 486,676 | 73,739 | 32.8 | |||||||||||||||||||||
Claims adjusting services |
89,012 | 10.6 | 140,670 | 12.2 | 177,094 | 26,832 | 11.9 | |||||||||||||||||||||
Total net revenues |
843,962 | 100.0 | 1,154,851 | 100.0 | 1,485,029 | 225,004 | 100.0 | |||||||||||||||||||||
-54-
-55-
Year Ended December 31, | ||||||||||||||||||||||||||||
2008 | 2009 | 2010 | ||||||||||||||||||||||||||
RMB | % | RMB | % | RMB | US$ | % | ||||||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||||||
Total net revenues |
843,962 | 100.0 | 1,154,851 | 100.0 | 1,485,029 | 225,004 | 100.0 | |||||||||||||||||||||
Operating costs and
expenses: |
||||||||||||||||||||||||||||
Commissions and fees |
(436,803 | ) | (51.8 | ) | (579,911 | ) | (50.2 | ) | (708,403 | ) | (107,333 | ) | (47.7 | ) | ||||||||||||||
Selling expenses |
(17,328 | ) | (2.1 | ) | (49,498 | ) | (4.3 | ) | (73,567 | ) | (11,147 | ) | (4.9 | ) | ||||||||||||||
General and administrative
expenses |
(180,031 | ) | (21.3 | ) | (199,246 | ) | (17.3 | ) | (271,444 | ) | (41,128 | ) | (18.3 | ) | ||||||||||||||
Total operating costs and
expenses |
(634,162 | ) | (75.2 | ) | (828,655 | ) | (71.8 | ) | (1,053,414 | ) | (159,608 | ) | (70.9 | ) | ||||||||||||||
| Salaries for employees who work in back office below the provincial management level
and employment benefits for our in-house sales staff; |
| office rental, telecommunications expenses and office supply expenses incurred in
connection with sales activities; and |
| advertising and marketing expenses. |
| salaries and benefits for our administrative staff; |
| share-based compensation expenses for managerial and administrative staff; |
| professional fees paid for valuation, market research, legal and auditing services; |
| compliance-related expenses, including expenses for professional services; |
| depreciations and amortizations; |
-56-
| office rental expenses; |
| travel and telecommunications expenses; |
| entertainment expenses; |
| office supply expenses for our administrative staff; |
| foreign exchange loss; and |
| impairment loss. |
For the Year Ended December 31, | ||||||||||||||||||||||||||||
2008 | 2009 | 2010 | ||||||||||||||||||||||||||
RMB | % | RMB | % | RMB | US$ | % | ||||||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||||||
General and
administrative
expenses |
180,031 | 100.0 | 199,246 | 100.0 | 271,444 | 41,128 | 100.0 | |||||||||||||||||||||
Share-based
compensation
expenses |
45,659 | 25.4 | 7,553 | 3.8 | 22,211 | 3,365 | 8.2 |
-57-
-58-
-59-
-60-
-61-
For the Year Ended December 31, | ||||||||||||||||||||||||
2008 to 2009 | 2009 to 2010 | |||||||||||||||||||||||
Percentage | Percentage | |||||||||||||||||||||||
2008 | Change | 2009 | Change | 2010 | ||||||||||||||||||||
RMB | % | RMB | % | RMB | US$ | |||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||
Consolidated Statement of Operations
Data |
||||||||||||||||||||||||
Net revenues: |
||||||||||||||||||||||||
Commissions and fees |
843,107 | 36.9 | 1,154,090 | 28.6 | 1,484,389 | 224,907 | ||||||||||||||||||
Other service fees |
855 | (11.0 | ) | 761 | (15.9 | ) | 640 | 97 | ||||||||||||||||
Total net revenues |
843,962 | 36.8 | 1,154,851 | 28.6 | 1,485,029 | 225,004 | ||||||||||||||||||
Operating costs and expenses: |
||||||||||||||||||||||||
Commissions and fees |
(436,803 | ) | 32.8 | (579,911 | ) | 22.2 | (708,403 | ) | (107,333 | ) | ||||||||||||||
Selling expenses |
(17,328 | ) | 185.7 | (49,498 | ) | 48.6 | (73,567 | ) | (11,147 | ) | ||||||||||||||
General and administrative expenses |
(180,031 | ) | 10.7 | (199,246 | ) | 36.2 | (271,444 | ) | (41,128 | ) | ||||||||||||||
Total operating costs and expenses |
(634,162 | ) | 30.7 | (828,655 | ) | 27.1 | (1,053,414 | ) | (159,608 | ) | ||||||||||||||
Income from operations |
209,800 | 55.5 | 326,196 | 32.3 | 431,615 | 65,396 | ||||||||||||||||||
Other income (expense), net: |
||||||||||||||||||||||||
Gain on disposal of investment in
a subsidiary |
525 | * | | * | | | ||||||||||||||||||
Investment income |
| * | 18,905 | 118.2 | 41,244 | 6,249 | ||||||||||||||||||
Interest income |
47,967 | (30.6 | ) | 33,299 | (19.1 | ) | 26,924 | 4,080 | ||||||||||||||||
Interest expense |
(95 | ) | (95.8 | ) | (4 | ) | 25.0 | (5 | ) | (1 | ) | |||||||||||||
Others, net |
(28 | ) | 5,128.6 | 1,408 | (72.2 | ) | 391 | 59 | ||||||||||||||||
Changes in fair value of
contingent consideration payables |
| * | (5,946 | ) | (100.0 | ) | | | ||||||||||||||||
Net income before income taxes and
income of affiliates |
258,169 | 44.8 | 373,858 | 33.8 | 500,169 | 75,783 | ||||||||||||||||||
Income tax expense |
(62,438 | ) | 53.1 | (95,618 | ) | 1.2 | (96,743 | ) | (14,658 | ) | ||||||||||||||
Share of income of affiliates |
135 | 473.3 | 774 | 1,567.18 | 12,904 | 1,955 | ||||||||||||||||||
Net income |
195,866 | 42.5 | 279,014 | 49.22 | 416,330 | 63,080 | ||||||||||||||||||
Less: Net income (loss) attributable
to the noncontrolling interests |
4,129 | (628.6 | ) | (21,827 | ) | (72.6 | ) | (5,978 | ) | (906 | ) | |||||||||||||
Net income attributable to the
CNinsure Inc.s shareholders |
191,737 | 56.9 | 300,841 | 40.4 | 422,308 | 63,986 | ||||||||||||||||||
* | Not meaningful for analysis because the percentage change is mathematically undeterminable or
involves a change from income or benefit to loss or expense, or vice versa. |
| a 4.9% increase from RMB783.2 million in 2009 to RMB821.3 million (US$124.4 million) in
2010 in commissions and fees and other service fees derived from the distributions of
property and casualty insurance products; |
| a 110.7% increase from
RMB231.0 million in 2009 to RMB486.7 million (US$73.7 million) in
2010 in commissions and fees derived from the distributions of life insurance products;
and |
| a 25.9% increase from RMB140.7 million in 2009 to RMB177.1 million (US$26.8 million)
in 2010 in commissions and fees derived from the provision of claims adjusting services.
|
-62-
| an increase of 59.5% in depreciation of fixed assets from RMB14.1 million in 2009 to
RMB22.4 million (US$3.4 million) in 2010, largely as a result of operating the upgraded IT
system in more affiliated entities in 2010; |
| an increase of 122.9% in amortization of intangible assets from RMB9.7 million in 2009
to RMB21.5 million (US$3.3 million) in 2010, largely as a result of the acquisitions we
made in 2010; |
| a recognition of RMB4.6 million (US$0.7 million) impairment loss in respect of
intangible assets for the fourth quarter of 2010; and |
| an increase of 194.0% in share-based compensation expenses from RMB7.6 million in 2009
to RMB22.2 million (US$3.4 million) in 2010, associated with the grant of options to
various directors, officers and employees in February 2010. |
-63-
| a 23.5% increase from RMB634.4 million in 2008 to RMB783.2 million in 2009 in
commissions and fees and other service fees derived from the distributions of property and
casualty insurance products; |
| a 91.6% increase from RMB120.6 million in 2008 to RMB231.0 million in 2009 in
commissions and fees derived from the distributions of life insurance products; and |
| a 58.0% increase from RMB89.0 million in 2008 to RMB140.7 million in 2009 in
commissions and fees derived from the provision of claims adjusting services. |
| an increase in depreciation of fixed assets due to the installation and operation of
our upgraded IT system in more affiliated entities in 2009; |
| an increase in headcount, primarily as a result of the recruitment of more senior
managers, and an increase in base salaries for the managerial and administrative staff; |
| an increase in amortization of intangible assets as a result of the acquisitions we
made in 2008 and 2009; and |
| an increase in office rental expenses and expenses incurred by newly acquired entities
as well as the expansion of our distribution and service network.
|
-64-
| property and casualty insurance segment, which refers to entities that have been
primarily engaged in the distribution of property and casualty insurance products; |
| life insurance segment, which refers to entities that have been primarily engaged in
the distribution of life insurance products; |
| claims adjusting segment, which refers to our claims adjusting firms that are engaged
in claims adjusting services such as pre-underwriting survey, claims adjusting, disposal
of residual value, loading and unloading supervision and consulting services; and |
| Datong segment, which refers to Datong and entities under its control, which are
primarily engaged in the distribution of life insurance products. |
-65-
Year Ended December 31, | ||||||||||||||||||||||||
2008 to 2009 | 2009 to 2010 | |||||||||||||||||||||||
Percentage | Percentage | |||||||||||||||||||||||
2008 | Change | 2009 | Change | 2010 | ||||||||||||||||||||
RMB | % | RMB | % | RMB | US$ | |||||||||||||||||||
(in thousands except percentages) | ||||||||||||||||||||||||
Net revenues: |
||||||||||||||||||||||||
Property and casualty |
599,353 | 30.7 | 783,220 | 4.9 | 821,259 | 124,433 | ||||||||||||||||||
Life |
154,174 | 15.3 | 177,713 | 32.6 | 235,584 | 35,695 | ||||||||||||||||||
Claims adjusting |
89,012 | 58.0 | 140,670 | 25.9 | 177,094 | 26,832 | ||||||||||||||||||
Datong |
1,423 | 3,642.0 | 53,248 | 371.6 | 251,092 | 38,044 | ||||||||||||||||||
Total net revenues |
843,962 | 36.8 | 1,154,851 | 28.6 | 1,485,029 | 225,004 | ||||||||||||||||||
Operating costs and expenses: |
||||||||||||||||||||||||
Property and casualty |
(319,776 | ) | 27.8 | (408,643 | ) | (4.7 | ) | (389,266 | ) | (58,980 | ) | |||||||||||||
Life |
(127,634 | ) | 24.4 | (158,804 | ) | 22.5 | (194,612 | ) | (29,487 | ) | ||||||||||||||
Claims adjusting |
(70,961 | ) | 71.6 | (121,753 | ) | 28.8 | (156,825 | ) | (23,761 | ) | ||||||||||||||
Datong |
(5,837 | ) | 1,138.3 | (72,281 | ) | 196.1 | (214,001 | ) | (32,424 | ) | ||||||||||||||
Other |
(109,954 | ) | (38.9 | ) | (67,174 | ) | 47.0 | (98,710 | ) | (14,956 | ) | |||||||||||||
Total operating costs and
expenses |
(634,162 | ) | 30.7 | (828,655 | ) | 27.1 | (1,053,414 | ) | (159,608 | ) | ||||||||||||||
Income (Loss) from operations: |
||||||||||||||||||||||||
Property and casualty |
279,577 | 34.0 | 374,577 | 15.3 | 431,993 | 65,453 | ||||||||||||||||||
Life |
26,540 | (28.8 | ) | 18,909 | 116.7 | 40,972 | 6,208 | |||||||||||||||||
Claims adjusting |
18,051 | 4.8 | 18,917 | 7.1 | 20,269 | 3,071 | ||||||||||||||||||
Datong |
(4,414 | ) | 331.2 | (19,033 | ) | 294.9 | 37,091 | 5,620 | ||||||||||||||||
Other |
(109,954 | ) | (38.9 | ) | (67,174 | ) | 46.9 | (98,710 | ) | (14,956 | ) | |||||||||||||
Total income from operations |
209,800 | 55.5 | 326,196 | 32.3 | 431,615 | 65,396 | ||||||||||||||||||
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-67-
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Year Ended December 31, | ||||||||||||||||
2008 | 2009 | 2010 | ||||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
(in thousands) | ||||||||||||||||
Net cash generated from operating activities |
254,619 | 259,599 | 366,665 | 55,554 | ||||||||||||
Net cash used in investing activities |
(252,920 | ) | (256,243 | ) | (400,021 | ) | (60,609 | ) | ||||||||
Net cash generated from (used in) financing activities |
16,576 | (57,166 | ) | 511,168 | 77,450 | |||||||||||
Net increase (decrease) in cash and cash equivalents |
18,275 | (53,810 | ) | 477,812 | 72,395 | |||||||||||
Cash and cash equivalents at the beginning of the year |
1,544,817 | 1,510,432 | 1,457,890 | 220,892 | ||||||||||||
Cash and cash equivalents at the end of the year |
1,510,432 | 1,457,890 | 1,924,884 | 291,649 |
-69-
-70-
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Payment Due by Period | ||||||||||||||||||||
Less than | More than | |||||||||||||||||||
Total | 1 year | 1-3 years | 3-5 years | 5 years | ||||||||||||||||
(in thousands of RMB) | ||||||||||||||||||||
Operating lease obligations |
36,138 | 21,251 | 14,333 | 554 | | |||||||||||||||
Purchase obligations (1) |
365 | 365 | | | | |||||||||||||||
Total |
36,503 | 21,616 | 14,333 | 554 | | |||||||||||||||
(1) | Represents payment commitment in connection with the construction of our Core Business System
and ERP-based financial and accounting system. |
Directors and Executive Officers | Age | Position/Title | ||||
Yinan Hu
|
45 | Chairman and Chief Executive Officer | ||||
Qiuping Lai
|
57 | President and Director | ||||
Peng Ge
|
40 | Chief Financial Officer | ||||
Chunlin Wang
|
41 | Vice President, Chief Operating Officer and Head of the Property and Casualty Insurance Unit | ||||
Feng Jin
|
45 | Vice President, Chief Information Officer and Head of the Life Insurance Unit | ||||
Shangzhi Wu
|
60 | Director | ||||
Yongwei Ma
|
68 | Independent Director | ||||
Stephen Markscheid
|
57 | Independent Director | ||||
Allen Warren Lueth
|
42 | Independent Director | ||||
Mengbo Yin
|
55 | Independent Director |
-72-
-73-
-74-
| options to purchase our ordinary shares; |
| restricted shares, which represent non-transferable ordinary shares, that may be
subject to forfeiture, restrictions on transferability and other restrictions; and |
| restricted share units, which represent the right to receive our ordinary shares at a
specified date in the future, which may be subject to forfeiture. |
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Ordinary Shares | |||||||||||||||
Underlying | Exercise Price (Per | ||||||||||||||
Name | Outstanding Options | Share) | Grant Date | Expiration Date | |||||||||||
Yinan Hu |
2,600,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
1,800,000 | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | |||||||||||
4,500,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | |||||||||||
Qiuping Lai |
1,500,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
1,200,000 | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | |||||||||||
3,400,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | |||||||||||
Peng Ge |
1,500,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
1,200,000 | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | |||||||||||
3,350,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | |||||||||||
Chunlin Wang |
1,000,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
900,000 | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | |||||||||||
2,050,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | |||||||||||
Feng Jin |
1,000,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
900,000 | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | |||||||||||
1,435,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | |||||||||||
Yongwei Ma |
400,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | ||||||||||
Mengbo Yin |
400,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
400,000 | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | |||||||||||
400,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | |||||||||||
Stephen Markscheid |
400,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
400,000 | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | |||||||||||
600,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | |||||||||||
Allen Warren Lueth |
400,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
400,000 | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | |||||||||||
600,000 | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | |||||||||||
Other individuals as a group |
19,600,000 | US$ | 0.7340 | April 28, 2011 | March 31, 2017 | ||||||||||
21,796,150 | (1) | US$ | 0.8395 | February 08, 2010 | March 31, 2016 | ||||||||||
8,248,470 | US$ | 0.3360 | March 09, 2009 | March 31, 2015 | |||||||||||
12,342,840 | (2) | US$ | 0.2780 | November 21, 2008 | March 31, 2015 | ||||||||||
652,631 | (3) | RMB | 2.3214 | February 03, 2007 | February 1, 2017 |
(1) | Including 1,500,000 options held by Mr. Chengbin Li, our former Vice President and head
of our Life Insurance Unit. |
|
(2) | Including 1,365,000 options held by Mr. Chengbin Li, our former Vice President and head
of our Life Insurance Unit. |
|
(3) | Remaining unexercised options held by Mr. David Tang, our former Chief Financial Officer. |
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| selecting the independent auditors and pre-approving all auditing and non-auditing
services permitted to be performed by the independent auditors; |
| reviewing with the independent auditors any audit problems or difficulties and
managements response; |
| reviewing and approving all proposed related-party transactions; |
| discussing the annual audited financial statements with management and the independent
auditors; |
| reviewing major issues as to the adequacy of our internal controls and any special
audit steps adopted in light of material control deficiencies; |
| annually reviewing and reassessing the adequacy of our audit committee charter; |
| meeting separately and periodically with management, the independent auditors and the
internal auditor; and |
| reporting regularly to the full board of directors. |
| reviewing and recommending to the board with respect to the total compensation package
for our chief executive officer; |
| approving and overseeing the total compensation package for our executives other than
the chief executive officer; |
| reviewing and making recommendations to the board with respect to the compensation of
our directors; and |
| reviewing periodically and approving any long-term incentive compensation or equity
plans, programs or similar arrangements, annual bonuses, employee pension and welfare
benefit plans. |
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| identifying and recommending to the board nominees for election or re-election to the
board, or for appointment to fill any vacancy; |
| reviewing annually with the board the current composition of the board in light of the
characteristics of independence, skills, experience and availability of service to us; |
| identifying and recommending to the board the names of directors to serve as members of
the audit committee and the compensation committee, as well as the corporate governance
and nominating committee itself; |
| advising the board periodically with respect to significant developments in the law and
practice of corporate governance, as well as our compliance with applicable laws and
regulations, and making recommendations to the board on all matters of corporate
governance and on any corrective action to be taken; and |
| monitoring compliance with our code of business conduct and ethics, including reviewing
the adequacy and effectiveness of our procedures to ensure proper compliance. |
Number of | ||||||||
Employees | % of Total | |||||||
Management and administrative staff |
2,454 | 54.3 | % | |||||
Financial and accounting staff |
421 | 9.3 | % | |||||
Sales and marketing staff |
145 | 3.2 | % | |||||
Professional claims adjustors |
1,497 | 33.2 | % | |||||
Total |
4,517 | 100.0 | % | |||||
-79-
E. | Share Ownership |
| each of our current directors and executive officers; and |
| each person known to us to own beneficially more than 5% of our shares. |
Ordinary Shares Beneficially Owned(1) (2) | ||||||||
Number | % | |||||||
Directors and Executive Officers: |
||||||||
Yinan Hu(3) |
185,297,368 | 18.4 | ||||||
Qiuping Lai(4) |
27,752,285 | 2.8 | ||||||
Peng Ge(5) |
9,675,925 | 1.0 | ||||||
Feng Jin |
* | * | ||||||
Chunlin Wang |
* | * | ||||||
Shangzhi Wu(6) |
124,688,540 | 12.4 | ||||||
Yongwei Ma |
* | * | ||||||
Stephen Markscheid |
* | * | ||||||
Allen Warren Lueth |
* | * | ||||||
Mengbo Yin |
* | * | ||||||
All Directors and Executive Officers as a Group(7) |
355,195,662 | 35.0 | ||||||
Principal Shareholders: |
||||||||
Kingsford Resources Limited(8) |
219,441,430 | 21.9 | ||||||
CDH Inservice Limited(9) |
124,688,540 | 12.4 | ||||||
FMR LLC(10) |
65,868,840 | 6.6 | ||||||
Norges Bank (the Central Bank of Norway)(11) |
52,700,000 | 5.3 |
* | Less than 1% of our total outstanding ordinary shares. |
|
| Except for Dr. Wu and Mr. Ma, the business address of our directors and executive officers is
c/o 22/F, Yinhai Building, No. 299 Yanjiang Zhong Road, Guangzhou, Guangdong 510110, Peoples
Republic of China. |
-80-
(1) | The number of shares beneficially owned by each director and executive officer includes the
shares beneficially owned by such person, the shares underlying all options held by such
person that have vested or will vest within 60 days after April 8, 2011. The options were
granted on November 21, 2008 and February 08, 2010 under the 2007 share incentive plan. |
|
(2) | Percentage of beneficial ownership of each director and executive officer is based on
1,003,270,326 ordinary shares outstanding as of April 8, 2011 and the number of ordinary
shares underlying options held by such person that have vested or will vest within 60 days
after April 8, 2011. |
|
(3) | Includes 170,226,375 ordinary shares, 9,258,840 ordinary shares in the form of ADSs of our
company and 3,240,000 ordinary shares issuable upon exercise of options within 60 days after
April 8, 2011 held by Mr. Hu. Mr. Hu holds approximately 87.6% of the total outstanding
shares of High Rank Investments Limited, or High Rank Investments, a company incorporated in
the British Virgin Islands. High Rank Investments holds approximately 93.3% of the total
outstanding shares of Kingsford Resources Limited, or Kingsford Resources, a company
incorporated in the British Virgin Islands. Also includes 2,439,473 ordinary shares and
132,680 ordinary shares in the form of ADSs held by Ms. Hui Li, spouse of Mr. Hu. Ms. Li holds
approximately 17.6% of the total outstanding shares of Better Rise Investments Limited, or
Better Rise Investments, a company incorporated in the British Virgin Islands. Better Rise
Investments owns approximately 6.7% of Kingsford Resources. Kingsford Resources holds
208,121,430 ordinary shares and 11,320,000 ordinary shares in the form of ADSs of our company.
Mr. Hu disclaims beneficial ownership of all of our shares held by Kingsford Resources except
to the extent of his pecuniary interest therein. |
|
(4) | Includes 24,044,465 ordinary shares, 1,307,820 ordinary shares in the form of ADSs and
2,400,000 ordinary shares issuable upon exercise of options held by Mr. Lai who holds
approximately 12.4% of the total outstanding shares of High Rank
Investments. High Rank Investments holds approximately 93.3% of the total outstanding shares
of Kingsford Resources. Kingsford Resources holds 208,121,430 ordinary shares and 11,320,000
ordinary shares in the form of ADSs of our company.
Mr. Lai disclaims beneficial ownership of all of our shares held by Kingsford Resources except
to the extent of his pecuniary interest therein. |
|
(5) | Mr. Ge holds approximately 50.0% of the total outstanding shares of Better Rise Investments
which owns approximately 6.7% of Kingsford Resources. Therefore, Mr. Ge may be deemed to
beneficially own, indirectly through Better Rise Investments and Kingsford Resources,
approximately 6,929,045 ordinary shares and 376,880 ordinary shares in the form of ADSs of our
company. 2,370,000 ordinary shares held by Mr. Ge are issuable upon exercise of options within
60 days after April 8, 2011. Mr. Ge disclaims beneficial ownership of all of our shares held
by Kingsford Resources except to the extent of his pecuniary interest therein. |
|
(6) | Includes 91,600,000 ordinary shares and 33,088,540 ordinary shares in the form of ADSs of our
company held by CDH Inservice, a British Virgin Islands company. All of the issued and
outstanding shares of CDH Inservice are owned by CDH China Growth Capital Fund II, L.P., or
CDH Fund II, a Cayman Islands exempted limited partnership. CDH Growth Capital Holdings, a
Cayman Islands exempted limited liability company, is the general partner of CDH Fund II and
has the power to direct CDH Fund II as to the voting and disposition of shares directly and
indirectly held by CDH Fund II. Dr. Wu is director, managing partner and member of the
investment committee of CDH Growth Capital Holdings. Dr. Wu disclaims beneficial ownership of
all of our shares held by CDH Inservice except to the extent of his pecuniary interest
therein. The business address of Dr. Wu is c/o CDH China Growth Capital Holdings Company
Limited, 1503 International Commerce Center, 1 Austin Road West, Kowloon, Hong Kong. |
|
(7) | Includes ordinary shares beneficially owned by all of our directors and executive officers as
a group and ordinary shares underlying all options held by such persons that have vested or
will vest within 60 days after April 8, 2011. |
|
(8) | Includes 208,121,430 ordinary shares and 11,320,000 ordinary shares in the form of ADSs of
our company held by Kingsford Resources. Approximately 93.3% of the total outstanding shares
of Kingsford Resources are held by High Rank Investments, which is 87.6% owned by Mr. Yinan
Hu, our chairman and chief executive officer, and 12.4% owned by Mr. Qiuping Lai, our
president. The remaining 6.7% of the total outstanding shares of Kingsford Resources are held
by Better Rise Investments, which is owned by two of our executive officers, one former
executive officer and Mr. Yinan Hus wife. The registered address of Kingsford Resources is
Beaufort House, P.O. Box 438, Road Town, Tortola, British Virgin Islands. |
|
(9) | Includes 91,600,000 ordinary shares and 33,088,540 ordinary shares in the form of ADSs of our
company held by CDH Inservice. All of the issued and outstanding shares of CDH Inservice are
owned by CDH Fund II, a Cayman Islands exempted limited partnership. CDH Growth Capital
Holdings, a Cayman Islands exempted limited liability company, is the general partner of CDH
Fund II and has the power to direct CDH Fund II as to the voting and disposition of shares
directly and indirectly held by CDH Fund II. The investment committee of CDH Growth Capital
Holdings is comprised of Wu Shangzhi and two other individuals. Changes to the investment
committee require the approval of the directors of CDH Growth Capital Holdings. The directors
of CDH Growth Capital Holdings are nominated by the principal shareholders of CDH Growth
Capital Holdings, being (i) an affiliate of Capital Z Partners, (ii) an affiliate of the
Government of Singapore Investment Corporation, and (iii) China Diamond Holdings II, L.P., a
British Virgin Islands limited partnership controlled by senior members of the CDH Fund II
investment team. CDH Growth Capital Holdings disclaims beneficial ownership of all of our
shares held by CDH Inservice except to the extent of its pecuniary interest therein. The
registered address of CDH Inservice is c/o Maples Finance BVI Limited, P.O. Box 173, Kingston
Chambers, Road Town, Tortola, British Virgin Islands. |
|
(10) | Represents 65,868,840 ordinary shares in the form of ADSs of our Company held by FMR LLC, as
reported on Schedule 13G filed by FRM LLC on April 8, 2011. The percentage of beneficial
ownership was calculated based on the total number of our ordinary shares outstanding as of
April 8, 2011. The address of FMR LLC is 82 Devonshire Street, Boston, Massachusetts, USA. |
|
(11) | Represents 52,700,000 ordinary shares in the form of ADSs of our Company held by Norges
Bank, as reported on Schedule 13G filed by Norges Bank on February 15, 2011. The percentage of
beneficial ownership was calculated based on the total number of our ordinary shares
outstanding as of April 8, 2011. The address of Norges Bank is Bankplassen 2, PO Box 1179
Sentrum, NO 0107 Oslo, Norway. |
-81-
Item 7. | Major Shareholders and Related Party Transactions |
A. | Major Shareholders |
B. | Related Party Transactions |
-82-
C. | Interests of Experts and Counsel |
Item 8. | Financial Information |
A. | Consolidated Statements and Other Financial Information |
-83-
B. | Significant Changes |
Item 9. | The Offer and Listing |
A. | Offer and Listing Details |
Sales Price | ||||||||
High | Low | |||||||
US$ | US$ | |||||||
Annual High and Low |
||||||||
2007 (from October 31) |
28.74 | 12.00 | ||||||
2008 |
16.63 | 5.44 | ||||||
2009 |
24.74 | 6.26 | ||||||
2010 |
28.62 | 15.33 | ||||||
Quarterly Highs and Lows |
||||||||
First Quarter of 2009 |
9.59 | 6.26 | ||||||
Second Quarter of 2009 |
14.20 | 7.00 | ||||||
Third Quarter of 2009 |
24.74 | 12.92 | ||||||
Fourth Quarter of 2009 |
24.64 | 18.42 | ||||||
First Quarter of 2010 |
27.46 | 16.49 | ||||||
Second Quarter of 2010 |
28.62 | 20.25 | ||||||
Third Quarter of 2010 |
27.67 | 20.13 | ||||||
Fourth Quarter of 2010 |
26.74 | 15.33 | ||||||
First Quarter of 2011 |
20.88 | 11.42 | ||||||
Monthly Highs and Lows |
||||||||
November 2010 |
26.74 | 18.50 | ||||||
December 2010 |
22.37 | 15.33 | ||||||
January 2011 |
20.88 | 16.41 | ||||||
February 2011 |
18.37 | 16.64 | ||||||
March 2011 |
18.22 | 11.42 | ||||||
April 2011 |
15.60 | 12.40 | ||||||
May 2011 (through May 3) |
15.35 | 14.14 |
-84-
B. | Plan of Distribution |
C. | Markets |
D. | Selling Shareholders |
E. | Dilution |
F. | Expenses of the Issue |
Item 10. | Additional Information |
A. | Share Capital |
B. | Memorandum and Articles of Association |
-85-
-86-
C. | Material Contracts |
D. | Exchange Controls |
E. | Taxation |
-87-
| banks and other financial institutions; |
| insurance companies; |
| broker-dealers; |
| traders that elect to use a mark-to-market method of accounting; |
| tax-exempt entities; |
| persons liable for alternative minimum tax; |
| U.S. expatriates; |
| regulated investment companies or real estate investment trusts; |
| persons holding an ADS or ordinary share as part of a straddle, hedging, conversion or
integrated transaction; |
| persons who acquired ADSs or ordinary shares pursuant to the exercise of any employee
stock options or otherwise as compensation; |
| persons that actually or constructively own 10% or more of the total combined voting
power of all classes of our voting stock; or |
| partnerships or other pass-through entities, or persons holding ADSs or ordinary shares
through such entities. |
-88-
| an individual who is a citizen or resident of the United States; |
| a corporation (or other entity treated as a corporation for U.S. federal income tax
purposes) organized under the laws of the United States, any state thereof or the District
of Columbia; |
| an estate, the income of which is subject to U.S. federal income taxation regardless of
its source; or |
| a trust that (i) is subject to the primary supervision of a court within the United
States and the control of one or more U.S. persons for all substantial decisions; or (ii)
has a valid election in effect under applicable U.S. Treasury regulations to be treated as
a U.S. person. |
-89-
| at least 75% of its gross income for such year is passive income; or |
| at least 50% of the value of its assets (based on an average of the quarterly values of
the assets) during such year is attributable to assets that produce passive income or are
held for the production of passive income (the asset test). |
-90-
| the excess distribution or recognized gain will be allocated ratably over your holding
period for the ADSs or ordinary shares; |
| the amount allocated to the current taxable year, and any taxable years in your holding
period prior to the first taxable year in which we were a PFIC, will be treated as
ordinary income; and |
| the amount allocated to each other year will be subject to the highest tax rate in
effect for individuals or corporations, as applicable, for each such year, and the
interest charge generally applicable to underpayments of tax will be imposed on the
resulting tax attributable to each such year. |
-91-
F. | Dividends and Paying Agents |
G. | Statement by Experts |
H. | Documents on Display |
-92-
I. | Subsidiary Information |
Item 11. | Quantitative and Qualitative Disclosures about Market Risk |
Item 12. | Description of Securities Other than Equity Securities |
A. | Debt Securities |
B. | Warrants and Rights |
C. | Other Securities |
-93-
D. | American Depositary Shares |
Category | Depositary Actions | Associated Fees | ||
(a) Depositing or substituting the underlying shares |
Each person to whom ADRs are issued
against deposits of shares, including deposits and issuances in respect of:
Share distributions, stock split, rights, merger
|
US$5.00 for each 100 ADSs (or portion thereof) evidenced by the new ADRs delivered | ||
Exchange of securities or any other transaction or event or other distribution
affecting the ADSs or the Deposited Securities |
||||
(b) Receiving or distributing dividends |
Distribution of dividends | US$0.02 or less per ADS | ||
(c) Selling or exercising rights |
Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities | US$5.00 for each 100 ADSs (or portion thereof) | ||
(d) Withdrawing an underlying security |
Acceptance of ADRs surrendered for withdrawal of deposited securities | US$5.00 for each 100 ADSs (or portion thereof) evidenced by the ADRs surrendered | ||
(e) Transferring, splitting or
grouping receipts
|
Transfers, combining or grouping of depositary receipts | US$1.50 per ADS | ||
(f) General depositary
services, particularly those
charged on an annual basis.
|
Other services performed by the depositary in administering the ADRs
Provide information about the depositarys right, if any, to collect fees and
charges by offsetting them against dividends received and deposited securities
|
US$0.02 per ADS (or portion thereof) not more than once each calendar year and payable at the sole discretion of the depositary by billing Holders or by deducting such charge from one or more cash dividends or other cash distributions | ||
(g) Expenses of the depositary
|
Expenses incurred on behalf of Holders in connection with
Compliance with foreign exchange control regulations or any law or regulation relating to foreign investment
The depositarys or its custodians compliance with applicable law, rule or regulation
Stock transfer or other taxes and other governmental charges
Cable, telex, facsimile transmission/delivery
Expenses of the depositary in connection with the conversion of foreign currency into U.S. dollars (which are
paid out of such foreign currency)
Any other charge payable by depositary or its agents
|
Expenses payable at the sole discretion of the depositary by billing Holders or by deducting charges from one or more cash dividends or other cash distributions |
-94-
For the Year Ended December 31, | ||||||||
2009 | 2010 | |||||||
(in thousands of US$) | ||||||||
Investor relations(1) |
296.4 | 243.7 | ||||||
Directors and officers liability insurance |
103.6 | 96.9 | ||||||
Legal fees incurred in connection with preparation of Form 20-F and
ongoing SEC compliance and listing requirements |
55.6 | 172.5 | ||||||
Broker reimbursements(2) |
5.4 | | ||||||
Listing fees |
| 42.5 | ||||||
Advertising and public relations |
| | ||||||
Consulting services fee in connection with SOX Compliance |
| 330.0 | ||||||
Others |
3.2 | 42.7 |
(1) | Includes expenses in relation with roadshows, press release distribution, maintenance of
investor relations website and printing. |
|
(2) | Broker reimbursements are fees payable to proxy agents and other service providers for the
distribution of proxy materials to beneficial ADR holders. |
For the Year Ended December 31, | ||||||||
2009 | 2010 | |||||||
(in thousands of US$) | ||||||||
Third-party expenses paid indirectly |
| | ||||||
Fee waived |
255 | 255 |
Item 13. | Defaults, Dividend Arrearages and Delinquencies |
Item 14. | Material Modifications to the Rights of Security Holders and Use of Proceeds |
-95-
E. | Use of Proceeds |
| approximately US$3.0 million to fund establishment of new insurance intermediary
companies; |
| approximately
US$151.1 million to fund acquisitions; and |
| approximately US$9.6 million to construct our operating platform. |
Item 15. | Controls and Procedures |
-96-
-97-
Item 16A. | Audit Committee Financial Expert |
Item 16B. | Code of Ethics |
Item 16C. | Principal Accountant Fees and Services |
For the Year Ended December 31, | ||||||||
2009 | 2010 | |||||||
(in thousands of US$) | ||||||||
Audit fees(1) |
2,248 | 1,962 | ||||||
Audit-related fees(2) |
35 | 100 | ||||||
Tax fees(3) |
24 | 48 | ||||||
All other fees |
| |
(1) | Audit fees meant the aggregate fees billed in each of the fiscal years listed for
professional services rendered by our independent registered public accounting firm for the
audit of our annual financial statements and review of quarterly financial statements included
in our reports on Form 6-K, services that are normally provided in connection with statutory
and regulatory filings or engagements for those fiscal years. |
|
(2) | Audit-related fees meant the aggregate fees billed in each of the fiscal years listed for
assurance and related services by our independent registered public accounting firm that are
reasonably related to the performance of the audit or review of our financial statements and
are not reported under Audit fees. The fees billed in 2009 comprised US$30,300 for review of
F-3 registration statement and US$5,100 for S-8 registration statements. The fee billed in
2010 comprised US$100,000 for review of F-3 registration statement for the follow-on offering. |
|
(3) | Tax fees meant the aggregate fees billed in each of the fiscal years listed for
professional services rendered by our independent registered public accounting firm for tax
compliance, tax advice, and tax planning. The fees billed in 2009 and 2010 represented tax
consultant fees for transfer pricing. |
Item 16D. | Exemptions from the Listing Standards for Audit Committees |
Item 16E. | Purchases of Equity Securities by the Issuer and Affiliated Purchasers |
-98-
Item 16F. | Change in Registrants Certifying Accountant |
Item 16G. | Corporate Governance |
Item 17. | Financial Statements |
Item 18. | Financial Statements |
Item 19. | Exhibits |
Exhibit | ||||
Number | Description of Document | |||
1.1 | Amended and Restated Memorandum and Articles of Association of the Registrant
(incorporated by reference to Exhibit 3.2 of our F-1 registration statement
(File No. 333-146605), as amended, initially filed with the Commission on
October 10, 2007) |
|||
1.2 | Amendments to the Articles of Association adopted by the shareholders of the
Registrant on December 18, 2008 (incorporated by reference to Exhibit 99.2 of
our report on Form 6-K furnished to the Commission on December 22, 2008) |
|||
2.1 | Registrants Specimen American Depositary Receipt (incorporated by reference to
Exhibit 4.1 of our F-1 registration statement (File No. 333-146605), as amended,
initially filed with the Commission on October 10, 2007) |
|||
2.2 | Registrants Specimen Certificate for Ordinary Shares (incorporated by reference
to Exhibit 4.2 of our F-1 registration statement (File No. 333-146605), as
amended, initially filed with the Commission on October 10, 2007) |
|||
2.3 | Form of Deposit Agreement among the Registrant, the depositary and holder of the
American Depositary Receipts (incorporated by reference to Exhibit 4.3 of our
F-1 registration statement (File No. 333-146605), as amended, initially filed
with the Commission on October 10, 2007) |
|||
4.1 | 2007 Share Incentive Plan (as amended and restated effective December 18, 2008)
(incorporated by reference to Exhibit 99.3 of our report on Form 6-K furnished
to the Commission on December 22, 2008) |
|||
4.2 | Form of Indemnification Agreement with the Registrants directors and officers
(incorporated by reference to Exhibit 10.3 of our F-1 registration statement
(File No. 333-146605), as amended, initially filed with the Commission on
October 10, 2007) |
-99-
Exhibit | ||||
Number | Description of Document | |||
4.3 | Form of Director Agreement with Independent Directors of the Registrant
(incorporated by reference to Exhibit 10.4 of our F-1 registration statement
(File No. 333-146605), as amended, initially filed with the Commission on
October 10, 2007) |
|||
4.4 | Form of Employment Agreement between the Registrant and an Executive Officer of
the Registrant (incorporated by reference to Exhibit 4.4 of our annual report on
Form 20-F filed with the Commission on May 15, 2009) |
|||
4.5 | English translation of Form of Loan Agreement between Fanhua Xinlian Information
Technology Consulting (Shenzhen) Co., Ltd. (previously known as Yiqiman
Enterprise Management Consulting (Shenzhen) Co., Ltd.) and each shareholder of
Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co., Ltd.)
(incorporated by reference to Exhibit 10.6 of our F-1 registration statement
(File No. 333-146605), as amended, initially filed with the Commission on
October 10, 2007) |
|||
4.6 | English translation of Form of Equity Pledge Agreement among Fanhua Xinlian
Information Technology Consulting (Shenzhen) Co., Ltd., each shareholder of
Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co., Ltd.)
and Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co.,
Ltd.) (incorporated by reference to Exhibit 10.7 of our F-1 registration
statement (File No. 333-146605), as amended, initially filed with the Commission
on October 10, 2007) |
|||
4.7 | English translation of Form of Irrevocable Power of Attorney issued by each
shareholder of Guangdong Meidiya Investment Co., Ltd. and Sichuan Yihe
Investment Co., Ltd. (incorporated by reference to Exhibit 10.8 of our F-1
registration statement (File No. 333-146605), as amended, initially filed with
the Commission on October 10, 2007) |
|||
4.8 | English translation of Form of Exclusive Purchase Option Agreement among Fanhua
Xinlian Information Technology Consulting (Shenzhen) Co., Ltd., each shareholder
of Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment Co.,
Ltd.), and Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe Investment
Co., Ltd.) (incorporated by reference to Exhibit 10.9 of our F-1 registration
statement (File No. 333-146605), as amended, initially filed with the Commission
on October 10, 2007) |
|||
4.9 | English translation of Form of Trademark Licensing Agreement between Beijing
Ruisike Management Consulting Company Limited and some of the insurance agency
and brokerage subsidiaries of Guangdong Meidiya Investment Co., Ltd. and
Sichuan Yihe Investment Co., Ltd. (incorporated by reference to Exhibit 10.12 of
our F-1 registration statement (File No. 333-146605), as amended, initially
filed with the Commission on October 10, 2007) |
|||
4.10 | English translation of Form of Employment Agreement between an acquired company
and its founder (incorporated by reference to Exhibit 10.13 of our F-1
registration statement (File No. 333-146605), as amended, initially filed with
the Commission on October 10, 2007) |
|||
4.11 | English translation of Form of Technology Consulting and Service Agreement
between Fanhua Xinlian Information Technology Consulting (Shenzhen) Co., Ltd.
and some of the insurance intermediary subsidiaries of Guangdong Meidiya
Investment Co., Ltd. and Sichuan Yihe Investment Co., Ltd. (incorporated by
reference to Exhibit 4.14 of our annual report on Form 20-F filed with the
Commission on June 20, 2008) |
|||
4.12 | English translation of Form of Consulting and Service Agreement between Fanhua
Zhonglian Enterprise Image Planning (Shenzhen) Co., Ltd. (formerly known as
Haidileji Enterprise Image Planning (Shenzhen) Co., Ltd.) and some of the
insurance intermediary subsidiaries of Guangdong Meidiya Investment Co., Ltd.
and Sichuan Yihe Investment Co., Ltd. (incorporated by reference to Exhibit 4.15
of our annual report on Form 20-F filed with the Commission on June 20, 2008) |
|||
4.13 | English translation of Form of Credit and Liability Transfer Agreement among a
former shareholder of Guangdong Meidiya Investment Co., Ltd. (or Sichuan Yihe
Investment Co., Ltd.), Mr. Peng Ge and Fanhua Xinlian Information Technology
Consulting (Shenzhen) Co., Ltd. (incorporated by reference to Exhibit
4.13 of our annual report on Form 20-F filed with the Commission on May 15,
2009) |
|||
4.14 | English translation of Share Transfer Agreement between CISG Holdings Ltd. and
Keep High Holdings Limited (incorporated by reference to Exhibit 4.14 of our
annual report on Form 20-F filed with the Commission on May 15, 2009) |
-100-
Exhibit | ||||
Number | Description of Document | |||
4.15 | English translation of Shareholders Agreement among Guangdong Meidiya Investment
Co., Ltd., Mr. Keping Lin and Chengdu Mingxia Industrial Co., Ltd. (incorporated
by reference to Exhibit 4.15 of our annual report on Form 20-F filed with the
Commission on May 15, 2009) |
|||
4.16 | English translation of Supplemental Agreement I dated June 30, 2009 (to the
Shareholders Agreement dated September 17, 2008) between Guangdong Meidiya
Investment Co., Ltd. and Mr. Keping Lin(incorporated by reference to Exhibit
4.16 of our annual report on Form 20-F filed with the Commission on May 7, 2010) |
|||
4.17 | English translation of Supplemental Agreement II dated November 20, 2009 (to the
Shareholders Agreement dated September 17, 2008 and the supplemental agreement
dated June 30, 2009) between Guangdong Meidiya Investment Co., Ltd. and Mr.
Keping Lin (incorporated by reference to Exhibit 4.17 of our annual report on
Form 20-F filed with the Commission on May 7, 2010) |
|||
4.18 | * | Supplemental Subscription and Share Purchase and Shareholders Agreement relating
to Inscom Holding Limited dated April 27, 2011 among InsCom HK Limited, InsCom
Group Limited, InsCom Holding Limited, Apollo & Muse Holding Limited, Clever
Star Holdings Limited, CISG Holdings Ltd. and Subscription and Shares Purchase
and Shareholders Agreement dated July 29, 2010 among the same parties. |
||
4.19 | * | Deed of Adherence relating to InsCom Holding Limited dated October 29, 2010
among InsCom Holding Limited, InsCom Group Limited, InsCom HK Limited, Apollo &
Muse Holding Limited, Clever Star Holdings Limited, CISG Holdings Ltd., Wang
Strategic Capital Partners (II) Limited, Harbor Pacific Capital Partners I, LP |
||
4.20 | * | Subscription and Share Purchase Agreement relating to InsCom Holding Limited
dated October 29, 2010 among InsCom Holding Limited, InsCom Group Limited,
InsCom HK Limited, Apollo & Muse Holding Limited, Clever Star
Holdings Limited, Wang Strategic Capital Partners (II) Limited, Harbour
Pacific Capital Partners I, LP |
||
4.21 | * | Put Option Agreement dated October 29, 2010 among Hu Yinan, Apollo & Muse
Holding Limited, Wang Strategic Capital Partners (II) Limited and Harbor Pacific
Capital Partners I, LP |
||
4.22 | * | English translation of Loan Agreement dated December 3, 2010 between Ying
Si Kang Information Technology (Shenzhen) Co., Ltd. and Chunlin Wang |
||
4.23 | * | English translation of Equity Pledge Contract dated December 3, 2010 between
Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Chunlin Wang and
Shenzhen Xinbao Investment Management Co., Ltd. |
||
4.24 | * | English translation of Exclusive Purchase Option Contract dated December 3, 2010
among Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Chunlin
Wang and Shenzhen Xinbao Investment Management Co., Ltd. |
||
4.25 | * | English translation of Power of Attorney dated December 3, 2010 of Chunlin Wang |
||
4.26 | * | English translation of Loan Agreement dated December 3, 2010 between Ying
Si Kang Information Technology (Shenzhen) Co., Ltd. and Yuan Tian |
||
4.27 | * | English translation of Equity Pledge Contract dated December 3, 2010 between
Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Yuan Tian and
Shenzhen Xinbao Investment Management Co., Ltd. |
||
4.28 | * | English translation of Exclusive Purchase Option Contract dated December 3, 2010
among Ying Si Kang Information Technology (Shenzhen) Co., Ltd., Yuan Tian
and Shenzhen Xinbao Investment Management Co., Ltd. |
||
4.29 | * | English translation of Power of Attorney dated December 3, 2010 of Yuan Tian |
||
4.30 | * | Share Subscription Agreement dated December 24, 2010 among Datong International
Holdings Limited, Winner Sight Global Limited, CISG Holdings Ltd., Keping Lin,
Expert Central Limited and Mancini Holdings Limited |
-101-
Exhibit | ||||
Number | Description of Document | |||
4.31 | * | Share Purchase Agreement dated March 24, 2011 among Winner Sight Global Limited,
CNinsure Inc., CISG Holdings Ltd., Guangdong Meidiya Investment Co., Ltd.,
Keping Lin, Expert Central Limited, Mancini Holdings Limited, Datong
International Holdings Limited, Datong Group Limited, Beijing Dahua Rongjin
Information Technology Limited, Beijing Fanhua Datong Investment Management Co.,
Ltd. and Datong Insurance Sales and Services Co., Ltd. |
||
4.32 | * | English translation of Share Transfer Agreement dated March 24, 2011 between
Guangdong Meidiya Investment Co., Ltd. and Beijing Min Si Lian Hua Investment
Management Co., Ltd. |
||
4.33 | * | English translation of Supplemental Agreement (to the Share Transfer Agreement
dated March 24, 2011) dated March 24, 2011 between Guangdong Meidiya Investment
Co., Ltd. and Beijing Min Si Lian Hua Investment Management Co., Ltd. |
||
4.34 | * | English translation of Settlement Agreement (Shareholders Agreement) dated March
24, 2011 among Guangdong Meidiya Investment Co., Ltd., Mr. Keping Lin and
Beijing Fanhua Datong Investment Management Co., Ltd. |
||
4.35 | * | English translation of Form of Consulting and Service Agreement made with Fanhua
Xinlian Information Technology Consulting (Shenzhen) Co., Ltd. |
||
4.36 | * | English translation of Form of Consulting and Service Agreement made with Fanhua
Zhonnglian Enterprise Image Planning (Shenzhen) Co., Ltd. |
||
4.37 | * | English translation of Form of IT Platform Service Agreement made with Litian
Zhuoyue Software (Beijing) Co., Ltd. |
||
8.1 | * | Subsidiaries and Consolidated Affiliated Entities of the Registrant |
||
11.1 | Code of Business Conduct and Ethics of the Registrant (incorporated by reference
to Exhibit 99.1 of our F-1 registration statement (File No. 333-146605), as
amended, initially filed with the Commission on October 10, 2007) |
|||
12.1 | * | CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
||
12.2 | * | CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
||
13.1 | * | CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
||
13.2 | * | CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
||
15.1 | * | Consent of Maples and Calder |
||
15.2 | * | Consent of Commerce & Finance Law Offices |
||
15.3 | * | Consent of Deloitte Touche Tohmatsu |
* | Filed with this Annual Report on Form 20-F |
-102-
CNINSURE INC. |
||||
By: | /s/ Yinan Hu | |||
Name: | Yinan Hu | |||
Title: | Chairman and Chief Executive Officer |
Page | ||||
F-2 | ||||
F-3 | ||||
F-6 | ||||
F-7 | ||||
F-9 | ||||
F-11 | ||||
F-46 |
F-1
F-2
As of December 31, | ||||||||||||
2009 | 2010 | 2010 | ||||||||||
RMB | RMB | US$ | ||||||||||
ASSETS: |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
1,457,890 | 1,924,884 | 291,649 | |||||||||
Restricted cash |
1,957 | 9,177 | 1,390 | |||||||||
Accounts receivable, net of allowance
for doubtful amounts of RMB2,136 and
RMB5,790 (US$877) as of December 31,
2009 and 2010, respectively |
181,360 | 243,175 | 36,845 | |||||||||
Insurance premium receivables |
230 | 92 | 14 | |||||||||
Other receivables (Note 4) |
52,108 | 67,034 | 10,157 | |||||||||
Deferred tax assets (Note 11)
|
2,602 | 5,691 | 862 | |||||||||
Amounts due from related parties (Note 15) |
25,337 | 40,000 | 6,061 | |||||||||
Other current assets |
6,015 | 12,372 | 1,874 | |||||||||
Total current assets |
1,727,499 | 2,302,425 | 348,852 | |||||||||
Non-current assets: |
||||||||||||
Property, plant and equipment, net (Note 5) |
108,318 | 102,175 | 15,481 | |||||||||
Goodwill (Note 6) |
535,911 | 1,154,373 | 174,905 | |||||||||
Intangible assets, net |
81,485 | 145,653 | 22,069 | |||||||||
Deferred tax assets (Note 11) |
3,801 | 6,755 | 1,023 | |||||||||
Investment in affiliates (Note 7) |
86,701 | 139,116 | 21,078 | |||||||||
Other non-current assets |
2,250 | 3,959 | 600 | |||||||||
Total non-current assets |
818,466 | 1,552,031 | 235,156 | |||||||||
Total assets |
2,545,965 | 3,854,456 | 584,008 | |||||||||
F-3
As of December 31, | ||||||||||||
2009 | 2010 | 2010 | ||||||||||
RMB | RMB | US$ | ||||||||||
LIABILITIES AND EQUITY: |
||||||||||||
Current liabilities: |
||||||||||||
Accounts payable (including accounts
payable of the consolidated variable
interest entities
(VIEs) without recourse to
CNinsure Inc. of RMB59,168 and
RMB75,285 (US$11,407) as of December
31, 2009 and December 31, 2010,
respectively) |
72,716 | 89,573 | 13,572 | |||||||||
Insurance premium payables (including
insurance premium payables of the
consolidated VIEs without recourse to
CNinsure Inc. of RMB1,957 and RMB1,364
(US$207) as of December 31, 2009 and
December 31, 2010, respectively) |
1,957 | 1,364 | 207 | |||||||||
Other payables and accrued expenses
(including other payables and accrued
expenses of the consolidated VIEs
without recourse to CNinsure Inc. of
RMB130,073 and RMB52,725 (US$7,989) as
of December 31, 2009 and December 31,
2010, respectively) (Note 9) |
182,139 | 93,460 | 14,160 | |||||||||
Accrued payroll (including accrued
payroll of the consolidated VIEs
without recourse to CNinsure Inc. of
RMB18,962 and RMB27,158 (US$4,115) as
of December 31, 2009 and December 31,
2010, respectively) |
24,152 | 31,237 | 4,733 | |||||||||
Income taxes payable (including income
taxes payable of the consolidated VIEs
without recourse to CNinsure Inc. of
RMB18,564 and RMB32,134 (US$4,869) as
of December 31, 2009 and December 31,
2010, respectively) |
37,410 | 34,927 | 5,292 | |||||||||
Amounts due to related parties
(including amounts due to related
parties of the consolidated VIEs
without recourse to CNinsure Inc. of
RMB1,718 and RMB7,800 (US$1,182) as of
December 31, 2009 and December 31,
2010, respectively) (Note 15) |
19,274 | 37,800 | 5,727 | |||||||||
Total current liabilities |
337,648 | 288,361 | 43,691 | |||||||||
F-4
As of December 31, | ||||||||||||
2009 | 2010 | 2010 | ||||||||||
RMB | RMB | RMB | ||||||||||
Non-current liabilities: |
||||||||||||
Other tax liabilities (including
non-current portion of other tax
liabilities of the consolidated VIEs
without recourse to CNinsure Inc. of
Nil and Nil as of December 31, 2009 and
December 31, 2010) (Note 11) |
2,537 | 5,519 | 836 | |||||||||
Deferred tax liabilities (including
non-current portion of deferred tax
liabilities of the consolidated VIEs
without recourse to CNinsure Inc. of
RMB Nil and Nil as of December 31, 2009 and
December 31, 2010) (Note 11) |
19,075 | 43,513 | 6,593 | |||||||||
Total non-current liabilities |
21,612 | 49,032 | 7,429 | |||||||||
Total liabilities |
359,260 | 337,393 | 51,120 | |||||||||
Commitments and contingencies (Note 16) |
||||||||||||
Ordinary shares (Authorized
shares:10,000,000,000 at US$0.001 each;
issued and outstanding shares:
912,497,726 and 1,002,977,326 as of
December 31, 2009 and 2010,
respectively) (Note 12) |
7,036 | 7,649 | 1,159 | |||||||||
Additional paid-in capital |
1,604,774 | 2,261,849 | 342,704 | |||||||||
Statutory reserves |
103,877 | 136,681 | 20,709 | |||||||||
Retained earnings |
348,663 | 738,165 | 111,843 | |||||||||
Accumulated other comprehensive loss |
(72,542 | ) | (83,360 | ) | (12,630 | ) | ||||||
Total CNinsure Inc. shareholders equity |
1,991,808 | 3,060,984 | 463,785 | |||||||||
Noncontrolling interests |
194,897 | 456,079 | 69,103 | |||||||||
Total equity |
2,186,705 | 3,517,063 | 532,888 | |||||||||
Total liabilities and equity |
2,545,965 | 3,854,456 | 584,008 | |||||||||
F-5
Year Ended December 31, | ||||||||||||||||
2008 | 2009 | 2010 | 2010 | |||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
Net revenues: |
||||||||||||||||
Commissions and fees |
843,107 | 1,154,090 | 1,484,389 | 224,907 | ||||||||||||
Other service fees |
855 | 761 | 640 | 97 | ||||||||||||
Total net revenues |
843,962 | 1,154,851 | 1,485,029 | 225,004 | ||||||||||||
Operating costs and expenses: |
||||||||||||||||
Commissions and fees |
(436,803 | ) | (579,911 | ) | (708,403 | ) | (107,333 | ) | ||||||||
Selling expenses |
(17,328 | ) | (49,498 | ) | (73,567 | ) | (11,147 | ) | ||||||||
General and administrative expenses* |
(180,031 | ) | (199,246 | ) | (271,444 | ) | (41,128 | ) | ||||||||
Total operating costs and expenses |
(634,162 | ) | (828,655 | ) | (1,053,414 | ) | (159,608 | ) | ||||||||
Income from operations |
209,800 | 326,196 | 431,615 | 65,396 | ||||||||||||
Other income (expense), net: |
||||||||||||||||
Gain on disposal of
investment in subsidiary |
525 | | | | ||||||||||||
Investment income |
| 18,905 | 41,244 | 6,249 | ||||||||||||
Interest income |
47,967 | 33,299 | 26,924 | 4,080 | ||||||||||||
Interest expense |
(95 | ) | (4 | ) | (5 | ) | (1 | ) | ||||||||
Others, net |
(28 | ) | 1,408 | 391 | 59 | |||||||||||
Changes in fair value of
contingent consideration
payables |
| (5,946 | ) | | | |||||||||||
Net income before income taxes and
income of affiliates |
258,169 | 373,858 | 500,169 | 75,783 | ||||||||||||
Income tax expense |
(62,438 | ) | (95,618 | ) | (96,743 | ) | (14,658 | ) | ||||||||
Share of income of affiliates |
135 | 774 | 12,904 | 1,955 | ||||||||||||
Net income |
195,866 | 279,014 | 416,330 | 63,080 | ||||||||||||
Less: Net income (loss)
attributable to the noncontrolling
interests |
4,129 | (21,827 | ) | (5,978 | ) | (906 | ) | |||||||||
Net income attributable to the
CNinsure Incs shareholders |
191,737 | 300,841 | 422,308 | 63,986 | ||||||||||||
Net income per share: |
||||||||||||||||
Basic |
0.2101 | 0.3297 | 0.4408 | 0.0668 | ||||||||||||
Diluted |
0.2090 | 0.3241 | 0.4264 | 0.0646 | ||||||||||||
Net income per American Depositary
Shares (ADS): |
||||||||||||||||
Basic |
4.2025 | 6.5938 | 8.8162 | 1.3358 | ||||||||||||
Diluted |
4.1803 | 6.4815 | 8.5288 | 1.2922 | ||||||||||||
Shares used in calculating net
income per share: |
||||||||||||||||
Basic |
912,497,726 | 912,497,726 | 958,029,717 | 958,029,717 | ||||||||||||
Diluted |
917,335,390 | 928,312,312 | 990,318,528 | 990,318,528 | ||||||||||||
* | Including (i) share-based compensation expenses of RMB45,659 and RMB7,553 and RMB22,211 (US$3,365) for the
years ended December 31, 2008, 2009 and 2010, respectively; and (ii) impairment loss on intangible assets of Nil, Nil and
RMB4,600 (US$697) for the years ended December 31, 2008, 2009 and 2010, respectively. |
F-6
Accumulated | ||||||||||||||||||||||||||||||||||||
(Accumulated | other | |||||||||||||||||||||||||||||||||||
Share Capital | Additional | Statutory | deficit) | comprehensive | Noncontrolling | Comprehensive | ||||||||||||||||||||||||||||||
Number of Share | Amounts | Paid-in Capital | Reserves | retained earnings | income (loss) | Interests | Total | income (loss) | ||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||
January 1, 2008 |
912,497,726 | 7,036 | 1,621,064 | 47,903 | (87,941 | ) | (21,150 | ) | 18,324 | 1,585,236 | 129,963 | |||||||||||||||||||||||||
Share-based compensation |
| | 45,659 | | | | | 45,659 | ||||||||||||||||||||||||||||
Net income |
| | | | 191,737 | | 4,129 | 195,866 | 195,866 | |||||||||||||||||||||||||||
Provision for statutory
reserves |
| | | 23,334 | (23,334 | ) | | | | |||||||||||||||||||||||||||
Acquisition of subsidiaries |
| | | | | | 71,970 | 71,970 | ||||||||||||||||||||||||||||
Foreign currency translation |
| | | | | (52,660 | ) | | (52,660 | ) | (52,660 | ) | ||||||||||||||||||||||||
Balance as of December 31,
2008 |
912,497,726 | 7,036 | 1,666,723 | 71,237 | 80,462 | (73,810 | ) | 94,423 | 1,846,071 | 143,206 | ||||||||||||||||||||||||||
Share-based compensation |
| | 6,609 | | | | | 6,609 | ||||||||||||||||||||||||||||
Net income |
| | | | 300,841 | | (21,827 | ) | 279,014 | 279,014 | ||||||||||||||||||||||||||
Dividends |
| | (68,558 | ) | | | | | (68,558 | ) | ||||||||||||||||||||||||||
Provision for statutory
reserves |
| | | 32,640 | (32,640 | ) | | | | |||||||||||||||||||||||||||
Acquisition of subsidiaries |
| | | | | | 122,301 | 122,301 | ||||||||||||||||||||||||||||
Foreign currency translation |
| | | | | 1,268 | | 1,268 | 1,268 | |||||||||||||||||||||||||||
Balance as of December 31,
2009 |
912,497,726 | 7,036 | 1,604,774 | 103,877 | 348,663 | (72,542 | ) | 194,897 | 2,186,705 | 280,282 | ||||||||||||||||||||||||||
F-7
Accumulated | ||||||||||||||||||||||||||||||||||||
Additional | (Accumulated | other | ||||||||||||||||||||||||||||||||||
Share Capital | Paid-in | Statutory | deficit) | comprehensive | Noncontrolling | Comprehensive | ||||||||||||||||||||||||||||||
Number of Share | Amounts | Capital | Reserves | retained earnings | income (loss) | Interests | Total | income (loss) | ||||||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | RMB | RMB | RMB | |||||||||||||||||||||||||||||
Issuance of ordinary shares upon
follow-on offering on July 14,
2010 |
92,000,000 | 623 | 743,144 | | | | | 743,767 | | |||||||||||||||||||||||||||
Exercise of share options |
5,100,780 | 34 | 10,041 | | | | | 10,075 | | |||||||||||||||||||||||||||
Repurchase of ordinary shares |
(6,621,180 | ) | (44 | ) | (37,243 | ) | | | | | (37,287 | ) | | |||||||||||||||||||||||
Share-based compensation |
| | 22,211 | | | | | 22,211 | | |||||||||||||||||||||||||||
Net income |
| | | | 422,308 | | (5,978 | ) | 416,330 | 416,330 | ||||||||||||||||||||||||||
Dividends |
| | (80,985 | ) | | | | | (80,985 | ) | | |||||||||||||||||||||||||
Provision for statutory reserves |
| | | 32,806 | (32,806 | ) | | | | | ||||||||||||||||||||||||||
Acquisition of subsidiaries |
| | | | | | 272,061 | 272,061 | | |||||||||||||||||||||||||||
Acquisition of additional
shares in a subsidiary |
| | (93 | ) | | | | (2,317 | ) | (2,410 | ) | | ||||||||||||||||||||||||
Disposal of subsidiaries |
| | | (2 | ) | | | (2,584 | ) | (2,586 | ) | |||||||||||||||||||||||||
Foreign currency translation |
| | | | | (10,818 | ) | | (10,818 | ) | (10,818 | ) | ||||||||||||||||||||||||
Balance as of December 31, 2010 |
1,002,977,326 | 7,649 | 2,261,849 | 136,681 | 738,165 | (83,360 | ) | 456,079 | 3,517,063 | 405,512 | ||||||||||||||||||||||||||
Balance as of December 31, 2010
in US$ |
1,159 | 342,704 | 20,709 | 111,843 | (12,630 | ) | 69,103 | 532,888 | 61,441 | |||||||||||||||||||||||||||
F-8
Year Ended December 31, | ||||||||||||||||
2008 | 2009 | 2010 | 2010 | |||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
OPERATING ACTIVITIES |
||||||||||||||||
Net income |
195,866 | 279,014 | 416,330 | 63,080 | ||||||||||||
Adjustments to reconcile net income to net
cash generated from operating activities: |
||||||||||||||||
Depreciation |
6,222 | 18,791 | 30,552 | 4,629 | ||||||||||||
Amortization of acquired intangible assets |
3,260 | 9,654 | 21,520 | 3,261 | ||||||||||||
Impairment loss for acquired intangible assets |
| | 4,600 | 697 | ||||||||||||
Allowance for doubtful receivables |
251 | 1,885 | 5,136 | 778 | ||||||||||||
Change in fair value of contingent
consideration payables |
| 5,946 | | | ||||||||||||
Compensation expenses associated with stock
options |
45,659 | 6,609 | 22,211 | 3,365 | ||||||||||||
Loss (gain) on disposal of property, plant
and equipment |
249 | 26 | (97 | ) | (15 | ) | ||||||||||
Investment income |
| (18,905 | ) | (41,244 | ) | (6,249 | ) | |||||||||
Share of income of affiliates |
(135 | ) | (774 | ) | (12,904 | ) | (1,955 | ) | ||||||||
Gain on disposal of investment in a subsidiary |
(525 | ) | | | | |||||||||||
Deferred taxes |
(4,175 | ) | 2,835 | (1,450 | ) | (220 | ) | |||||||||
Changes in operating assets and liabilities: |
||||||||||||||||
Accounts receivable |
(58,265 | ) | (85,639 | ) | (61,750 | ) | (9,356 | ) | ||||||||
Insurance premium receivables |
2,419 | (213 | ) | 141 | 21 | |||||||||||
Other receivables |
(13,827 | ) | (5,167 | ) | (7,951 | ) | (1,205 | ) | ||||||||
Other current assets |
(3,927 | ) | (762 | ) | (6,357 | ) | (963 | ) | ||||||||
Accounts payable |
48,415 | 13,071 | 13,793 | 2,090 | ||||||||||||
Insurance premium payables |
(11,361 | ) | (2,243 | ) | (607 | ) | (92 | ) | ||||||||
Other payables and accrued expenses |
13,641 | 16,004 | (22,386 | ) | (3,392 | ) | ||||||||||
Accrued payroll |
6,830 | 7,631 | 6,629 | 1,004 | ||||||||||||
Income taxes payable |
23,310 | 11,170 | (2,482 | ) | (376 | ) | ||||||||||
Other tax liabilities |
712 | 666 | 2,981 | 452 | ||||||||||||
Net cash generated from operating activities |
254,619 | 259,599 | 366,665 | 55,554 | ||||||||||||
Cash flows from investing activities: |
||||||||||||||||
Addition in other investments |
(189 | ) | (1,401 | ) | (2,509 | ) | (380 | ) | ||||||||
Addition in investment in affiliates |
(292 | ) | (68,269 | ) | (39,511 | ) | (5,986 | ) | ||||||||
Purchase of property, plant and equipment |
(51,828 | ) | (47,792 | ) | (24,398 | ) | (3,697 | ) | ||||||||
Proceeds from disposal of property and
equipment |
759 | 2,059 | 1,425 | 216 |
F-9
Year Ended December 31, | ||||||||||||||||
2008 | 2009 | 2010 | 2010 | |||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
Acquisition of subsidiaries, net of cash
acquired of RMB41,025, RMB2,006 and RMB18,156 (US$2,751) in 2008, 2009 and 2010,
respectively |
(23,868 | ) | (330,652 | ) | (307,844 | ) | (46,643 | ) | ||||||||
Disposal of investment in subsidiaries, net
of cash disposed of RMB64, RMB255, and
RMB5,283 (US$800) in 2008, 2009 and 2010,
respectively |
1,545 | 4,110 | (2,733 | ) | (414 | ) | ||||||||||
Amounts due from related parties |
(187,595 | ) | | | | |||||||||||
Repayments from (to) related parties |
| 183,459 | (17,231 | ) | (2,611 | ) | ||||||||||
Decrease (increase) in restricted cash |
8,548 | 2,243 | (7,220 | ) | (1,094 | ) | ||||||||||
Net cash used in investing activities |
(252,920 | ) | (256,243 | ) | (400,021 | ) | (60,609 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||||||
Repayments of bank loans |
(1,634 | ) | | | | |||||||||||
Payment for contingent consideration |
| | (125,380 | ) | (18,997 | ) | ||||||||||
Acquisition of additional interest in a
subsidiary |
(3,000 | ) | | (2,410 | ) | (365 | ) | |||||||||
Increase in capital injection by
noncontrolling interests |
10,612 | 20,315 | 12,295 | 1,863 | ||||||||||||
Advances from related parties |
10,598 | | | | ||||||||||||
Repayments to related parties |
| (8,923 | ) | (8,907 | ) | (1,350 | ) | |||||||||
Proceeds from share issuances |
| | 743,767 | 112,692 | ||||||||||||
Proceeds on exercise of stock options |
| | 10,075 | 1,527 | ||||||||||||
Repurchase of ordinary shares |
| | (37,287 | ) | (5,650 | ) | ||||||||||
Dividends paid |
| (68,558 | ) | (80,985 | ) | (12,270 | ) | |||||||||
Net cash generated from (used in) financing
activities |
16,576 | (57,166 | ) | 511,168 | 77,450 | |||||||||||
Net increase (decrease) in cash and cash
equivalents |
18,275 | (53,810 | ) | 477,812 | 72,395 | |||||||||||
Cash and cash equivalents at beginning of year |
1,544,817 | 1,510,432 | 1,457,890 | 220,892 | ||||||||||||
Effect of exchange rate changes on cash and
cash equivalents |
(52,660 | ) | 1,268 | (10,818 | ) | (1,638 | ) | |||||||||
Cash and cash equivalents at end of year |
1,510,432 | 1,457,890 | 1,924,884 | 291,649 | ||||||||||||
Supplemental disclosure of cash flow information: |
||||||||||||||||
Interest paid |
95 | 4 | 5 | 1 | ||||||||||||
Income taxes paid |
42,590 | 80,826 | 97,869 | 14,829 |
F-10
F-11
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Accounts receivable |
183,496 | 248,965 | ||||||
Allowance for doubtful accounts |
(2,136 | ) | (5,790 | ) | ||||
Accounts receivable, net |
181,360 | 243,175 | ||||||
2008 | 2009 | 2010 | ||||||||||
RMB | RMB | RMB | ||||||||||
Balance at the beginning of the year |
| 251 | 2,136 | |||||||||
Provision for doubtful accounts |
251 | 1,885 | 5,136 | |||||||||
Write-offs |
| | (1,482 | ) | ||||||||
Balance at the ending of the year |
251 | 2,136 | 5,790 | |||||||||
Estimated useful | Estimated residual | |||
life (Years) | value | |||
Office equipment, furniture and fixtures |
3-5 | 0%-3% | ||
Motor vehicles |
5-10 | 0%-3% | ||
Leasehold improvements |
5 | 0% |
F-12
F-13
Useful | As of December 31, 2009 | As of December 31, 2010 | ||||||||||||||||||||||||||||
life | Accumulated | Net carrying | Accumulated | Impairment | Net carrying | |||||||||||||||||||||||||
(Years) | Cost | amortization | values | Cost | amortization | loss | values | |||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||||||||
Brand name |
Indefinite | 24,091 | | 24,091 | 24,091 | | | 24,091 | ||||||||||||||||||||||
Trade name |
10 | | | | 8,140 | (144 | ) | | 7,996 | |||||||||||||||||||||
Customer relationship |
4.6 to 9.8 | 24,086 | 6,596 | 17,490 | 48,356 | (14,987 | ) | | 33,369 | |||||||||||||||||||||
Non-compete agreement |
3 to 14 | 43,340 | 5,956 | 37,384 | 83,191 | (16,583 | ) | (4,600 | ) | 62,008 | ||||||||||||||||||||
Agency agreement and
licence |
4.6 to 10 | 3,007 | 487 | 2,520 | 15,294 | (2,654 | ) | | 12,640 | |||||||||||||||||||||
Software and system |
5 to 10 | | | | 5,740 | (191 | ) | | 5,549 | |||||||||||||||||||||
94,524 | 13,039 | 81,485 | 184,812 | (34,559 | ) | (4,600 | ) | 145,653 | ||||||||||||||||||||||
F-14
F-15
F-16
F-17
F-18
F-19
Fanlian | Mintai | Baolian | Fangda | Inscom | ||||||||||||||||
RMB | RMB | RMB | RMB | RMB | ||||||||||||||||
Cash consideration for controlling interest |
52,000 | 90,000 | 60,000 | 40,000 | 84,000 | |||||||||||||||
Fair value of previously held equity interest |
10,530 | 16,900 | 11,270 | 3,344 | | |||||||||||||||
Fair value of noncontrolling interests |
51,580 | 82,820 | 55,210 | 32,776 | 37,380 | |||||||||||||||
Total consideration |
114,110 | 189,720 | 126,480 | 76,120 | 121,380 | |||||||||||||||
F-20
Fanlian | Mintai | Baolian | Fangda | Inscom | ||||||||||||||||
RMB | RMB | RMB | RMB | RMB | ||||||||||||||||
Net tangible assets acquired |
3,265 | 2,632 | (411 | ) | 2,382 | 10,044 | ||||||||||||||
Intangible assets |
20,880 | 17,850 | 12,760 | 12,111 | 17,680 | |||||||||||||||
Goodwill |
95,185 | 173,608 | 117,093 | 64,500 | 98,076 | |||||||||||||||
Deferred tax assets |
| 92 | 228 | 155 | | |||||||||||||||
Deferred tax liability |
(5,220 | ) | (4,462 | ) | (3,190 | ) | (3,028 | ) | (4,420 | ) | ||||||||||
Total consideration |
114,110 | 189,720 | 126,480 | 76,120 | 121,380 | |||||||||||||||
Fair Value Acquired | ||||||||||||||||||||||||
Useful life | RMB | |||||||||||||||||||||||
(Years) | Fanlian | Mintai | Baolian | Fangda | Inscom | |||||||||||||||||||
Trade name |
9.4 | | | | | 8,140 | ||||||||||||||||||
Customer relationship |
5.8-6.25 | 13,360 | 490 | 2,300 | 4,910 | 3,210 | ||||||||||||||||||
Non-compete agreement |
5.8-6.25 | 6,640 | 16,880 | 10,020 | 6,311 | | ||||||||||||||||||
Agency agreement |
5.8-6.25 | 880 | 480 | 440 | 890 | 590 | ||||||||||||||||||
System and software |
5.0-10.0 | | | | | 5,740 | ||||||||||||||||||
Total |
20,880 | 17,850 | 12,760 | 12,111 | 17,680 | |||||||||||||||||||
Year ended December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma net revenues |
1,180,577 | 1,485,029 | ||||||
Pro forma income from operations |
322,981 | 431,616 | ||||||
Pro forma net income |
299,775 | 422,309 | ||||||
Pro forma net income per share |
0.3285 | 0.4408 |
F-21
Year ended December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma net revenues |
1,154,934 | 1,485,639 | ||||||
Pro forma income from operations |
322,948 | 430,649 | ||||||
Pro forma net income |
299,494 | 421,817 | ||||||
Pro forma net income per share |
0.3282 | 0.4403 |
Year ended December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma net revenues |
1,157,672 | 1,486,220 | ||||||
Pro forma income from operations |
323,474 | 430,684 | ||||||
Pro forma net income |
299,474 | 421,714 | ||||||
Pro forma net income per share |
0.3282 | 0.4402 |
Year ended December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma net revenues |
1,158,969 | 1,492,002 | ||||||
Pro forma income from operations |
323,819 | 430,148 | ||||||
Pro forma net income |
299,661 | 421,738 | ||||||
Pro forma net income per share |
0.3284 | 0.4402 |
Year ended December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma net revenues |
1,169,207 | 1,490,068 | ||||||
Pro forma income from operations |
328,576 | 426,688 | ||||||
Pro forma net income |
304,225 | 415,734 | ||||||
Pro forma net income per share |
0.3334 | 0.4339 |
F-22
RMB | ||||
Net tangible assets acquired |
3,597 | |||
Intangible assets |
11,290 | |||
Goodwill |
16,940 | |||
Deferred tax liability |
(1,827 | ) | ||
Total consideration |
30,000 | |||
Useful life | Fair value acquired | |||||||
(Years) | RMB | |||||||
Brand name |
Indefinite | 3,980 | ||||||
Customer relationship |
5.6 | 5,910 | ||||||
Non-compete agreement |
3.0 | 410 | ||||||
Agency agreement |
5.6 | 990 | ||||||
Total |
11,290 | |||||||
F-23
Year ended December 31, | ||||||||
2008 | 2009 | |||||||
RMB | RMB | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma net revenues |
869,361 | 1,161,248 | ||||||
Pro forma income from operations |
210,580 | 325,572 | ||||||
Pro forma net income |
192,691 | 300,132 | ||||||
Pro forma net income per share |
0.2112 | 0.3289 |
Zhixin | Anlian | |||||||
RMB | RMB | |||||||
Cash consideration on acquisition date |
1,000 | 1,000 | ||||||
Fair value of previously held equity interest |
16,250 | 2,730 | ||||||
Fair value of noncontrolling interests |
79,600 | 26,720 | ||||||
Contingent consideration payables at fair value on acquisition date |
85,500 | 31,580 | ||||||
Total consideration |
182,350 | 62,030 | ||||||
F-24
Zhixin | Anlian | |||||||
RMB | RMB | |||||||
Net tangible assets (liabilities) acquired |
(394 | ) | 268 | |||||
Intangible assets |
18,090 | 8,240 | ||||||
Goodwill |
168,953 | 55,524 | ||||||
Deferred tax assets |
223 | 58 | ||||||
Deferred tax liability |
(4,522 | ) | (2,060 | ) | ||||
Total |
182,350 | 62,030 | ||||||
Fair value acquired | ||||||||||||
Useful life | RMB | |||||||||||
(Years) | Zhixin | Anlian | ||||||||||
Customer relationship |
5.8 | 720 | 1,010 | |||||||||
Non-compete agreement |
5.8 | 16,590 | 6,810 | |||||||||
Agency agreement |
5.8 | 780 | 420 | |||||||||
Total |
18,090 | 8,240 | ||||||||||
Year ended December 31, | ||||||||
2008 | 2009 | |||||||
RMB | RMB | |||||||
(unaudited) | (unaudited) | |||||||
Pro forma net revenues |
844,265 | 1,157,538 | ||||||
Pro forma income from operations |
204,209 | 324,987 | ||||||
Pro forma net income |
187,279 | 299,916 | ||||||
Pro forma net income per share |
0.2052 | 0.3287 |
F-25
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Advances to staff (i) |
6,142 | 9,046 | ||||||
Advances to entrepreneurial agents (ii) |
15,919 | 9,897 | ||||||
Insurance claim receivables |
86 | 65 | ||||||
Rental deposits |
5,428 | 6,147 | ||||||
Interest income receivables (iii) |
18,778 | 13,673 | ||||||
Advances to third parties (iv) |
| 21,294 | ||||||
Others |
5,755 | 6,912 | ||||||
52,108 | 67,034 | |||||||
(i) | This represented advances to staff of the Group for daily business operations which are
unsecured, interest-free and repayable on demand. |
|
(ii) | This represented advances to entrepreneurial agents who provide services to the Group. The
advances are used by entrepreneurial individual sales agents to build business. The advances
were unsecured, interest-free and repayable on demand. |
|
(iii) | This represented accrued interest income on bank deposits. |
|
(iv) | This mainly represented advance consideration payment made for the acquisition of Henan
Zhongrui Insurance Agency Co., Ltd. (Zhongrui) amounting to RMB18,000. On June 30, 2010, the
Group entered into agreement to acquire an additional 45% equity interest in Zhongrui for
RMB18,000, bringing the Groups shareholdings in Zhongrui from 10% to 55%. As at December 31,
2010 the acquisition of Zhongrui has not been completed and the acquisition has been
subsequently terminated with the refund received on March 25, 2011. |
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Office equipment, furniture and fixtures |
95,456 | 97,028 | ||||||
Motor vehicles |
40,639 | 47,030 | ||||||
Leasehold improvements |
6,961 | 9,548 | ||||||
Total |
143,056 | 153,606 | ||||||
Less: Accumulated depreciation |
(34,738 | ) | (51,431 | ) | ||||
Property, plant and equipment, net |
108,318 | 102,175 | ||||||
F-26
Claims | ||||||||||||||||||||
P&C | Adjusting | Datong | ||||||||||||||||||
segment | Life segment | segment | segment | Total | ||||||||||||||||
RMB | RMB | RMB | RMB | RMB | ||||||||||||||||
Balance as of January 1, 2009 |
| 10,362 | 21,137 | 6,389 | 37,888 | |||||||||||||||
Addition for acquisitions |
224,477 | | 16,940 | | 241,417 | |||||||||||||||
Addition for contingent considerations |
210,068 | 6,538 | | 40,000 | 256,606 | |||||||||||||||
Balance as of December 31, 2009 |
434,545 | 16,900 | 38,077 | 46,389 | 535,911 | |||||||||||||||
Addition for acquisitions |
548,462 | | | | 548,462 | |||||||||||||||
Addition for contingent considerations |
| | | 70,000 | 70,000 | |||||||||||||||
Balance as of December 31, 2010 |
983,007 | 16,900 | 38,077 | 116,389 | 1,154,373 | |||||||||||||||
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Teamhead Automobile |
489 | 266 | ||||||
Sincere Fame |
86,212 | 138,850 | ||||||
Total |
86,701 | 139,116 | ||||||
F-27
F-28
| If the ownership structure and
contractual arrangements are found to be in
violation of any existing or future PRC
laws or regulations, the Group could be
subject to severe penalties; |
||
| The Group rely on contractual
arrangements with the VIEs and its equity
holders for substantially all of its China
operations, which may not be as effective
as direct ownership in providing
operational control; and |
||
| The Group may have to incur
significant cost to enforce, or may not be
able to effectively enforce, the
contractual arrangements with the VIEs and
their equity holders in the event of a
breach or non-compliance by the VIEs or
their equity holders. |
F-29
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Total assets |
1,249,737 | 1,644,806 | ||||||
Total liabilities |
896,406 | 992,668 |
Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
RMB | RMB | RMB | ||||||||||
Net Revenues |
709,536 | 1,062,019 | 1,379,040 | |||||||||
Net Income |
23,850 | 56,825 | 68,571 | |||||||||
Net cash provided by operating activities |
3,897 | (7,704 | ) | 8,688 | ||||||||
Net cash used in investing activities |
(36,857 | ) | (346,255 | ) | (192,449 | ) | ||||||
Net cash provided by financing activities |
19,577 | 387,749 | 287,846 |
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Consideration payables on acquisition of subsidiaries |
85,380 | | ||||||
Business and other tax payable |
17,897 | 34,085 | ||||||
Refundable deposits from employees and agents |
13,354 | 15,177 | ||||||
Audit fee |
11,085 | 10,177 | ||||||
Advances from third parties |
20,643 | 11,517 | ||||||
Payables for addition of office equipment, furniture and fixtures |
12,593 | 9,799 | ||||||
Other professional fees |
5,431 | 2,423 | ||||||
Insurance compensation claim payable to customers |
3,575 | 2,307 | ||||||
Others |
12,181 | 7,975 | ||||||
Total |
182,139 | 93,460 | ||||||
F-30
RMB | ||||
Balance as of January 1, 2008 |
1,160 | |||
Gross increase in prior-period tax positions |
711 | |||
Balance as of December 31, 2008 |
1,871 | |||
Gross increase in prior-period tax positions |
666 | |||
Balance as of December 31, 2009 |
2,537 | |||
Gross increase in prior-period tax positions |
2,982 | |||
Balance as of December 31, 2010 |
5,519 | |||
F-31
Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
RMB | RMB | RMB | ||||||||||
Current tax expense |
(65,901 | ) | (92,117 | ) | (95,229 | ) | ||||||
Deferred tax income (expense) |
3,463 | (3,501 | ) | (1,514 | ) | |||||||
Income tax expense |
(62,438 | ) | (95,618 | ) | (96,743 | ) | ||||||
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Current deferred tax assets: |
||||||||
Operating loss carry forward |
2,602 | 5,691 | ||||||
Less: valuation allowances |
| | ||||||
Current deferred tax asset, net |
2,602 | 5,691 | ||||||
Non-current deferred tax assets: |
||||||||
Operating loss carry forward |
5,063 | 5,730 | ||||||
Others |
2,115 | 2,592 | ||||||
Less: valuation allowances |
(3,377 | ) | (1,567 | ) | ||||
Non-current deferred tax asset, net |
3,801 | 6,755 | ||||||
Total |
6,403 | 12,446 | ||||||
Deferred tax liabilities: |
||||||||
Intangible assets, net |
(19,075 | ) | (43,513 | ) | ||||
F-32
Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
RMB | RMB | RMB | ||||||||||
Net income before income taxes and income of
affiliates |
258,169 | 373,858 | 500,169 | |||||||||
PRC statutory tax rate |
25 | % | 25 | % | 25 | % | ||||||
Income tax at statutory tax rate |
64,542 | 93,464 | 125,042 | |||||||||
Expenses not deductible for tax purposes: |
||||||||||||
Entertainment |
355 | 475 | 840 | |||||||||
Salaries and employees benefits |
118 | | | |||||||||
Others |
| 471 | 1,130 | |||||||||
Tax exemption and tax relief: |
||||||||||||
Income tax at preferential tax rate of 18%, 20%
and 22% for 2008, 2009 and 2010 |
(15,111 | ) | (15,541 | ) | (8,023 | ) | ||||||
Impact of lower tax rates in other jurisdictions |
12,530 | 14,561 | 9,007 | |||||||||
Tax holidays |
| | (31,783 | ) | ||||||||
Change in valuation allowance |
(279 | ) | 1,253 | (1,810 | ) | |||||||
Others |
283 | 935 | 2,340 | |||||||||
Income tax expense |
62,438 | 95,618 | 96,743 | |||||||||
F-33
F-34
Year Ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
RMB | RMB | RMB | ||||||||||
Basic: |
||||||||||||
Net income attributable to the Companys shareholders |
191,737 | 300,841 | 422,308 | |||||||||
Weighted average number of ordinary shares
outstanding |
912,497,726 | 912,497,726 | 958,029,717 | |||||||||
Basic net income per ordinary share |
0.2101 | 0.3297 | 0.4408 | |||||||||
Basic net income per ADS |
4.2025 | 6.5938 | 8.8162 | |||||||||
Diluted: |
||||||||||||
Net income attributable to the Companys shareholders |
191,737 | 300,841 | 422,308 | |||||||||
Weighted average number of ordinary shares
outstanding |
912,497,726 | 912,497,726 | 958,029,717 | |||||||||
Share options |
4,837,664 | 15,814,586 | 32,288,811 | |||||||||
Total |
917,335,390 | 928,312,312 | 990,318,528 | |||||||||
Diluted net income per ordinary share |
0.2090 | 0.3241 | 0.4264 | |||||||||
Diluted net income per ADS |
4.1803 | 6.4815 | 8.5288 | |||||||||
F-35
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Amount due from an affiliate (i) |
500 | 20,000 | ||||||
Amounts due from directors/officers (i) |
3,637 | | ||||||
Amounts due from noncontrolling shareholders (ii) |
21,200 | 20,000 | ||||||
Total |
25,337 | 40,000 | ||||||
As of December 31, | ||||||||
2009 | 2010 | |||||||
RMB | RMB | |||||||
Amount due to an affiliate (i) |
17,231 | | ||||||
Amount due to a shareholder (i) |
325 | | ||||||
Amounts due to noncontrolling shareholders (iii) |
1,718 | 37,800 | ||||||
Total |
19,274 | 37,800 | ||||||
(i) | The amount due from/to an affiliate, amounts due from directors/officers and amount due to a
shareholder were unsecured, interest-free and repayable on demand. As of December 31, 2010,
amount due from an affiliate represents RMB20,000 receivable from a subsidiary of Sincere
Fame. This amount was subsequently settled on January 4, 2011. |
|
(ii) | Amounts due from noncontrolling interests were unsecured, interest free and repayable on
demand. The amounts represented RMB20,000 receivable from Mr. Keping Lin (Mr. Lin) who
committed to inject to Datong as working capital unilaterally within two years on the
completion of selling Beijing Fanhua Datong Investment Management Co., Ltd. (Datong
Investment) to the Group. Such commitment has been cancelled subsequent to year ended
December 31, 2010 on selling of Datong Investment on March 25, 2011. |
|
(iii) | As of December 31, 2010, included in amount due to noncontrolling shareholders was RMB30,000
payable to Mr. Lin, the selling shareholder of Datong Investment as Datong Investment met the
year 2010 performance target. Such contingent consideration payable has been subsequently
settled in 2011. The amount was unsecured, interest-free and repayable demand. |
F-36
Minimum Lease | ||||
Payment | ||||
RMB | ||||
Year ending December 31: |
||||
2011 |
21,251 | |||
2012 |
8,747 | |||
2013 |
5,586 | |||
2014 |
482 | |||
2015 |
72 | |||
Total |
36,138 | |||
Year ended December 31, | ||||||||||||||||||||||||
2008 | % of sales | 2009 | % of sales | 2010 | % of sales | |||||||||||||||||||
RMB | RMB | RMB | ||||||||||||||||||||||
PICC Property and
Casualty Company
Limited (PICC) |
180,595 | 21 | % | 225,847 | 20 | % | 275,889 | 19 | % | |||||||||||||||
China Pacific
Property Insurance
Co., Ltd (CPIC) |
165,879 | 20 | % | 196,530 | 17 | % | 202,404 | 14 | % | |||||||||||||||
Aviva-Cofco Life
Insurance Co., Ltd
(Aviva-Cofco) |
* | * | * | * | 192,670 | 13 | % | |||||||||||||||||
Ping An Property &
Casualty Insurance
Company of China,
Ltd (Ping An) |
98,410 | 12 | % | 140,057 | 12 | % | 156,251 | 11 | % | |||||||||||||||
444,884 | 53 | % | 562,434 | 49 | % | 827,214 | 57 | % | ||||||||||||||||
F-37
As of December 31, | ||||||||||||||||
2009 | % | 2010 | % | |||||||||||||
RMB | RMB | |||||||||||||||
Aviva-Cofco |
26,176 | 14 | % | 62,509 | 26 | % | ||||||||||
PICC |
46,539 | 25 | % | 34,572 | 14 | % | ||||||||||
Ping An |
18,305 | 10 | % | * | * | |||||||||||
CPIC |
17,638 | 10 | % | * | * | |||||||||||
108,658 | 59 | % | 97,081 | 40 | % | |||||||||||
* | Less than 10% |
Year ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
RMB | RMB | RMB | ||||||||||
Considerations payable in connection
with acquisition of subsidiaries |
11,406 | 85,380 | 30,000 | |||||||||
Considerations payable in connection
with acquisition of an affiliate |
| 17,231 | | |||||||||
Payables for addition of office
equipment, furniture and fixtures |
4,652 | 12,593 | 9,799 | |||||||||
Net assets acquired in connection
with acquisitions of subsidiaries
(Note 15 (ii)) |
20,000 | | |
F-38
Option E1 | Option E2 | Option E3 | Option E4 | |||||||||||||
Weight average assumptions expected dividend yield |
1.31 | % | 1.31 | % | 1.31 | % | 1.31 | % | ||||||||
Risk-free interest rate |
2.35 | % | 2.61 | % | 2.82 | % | 3.06 | % | ||||||||
Expected life |
3.64 years | 4.14 years | 4.64 years | 5.14 years | ||||||||||||
Expected volatility |
34.91 | % | 33.7 | % | 32.62 | % | 31.82 | % |
Option D1 | Option D2 | Option D3 | Option D4 | |||||||||||||
Weight average assumptions expected dividend yield |
0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Risk-free interest rate |
3.35 | % | 3.51 | % | 3.55 | % | 3.61 | % | ||||||||
Expected life |
3.56 years | 4.06 years | 4.56 years | 5.06 years | ||||||||||||
Expected volatility |
33.0 | % | 31.9 | % | 32.2 | % | 31.2 | % |
F-39
Option C1 | Option C2 | Option C3 | Option C4 | |||||||||||||
Weight average assumptions expected dividend yield |
0 | % | 0 | % | 0 | % | 0 | % | ||||||||
Risk-free interest rate |
3.70 | % | 3.71 | % | 3.93 | % | 4.07 | % | ||||||||
Expected life |
3.86 years | 4.36 years | 4.86 years | 5.36 years | ||||||||||||
Expected volatility |
28.2 | % | 28.9 | % | 28.0 | % | 27.6 | % |
Weighted average assumptionsexpected dividend yield |
0 | % | ||
Risk-free interest rate |
2.71 | % | ||
Expected life |
5.6 years | |||
Expected volatility |
28.5 | % |
F-40
Option B1 | Option B2 | Option B3 | ||||||||||
Weight average assumptions expected dividend yield |
0 | % | 0 | % | 0 | % | ||||||
Risk-free interest rate |
3.81 | % | 3.89 | % | 3.97 | % | ||||||
Expected life |
3.92 years | 4.42 years | 4.92 years | |||||||||
Expected volatility |
23.07 | % | 23.29 | % | 24.20 | % |
Weighted | ||||||||||||
No. of Shares | average | Aggregate | ||||||||||
underlying | exercise price in | Intrinsic Value | ||||||||||
options granted | RMB | RMB | ||||||||||
Balance as of December 31, 2008 |
39,492,631 | 2.2305 | 30,330 | |||||||||
Granted on March 9, 2009 |
10,000,000 | 2.2982 | ||||||||||
Exercised |
| | ||||||||||
Cancelled |
(2,360,600 | ) | 5.8437 | |||||||||
Forfeited |
(565,400 | ) | 5.2703 | |||||||||
Balance as of December 31, 2009 |
46,566,631 | 2.0250 | 224,835 | |||||||||
Granted on February 8, 2010 |
48,000,000 | 5.7308 | ||||||||||
Exercised |
(5,100,780 | ) | 2.1240 | |||||||||
Cancelled |
| | ||||||||||
Forfeited |
(1,446,410 | ) | 2.1513 | |||||||||
Balance as of December 31, 2010 |
88,019,441 | 4.0381 | 146,782 | |||||||||
Exercisable as of December 31, 2010 |
11,853,681 | 2.0618 | 43,193 | |||||||||
F-41
Year ended December 31, | ||||||||||||
2008 | 2009 | 2010 | ||||||||||
RMB | RMB | RMB | ||||||||||
Weighted-average grant-date fair value of
options granted |
0.5790 | 0.7208 | 1.5770 | |||||||||
Total intrinsic value of options exercised |
| | 32,465 | |||||||||
Total fair value of share options vested |
3,414 | | 7,526 |
Weighted Average | ||||||||||||||||
Remaining | Weighted average | |||||||||||||||
Contractual Life | exercise price in | |||||||||||||||
Options outstanding | (Years) | RMB | Options Exercisable | |||||||||||||
2010 Options |
48,000,000 | 4.25 | 5.7308 | | ||||||||||||
2009 Options |
8,272,170 | 3.25 | 2.2982 | 2,068,770 | ||||||||||||
2008 Options |
29,094,640 | 3.26 | 1.8967 | 7,132,280 | ||||||||||||
2007 Option A |
2,652,631 | 6.0 | 2.3214 | 2,652,631 | ||||||||||||
Total |
88,019,441 | 11,853,681 | ||||||||||||||
F-42
Year ended December 31, | ||||||||||||||||
2008 | 2009 | 2010 | 2010 | |||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
Net revenues |
||||||||||||||||
P&C |
599,353 | 783,220 | 821,259 | 124,433 | ||||||||||||
Life |
154,174 | 177,713 | 235,584 | 35,695 | ||||||||||||
Claims Adjusting |
89,012 | 140,670 | 177,094 | 26,832 | ||||||||||||
Datong |
1,423 | 53,248 | 251,092 | 38,044 | ||||||||||||
Total net revenues |
843,962 | 1,154,851 | 1,485,029 | 225,004 | ||||||||||||
Operating costs and expenses |
||||||||||||||||
P&C |
(319,776 | ) | (408,643 | ) | (389,266 | ) | (58,980 | ) | ||||||||
Life |
(127,634 | ) | (158,804 | ) | (194,612 | ) | (29,487 | ) | ||||||||
Claims Adjusting |
(70,961 | ) | (121,753 | ) | (156,825 | ) | (23,761 | ) | ||||||||
Datong |
(5,837 | ) | (72,281 | ) | (214,001 | ) | (32,424 | ) | ||||||||
Others |
(109,954 | ) | (67,174 | ) | (98,710 | ) | (14,956 | ) | ||||||||
Total operating costs and expenses |
(634,162 | ) | (828,655 | ) | (1,053,414 | ) | (159,608 | ) | ||||||||
Income (loss) from operations |
||||||||||||||||
P&C |
279,577 | 374,577 | 431,993 | 65,453 | ||||||||||||
Life |
26,540 | 18,909 | 40,972 | 6,208 | ||||||||||||
Claims Adjusting |
18,051 | 18,917 | 20,269 | 3,071 | ||||||||||||
Datong |
(4,414 | ) | (19,033 | ) | 37,091 | 5,620 | ||||||||||
Others |
(109,954 | ) | (67,174 | ) | (98,710 | ) | (14,956 | ) | ||||||||
Total income from operations |
209,800 | 326,196 | 431,615 | 65,396 | ||||||||||||
F-43
As of December 31, | ||||||||||||
2009 | 2010 | 2010 | ||||||||||
RMB | RMB | US$ | ||||||||||
Segment assets |
||||||||||||
P&C |
956,836 | 1,876,999 | 284,394 | |||||||||
Life |
120,860 | 175,064 | 26,525 | |||||||||
Claims Adjusting |
174,425 | 175,777 | 26,633 | |||||||||
Datong |
169,507 | 282,799 | 42,848 | |||||||||
Others |
1,124,337 | 1,343,817 | 203,608 | |||||||||
Total assets |
2,545,965 | 3,854,456 | 584,008 | |||||||||
F-44
(a) | On March 25, 2011, the Company announced that it has reached definitive agreements to
sell its 55% equity interest in Datong to an independent third party at a cash
consideration of approximately US$63,690. In addition, Datong agreed to pay a cash dividend
of RMB10,000 exclusively to the Company. The transaction has been completed on March 25,
2011. |
||
(b) | On February 15, 2011, the Company entered into an agreement to waive the selling
shareholders of Fanlian, Mintai, Baolian and Fangda to transfer 5% interest in Fanlian,
Mintai, Baolian and Fangda if these entities fails to meet performance target as described
in note (3)(a). |
||
(c) | On April 28, 2011, our board of directors approved the grant of options to purchase an
aggregate of 28,400,000 ordinary shares to certain directors, officers and employees
pursuant to the amended and restated 2007 Share Incentive Plan. The exercise price of these
options is US$0.734 per ordinary share equal to the closing price of ADS at grant date. These options will vest over a four-year period starting from March 31, 2012. |
F-45
As of December 31, | ||||||||||||
2009 | 2010 | 2010 | ||||||||||
RMB | RMB | US$ | ||||||||||
ASSETS: |
||||||||||||
Current assets: |
||||||||||||
Cash and cash equivalents |
43,490 | 109,393 | 16,575 | |||||||||
Other receivables |
3,057 | 2,034 | 308 | |||||||||
Amounts due from subsidiaries |
1,011,289 | 1,539,092 | 233,196 | |||||||||
Total current assets |
1,057,836 | 1,650,519 | 250,079 | |||||||||
Non-current assets: |
||||||||||||
Investment in subsidiaries |
947,610 | 1,436,221 | 217,609 | |||||||||
Total assets |
2,005,446 | 3,086,740 | 467,688 | |||||||||
LIABILITIES AND SHAREHOLDERS EQUITY: |
||||||||||||
Current liabilities: |
||||||||||||
Other payables |
10,030 | 12,557 | 1,903 | |||||||||
Amounts due to subsidiaries |
3,608 | 13,199 | 2,000 | |||||||||
Total liabilities |
13,638 | 25,756 | 3,903 | |||||||||
Ordinary shares (Authorized
shares:10,000,000,000 at US$0.001 each;
issued and outstanding shares:
912,497,726 and 1,002,977,326 as of
December 31, 2009 and 2010, respectively) |
7,036 | 7,649 | 1,159 | |||||||||
Additional paid-in capital |
1,604,774 | 2,261,849 | 342,704 | |||||||||
Statutory reserves |
103,877 | 136,681 | 20,709 | |||||||||
Retained earnings |
348,663 | 738,165 | 111,843 | |||||||||
Accumulated other comprehensive loss |
(72,542 | ) | (83,360 | ) | (12,630 | ) | ||||||
Total shareholders equity |
1,991,808 | 3,060,984 | 463,785 | |||||||||
Total liabilities and shareholders equity |
2,005,446 | 3,086,740 | 467,688 | |||||||||
F-46
Year Ended December 31, | ||||||||||||||||
2008 | 2009 | 2010 | 2010 | |||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
General and administrative expenses |
(63,757 | ) | (18,749 | ) | (26,705 | ) | (4,046 | ) | ||||||||
Interest income |
17,089 | 896 | 450 | 68 | ||||||||||||
Equity in earnings of subsidiaries |
238,405 | 318,694 | 448,563 | 67,964 | ||||||||||||
Net income |
191,737 | 300,841 | 422,308 | 63,986 | ||||||||||||
F-47
(Accumulated | Accumulated | |||||||||||||||||||||||||||||||
Share Capital | Additional | deficit) | other | |||||||||||||||||||||||||||||
Number of | Paid-in | Statutory | retained | comprehensive (loss) | Comprehensive | |||||||||||||||||||||||||||
Share | Amounts | Capital | Reserves | earnings | income | Total | (loss) income | |||||||||||||||||||||||||
RMB | RMB | RMB | RMB | RMB | RMB | RMB | ||||||||||||||||||||||||||
Balance as of
January 1, 2008 |
912,497,726 | 7,036 | 1,621,064 | 47,903 | (87,941 | ) | (21,150 | ) | 1,566,912 | 132,387 | ||||||||||||||||||||||
Share-based
compensation |
| | 45,659 | | | | 45,659 | |||||||||||||||||||||||||
Net income |
| | | | 191,737 | | 191,737 | 191,737 | ||||||||||||||||||||||||
Provision for
statutory reserves |
| | | 23,334 | (23,334 | ) | | | ||||||||||||||||||||||||
Foreign
currency
translation |
| | | | | (52,660 | ) | (52,660 | ) | (52,660 | ) | |||||||||||||||||||||
Balance as of
December 31, 2008 |
912,497,726 | 7,036 | 1,666,723 | 71,237 | 80,462 | (73,810 | ) | 1,751,648 | 139,077 | |||||||||||||||||||||||
Share-based
compensation |
| | 6,609 | | | | 6,609 | |||||||||||||||||||||||||
Net income |
| | | | 300,841 | | 300,841 | 300,841 | ||||||||||||||||||||||||
Dividends |
| | (68,558 | ) | | | | (68,558 | ) | |||||||||||||||||||||||
Provision for
statutory reserves |
| | | 32,640 | (32,640 | ) | | | ||||||||||||||||||||||||
Foreign
currency
translation |
| | | | | 1,268 | 1,268 | 1,268 | ||||||||||||||||||||||||
Balance as of
December 31, 2009 |
912,497,726 | 7,036 | 1,604,774 | 103,877 | 348,663 | (72,542 | ) | 1,991,808 | 302,109 | |||||||||||||||||||||||
Issuance of
ordinary shares
upon follow-on
offering |
92,000,000 | 623 | 743,144 | | | | 743,767 | |||||||||||||||||||||||||
Exercise of
share options |
5,100,780 | 34 | 10,041 | | | | 10,075 | |||||||||||||||||||||||||
Repurchase of
ordinary shares |
(6,621,180 | ) | (44 | ) | (37,243 | ) | | | | (37,287 | ) | |||||||||||||||||||||
Share-based
compensation |
| | 22,211 | | | | 22,211 | |||||||||||||||||||||||||
Net income |
| | | 422,308 | | 422,308 | 422,308 | |||||||||||||||||||||||||
Dividends |
| | (80,985 | ) | | | | (80,985 | ) | |||||||||||||||||||||||
Provision for
statutory reserves |
| | | 32,806 | (32,806 | ) | | | ||||||||||||||||||||||||
Foreign
currency
translation |
| | | | | (10,818 | ) | (10,818 | ) | (10,818 | ) | |||||||||||||||||||||
Others |
| | (93 | ) | (2 | ) | | | (95 | ) | ||||||||||||||||||||||
Balance as of
December 31, 2010 |
1,002,977,326 | 7,649 | 2,261,849 | 136,681 | 738,165 | (83,360 | ) | 3,060,984 | 411,490 | |||||||||||||||||||||||
Balance as of
December 31, 2010
in US$ |
1,159 | 342,704 | 20,709 | 111,843 | (12,630 | ) | 463,785 | 62,347 | ||||||||||||||||||||||||
F-48
Year Ended December 31, | ||||||||||||||||
2008 | 2009 | 2010 | 2010 | |||||||||||||
RMB | RMB | RMB | US$ | |||||||||||||
OPERATING ACTIVITIES |
||||||||||||||||
Net income |
191,737 | 300,841 | 422,308 | 63,986 | ||||||||||||
Adjustments to reconcile net income to
net cash generated from operating
activities: |
||||||||||||||||
Equity in earnings of subsidiaries |
(238,405 | ) | (318,694 | ) | (448,563 | ) | (67,964 | ) | ||||||||
Compensation expenses associated with
stock options |
45,659 | 6,609 | 22,211 | 3,365 | ||||||||||||
Changes in operating assets and
liabilities: |
||||||||||||||||
Other receivables |
2,004 | (459 | ) | 1,023 | 155 | |||||||||||
Other payables |
8,564 | (2,547 | ) | 2,527 | 383 | |||||||||||
Net cash generated from (used in)
operating activities |
9,559 | (14,250 | ) | (494 | ) | (75 | ) | |||||||||
Cash flows from investing activities |
||||||||||||||||
Increase in investment in subsidiaries |
(36,989 | ) | (5,653 | ) | (40,143 | ) | (6,082 | ) | ||||||||
Advances to subsidiaries |
(664,893 | ) | (198,132 | ) | (518,212 | ) | (78,517 | ) | ||||||||
Net cash used in investing activities |
(701,882 | ) | (203,785 | ) | (558,355 | ) | (84,599 | ) | ||||||||
Cash flows from financing activities: |
||||||||||||||||
Proceeds from share issuances |
| | 743,767 | 112,692 | ||||||||||||
Proceeds on exercise of stock options |
| | 10,075 | 1,527 | ||||||||||||
Share repurchase |
| | (37,287 | ) | (5,650 | ) | ||||||||||
Dividends paid |
| (68,558 | ) | (80,985 | ) | (12,270 | ) | |||||||||
Net cash generated from (used in)
financing activities |
| (68,558 | ) | 635,570 | 96,299 | |||||||||||
Net increase (decrease) in cash and
cash equivalents |
(692,323 | ) | (286,593 | ) | 76,721 | 11,625 | ||||||||||
Cash and cash equivalents at beginning
of year |
1,073,798 | 328,815 | 43,490 | 6,588 | ||||||||||||
Effect of exchange rate changes on cash
and cash equivalents |
(52,660 | ) | 1,268 | (10,818 | ) | (1,638 | ) | |||||||||
Cash and cash equivalents at end of year |
328,815 | 43,490 | 109,393 | 16,575 | ||||||||||||
F-49
F-50
(1) | INSCOM HK LIMITED |
(2) | INSCOM GROUP LIMITED |
(3) | INSCOM HOLDING LIMITED |
(4) | APOLLO & MUSE HOLDING LIMITED |
(5) | CLEVER STAR HOLDINGS LIMITED |
(6) | CISG HOLDINGS LIMITED |
(1) | INSCOM HK LIMITED, a company incorporated under the laws of the HKSAR (under company number
1457225) whose registered office is situate at 12/F Ruttonjee House, 11 Duddell Street,
Central, Hong Kong. (INSCOM HK); |
(2) | INSCOM GROUP LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584027) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the INSCOM BVI); |
(3) | INSCOM HOLDING LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584021) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the Company); |
(4) | APOLLO & MUSE HOLDING LIMITED, a company incorporated under the laws of the British Virgin
Islands (under company number 1584020) whose registered office is situate at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (Apollo); |
(5) | CLEVER STAR HOLDINGS LIMITED, a company incorporated under the laws of the British Virgin
Islands (under company number 1593866) whose registered office is situate at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (CSH); and |
(6) | CISG HOLDINGS LTD., a company incorporated under the laws of the British Virgin Islands
(under company number 599853) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (CISG or Subscriber). |
(A) | Pursuant to the Principal Agreement, the Subscriber has agreed to purchase and subscribe and
the Company has agreed to issue and allot the Subscriber such number of Subscription Shares
(as defined in the Principal Agreement) and Apollo has agreed to sell and transfer the Sale
shares (as defined in the Principal Agreement) in accordance with the terms of the Principal
Agreement. |
(B) | Following further discussions between the parties to the Principal Agreement and having
regard to the prevailing circumstances, the parties have agreed to vary the terms of the
Principal Agreement on the terms and conditions as hereinafter provided. |
2
(C) | Apollo and CSH, together with the Company, INSCOM BVI and INSCOM HK, have entered into a
similar subscription and share purchase agreement (the Further Share Purchase Agreement)
relating to the Company on 29 October 2010 with two other subscribers, namely Wang Strategic
Capital Partners (II) Limited and Harbor Pacific Capital Partners I, LP (the New
Subscribers). The New Subscribers had, pursuant to the execution of the Further Share
Purchase Agreement, executed a Deed of Adherence to the effect that they shall perform,
assume, comply with and be bound by all the terms, covenants, obligations and provision in the
Principal Agreement. |
(D) | Apollo, CSH and the Company confirm that (i) the relevant terms in the Principal Agreement to
be amended by this Supplemental Agreement were not included in the Further Share Purchase
Agreement; and (ii) the relevant terms in the Principal Agreement as amended by this
Supplemental Agreement do not affect the rights and obligations of the New Subscribers under
the Principal Agreement and/or Further Share Purchase Agreement. |
(a) | Section 6.1 of the Principal Agreement shall be replaced by the following clause in its
entirety:- |
(a) | As an inducement to the Subscribers agreement to subscribe for the Subscription Shares, each
of Apollo, CSH and the Company hereby agrees to undertake to use its/his/her best endeavors to
achieve targets of Net Profit to be agreed for the financial years of 2011, 2012 and 2013
respectively. |
(b) | The exact targets of Net Profit shall be further negotiated and agreed among the Subscriber,
Apollo and CSH by 31 December 2011. |
(c) | If no agreement on applicable targets of Net Profit is made among CISG, Apollo and CSH by 31
December 2011, each of Apollo, CSH and the Company shall be deemed to have undertaken the
Subscriber to use its/his/her best endeavors to achieve the following targets:- |
|
the Net Profit for the financial years of 2011, 2012 and 2013 shall not be less than
RMB 102,600,000, RMB 136,300,000 and RMB 170,200,000 respectively. |
3
(a) | Save as expressly amended or altered by this Supplemental Agreement, the Principal Agreement
shall continue in full force and effect and upon the same terms and conditions. |
(b) | The headings of the clauses of this Supplemental Agreement are inserted for convenience only
and shall not in any way affect the meaning or construction of any provision of this
Supplemental Agreement. |
(c) | In the event of any conflict between the provisions of the Principal Agreement and this
Supplemental Agreement, the provisions of this Supplemental Agreement shall prevail. |
(d) | This Supplemental Agreement may be executed by the parties hereto in counterparts and by
different parties on separate counterparts, each of which when so executed and delivered shall
be an original but all of which shall together constitute one and the same instrument. |
(e) | This Supplemental Agreement and the Principal Agreement constitute the entire and only
agreement between the parties hereto with respect to the subject matter hereof. |
(f) | Time shall be of the essence as regards any date or period mentioned in this Supplemental
Agreement, or any date or period substituted for the same by the agreement of the parties
otherwise. |
(g) | Section 12 (Miscellaneous) of the Principal Agreement shall be incorporated herein by
reference and shall apply mutatis mutandis to this Agreement. |
INSCOM HK |
||||||
SIGNED BY Tian Yuan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM HK LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Han Chunying |
||||||
INSCOM BVI |
||||||
SIGNED BY Tian Yuan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM GROUP LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Han Chunying |
||||||
The Company |
||||||
SIGNED BY Tian Yuan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM HOLDING LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Han Chunying |
||||||
Apollo |
||||||
SIGNED BY Tian Yuan
|
) | |||||
authorized signatory for and on behalf
|
) | /s/ Tian Yuan | ||||
of APOLLO & MUSE HOLDING
|
) | |||||
LIMITED, in the presence of
|
) | |||||
/s/ Han Chunying |
CSH |
||||||
SIGNED BY Feng Zhuojun
|
) | |||||
a director, for and on behalf of
|
) | /s/ Feng Zhuojun | ||||
CLEVER STAR HOLDINGS LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Zhu Jiusheng |
||||||
CISG |
||||||
SIGNED BY Hu Yinan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Hu Yinan | ||||
CISG HOLDING LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Zhu Jiusheng |
(1) | INSCOM HK LIMITED, a company incorporated under the laws of the HKSAR (under company number
1457225) whose registered office is situate at 12/F Ruttonjee House, 11 Duddell Street,
Central, Hong Kong. (INSCOM HK); |
(2) | INSCOM GROUP LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584027) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (INSCOM BVI); |
(3) | INSCOM HOLDING LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584021) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the Company); |
(4) | APOLLO & MUSE HOLDING LIMITED, a company incorporated under the laws of British Virgin
Islands (under company number 1584020) whose registered office is situate at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (Apollo); |
(5) | CLEVER STAR HOLDINGS LIMITED, a company incorporated under the laws of British Virgin Islands
(under company number 1593866) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (CSH); |
(6) | CISG HOLDINGS LTD., a company incorporated under the laws of the British Virgin Islands
(under company number 599853) whose registered office is situate at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (CISG or Subscriber). |
(A) | The Company is a private limited company incorporated and subsisting under the laws of the
British Virgin Islands and as at the date hereof has an authorized capital of US$50,000
divided into 50,000 shares of US$1.00 each, of which 10,000 Ordinary Shares have been issued
and fully paid. Corporate information of the Company is set out in Schedule 1 of this
Agreement. |
(B) | As at the date hereof, the Company is the legal and beneficial owner of the entire issued
share capital of INSCOM BVI, which in turn owns the entire issued share capital of INSCOM HK.
Corporate information of INSCOM BVI and INSCOM HK is set out in Schedules 3A and 3B of this
Agreement respectively. INSCOM HK owns the entire equity interests in
(Ying Si Kang) as at the date hereof, which is a wholly
foreign owned enterprise incorporated in PRC. Corporate
information of Ying Si Kang is set out in Schedule 3C of this Agreement. Through the
structure of variable interests entities (VIE), Ying Si Kang has exercised effective
control and management over the following two PRC companies: - |
(i) | (SZ Xinbao Investment); and |
||
(ii) | (SZ InsCom E-Commerce). |
(C) | CISG, a private limited company incorporated and subsisting under the laws of the British
Virgin Islands, is a wholly owned subsidiary of CNinsure Inc., a company incorporated in the
Cayman Islands and whose shares are listed on NASDAQ under symbol CISG. |
(D) | As at the date hereof, Apollo is legal and beneficial owner of 7,788 Ordinary Shares of the
Company constituting 77.88% of the entire issued share capital of the Company. Apollo has
agreed to sell and CISG has agreed to purchase the Sale Shares (as defined below) in
accordance with the terms of this Agreement. |
(E) | The Subscriber has agreed to subscribe and the Company has agreed to issue and allot to the
Subscriber such number of Subscription Shares (as defined below) in accordance with the terms
of this Agreement. |
(F) | Immediately upon Closing of the Subscription and Shares Purchase, CISG shall procure its
beneficial equity interests in the following PRC companies be transferred to Ying Si Kang or
its associated companies in the PRC: - |
(i) | (HN Fanhua Anlian Insurance); |
||
(ii) | (HZ Fanhua Zhixin Insurance); |
||
(iii) | (TJ Fanhua Xianghe Insurance); |
||
(iv) | (FZ Fanhua Guoxin Insurance); |
||
(v) | (CS Lianyi Insurance); and |
||
(vi) | (NB Baolian Insurance). |
(G) | The Parties are desirous of entering into this Agreement to set out the terms and conditions
of the Subscription and Shares Purchase and to establish certain matters
pertaining to the operation and management of the Group and to regulate certain rights and
obligations among themselves with respect thereto. |
(a) | Representations and Warranties. The representations and warranties of each of the
Parties contained in Section 7.1 and Schedule 4 of this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same effect as though made again
on and as of such date. |
(b) | Performance of Obligations. Each of the other Parties shall have performed and
complied in all material respects with all obligations and covenants required to be performed
or complied with by it on or prior to the Closing Date. |
(c) | No Government Injunction/Consents from Governmental Authority. There is not pending
or threatened any action, proceeding or investigation that seeks any governmental injunction
or restraining order issued by a court of competent jurisdiction against the Company and/or
any member of the Group. All consents, permits from relevant Governmental Authority as well as
all third party consents which are legally required for completion of the Subscription and
Shares Purchase having been duly obtained. |
(d) | No Material Adverse Change. There shall not have occurred any material adverse
change in the financial markets, governmental regulations and business environment in China.
The Subscriber being satisfied that consummation of any of the transactions contemplated by
this Agreement would not produce a material adverse effect on the Group or the business of the
Group. |
(e) | Due Diligence Reports. In addition to Section 5.1(a)-(d), the Subscribers
obligation to effect Closing is further subject to the Subscriber being satisfied with the
results of the Due Diligence Reports in which:- |
(i) | the Legal Due Diligence Report has confirmed such legal issues including but
not limited to:- |
(aa) | legality of the First PRC Subsidiaries operation of the Business
in China in accordance with the details of the Business Plan; |
(bb) | legality of such other issues incidental to matters, transactions
contemplated under the Business Plan; and |
(cc) | legality of the entities of the Group outside China. |
(ii) | the Financial Due Diligence Report has confirmed satisfaction of such
accounting issues incidental to matters, transactions contemplated under the Business
Plan including but not limited to: - |
(aa) | satisfaction of such accounting issues incidental to matters,
transactions contemplated under the Business Plan; |
(bb) | accuracy of the financial statements which have been submitted by
the Company and/ or Apollo to CISG. In particular, the Financial Due Diligence
Report shall confirm that the Group has no liabilities other than those which
have been disclosed; |
(f) | Business Plan. The business plan shall have been finalized to the satisfaction of
the Subscriber setting out relevant information as the Subscriber may require including but
not limited to description of the organizational structure, business strategy and production
expansion plan, analysis of market conditions and regulatory environment, utilization of
Subscription Consideration by the Company, investment plan and financial projection of the
business for the next 3 years following Closing. |
(g) | Closing Accounts. The Company shall have produced the Closing Accounts to the
Subscriber and the Subscriber being satisfied (i) with the financial position and other issues
and matters as reflected in the Closing Accounts; (ii) that there shall be no material
deviations or changes between the Closing Accounts and the Accounts; and (iii) that the
Company shall have a book value of net cash asset of not less than RMB10,000,000 or equivalent
sum in USD. For the avoidance of doubt, net cash asset shall mean net asset in cash as shown
in the Closing Accounts. |
(h) | satisfaction of financial review of the Company whereby it is substantiated that the net cash
asset of the Company shall not be less than RMB 10,000,000 or equivalent sum in USD; and |
(i) | Other Conditions to Closing. Such other conditions as CISG may require and considers
to be necessary in the course of conducting the due diligence of the Group. |
(a) | Companys Obligations. Subject to satisfaction of all the conditions set out in
Section 5.1, Closing shall take place on the Closing Date. At Closing and in so far as the
Subscription is concerned, the Company shall and the Existing Shareholders shall procure the
Company to deliver to the Subscriber:- |
(i) | duly executed sealed share certificate(s) issued in the name of CISG or its
nominee(s) in respect of the Subscription Shares in favor of the Subscriber and/ or its
nominee(s); |
(ii) | certified true copies of the board resolutions as referred to in Section
5.2(c); |
(iii) | shareholders resolution approving the amendments to the Articles of
Association; and |
(iv) | such other documents (including any power of attorney under which any document
required to be delivered under this Section shall have been executed and any waivers or
consents) as the Subscriber may require to enable the Subscriber and/or its nominee(s)
to be registered as holders of the Subscription Shares. |
(b) | Apollos Obligations. Subject to satisfaction of all the conditions set out in
Section 5.1, Closing shall take place on the Closing Date. At Closing and in so far as the
Shares Purchase is concerned, Apollo shall cause to deliver to CISG: |
(i) | original share certificate(s) in respect of the Sale Shares; |
(ii) | the duly completed and executed instrument(s) of transfer and sold notes by
Apollo in favor of CISG or its nominee(s) in respect of the Sale Shares; |
(iii) | a copy of the Companys register of members, certified by a director of the
Company as true and complete as of the Closing Date, updated to show CISG or its
nominee(s) as the holder of the Sale Shares of the Company; and |
(iv) | a certified copy of the written resolutions of the directors of Apollo
authorizing the Share Purchase. |
(c) | Board Resolutions of the Company. On or prior to Closing, the Company shall pass and
the Existing Shareholders shall cause the Company to pass board resolutions to the effect
that: |
(i) | the Subscription Shares be allotted and issued to the Subscriber on the Closing
Date, for cash at the Subscription Consideration; |
(ii) | the transfer of the Sale Shares shall be approved for registration and the relative
share certificates issued to CISG or its nominee(s); |
(iii) | the Subscriber or CISG or its nominee(s) be entered into the register of
members of the Company as holder of the Subscription Shares and the Sale Shares; |
(iv) | the appointment of Mr. Chunlin Wang and Mr. Peng Ge or such other person as
nominated by the Subscriber or CISG as directors of the Company; |
||
(v) | the appointment of Mr. Chunlin Wang as chairman of the Board of Directors; and |
(vi) | such other matters to be dealt with and resolved upon as the Subscriber or CISG
shall require for the purpose of giving effect to the provisions of this Agreement. |
(a) | In the event that Performance Benchmark is not fulfilled in any single year of 2011, 2012 and
2013, CISG shall have the right to demand Apollo to pay to CISG an amount equivalent to such
portion of net profit that falls short of the Performance Benchmark for that particular year
(Cash Compensation) within 15 days upon the delivery of the Approved Accounts of that
particular year. For the avoidance of doubt, the aggregate Cash Compensation for 2011, 2012
and 2013 shall not in any event exceed the total amount of RMB84,000,000. |
(b) | In the event that the Performance Benchmark in any single year of 2011, 2012 and 2013 is less
than 70% of the target mentioned in Section 6.1, CISG shall, in addition and without prejudice
to Cash Compensation, have the right to demand CSH in any of such year to transfer such number
of shares (Compensation Shares) constituting 3% of the entire issued share capital of the
Company at a nominal consideration of USD1.00 to CISG or its nominee(s) within 15 days upon
the delivery of the Approved Accounts of that particular year. For the avoidance of doubt,
CISG shall have the right to demand CSH to transfer a total number of the Compensation Shares
representing 9% of the entire issued share capital of the Company at a total nominal
consideration of USD3.00 if the Net Profit for all the years of 2011, 2012 and 2013 is less
than 70% of the target mentioned in Section 6.1. |
(a) | Corporate Status, Power and Authority. Such Party has full power and authority
(corporate or otherwise) to enter into and perform its/his obligations under this Agreement. |
(b) | Authorization and Enforceability. The execution and delivery of this Agreement and
the performance of the obligations hereunder has been duly authorised (corporate or otherwise)
by such Party and this Agreement constitutes valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms. |
(c) | Regulatory Approvals. No consent, waiver, approval or authorization of any
Governmental Authority or any filing, registration or qualification with or notice to, any
Governmental Authority is required on the part of such Party in connection with such Partys
execution or delivery of this Agreement or the performance of any of its obligations
hereunder. |
(d) | Litigation. To the best knowledge of such Party after having made due inquiry, there
are no judicial or administrative actions, proceedings or investigations pending or threatened
against such Party that questions the validity, binding nature and enforceability of this
Agreement or the ability of such Party to perform the obligations under this Agreement. In the
event that the Company has came to the knowledge of the aforesaid, Apollo and CSH shall
forthwith notify CISG. |
(e) | Encumbrances. Unless with the unanimous consent of the board of directors, all the
shareholders of the Company warrants and undertakes that they shall not mortgage, charge,
pledge, lien or have other form of security or encumbrance on, over or affecting any of their
equity interest in the Company. |
(a) | In consideration of CISG entering into this Agreement, each of the Company, Apollo and CSH
hereby:- |
(i) | warrants, represents and undertake to CISG that on the date hereof and as of
the Closing Date, each statement set out in Schedule 4 of this Agreement and this
Article is true, accurate and not misleading; |
(ii) | warrants, represents and undertakes to CISG that the entry into and performance
of this Agreement by the Parties (other than CISG) will not be contrary to any
applicable law; |
(iii) | undertakes to CISG that prior to the Closing Date, if any of the Warranties is
discovered by the Company and/or Apollo and/or CSH to be untrue, inaccurate or
misleading or any of the Warranties has not been fully and/or punctually carried out
in any respect, or in the event of the Company and/or Apollo and/or CSH becoming
unable or failing to do anything required under this Agreement to be done by any one
of them on or before the Closing Date and if any of the aforesaid comes to the
knowledge of the Company and/or Apollo and/or CSH, the Company and/or Apollo and/or
CSH shall forthwith notify CISG, and in all these events, CISG shall have the
absolute discretion to postpone completion of the Subscription and/or Share Purchase
for three (3) months and require the Company and/or Apollo and/or CSH to rectify the
aforesaid events. In the event that such event(s) shall not have been rectified to
the satisfaction of CISG within three (3) months from the Closing Date, CISG shall
have the right not to complete the Subscription and/or Share Purchase and may by
notice in writing rescind this Agreement, in which event the Parties shall be
discharged from their respective further obligations hereunder on a no recourse
basis except for their obligations under Section 10.3 and Articles XI and XII. |
(b) | The Warranties shall be separate and independent and save as expressly provided shall not be
limited by reference to any other section or anything in this Agreement or the Schedules. |
(c) | The Warranties shall be deemed to be repeated as at the Closing Date as if all references
therein to the date of this Agreement were references to the Closing Date. |
(a) | the settlement of any claim that any of the Warranties are untrue or misleading or have been
breached; |
(b) | any arbitration proceedings in which CISG claims that any of the Warranties are untrue or
misleading or have been breached and in which the arbitral order is given for CISG; or |
(a) | In consideration of CISGs entering into this Agreement, each of Apollo and CSH as primary
obligor hereby, jointly and severally, unconditionally and irrevocably guarantees by way of
continuing guarantee to CISG the due and punctual performance and observance by the Company
and the Existing Shareholders of their respective obligations, commitments, undertakings,
agreements, Warranties, indemnities and covenants under or pursuant to this Agreement and,
agrees to indemnify and keep indemnified CISG in full from and against all liabilities,
losses, damages, claims, costs and expenses (including properly |
(b) | The guarantee and indemnity set out in this Section 7.4(a) shall be a continuing security to
CISG for all obligations, commitments, undertaking, Warranties, indemnities and covenants on
the part of the Company and Existing Shareholders under or pursuant to this Agreement
notwithstanding any settlement of account or other matter or thing whatsoever and is in
addition and without prejudice to and not in substitution for any rights or security which
CISG may now or hereafter have or hold for the performance and observance of the obligations,
commitments, undertakings, agreements, Warranties, indemnities and covenants of the Company
and/or Existing Shareholders under or in connection with this Agreement. |
(c) | The obligations of Apollo and CSH under this Section shall not be affected by any matter or
thing which but for this provision might operate to affect or prejudice those obligations,
including without limitation:- |
(i) | any time or indulgence granted to, or composition with, the Company and/or the
Existing Shareholders or any other person; |
(ii) | the taking, variation, renewal or release of, or neglect to perfect or enforce
this Agreement or any right, guarantee, remedy or security from or against the Company
and/or the Existing Shareholders or any other person; |
(iii) | any unenforceability or invalidity of any obligation of the Company and/or the
Existing Shareholders, so that this Section shall be construed as if there were no such
unenforceability or invalidity; |
(iv) | the liquidation, bankruptcy, winding-up, receivership of the Company and/or the
Existing Shareholders or other member of the Group; and |
(v) | any other act, matter, event or omission which but for this provision would or
might operate to discharge, impair or otherwise affect the liabilities of Apollo and
CSH hereunder. |
(a) | The Board shall meet as required provided that any Director may call a Board meeting by not
less than seven (7) days notice in writing to the Company specifying the business to be
transacted thereat. Directors may participate in a meeting of the Board by means of telephone
conference or similar communications equipment whereby all persons participating in the
meeting can hear each other and such participation shall constitute presence in person.
Resolutions of the Board may be passed by resolution signed by all the Directors. |
(b) | A shareholder of the Company or any member of the Group may call a general meeting of the
relevant company by not less than seven (7) days notice in writing to the Company. The quorum
for shareholders meetings shall be two (2) and must consist of at least one (1) person being
the authorized representative or proxy for CISG. |
(c) | Each Company Shareholder will exercise or refrain from exercising any voting rights or other
powers of control so as to ensure the passing of any and every resolution necessary or
desirable to procure that the affairs of the Group are conducted in accordance with the
provisions of this Agreement and otherwise to give full effect to the provisions of this
Agreement and likewise to ensure that no resolution is passed which does not accord with
such provisions. |
(a) | issuing or agreeing to issue any shares of any class in any member of the Group or any loan
capital, securities or other rights, having attached thereto a right of conversion into or
exchange for any shares or any equity interest in any member of the Group. |
(b) | acquiring, merging or consolidating with or into any other company, or reconstructing or
amalgamating its business or, promoting or taking any steps to effect its winding up or
passing of any resolution to liquidate it or applying to any court of competent jurisdiction
for an order to convene a meeting of creditors or any class of creditors or members or any
class of members or to sanction any such compromise or arrangement. |
(c) | incorporating any subsidiary or acquiring further interest or permit the disposal or dilution
of its interest, directly or indirectly, in any subsidiary or acquire shares or interests in
any company, joint venture, partnership or such other business entities or dispose of any
shares or interests in any company or acquire or dispose of any loans or loan capital. |
(d) | commencing, acquiring or expanding any new line of business which does not fall within the
business or engaging in any other business activities other than those contemplated under
the Business Plan. |
(e) | engaging in any material investments or disposals of assets of the Company outside the
ordinary course of business. For this purpose, a material investment or a material
disposal means an investment or a disposal which has a book value of more
than RMB5,000,000.00. |
(f) | borrowing any money or obtaining any credit advance in any form from any parties which incurs
an accumulated indebtedness in excess of RMB5,000,000.00 over any 12 months period. |
(g) | creating or allowing to subsist any security interest and/or Encumbrances over any of the
Groups assets in excess of an accumulated sum of RMB5,000,000.00 over any 12 months period. |
(h) | entering into any contract or arrangement other than in the ordinary course of business and
involving an one-off transaction sum of more than RMB5,000,000.00 or series of transactions of
the same or similar nature involving an accumulated sum of more than RMB5,000,000.00 over any
12 months period. |
(i) | issuing or agreeing to issue any shares, options or convertible bonds to any Person at a
price lower than the Effective Subscription Price. |
(j) | repurchasing or redemption of stocks/shares/securities or debt instruments (except to the
extent such debt is due in accordance with its terms and conditions issued by any Group
Company. |
(k) | committing to any capital expenditure not previously approved by annual budget of the Group
and in excess of RMB5,000,000.00 over any 12 months period. |
|
(l) | declaring or paying any dividends. |
(m) | entering into any connected transaction(s) (as defined in the Listing Rules) between any
member of the Group of the one part and connected persons (as defined in the Listing Rules) of
the other part. |
(n) | changing or amending the Memorandum and Articles of Association of any member of the Group
other than those amendments which are necessary to accord with the provisions of this
Agreement. |
(o) | altering its accounting year end or changing its secretary, or accounting policies, practices
and procedures. |
|
(p) | changing the size of the Board of Directors. |
(q) | the appointment of senior managerial staff, including the chief executive officer, chief
financial officer and such other key staff members receiving an annual remuneration of more
than RMB1,000,000.00. |
|
(r) | approval of the annual budget and business plan of the Group. |
(s) | entering into or modifying, varying any employment contract, remuneration package or benefit
scheme in respect of senior managerial staff members;. |
(t) | acquiring, hiring or leasing of any automobile, apartment for any staff member of the
management team of the Group. |
(u) | altering the arrangement regarding appointment of authorized signatories of bank accounts of
the Group. |
(v) | lending any money to any person (otherwise than by way of deposit with a bank or other
financial institution the normal business of which includes the acceptance of deposits) or
granting any credit to any person (except to its customers in the normal course of business. |
|
(w) | direct or indirect provision of any guarantees to any parties. |
|
(x) | pledging of the stocks or shares of any member of the Group to any parties/persons. |
(y) | varying, modifying or abrogating any of the rights attaching to any of the stocks or shares
of any member of the Group. |
(z) | increasing its nominal share capital, reducing its share capital or share premium account or
capital redemption reserve fund, or sub-dividing or consolidating any of the stocks of any
member of the Group. |
(aa) | granting or agreeing to grant any option over or right to acquire or purchase or redeem any
shares or stocks of any member of the Group. |
|
(bb) | consolidate, subdivide or convert any of its share capital of any member in the Group. |
(cc) | passing any resolution the result of which would be its winding up, liquidation or
receivership save as otherwise expressly provided in this Agreement, or make any composition
or arrangement with creditors. |
(dd) | issuing any debentures or other securities convertible into shares or debentures or
interests. |
(ee) | offering the Ordinary Shares or other securities of the Company or any member of the Group
for subscription by the general public by initial public offering either on The Stock Exchange
of Hong Kong Limited or other stock exchange or securities exchange of other parts of the
world. |
(ff) | determining the relevant stock exchange or securities exchange for the IPO as well as
the appropriate timing for the IPO application and IPO valuation. |
(gg) | approval of the terms and conditions regarding the Share Incentive Scheme upon which the
Management Incentive Shares or any part thereof will be granted. |
(hh) | entering into any contract or arrangement not at arms length (including but
not limited
to the terms pursuant to which any Ordinary Shares or other securities in the Company will be
issued and allotted to any potential subscribers or investors. |
(ii) | doing or failing to do anything which has the effect of breaching, varying or modifying the
terms of this Agreement. |
(a) | For the purposes of this Clause, Confidential Information means all information of a
confidential nature disclosed (whether in writing, verbally or by any other means and whether
directly or indirectly) by one party (the Disclosing Party) to any other party (the
Receiving Party) whether before or after the date of this Agreement. |
(b) | During the term of this Agreement and within one year after the termination or expiration of
this Agreement for any reason whatsoever the Receiving Party shall: |
(i) | keep the Confidential Information confidential; |
(ii) | not disclose the Confidential Information to any other person other than with
the prior written consent of the Disclosing Party or being compelled by law or in
accordance with Section 10.3 hereof; and |
(iii) | not use the Confidential Information for any purpose other than the
performance of its obligations under this Agreement. |
(c) | During the term of this Agreement the Receiving Party may disclose the Confidential
Information to its employees (the Recipient) to the extent that it is necessary for the
purposes of this Agreement. |
(d) | The Receiving Party shall procure that each Recipient is made aware of and complies with all
the Receiving Partys obligations of confidentiality under this Agreement as if the Recipient
was a party to this Agreement. |
(e) | The obligations contained in Section 10.3 hereof shall not apply to any Confidential
Information which:- |
(i) | is at the date of this Agreement or at any time after the date of this
Agreement comes into the public domain other than through breach of this Agreement by
the Receiving Party or any Recipient; or |
(ii) | can be shown by the Receiving Party to the reasonable satisfaction of the
Disclosing Party to have been known to the Receiving Party prior to it being disclosed
by the Disclosing Party to the Receiving Party; or |
(iii) | subsequently comes lawfully into the possession of the Receiving Party from a
third party; or |
(iv) | is required to be disclosed to the relevant Governmental Authority in
compliance with relevant laws and regulations applicable to that Party or the relevant
Listing Rules or any applicable rules in relation to any applicable stock exchange. |
(a) | Quarterly Financial Statements. Within 35 days after the close of each fiscal
quarterly accounting period ending after the date hereof, the consolidated balance sheet of
the Company and its Subsidiaries as at the end of such quarterly period and the related
statements of income, shareholders equity and cash flow for such quarterly period and (if
different) for that portion of the fiscal year that has elapsed with the last day of such
quarterly period, and in each such case setting forth comparative figures for the
corresponding periods in the prior fiscal year, all of which shall be prepared in accordance
with US GAAP applied on a consistent basis. |
(b) | Annual Financial Statements. Within 120 days after the close of each fiscal year of
the Company, the consolidated balance sheet of the Company and its Subsidiaries as of the end
of such fiscal year and the related statements of income, shareholders equity and cash flow
for such fiscal year, in each case setting forth comparative figures for the preceding fiscal
year, all of which shall be prepared in accordance with US GAAP applied on a consistent basis. |
(c) | Monthly Management Reports. Within 15 days after the close of each fiscal monthly
accounting period ending after the date hereof, the Company shall prepare and submit to the
Company Shareholders management reports setting out operational, management and financial
conditions of the Group in order to enable the Subscriber ascertaining the latest
position of business activities undertaken by the Group and the Groups financial position. |
(d) | Annual Budget. Within 30 days before the end of each year, the Company shall prepare
and submit to the Company Shareholders its estimated detailed financial budget for the
following financial year. |
(e) | Any other information in relation to the business activities, operation and financial
condition of the Group that the Directors may reasonably request from time to time. |
(a) | If the Company wishes to issue (Further Issuance) any further Ordinary Shares or any other
shares in the capital of the Company or any loan capital, securities or other rights which
having attached thereto a right of conversion into or exchange for any Ordinary Shares or any
equity interest in the Company, the Company shall give and the Existing Shareholders shall
procure the Company to give notice (the Companys Notice) to CISG stating the total number
of additional Ordinary Shares or any shares to be issued or which could be issued upon
exercise of a right of conversion or exchange pursuant to the Further Issuance and the price
for such Further Issuance to be subscribed for CISG shall have the option but not the
obligation to subscribe at the price set forth in the Companys Notice for that proportion of
Further Issuance equivalent to the percentage (%) which the number of Ordinary Shares held by
CISG bears to the total number of issued Ordinary Shares of the Company at the time when the
Companys Notice is issued. Such option may be exercised by CISG by serving a notice to the
Company at any time within 20 Business Days following CISGs receipt of the Companys Notice
and accompanied by payment in full for that proportion of the Further Issuance to be
subscribed for. The Company hereby agrees that any Further Issuance will be at a price that is
not less than CISGs price pursuant to this Subscription. The Parties hereby expressly
acknowledge, confirm and agree the purpose of this Section 10.5 is to offer an anti- dilution
protection in favor of CISG so that if CISG shall have elected to exercise the option
hereunder, its shareholdings in the Company will not be diluted notwithstanding the Further
Issuance. |
(b) | If and whenever the Ordinary Shares by reason of any consolidation or sub-division shall
become of a lesser nominal amount, CISG will proportionally be issued with additional Ordinary
Shares at a nominal consideration so that CISGs shareholdings in the Company immediately upon
such consolidation or sub-division will remain the same as its shareholdings in the Company
immediately before such consolidation or sub-division. |
(a) | The number of arbitrators shall be three, one of whom shall be appointed by the Party
asserting a claim against the other Party or Parties, one of whom shall be appointed by the
Party or Parties (acting together), as the case may be, against whom a claim has been
asserted, and the third of whom shall be selected by mutual agreement, if possible, within
thirty days of the selection of the second arbitrator and thereafter by the administering
authority. In the event the Party against whom a claim has been asserted fails to appoint the
second arbitrator within 15 days after the first arbitrator is appointed by the Party
asserting a claim, then the administering authority shall select the second and third
arbitrators after expiration of the said 15 days. |
(b) | The language of arbitration shall be conducted in the English language and any foreign
language documents presented at such arbitration shall be accompanied by an English
translation thereof. The arbitration shall be held in HKSAR. |
(c) | Any award of the arbitrators (i) shall be in writing, (ii) shall state the reasons upon which
such award is based and (iii) may include an award of costs, including reasonable attorneys
fees and disbursements. |
(d) | Any Party may make an application to the arbitrators seeking injunctive relief to maintain
the status quo until such time as the arbitration award is rendered or the dispute,
controversy or claim is otherwise resolved. Any Party may apply to any court having
jurisdiction hereof and seek injunctive relief in order to maintain the status quo until such
time as the arbitration award is rendered or the dispute, controversy or claim is otherwise
resolved. |
If to INSCOM HK: | ||||
Address: | ||||
Fax No.: | 0755-83521432 | |||
Attention: | Mr. Tian Yuan | |||
If to INSCOM BVI: | ||||
Address: | ||||
Fax No.: | 0755-83521432 | |||
Attention: | Mr. Tian Yuan | |||
If to the Company: | ||||
Address: | ||||
Fax No.: | 0755-83521432 | |||
Attention: | Mr. Tian Yuan | |||
If to Apollo: | ||||
Address: | ||||
Fax No.: | 0755-83521432 | |||
Attention: | Mr. Tian Yuan | |||
If to CSH: | ||||
Address: | ||||
Fax No.: | 020-61262893 | |||
Attention: | Ms. Feng Zhuo Jun | |||
If to CISG | ||||
Address: | ||||
Fax No.: | 020-61262893 | |||
Attention: | Mr. Hu Yi Nan |
SIGNED BY: Tian Yuan
|
) | |||||
Power
of attorney of a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM HK LIMITED
|
) | |||||
in the presence of
|
) |
SIGNED BY: Tian Yuan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM GROUP LIMITED
|
) | |||||
in the presence of
|
) |
SIGNED BY: Tian Yuan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM HOLDING LIMITED
|
) | |||||
in the presence of
|
) |
SIGNED BY: Tian Yuan
|
) | |||||
Power
of attorney of a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
APOLLO & MUSE HOLDING Limited
|
) | |||||
in the presence of |
SIGNED BY:Feng Zhuojun
|
) | |||||
a director, for and on behalf of
|
) | /s/ Feng Zhuojun | ||||
CLEVER STAR HOLDINGS LIMITED
|
) | |||||
in the presence of
|
) |
SIGNED BY:Hu Yinan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Hu Yinan | ||||
CISG HOLDINGS LTD.
|
) | |||||
in the presence of
|
) |
(1) Name of the Company |
: | InsCom Holding Limited | ||
(2) Company No. |
: | 1584021 | ||
(3) Date of Incorporation |
: | 7 May, 2010 | ||
(4) Place of Incorporation |
: | British Virgin Islands | ||
(5) Registered Address |
: | P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands | ||
(6) Directors |
: | Yuan Tian | ||
(7) Authorized Share Capital |
: | US$50,000 divided into 50,000 shares of US$1.00 each | ||
(8) Issued Share Capital |
: | US$10,000 | ||
(9) Shareholders |
Name of Shareholder | No. of Shares | Percentage holdings | ||||
Apollo & Muse Holding Limited |
7,788 ordinary | 77.88 | % | |||
Clever Star Holdings Limited |
2,212 ordinary | 22.12 | % |
(1) Name of the Company |
: | InsCom Group Limited | ||
(2) Company No. |
: | 1584027 | ||
(3) Date of Incorporation |
: | 7 May, 2010 | ||
(4) Place of Incorporation |
: | British Virgin Islands | ||
(5) Registered Address |
: | P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands | ||
(6) Directors |
: | Yuan Tian | ||
(7) Authorized Share Capital |
: | 50,000 shares of a single class each with a par value US$1.00 | ||
(8) Issued Share Capital |
: | US$1 | ||
(9) Shareholders |
Name of Shareholder | No. of Shares | Percentage holdings | ||||||
InsCom Holding Limited |
1 | 100 | % |
(1) Name of the Company |
: | InsCom HK Limited | ||
(2) Company No. |
: | 1457225 | ||
(3) Date of Incorporation |
: | 17 May, 2010 | ||
(4) Place of Incorporation |
: | Hong Kong | ||
(5) Registered Address |
: | 12/F Ruttonjee House, 11 Duddell Street, Central, Hong Kong | ||
(6) Directors |
: | Yuan Tian | ||
(7) Issued Share Capital |
: | HK$1.00 | ||
(8) Shareholders |
Name of Shareholder | No. of Shares | Percentage holdings | ||||||
InsCom Group Limited |
1 | 100 | % |
(1) Name of the Company |
: | Ying Si Kang Information Technology (Shenzhen)Co., Ltd | ||
(2) License No. |
: | 440301503378995 | ||
(3) Date of Incorporation |
: | 15 July, 2010 | ||
(4) Place of Incorporation |
: | PRC | ||
(5) Registered Address |
: | 2108-2110-35 Tower A, Jiahe Huaqiang Buiding, Shennan Road, Futian District, Shenzhen | ||
(6) Legal Representative |
: | Yuan Tian | ||
(7) Registered Capital |
: | US$1,200,000.00 | ||
(8) Shareholders |
Name of Shareholder | Percentage holdings | |||
InsCom HK Limited |
100 | % |
(1) Name of the Company |
: | Shenzhen Xinbao Investment Co., Ltd | ||
(2) License No. |
: | 440301104741339 | ||
(3) Date of Incorporation |
: | 12 June, 2010 | ||
(4) Place of Incorporation |
: | PRC | ||
(5) Registered Address |
: | 2108-2110-28 Tower A, Jiahe Huaqiang Buiding, Shennan Road, Futian District, Shenzhen | ||
(6) Legal Representative |
: | Yuan Tian | ||
(7) Registered Capital |
: | RMB30,000.00 | ||
(8) Shareholders |
Name of Shareholder | Percentage holdings | |||
Yuan Tian |
50 | % | ||
Fei Xiao |
50 | % |
(1) Name of the Company |
: | Shenzhen InsCom E-Commerce Co., Ltd | ||
(2) License No. |
: | 440301103498934 | ||
(3) Date of Incorporation |
: | 2 June, 2004 | ||
(4) Place of Incorporation |
: | PRC | ||
(5) Registered Address |
: | Unit A, Olympics Building7/F, Shangbao Road, Futian District, Shenzhen | ||
(6) Legal Representative |
: | Yuan Tian | ||
(7) Registered Capital |
: | RMB3,000,000.00 | ||
(8) Shareholders |
Name of Shareholder | Percentage holdings | |||
Yuan Tian |
50 | % | ||
Fei Xiao |
50 | % |
Registered | ||||||||||||||||
Company | Date of | Capital | Legal | |||||||||||||
Name | License No. | Incorporation | (RMB) | Representative | Shareholders | |||||||||||
HN Fanhua Anlian
Insurance Agency
Co.,Ltd |
410192100013786 | 29 Jan, 2008 | 3,000,000 | Jun Zhang | Meidiya: 51% Jingshi: 49% |
|||||||||||
HZ Fanhua Zhixin
Insurance Agency
Co.,Ltd |
330102000013189 | 4 Jan, 2008 | 5,000,000 | Yu Zeng | Meidiya: 51% Jingshi: 49% |
|||||||||||
TJ Fanhua Xianghe
Insurance Agency
Co.,Ltd |
120102000011824 | 23 Nov, 2007 | 2,000,000 | Changhua Mu | Meidiya: 70% Zhiyong: 30% |
|||||||||||
FZ Fanhua Guoxin
Insurance Agency
Co.,Ltd |
350102100011038 | 24 Jan, 2008 | 5,000,000 | Xiaomin Gong | Fanhua Invesntment: 70% Jingshi: 30% |
|||||||||||
CS Lianyi Insurance
Agency Co.,Ltd |
430102000040432 | 19 Dec,2007 | 5,000,000 | Jiangrong Xu | Meidiya: 70% Jingshi: 30% |
|||||||||||
NB Baolian
Insurance Agency
Co.,Ltd |
330215000013767 | 25 May, 2009 | 2,000,000 | Guangqing Ying | Meidiya: 51% Jingshi: 49% |
1. | GENERAL |
|
1.1 | Accuracy of recitals and schedules |
|
The information and particulars relating to the Group as set out in
the recitals and Schedules to this Agreement are true and accurate in
all respects. |
||
1.2 | Memorandum and articles of association, statutory books and returns |
(A) | Copies of articles of association of each member of Group which have been given
to the Subscriber are accurate and complete in all respects and have annexed or
incorporated copies of all resolutions or agreements required to be so annexed or
incorporated by the rules and regulations governing companies in the PRC. |
(B) | The statutory books and registers of the Group have been properly kept and no
notice or allegation that any of them is incorrect or should be rectified has been
received. |
(C) | All returns and particulars, resolutions and other documents which any member
of the Group is required by law to file with or deliver to the relevant authorities
have been correctly made up and duly filed or delivered. |
1.3 | Ownership of Interest |
(A) | The PRC Subsidiaries have been duly incorporated and are validly existing under
the laws of the PRC and have full power, authority and legal right to own their assets
and carry on the business. |
(B) | Save and except already disclosed to the Subscriber in writing by the Existing
Shareholders, no person is entitled or has claimed to be entitled to require any member
of Group to issue any share equity or loan capital either now or at any future date
whether contingently or not. |
(C) | Save and except already disclosed to the Subscriber in writing by the Existing
Shareholders, there is no option, right of pre-emption, right to acquire, mortgage,
charge, pledge, lien or other form of security or encumbrance on, over or affecting any
of the equity interest of the Group nor is there any commitment to give or create any
of the foregoing, and no person has claimed to be entitled to any of the foregoing. |
1.4 | Subsidiaries, associations and branches |
1.5 | Ownership of assets |
|
The Group is the legal and beneficial owner of its assets as set out in the Accounts. |
||
1.6 | Vulnerable antecedent transactions |
|
The Group has taken no steps to be a party to a transaction and has not entered into any disposition of property pursuant
to or as a result of which an asset owned, purportedly owned or otherwise held by any member of the Group is liable to be
transferred or re-transferred to another person or which gives or may give rise to a right of compensation or other payment
in favor of another person. |
||
1.7 | Compliance with statutes |
(A) | Each member of the Group has conducted its business in accordance with all
applicable laws, regulations and rules issued by the relevant PRC government
authorities and has not committed any criminal, illegal or unlawful act. |
(B) | To the best belief and knowledge of the Existing Shareholders, neither the
Group, nor any of its officers, agents or employees (during the course of their
duties), has done or omitted to do anything which is a contravention of any statute,
order, regulation or the like giving rise to any fine, penalty or other liability or
sanction on the part of the Group which could have produced adverse effect on the
normal operation of the Group. |
(C) | The Group has not committed any breach of contract or statutory duty or other
unlawful act which could lead to a claim for damages being made against it and no event
has occurred which would entitle any third party to terminate any contract or any
benefit enjoyed by the Group. |
1.8 | Licenses and consents |
|
All necessary licenses, approvals and/or permits for undertaking the
business by the Group have been validly issued to the Group Companies
by the Governmental Authorities and that the Existing Shareholders are
not aware of anything that might result in the revocation, suspension
or modification of any of such licenses, approvals and permits or any
circumstances that might prejudice their renewal. |
||
1.9 | Litigation |
|
The Existing Shareholders do not have actual knowledge and have not received any written
notice that:- |
(A) | the Group is engaged in any litigation or arbitration proceedings. |
(B) | the Group has done or omitted to do anything which will give rise to any
litigation or arbitration proceedings by or against the Group, and |
(C) | the Group is the subject of any investigation, inquiry or enforcement
proceedings or process by any governmental, administrative or regulatory body. |
1.10 | Insolvency |
(A) | Save as disclosed prior to signing of this Agreement, the Existing Shareholders
have not received any written notice or verbal indication from any party in which:- |
(i) | any receiver, liquidator, provisional administrator or other person
carrying on similar function has been appointed in respect of any Group or in
respect of the whole or any part of the assets or undertaking of any Group; and |
(ii) | any winding up or administrative order has been made and no
petition has been presented for such an order in respect of any Group. |
Save as disclosed prior to signing of this Agreement, the Existing Shareholders have
not received any notice in which:- |
(i) | any meeting has been convened at which a resolution shall be
proposed, any resolution has been passed, any petition has been presented and any
order has been made for the winding up or dissolution of any Group Company or for
an administrative order in respect of any Group Company; or |
(ii) | any Group Company has stopped or suspended payment of its debts,
become unable to pay its debts (within the meaning of Section 178 of the
Companies Ordinance or any similar provisions under the applicable laws in PRC)
or otherwise become insolvent. |
(B) | Save as disclosed prior to signing of this Agreement, the Existing Shareholders
have not received any written notice in which any circumstances have arisen which entitle
any person to take any action, appoint any person, commence proceedings or obtain any
order. |
(C) | Save as disclosed prior to signing of this Agreement, the Company, INSCOM HK and
INSCOM BVI have not carried on any actual business operation in any part of the world and
have not entered into any contract, agreement (whether verbal or in writing) with any
Person. |
2. | ACCOUNTS AND FINANCIAL |
|
2.1 | Accuracy of the Accounts |
(A) | to the best knowledge and belief of the Existing Shareholders, the Accounts
have been prepared in accordance with US GAAP and laws and regulations of PRC. |
(B) | are complete and accurate in all material respects and give, a true and fair
view of the state of affairs and financial position of the Group Companies as at the
Account Date. |
(C) | are true, accurate and complete, in all material respects with regard to
capital commitments, assets and liabilities (actual and contingent), profits and loss
and the financial position of the Group Companies as at the Account Date. |
(D) | are not materially and adversely affected by any unusual or non-recurring
items. |
||
(E) | fully disclose all the assets of the Group Companies as at the Account Date. |
(F) | fully disclose and make full provision or reserve for all actual liabilities,
and |
(G) | fully disclose and make provision or reserve for or note all contingent
liabilities, capital or burdensome commitments and deferred taxation. |
2.2 | Book debts |
2.3 | Books and records |
|
All accounts, books, ledgers, and other financial records of the Group Companies:- |
(A) | to the best knowledge and belief of the Existing Shareholders, all accounts,
books, ledgers, and other financial records of the Group Companies have been properly
maintained and contain accurate records of all matters required to be entered in them
in accordance with US GAAP, and applicable statutes and regulations of PRC; and |
(B) | give a true and fair view of the matters which ought to appear in them. |
2.4 | Dividends and distributions |
(A) | No dividend or other distribution of profits or assets has been or agreed to be
declared, made or paid by the Group Companies since the Account Date. |
(B) | All dividends or other distributions of profits or assets declared, made or
paid since the respective dates of incorporation of the Group Companies have been
declared, made and paid in accordance with the applicable PRC statutes and regulations
and the respective articles of association (or equivalent documents) of each member of
the Group Companies. |
2.5 | Bank and other borrowings |
(A) | The Group Companies have made no bank borrowings other than those as shown in
the Accounts. |
(B) | The Group Companies has no outstanding mortgages, charges, debentures or other
loan capital or bank overdrafts, bank or other borrowings, loans or other indebtedness,
financial facilities, finance leases or hire purchase commitments or any guarantees or
other contingent liabilities other than those as shown in the Accounts. |
(C) | No material outstanding indebtedness of any member of the Group Companies has
become payable by reason of default by any member of the Group Companies and no event
of default has occurred or is pending which with the lapse of time or the fulfillment
of any condition or the giving of notice may result in any such indebtedness becoming
so payable prior to maturity. |
2.6 | Loan capital and guarantees |
|
Save as disclosed in the Accounts, the Group Companies have no and has
not incurred any loan capital or any liability. |
||
2.7 | Loans |
|
The Group Companies have not lent any money to any parties which has
not been repaid to it or owns the benefit of any debt (whether present
or future) other than debts accrued to it in the ordinary course of
its business. |
||
2.8 | Working capital |
(A) | The Group Companies have sufficient working capital for the purposes of
operating their existing businesses. |
(B) | Save as disclosed in writing prior to signing of this Agreement or transactions
contemplated under this Agreement, the Group Companies have no material outstanding
capital commitment and is not engaged in any scheme or project requiring expenditure of
capital of a significant sum. |
2.9 | Liabilities |
(A) | Save as disclosed in the Accounts, there are no liabilities (including
contingent liabilities) which are outstanding on the part of the Group Companies other
than those incurred in the ordinary and proper course of business since the Account
Date. |
(B) | The Company, INSCOM HK and INSCOM BVI have not incurred any liabilities
(including contingent liabilities) since incorporation. |
2.10 | Financing Arrangements |
In relation to all financing arrangements (including all mortgages,
overdrafts and other loan or financial facilities) to which any Group
Companies is a party:- |
(A) | there has been no contravention of or non-compliance with any provision of any
such document. |
(B) | no steps for the enforcement of any encumbrances or the early repayment of the
indebtedness have been taken or threatened; |
(C)) | there has not been any alteration in the terms and conditions of any of the
said arrangements or facilities all of which are in full force and effect. |
(D) | nothing has been done or omitted to be done whereby the continuance of the said
arrangements and facilities in full force and effect might be affected or prejudiced. |
(E) | none of the arrangements is dependent on the guarantee of or on any security
provided by a third party. |
(F) | no consent is required from the lenders of such financing arrangements for the
entering into and completion of the transactions contemplated under this Agreement, and |
(G) | none of the facilities may be terminated, or mature prior to its stated
maturity as a result of completion of the Subscription or any matter contemplated by
this Agreement. |
2.11 | Position since the Account Date |
|
Since the Account Date:- |
(A) | the Group Companies have conducted the business of the Group Companies in a
normal and proper manner. |
(B) | the Group Companies have not entered into any unusual contract or commitment or
otherwise departs from its normal course of trading. |
||
(C) | there has been no material adverse change to the Accounts since Account Date. |
(D) | there has not been any sale or transfer by the Group Companies of any material
tangible or intangible assets other than in the ordinary course of business, any
mortgage or pledge or the creation of any security interest, lien, or encumbrance on
any such asset, or any lease of property, including equipment, other than tax liens
with respect to taxes not yet due and statutory rights of customers in inventory and
other assets. |
(E) | there has not been any damage, destruction, or loss, whether covered by
insurance or not, materially adversely affecting the business of the Group Companies
(taken as a whole. |
(F) | there has not been making of any material loan, advance, indemnity or guaranty
by the Group Companies to or for the benefit of any person except the creation of
accounts receivables in the ordinary course of business. |
(G) | there has not been any material adverse change in the business, financial
condition, operations, or assets of the Group Companies (taken as a whole. And |
||
(H) | there has not been an agreement to do any of the foregoing. |
3. | COMMERCIAL |
|
3.1 | Effect of Transactions contemplated under this Agreement |
|
Neither the execution of this Agreement nor the compliance with the
terms of this Agreement does and will:- |
(A) | conflict with, or result in the breach of, or constitute a default under, any
of the terms, conditions or provisions of any agreement or instrument to which the
Group Companies is a party, or any provision of the memorandum or articles of
association or other corresponding constitutional documents of the Group Companies or
any encumbrances, lease, contract, order, judgement, award, injunction, regulation or
other restriction or obligation of any kind or character by which or to which any asset
of the Group Companies is bound or subject. |
(B) | relieve any person from any obligation to the Group Companies or cause any
person to determine any such obligation or any right or benefit enjoyed by the Group
Companies, or to exercise any right, whether under an agreement with or otherwise in
respect of the Group Companies. |
(C) | result in the creation, imposition, crystallization or enforcement of any
encumbrance whatsoever on any of the assets of the Group Companies, and |
(D) | result in any present or future indebtedness of the Group Companies becoming
due and payable or capable of being declared due and payable prior to its stated
maturity. |
3.2 | Trading contracts |
3.3 | Material contracts |
3.4 | Agreements restricting business |
(A) | Each member of the Group Companies is not a party to any agency,
distributorship, marketing, purchasing, manufacturing or licensing agreement or
arrangement, or any restrictive trading or other agreement or arrangement which in any
way restricts its freedom to carry on business. |
(B) | The Group Companies are not a party to any undertaking or assurances given to
any court or governmental agency which is still in force. |
3.5 | Defaults under agreements |
(A) | On or prior to the Closing Date, the Group Companies are not and will not with
the lapse of time become:- |
(1) | in default under any agreement or covenant to which it is a party
or in respect of any other obligations or restrictions binding upon it; and |
(2) | to the best information and belief of the Existing Shareholders,
liable in respect of any breach of representation or warranty given under any
agreement to which it is a party. |
(B) | On or prior to the Closing Date, no threat or claim of default under any
agreement, instrument or arrangement to which any member of the Group Companies is a
party has been made and is outstanding against it and there is nothing whereby any such
agreement, instrument or arrangement may be prematurely terminated or rescinded by any
other party or whereby the terms thereof may be materially worsened as against the
relevant member of Group Companies. |
3.6 | Other partys defaults |
|
No party to any agreement with or under an obligation to the Company
is (1) in default under it, being a default which would be material in
the context of its financial or trading position and there are no
circumstances likely to give rise to such a default; or (2) incapable
of performing its obligations or granting any rights thereunder. |
||
3.7 | No powers of attorney |
|
The Group Companies have not granted any power of attorney or similar
authority which remains in force as at the date of this Agreement. |
4. | TAXATION |
(A) | Each Group Company has complied with all other relevant legal requirements relating to
registration or notification for Taxation purposes. |
|
(B) | Each member of Group Company has:- |
(i) | duly and punctually paid all Taxation which it has become liable to pay and is
under no liability to pay any penalty or interest in connection with any claim for
Taxation and has not paid any tax which it was and is not properly due to pay. |
(ii) | taken all necessary steps to obtain any repayment of or relief from Taxation
available to it. |
(C) | The returns which ought to have been made by or in respect of any member of Group Companies
for any Taxation purposes have been made and all such returns are up-to-date correct and on a
proper basis and are not the subject of any dispute with any Taxation or other relevant
authority and there are no present circumstances known to the Existing Shareholders which are
likely to give rise to any such dispute and provision has been made in the Accounts for all
amounts which were or would have been shown by any such return to be payable by the Company. |
(D) | The provisions (if any) included in the Accounts are sufficient to cover all Taxation in
respect of all periods ending on or before the Account Date for which the Group Companies was
then or might at any time thereafter become or have become liable. |
5. | INTELLECTUAL PROPERTY |
(A) | No member of the Group has entered into any agreements, arrangement or understanding (whether
legally enforceable or not) for the licensing or otherwise permitting the use or exploitation
of the IP Rights. |
(B) | None of the IP Works is currently being infringed, misused or used without authorization by
any third party and none of it has been so infringed, misused or used without authorization
during the last three years nor will it be so infringed, misused or used and no third party
has threatened any such infringement, misuse or unauthorized use. |
(C) | To the best belief and knowledge of the Existing Shareholders, there are no circumstances
under which the Groups right to use IP Works may be prohibited or terminated. |
(D) | The activities of the Group Companies do not infringe or otherwise involve the misuse or
unauthorized use of any industrial or intellectual property rights of third parties. None of
the IP Rights has been wrongfully or unlawfully acquired by the Group Companies. No claim
under any warranty contained in such documentation has been made or intimated nor are there
any reasonable grounds on which any such claim could be made. |
(E) | The Group has taken all steps open to it to preserve its IP Works including, but not limited
to take all reasonable steps to preserve the confidentiality of all know-how, confidential
information and trade secrets used in the Business, including ensuring that all such know-how,
information and secrets are fully documented and held in a secure location in the possession
or control of the Group, are only disclosed to such employees and other persons to whom
disclosure is necessary in the normal conduct of the business of the Group and who are aware
of, and accept in writing an obligation to maintain, the confidentiality thereof. |
(F) | The Group has not in the past been carrying on the business in such a way as to infringe any
intellectual property right of any person, does not do so as at the date of this Agreement,
and it will not do so prior to Closing. |
6. | PROPERTIES |
|
None of the Group has owned any real property in the PRC or elsewhere. |
1. | The relevant Selling Shareholder shall first give a notice in writing within 7 days after
receipt of the offer (the Transfer Notice) from any third party (Prospective Purchaser) to
CISG informing that he/she/it has received such an offer. The Transfer Notice shall specify:- |
(a) | the number of stocks which the Prospective Purchaser wishes to acquire (the
Offered Shares); |
||
(b) | the name of the Prospective Purchaser; |
||
(c) | the price which the Prospective Purchaser has offered for the Offered Shares
(if any); and |
||
(d) | details of any other material terms of the offer made by the Prospective
Purchaser (if any) and any other material terms or circumstances known to the relevant
Selling Shareholder which affect or may affect the offer. |
2. | CISG (Purchasing Shareholder) may within a period of 15 Business Days after receipt of the
Transfer Notice require the relevant Selling Shareholder to sell the Relevant Shares to CISG
under the same terms and conditions. |
|
3. | None of the Existing Shareholders shall Transfer or agree to transfer or enter into any
arrangement for the transfer of the Offered Shares or any part thereof to the Prospective
Purchaser or its nominees unless the provisions set out herein have been duly complied with. |
(a) Total Issue Price: | Subscription Consideration | |||
(b) Dividends: | The registered holders of the Preference Shares shall have the same entitlement to the dividends as that of the registered holders of the Ordinary Shares. | |||
(c) Liquidation Preference
|
(1) | In the event of any Liquidation Event: | ||
(i) | the holders of the Preference Shares shall be entitled to receive, prior to any distribution to the holders of the Ordinary Shares or any other class or series of Shares: | |||
(I) an amount per Preference Share (as adjusted for any share splits, share dividends, combinations, recapitalizations or the like) as calculated as follows: | ||||
= Subscription Consideration/ [[69,250] + Number of Additional Preference Shares issued (if any)]; | ||||
(II) all accrued or declared but unpaid dividends on the Preference Shares; and | ||||
(III) interest on both (I) and (II) at an interest rate of [30]% per annum accrued from Closing Date to the date of Liquidation Event | ||||
((I), (II) and (III) collectively referred to as the Preference Amount). | ||||
If upon such liquidation, dissolution or winding up of the Company, the assets available to be distributed among the holders of Preference Shares shall be insufficient to permit the payment in full of the Preference Amount, the entire assets of the Company to be distributed shall be distributed ratably among the holders of the Preference Shares; and | ||||
(ii) | after the distribution of the aforementioned Preference Amount, any remaining funds or assets of the Company legally available for distribution to shareholders shall be distributed pro rata among the holders of the Preference Shares (on an as-converted basis) together with the holders of the Ordinary Shares. |
(2) | For the purpose of this Schedule, Liquidation Events shall mean liquidation, dissolution or winding up of the Company, either voluntary or involuntary, and be deemed to include any merger, acquisition or sale of voting control of the Company as a result of which its existing shareholders will not retain a majority of the voting power in the new controlling entity of the Group, a sale of all or substantial part of the Companys assets. | |||
(d) Voting Rights: | The registered holders of the Preference Shares shall have the same voting rights as those of the registered holders of the Ordinary Shares at any general meeting of the Company. | |||
(e) Redemption: | CISG shall have the right to demand the Company to redeem the Preference Shares held by CISG for cash at RMB 400 million (or the USD equivalent to RMB 400 million at such an exchange rate to be quoted by the remitting bank at the date when redemption shall be made by the Company) prior to the occurrence of IPO. | |||
(f) Profit Entitlement | CISG shall be entitled to all of the dividend or other distribution of the profit of the Group prior to the occurrence of IPO and CISG shall have the right to demand the Company to pay to CISG the dividend or other distribution of profit prior to the occurrence of IPO. |
(1) | INSCOM HOLDING LIMITED |
(2) | INSCOM GROUP LIMITED |
(3) | INSCOM HK LIMITED |
(4) | APOLLO & MUSE HOLDING LIMITED |
(5) | CLEVER STAR HOLDINGS LIMITED |
(6) | CISG HOLDINGS LTD. |
(7) | WANG STRATEGIC CAPITAL PARTNERS (II) LIMITED |
(8) | HARBOR PACIFIC CAPITAL PARTNERS I, LP |
(1) | INSCOM HOLDING LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584021) whose registered office is situated at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the Company); |
(2) | INSCOM GROUP LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584027) whose registered office is situated at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (INSCOM BVI); |
(3) | INSCOM HK LIMITED, a company incorporated under the laws of the HKSAR (under company number
1457225) whose registered office is situated at 12/F Ruttonjee House, 11 Duddell Street,
Central, Hong Kong. (INSCOM HK); |
(4) | APOLLO & MUSE HOLDING LIMITED, a company incorporated under the laws of British Virgin
Islands (under company number 1584020) whose registered office is situated at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (Apollo); |
(5) | CLEVER STAR HOLDINGS LIMITED, a company incorporated under the laws of British Virgin Islands
(under company number 1593866) whose registered office is situated at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (CSH); |
(6) | CISG HOLDINGS LTD., a company incorporated under the laws of the British Virgin Islands
(under company number 599853) whose registered office is situated at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (CISG) |
(7) | WANG STRATEGIC CAPITAL PARTNERS (II) LIMITED, an exempted limited liability company
incorporated under the laws of Cayman Islands (under company number 177120) whose registered
office is situated at Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand
CaymanKY1-9002, Cayman Islands (WSCP); |
(8) | HARBOR PACIFIC CAPITAL PARTNERS I, LP, an exempted limited partnership registered in the
Cayman Islands (under registration number QH-37645) whose registered office is situated at c/o
Mourant Cayman Corporate Services Ltd, Harbour Center, 42 North Church Street, P.O. Box 1348,
George Town, Grand Canyon KY1-1108, Cayman Islands (HPC); and |
(1) | By a subscription and shares purchase and shareholders agreement dated 29 July 2010 (the
1st Agreement ) entered into between, inter alia, the Company and the Continuing
Parties, the parties thereto have agreed to regulate the business, affairs and management of
the Company and the relationship between the parties thereto upon the terms and conditions
therein contained. A copy of the 1st Agreement is now attached to this Deed and
marked Exhibit A. |
(2) | Pursuant to a subscription and shares purchase agreement (SPA) dated on or about the same
date as this Deed entered into by the Company, INSCOM BVI, INSCOM HK, Apollo, CSH, WSCP and
HPC, (i) WSCP and HPC have agreed to subscribe and the Company has agreed to issue and allot
to each of WSCP and HPC 60 Ordinary Shares of US$1.00 each in the Company and (ii) Apollo has
agreed to sell and WSCP and HPC have agreed to each purchase 115 Ordinary Shares of US$1.00
each in the Company. |
(3) | Completion of the subscription and shares purchase pursuant to the SPA (Completion) shall
take place immediately after execution of this Deed by the parties hereto, whereupon the New
Parties shall become the beneficial and legal owner and holders of the Subscription Shares and
Sale Shares (as defined in the SPA). |
(4) | This Deed is made subject to all terms and conditions set out in the 1st
Agreement. |
1. | Unless otherwise defined in this Deed, terms and expressions used in this Deed shall have the
same meanings ascribed to them in the 1st Agreement. |
2. | Pursuant to Section 12.2 of the 1st Agreement, the Company and the Continuing
Parties hereby agree to amend the Closing Date under the 1st Agreement to in any
event shall not be later than 1 November 2010. In other words, all Closing conditions set out
in Section 5.1 thereto shall be fulfilled or waived by written agreement of the Subscriber or
CISG on or before 1 November 2010 in accordance with the same section. |
3. | The New Parties confirm that they have each read a copy of the 1st Agreement and
hereby covenant with the Company and the Continuing Parties that with effect from Completion,
the New Parties shall perform, assume, comply with and be bound by all the terms, covenants,
obligations and provisions in the 1st Agreement as if the New Parties were original
parties to the 1st Agreement. Specifically, the New Parties will have the same
rights and obligations as CSH under Sections 8.2, 8.3, Articles IX and X of the 1st
Agreement. |
4. | A strategic committee (the Strategic Committee) shall be set up under the supervision of
the board of directors of the Company. Unless otherwise agreed by CISG, the Strategic
Committee shall consist of six (6) committee members of whom four (4) shall be appointed by
CISG, one (1) shall be appointed by Apollo and one (1) shall be appointed by WSCP and HPC
jointly. |
5. | For the purpose of Clause 12.1 of the 1st Agreement, the correspondence details
of the New Parties are as follows:- |
If to WSCP: |
||
Address:
|
31st Floor, China United Center, 28 Marble Road, North Point, HKSAR | |
Fax No.:
|
852-31071233 | |
Attention:
|
Mr. Sing Wang and Ms. Ka Yik Kwok | |
If to HPC: |
||
Address:
|
525 University Avenue, Suite 100, | |
Palo Alto, California 94301, USA. | ||
Fax No.:
|
+1-650-322-8092 | |
Attention:
|
Mr. Stuart Kwok and Mr. Kent Ho |
6. | Save as varied or supplemented by this Deed, the 1st Agreement shall remain in
full force and effect. |
7. | This Deed is governed by the laws of Hong Kong Special Administrative Region and any dispute,
controversy or claim arising out of or relating to this Deed, or any breach, termination or
invalidity thereof, shall be settled in the manner as described in the Article XI of the
1st Agreement. |
8. | With effect from the date of this Deed, this Deed together with the 1st Agreement
shall be construed as one instrument, but in the event of any conflict between this Deed and
the 1st Agreement, the provisions of this Deed shall prevail. |
9. | In the event of any conflict between this Deed and the SPA, the provisions of this Deed shall
prevail. |
10. | This Deed may be executed by the parties hereto in any number of counterparts and on separate
counterparts, each of which when so executed shall be deemed to be an original but all of
which shall constitute one and the same instrument and is binding on all parties hereto. |
INCOM
HK |
||||||
SIGNED, SEALED and DELIVERED
|
) | |||||
by TIAN YUAN
|
) | /s/ Tian Yuan | ||||
for and on behalf of
|
) | [Seal is affixed] | ||||
INSCOM HK LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Xiao Fei |
||||||
INCOM BVI |
||||||
SEALED with the COMMON SEAL of
|
) | |||||
INSCOM GROUP LIMITED
|
) | |||||
and signed by
|
) | /s/ Tian Yuan | ||||
TIAN YUAN
|
) | [Common Seal is affixed] | ||||
in the presence of
|
) | |||||
/s/ Xiao Fei |
||||||
CSH |
||||||
SEALED with the COMMON SEAL of
|
) | |||||
CLEVER STAR HOLDINGS LIMITED
|
) | |||||
and signed by
|
) | /s/ Feng Zhuojun | ||||
FENG ZHUOJUN
|
) | [Common Seal is affixed] | ||||
in the presence of
|
) | |||||
/s/ Zhu Jiusheng |
||||||
CISG |
||||||
SEALED with the COMMON SEAL of
|
) | |||||
CISG HOLDINGS LTD.
|
) | |||||
and signed by
|
) | /s/ Hu Yinan | ||||
HU YINAN
|
) | [Common Seal is affixed] | ||||
in the presence of
|
) | |||||
/s/ Zhu Jiusheng |
Apollo |
||||||
SEALED with the COMMON SEAL of
|
) | |||||
APOLLO & MUSE HOLDING LIMITED
|
) | |||||
and signed by
|
) | /s/ Tian Yuan | ||||
TIAN YUAN
|
) | [Common Seal is affixed] | ||||
in the presence of
|
) | |||||
/s/ Xiao Fei |
||||||
WSCP |
||||||
SEALED with the COMMON SEAL of
|
) | |||||
WANG STRATEGIC CAPITAL
|
) | |||||
PARTNERS (II) LIMITED
|
) | |||||
and signed by
|
) | /s/ Wang Sing | ||||
WANG SING
|
) | |||||
in the presence of
|
) | |||||
/s/ Rebecca |
||||||
HPC |
||||||
SEALED with the COMMON SEAL of
|
) | |||||
Harbor Pacific Capital LLC as general partner of
|
) | |||||
HARBOR PACIFIC CAPITAL
|
) | |||||
PARTNERS I, LP
|
) | |||||
and signed by
|
) | /s/ Stuart Kwok | ||||
STUART KWOK
|
) | |||||
in the presence of
|
) | |||||
/s/ Bonwoong Koo |
||||||
The Company |
||||||
SEALED with the COMMON SEAL of
|
) | |||||
INSCOM HOLDING LIMITED
|
) | |||||
and signed by
|
) | /s/ Tian Yuan | ||||
TIAN YUAN
|
) | [Common Seal is affixed] | ||||
in the presence of
|
) | |||||
/s/ Xiao Fei |
(1) | INSCOM HOLDING LIMITED |
(2) | INSCOM GROUP LIMITED |
(3) | INSCOM HK LIMITED |
(4) | APOLLO & MUSE HOLDING LIMITED |
(5) | CLEVER STAR HOLDINGS LIMITED |
(6) | WANG STRATEGIC CAPITAL PARTNERS (II) LIMITED |
(7) | HARBOR PACIFIC CAPITAL PARTNERS I, LP |
(1) | INSCOM HOLDING LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584021) whose registered office is situated at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (the Company); |
(2) | INSCOM GROUP LIMITED, a company incorporated under the laws of the British Virgin Islands
(under company number 1584027) whose registered office is situated at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (INSCOM BVI); |
(3) | INSCOM HK LIMITED, a company incorporated under the laws of the HKSAR (under company number
1457225) whose registered office is situated at 12/F Ruttonjee House, 11 Duddell Street,
Central, Hong Kong. (INSCOM HK); |
(4) | APOLLO & MUSE HOLDING LIMITED, a company incorporated under the laws of British Virgin
Islands (under company number 1584020) whose registered office is situated at P.O. Box 957,
Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (Apollo); |
(5) | CLEVER STAR HOLDINGS LIMITED, a company incorporated under the laws of British Virgin Islands
(under company number 1593866) whose registered office is situated at P.O. Box 957, Offshore
Incorporations Centre, Road Town, Tortola, British Virgin Islands (CSH); |
(6) | WANG STRATEGIC CAPITAL PARTNERS (II) LIMITED, an exempted limited liability company
incorporated under the laws of Cayman Islands (under company number 177120) whose registered
office is situated at Walkers SPV Limited, Walker House, 87 Mary Street, George Town, Grand
CaymanKY1-9002, Cayman Islands (WSCP); and |
(7) | HARBOR PACIFIC CAPITAL PARTNERS I, LP, an exempted limited partnership registered in the
Cayman Islands (under registration number QH-37645) whose registered office is situated at c/o
Mourant Cayman Corporate Services Ltd, Harbour Center, 42 North Church Street, P.O. Box 1348,
George Town, Grand Cayman KY1-1108, Cayman Islands (HPC). |
(A) | The Company is a private limited company incorporated and subsisting under the laws of the
British Virgin Islands and as at the date hereof has an authorized capital of US$10,000,000
divided into 8,000,000 ordinary shares of US$1.00 each and 2,000,000 preference shares of
US$1.00 each, of which 10,000 Ordinary Shares have been issued
and fully paid. Corporate information of the Company is set out in Schedule 1 to this
Agreement.
|
2
(B) | As at the date hereof, the Company is the legal and beneficial owner of the entire issued
share capital of INSCOM BVI, which in turn owns the entire issued share capital of INSCOM HK.
Corporate information of INSCOM BVI and INSCOM HK is set out in Schedules 3A and 3B
respectively to this Agreement. INSCOM HK owns the entire equity interests in
(Ying Si Kang) as at the date hereof, which is a wholly
foreign owned enterprise incorporated in PRC. Corporate information of Ying Si Kang is set out
in Schedule 3C to this Agreement. Through the structure of variable interests entities
(VIE), Ying Si Kang has exercised effective control and management over the following two
PRC companies: - |
(i) | (SZ Xinbao Investment); and |
||
(ii) | (SZ InsCom E-Commerce). |
(C) | Pursuant to the Subscription and Shares Purchase and Shareholders Agreement dated 29 July
2010 entered into by the Company, INSCOM BVI, INSCOM HK, Apollo, CSH and CISG Holdings Ltd
(CISG), immediately upon closing of the subscription and shares purchase as defined in such
agreement, CISG shall procure its beneficial equity interests in the following PRC companies
be transferred to Ying Si Kang or its associated companies in the PRC: - |
(i) | (HN Fanhua Anlian Insurance); |
||
(ii) | (HZ Fanhua Zhixin Insurance); |
||
(iii) | (TJ Fanhua Xianghe Insurance); |
||
(iv) | (FZ Fanhua Guoxin Insurance); |
||
(v) | (CS Lianyi Insurance); and |
||
(vi) | (NB Baolian Insurance). |
(D) | As at the date hereof, Apollo is legal and beneficial owner of 7,788 Ordinary Shares of the
Company constituting 77.88% of the entire issued share capital of the Company. Apollo has
agreed to sell and each of WSCP and HPC has agreed to purchase the Sale Shares (as defined
below) in accordance with the terms of this Agreement. |
(E) | Pursuant to the Subscription and Shares Purchase and Shareholders Agreement dated 29 July
2010 entered into by the Company, INSCOM BVI, INSCOM HK, Apollo, CSH and CISG, (i) CISG has
agreed to subscribe and the Company has agreed to issue and allot to CISG 69,250 Preference
Shares of US$1.00, and (ii), Apollo has agreed to sell and CISG has agreed to purchase 6,588
Ordinary Shares of US$1.00 each, the closing
of which is to take place no later than 1 October 2010, which is subsequently amended to 1
November ,2010 by a deed of adherence. |
3
(F) | Each of WSCP and HPC has agreed to subscribe and the Company has agreed to issue and allot to
each of WSCP and HPC such number of Subscription Shares (as defined below) in accordance with
the terms of this Agreement. |
(G) | The Parties are desirous of entering into this Agreement to set out the terms and conditions
of the Subscription and Shares Purchase. |
4
5
6
7
(a) | Representations and Warranties. The representations and warranties of each of the
Parties contained in Section 6.1 of this Agreement shall be true and correct in all material
respects on and as of the Closing Date with the same effect as though made again on and as of
such date. |
(b) | Performance of Obligations. Each of the other Parties shall have performed and
complied in all material respects with all obligations and covenants required to be performed
or complied with by it on or prior to the Closing Date. |
8
(c) | No Government Injunction/Consents from Governmental Authority. There is not any
pending or threatened action, proceeding or investigation that seeks any governmental
injunction or restraining order issued by a court of competent jurisdiction against the
Company and/or any member of the Group. All consents, permits from relevant Governmental
Authority as well as all third party consents which are legally required for completion of the
Subscription and Shares Purchase having been duly obtained. |
(d) | No Material Adverse Change. There shall not have occurred any material adverse
change in the financial markets, governmental regulations and business environment in China.
WSCP and HPC being satisfied that consummation of any of the transactions contemplated by this
Agreement would not produce a material adverse effect on the Group or the business of the
Group. |
(e) | Deed of Adherence. Parties and CISG shall enter into a deed of adherence pursuant to
which WSCP and HPC shall agree to be bound by all the restrictions of and to discharge all
duties and obligation as set out in the subscription and shares purchase and shareholders
agreement dated 29 July 2010 as if they were original parties thereto. Specifically, WSCP and
HPC shall have the same rights and obligations as CSH under Sections 8.2, 8.3, Articles IX and
X of the subscription and shares purchase and shareholders agreement dated 29 July 2010. Such
deed of adherence shall be in such form as the other parties shall reasonably require. |
(f) | Waiver of Rights of First Refusal. Apollo shall, in respect of the sale of Shares by
WSCP, HPC and Apollo as a result of exercising of the put option pursuant to the terms of the
Put Option Agreement, procure, in writing, the waiver of any restrictions on the sale of
Shares held in the name of Apollo, WSCP and HPC which exist in relation to CISGs rights,
including right of first refusal, arising out of or in connection with the subscription and
shares purchase and shareholders agreement dated 29 July 2010 or otherwise. |
(g) | Put Option Agreement and documents ancillary to the Put Option Agreement. The Put
Option Agreement and any ancillary document to the Put Option Agreement including without
limitation, the Equitable Share Mortgage and the agreement amongst Mr. Tian Yuan, WSCP and
HPC, shall be duly executed by all parties thereto. |
(h) | Consent and approval for execution of the Equitable Share Mortgage. Apollo shall,
(i) pursuant to Section 8.1 of the subscription and shares purchase and shareholders agreement
dated 29 July 2010, obtain the written consent and approval from CISG for the execution and
performance by Apollo of the Equitable Share Mortgage; and, (ii) pursuant to Section 6.1(e) of
this Agreement, obtain approval from the Board of Directors authorizing the execution and
performance by Apollo of the Equitable Share Mortgage. |
(i) | Authority for Apollo to execute the Put Option Agreement, the Equitable Share Mortgage
and ancillary documents. Apollo shall obtain (i) approval from the board of directors
authorizing the execution and performance by Apollo of all documents contemplated hereunder,
in connection with or ancillary to this Agreement and/or the Share Purchase and the
Subscription including, without limitation, the Put Option Agreement and the Equitable Share
Mortgage; (ii) approval from the shareholders of
the Apollo authorizing and approving the execution and performance by Apollo of all
documents contemplated hereunder, in connection with or ancillary to this Agreement and/or
the Share Purchase and the Subscription including, without limitation, the Put Option
Agreement and the Equitable Share Mortgage. |
9
(a) | Companys Obligations. Subject to satisfaction of all the conditions set out in
Section 5.1, Closing shall take place on the Closing Date. At Closing and in so far as the
Subscription is concerned, the Company shall procure the Company to deliver to each of WSCP
and HPC:- |
(i) | duly executed sealed share certificate(s) issued in the name of each of WSCP
and HPC or its respective nominee(s) in respect of the Subscription Shares in favor of
WSCP and HPC and/ or its respective nominee(s); |
(ii) | certified true copies of the board resolutions as referred to in Section
5.2(c); and |
(iii) | such other documents (including any power of attorney under which any document
required to be delivered under this Section shall have been executed and any waivers or
consents) as WSCP and HPC may require to enable WSCP and HPC and/or its respective
nominee(s) to be registered as holders of the Subscription Shares. |
(b) | Apollos Obligations. Subject to satisfaction of all the conditions set out in
Section 5.1, Closing shall take place on the Closing Date. At Closing and in so far as the
Shares Purchase is concerned, Apollo shall cause to deliver to each of WSCP and HPC: |
(i) | originals of duly executed Put Option Agreement, the Equitable Share Mortgage
and an agreement to be executed by Mr. Tian Yuan; |
(ii) | a certified copy of the duly passed resolutions of the board of directors of
the Apollo authorizing and approving the execution and performance by Apollo of the Put
Option Agreement and the Equitable Share Mortgage; |
10
(iii) | a certified copy of the duly passed resolutions of the shareholders of the Apollo
authorizing and approving the execution and performance by Apollo of the Put Option
Agreement and the Equitable Share Mortgage; |
(iv) | written consent and approval of CISG for the execution and performance by
Apollo of the Put Option Agreement and Equitable Share Mortgage; |
(v) | originals of the waiver duly signed by CISG referred to in Section 5.1 (f); |
||
(vi) | original share certificate(s) in respect of the Sale Shares; |
(vii) | the duly completed and executed instrument(s) of transfer and sold notes by
Apollo in favor of each of WSCP and HPC or its respective nominee(s) in respect of the
Sale Shares ; |
(viii) | a copy of the Companys register of members, certified by a director of the Company
as true and complete as of the Closing Date, updated to show each of WSCP and HPC or
its respective nominee(s) as the holder of the Sale Shares of the Company; and |
(ix) | a certified copy of the written resolutions of the directors of Apollo
authorizing the Share Purchase. |
(c) | Board Resolutions of the Company. On or prior to Closing, the Company shall pass and
the Existing Shareholders shall cause the Company to pass board resolutions to the effect
that: |
(i) | the execution and performance by Apollo under the Equitable Share Mortgage is
authorized and approved |
(ii) | the Subscription Shares be allotted and issued to each of WSCP and HPC on the
Closing Date, for cash at the Subscription Consideration; |
(iii) | the transfer of the Sale Shares shall be approved for registration and the
relative share certificates issued to each of WSCP and HPC or its respective
nominee(s); |
(iv) | each of WSCP and HPC or its respective nominee(s) be entered into the register
of members of the Company as holders of the Subscription Shares and the Sale Shares;
|
11
(a) | Corporate Status, Power and Authority. Such Party has full power and authority
(corporate or otherwise) to enter into and perform its/his obligations under this Agreement. |
(b) | Authorization and Enforceability. The execution and delivery of this Agreement and
the performance of the obligations hereunder has been duly authorised (corporate or otherwise)
by such Party and this Agreement constitutes valid and binding obligation of such Party,
enforceable against such Party in accordance with its terms. |
(c) | Regulatory Approvals. No consent, waiver, approval or authorization of any
Governmental Authority or any filing, registration or qualification with or notice to, any
Governmental Authority is required on the part of such Party in connection with such Partys
execution or delivery of this Agreement or the performance of any of its obligations
hereunder. |
(d) | Litigation. To the best knowledge of such Party after having made due inquiry, there
are no judicial or administrative actions, proceedings or investigations pending or threatened
against such Party that questions the validity, binding nature and enforceability of this
Agreement or the ability of such Party to perform the obligations under this Agreement. |
(e) | Encumbrances. Unless with the unanimous consent of the board of directors, each of
the Company Shareholders warrants and undertakes that they shall not mortgage, charges,
pledge, lien or have other form of security or encumbrance on, over or affecting any of their
equity interest in the Company. |
(a) | In consideration of WSCP and HPC entering into this Agreement, each of the Company, the
Existing Shareholders hereby:- |
(i) | warrants, represents and undertake to WSCP and HPC that on the date hereof and
as of the Closing Date, each statement set out in this Article is true, accurate and
not misleading; |
(ii) | warrants, represents and undertakes to WSCP and HPC that the entry into and
performance of this Agreement by the Parties (other than WSCP and HPC) will not be
contrary to any applicable law; |
(b) | The Warranties shall be separate and independent and save as expressly provided shall not be
limited by reference to any other section or anything in this Agreement or the Schedules. |
(c) | The Warranties shall be deemed to be repeated as at the Closing Date as if all references
therein to the date of this Agreement were references to the Closing Date. |
12
(a) | The number of arbitrators shall be 3, one of whom shall be appointed by the Party asserting a
claim against the other Party(ies), one of whom shall be appointed by the Party(ies), as the
case may be, against whom a claim has been asserted, and the third of whom shall be selected
by mutual agreement, if possible, within 30 days of the selection of the second arbitrator and
thereafter by the administering authority. In the event the Party against whom a claim has
been asserted fails to appoint the second arbitrator within 15 days after the first arbitrator
is appointed by the Party asserting a claim, then the administering authority shall select the
second and third arbitrators after expiration of the said 15 days. |
(b) | The arbitration shall be conducted in English and any foreign language documents presented at
such arbitration shall be accompanied by an English translation thereof. The arbitration shall
be held in HKSAR. |
(c) | Any award of the arbitrators (i) shall be in writing, (ii) shall state the reasons upon which
such award is based and (iii) may include an award of costs, including reasonable attorneys
fees and disbursements. |
(d) | Any Party may make an application to the arbitrators seeking injunctive relief to maintain
the status quo until such time as the arbitration award is rendered or the dispute,
controversy or claim is otherwise resolved. Any Party may apply to any court having
jurisdiction hereof and seek injunctive relief in order to maintain the status quo until such
time as the arbitration award is rendered or the dispute, controversy or claim is otherwise
resolved. |
13
If to INSCOM HK: |
||
Address:
|
||
Fax No.:
|
0755-83521432 | |
Attention:
|
Mr. Tian Yuan () | |
If to INSCOM BVI: |
||
Address:
|
||
Fax No.:
|
0755-83521432 | |
Attention:
|
Mr. Tian Yuan () | |
If to the Company: |
||
Address:
|
||
Fax No.:
|
0755-83521432 | |
Attention:
|
Mr. Tian Yuan () | |
If to Apollo: |
||
Address:
|
||
Fax No.:
|
0755-83521432 | |
Attention:
|
Mr. Tian Yuan () | |
If to CSH: |
||
Address:
|
||
Fax No.:
|
020-61262893 | |
Attention:
|
Ms. Feng Zhuo Jun () | |
If to WSCP: |
||
Address:
|
31st Floor, China United Center, 28 Marble Road, North Point, HKSAR | |
Fax No.:
|
852-31071233 | |
Attention:
|
Mr. Sing Wang and Ms. Ka Yik Kwok | |
If to HPC: |
||
Address:
|
525 University Avenue, Suite 100, Palo Alto, California 94301, USA. |
|
Fax No.:
|
+1-650-322-8092 | |
Attention:
|
Mr. Stuart Kwok and Mr. Kent Ho |
14
15
16
INSCOM HK |
||||||
SIGNED BY: Tian Yuan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM HK LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Xiao Fei |
||||||
INSCOM BVI |
||||||
SIGNED BY: Tian Yuan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM GROUP LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Xiao Fei |
||||||
The Company |
||||||
SIGNED BY: Tian Yuan
|
) | |||||
a director, for and on behalf of
|
) | /s/ Tian Yuan | ||||
INSCOM HOLDING LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Xiao Fei |
||||||
Apollo |
||||||
SIGNED BY: Tian Yuan
|
) | |||||
for and on behalf of
|
) | /s/ Tian Yuan | ||||
APOLLO & MUSE HOLDING Limited
|
) | |||||
in the presence of |
||||||
/s/ Xiao Fei |
17
CSH |
||||||
SIGNED BY: Feng Zhuojun
|
) | |||||
a director, for and on behalf of
|
) | /s/ Feng Zhuojun | ||||
CLEVER STAR HOLDINGS LIMITED
|
) | |||||
in the presence of
|
) | |||||
/s/ Zhu Jiusheng |
||||||
WSCP |
||||||
SIGNED BY: Wang Sing
|
) | |||||
a director, for and on behalf of
|
) | /s/ Wang Sing | ||||
WANG STRATEGIC CAPITAL
|
) | |||||
PARTNERS (II) LIMITED in the presence of
|
) | |||||
/s/ Rebecca |
||||||
HPC |
||||||
SIGNED BY: Stuart Kwok
|
) | |||||
a director, for and on behalf of
|
) | /s/ Stuart Kwok | ||||
Harbor Pacific Capital LLC
|
) | |||||
as a general partner of
|
) | |||||
HARBOR PACIFIC CAPITAL
|
) | |||||
PARTNERS I, LP in the presence of
|
) | |||||
/s/ Bonwoong Koo |
18
(1) Name of the Company
|
: | InsCom Holding Limited | ||
(2) Company No.
|
: | 1584021 | ||
(3) Date of Incorporation
|
: | 7 May 2010 | ||
(4) Place of Incorporation
|
: | British Virgin Islands | ||
(5) Registered Address
|
: | P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands |
||
(6) Directors
|
: | Yuan Tian | ||
(7) Authorized Share Capital
|
: | US$10,000,000 divided into 8,000,000 ordinary shares of US$1.00 each and 2,000,000 preference shares of US$1.00 each |
||
(8) Issued Share Capital
|
: | US$10,000 | ||
(9) Shareholders |
Name of Shareholder(s) | No. of Shares | Percentage holdings | ||||||
Apollo & Muse Holding Limited |
7,788 ordinary | 77.88 | % | |||||
Clever Star Holdings Limited |
2,212 ordinary | 22.12 | % |
19
20
(1) Name of the Company
|
: | InsCom Group Limited | ||
(2) Company No.
|
: | 1584027 | ||
(3) Date of Incorporation
|
: | 7 May 2010 | ||
(4) Place of Incorporation
|
: | British Virgin Islands | ||
(5) Registered Address
|
: | P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands |
||
(6) Directors
|
: | Yuan Tian | ||
(7) Authorized Share Capital
|
: | 50,000 shares of single class each with a par value US$1.00 |
||
(8) Issued Share Capital
|
: | US$1.00 | ||
(9) Shareholders |
Name of Shareholder(s) | No. of Shares | Percentage holdings | ||||||
InsCom Holding Limited |
1 | 100 | % |
21
(1) Name of the Company
|
: | InsCom HK Limited | ||
(2) Company No.
|
: | 1457225 | ||
(3) Date of Incorporation
|
: | 17 May 2010 | ||
(4) Place of Incorporation
|
: | Hong Kong | ||
(5) Registered Address
|
: | 12/F Ruttonjee House, 11 Duddell Street, Central, Hong Kong |
||
(6) Directors
|
: | Yuan Tian | ||
(7) Issued Share Capital
|
: | HK$1.00 | ||
(8) Shareholders |
Name of Shareholder(s) | No. of Shares | Percentage holdings | ||||||
InsCom Group Limited |
1 | 100 | % |
22
(1) Name of the Company
|
: | Ying Si Kang Information Technology (Shenzhen) Co., Ltd |
||
(2) License No.
|
: | 440301503378995 | ||
(3) Date of Incorporation
|
: | 15 July 2010 | ||
(4) Place of Incorporation
|
: | PRC | ||
(5) Registered Address
|
: | 2108-2110-35 Tower A, Jiahe Huaqiang Buiding, Shennan Road, Futian District, Shenzhen |
||
(6) Legal Representative
|
: | Yuan Tian | ||
(7) Registered Capital
|
: | US$1,200,000.00 | ||
(8) Shareholders |
Name of Shareholder(s) | Percentage holdings | |||
InsCom HK Limited |
100 | % |
23
(1) Name of the Company
|
: | Shenzhen Xinbao Investment Co., Ltd | ||
(2) License No.
|
: | 440301104741339 | ||
(3) Date of Incorporation
|
: | 12 June 2010 | ||
(4) Place of Incorporation
|
: | PRC | ||
(5) Registered Address
|
: | 2108-2110-28 Tower A, Jiahe Huaqiang Buiding, Shennan Road, Futian District, Shenzhen |
||
(6) Legal Representative
|
: | Yuan Tian | ||
(7) Registered Capital
|
: | RMB30,000.00 | ||
(8) Shareholders |
Name of Shareholder(s) | Percentage holdings | |||
Yuan Tian |
50 | % | ||
Fei Xiao |
50 | % |
24
(1) Name of the Company
|
: | Shenzhen InsCom E-Commerce Co., Ltd |
||
(2) License No.
|
: | 440301103498934 | ||
(3) Date of Incorporation
|
: | 2 June 2004 | ||
(4) Place of Incorporation
|
: | PRC | ||
(5) Registered Address
|
: | Unit A, 7th Floor, Olympics Building, Shangbao Road, Futian District, Shenzhen |
||
(6) Legal Representative
|
: | Yuan Tian | ||
(7) Registered Capital
|
: | RMB3,000,000.00 | ||
(8) Shareholders |
Name of Shareholder(s) | Percentage holdings | |||
Shenzhen Xinbao Investment Co., Ltd |
100 | % |
25
Article | Page | |||
1 DEFINITIONS AND INTERPRETATION |
3 | |||
2 PUT OPTION |
5 | |||
3 ENTIRE AGREEMENT |
7 | |||
4 CONFIDENTIALITY |
7 | |||
5 NOTICE AND OTHER COMMUNICATION |
8 | |||
6 GENERAL |
9 | |||
7 APPLICABLE LAW AND JURISDICTION |
10 | |||
8 ARBITRATION |
10 | |||
SCHEDULE 1 |
12 |
1
(A) | HU Yinan (PRC I.D. number: 510103196508283411)
of (the Chairman of CNinsure); and |
(B) | Apollo & Muse Holding Limited, a company incorporated and validly existing under the laws of
the British Virgin Islands with limited liability (under company number 1584020) and whose
registered office is situated at P.O. Box 957, Offshore Incorporations Centre, Road Town,
Tortola, British Virgin Islands (Apollo); and |
(C) | Wang Strategic Capital Partners (II) Limited, an exempted limited liability company
incorporated and validly existing under the laws of the Cayman Islands (under company number
177120) whose registered office is situated at Walkers SPV Limited, Walker House, 87 Mary
Street, George Town, Grand Cayman KY1-9002, the Cayman Islands (WSCP); and |
(D) | Harbor Pacific Capital Partners I, LP, an exempted limited partnership registered in and
validly existing under the laws of the Cayman Islands (under registration number QH-37645)
whose registered office is situated at c/o Mourant Cayman Corporate Services Ltd, Harbour
Center, 42 North Church Street, P.O. Box 1348, George Town, Grand Cayman KY1-1108, Cayman
Islands (HPC), |
(1) | InsCom Holding Limited (the Company), InsCom HK Limited, InsCom Group Limited, Apollo,
Clever Star Holdings Limited (CSH) and CISG Holdings Ltd (CISG) have entered into a
subscription and share purchase and shareholders agreement dated 29 July 2010 (the
1st Agreement) pursuant to which CISG shall procure the injection of certain
assets of CNinsure Inc. (CNinsure) to facilitate the Restructuring of
(INS) and (New INS) immediately upon
closing of the subscription and share purchase and to regulate their relationship as
shareholders of the Company. |
(2) | The Company, InsCom HK Limited, InsCom Group Limited, Apollo, CSH, WSCP and HPC have entered
into a subscription and share purchase agreement on
_____
October, 2010 (the 2nd
Agreement) and a deed of adherence dated
_____
October, 2010 (Deed of Adherence) pursuant to
which, among other things, each of WSCP and HPC covenants with the Company that they shall
perform, assume, comply with and be bound by the terms, covenants, obligations and provisions
in the 1st Agreement to regulate their relationship as shareholders of the
Company. Specifically, WSCP and HPC will have the same rights and obligations as CSH under
Sections 8.2, 8.3, Articles IX and X of the 1st Agreement. |
(3) | Subject to the condition that the 1st Under the condition that the 1st
_____,Agreement
is closed in accordance with the terms and conditions contained therein, Apollo, WSCP and HPC
(collectively, the Grantees) have the right to request Chairman of CNinsure to grant an
option to each of the Grantees to require Chairman of CNinsure to buy all of the shares held
by the Grantees in the Company, and Chairman of CNinsure agrees to grant each of the Grantees
an option to sell to the Chairman of CNinsure all of the shares held by the Grantees in the
Company, pursuant to the terms of this Agreement. |
2
(4) | On or about the same date of this Agreement, Mr. Tian Yuan () entered into an agreement
with WSCP and HPC undertaking to pay the difference in value between (i) the consideration
WSCP and HPC are entitled to receive if the Put Option herein is exercised and (ii) the value
of the Option Shares assuming value of the Company is 10 times the price to earnings, in the
event the Put Option is exercisable under this Agreement. Mr. Tian Yuan also undertakes in
such agreement to procure Apollo to mortgage all of its Shares in the Company in favor of WSCP
and HPC to secure Mr. Tian Yuans payment of such difference in value and performance of other
obligations as stated in that agreement. On or about the same date of this Agreement, Apollo
entered into a share mortgage in favor of WSCP and HPC mortgaging all of its Shares in the
Company in favor of WSCP and HPC (the Share Mortgage). |
1 | DEFINITIONS AND INTERPRETATION |
1.1 | In this Agreement, unless otherwise expressed or required by context: |
3
4
1.2 | The headings to the clauses of this Agreement are for ease of reference only and shall not
affect the interpretation of this Agreement. |
1.3 | References herein to Clauses and Schedules are references to clauses and schedules of or
to this Agreement. |
1.4 | In this Agreement the singular includes the plural and vice versa, words importing gender or
the neuter include both genders and the neuter and references to persons include bodies
corporate or unincorporate. |
1.5 | Unless the contrary intention appears, a reference in this Agreement to any amount that is to
be converted from RMB to USD shall be converted by reference to the middle rate for the
conversion of RMB to USD as published on the website of the Peoples Bank of China one day
prior to the day upon which such conversion is to be made. |
2 | PUT OPTION |
2.1 | If a Qualified IPO has not occurred on or prior to the third anniversary date of the date of
Closing (as defined under the 1st Agreement) pursuant to the 1st
Agreement, each of the Existing Shareholders shall, subject to Clause 2.2 below, have the
right (but not the obligation) and the option to put (the Put Option) to Chairman of
CNinsure and require Chairman of CNinsure to purchase or to cause any of his Affiliates or to
procure any third party to purchase from that Existing Shareholder all of the Shares (Option
Shares) held by that Existing Shareholder at a purchase price per Share equal to the Option
Price pursuant to the provisions of this Agreement. Notwithstanding anything contained herein,
Chairman of CNinsures maximum aggregate liability in respect of the Consideration under the
Put Option to purchase all of the Shares held by Apollo, WSCP and HPC is RMB155,760,000. In
consideration of the grant of the Put Option, each of the Existing Shareholders shall pay to
Chairman of CNinsure, on exchange of this Agreement, HK$1.00, receipt of which is
acknowledged. |
2.2 | Each of the Existing Shareholders shall have the right to exercise the Put Option at any time
between the period commencing on the third anniversary date and expiring on the fifth
anniversary date, of the date of Closing (as defined under the 1st Agreement)
pursuant to the 1st Agreement (Option Exercise Period), provided that Apollo may
only exercise its right to the Put Option if and only if both WSCP and HPC have exercised
their right to the Put Option and that each of WSCP and HPC has received the full amount of
the Consideration as defined in Clause 2.6 below. |
2.3 | Notwithstanding anything contained herein, WSCP and HPC may only exercise their respective
right to the Put Option by jointly issuing the Put Option Notice (as defined below). |
2.4 | To exercise the Put Option, the Existing Shareholder must execute and deliver a written
notice to Chairman of CNinsure, the form of which is set out in Schedule 1 (Put Option
Notice). The Put Option may be exercised at any time during the Option Exercise Period, and
if not exercised, the Put Option will expire automatically at the end of the Option Exercise
Period. |
2.5 | In the event that any Existing Shareholder shall deliver a Put Option Notice to Chairman of
CNinsure in accordance with Clause 2.4, then the same shall amount to a binding agreement for
that Existing Shareholder to sell the Shares as registered and beneficial owner and for
Chairman of CNinsure to purchase, to cause his Affiliates to purchase or to procure a third
party to purchase all of the Shares of that Existing Shareholder at the Option Price
determined in accordance with Clause 2.8 below, on and with effect from Completion, free from
all charges, liens, equities, encumbrances, claims or restrictions whatsoever and together
with all rights attaching or accruing to the Option Shares and all dividends and distributions
declared, made or paid on the Option Shares on or after Completion. |
5
2.6 | The consideration payable to each of the Existing Shareholder who has exercised the Put
Option shall equal the Option Price multiplied by the then number of Shares held by that
Existing Shareholder (Consideration). The Consideration payable by Chairman of CNinsure for
the purchase of the Shares held by the Existing Shareholder who has delivered a Put Option
Notice shall be paid, at the option of that Existing Shareholder in full in US$ in cash or
other ways as agreed by the Parties. The maximum Consideration payable by Chairman of
CNinsure for the purchase of the Shares held by WSCP and HPC, on one hand, and Apollo, on the
other hand, shall be RMB41,300,000 and RMB114,460,000, respectively. The Consideration payable
by Chairman of CNinsure for the purchase of the Shares held by Apollo shall only be made upon
fulfillment of not less than 70% of the Performance Benchmark for the year 2013 by the
Company. Each party to this Agreement shall bear its own costs, charges and expenses incurred
in the preparation and Completion of this Agreement and the stamp duty payable on the transfer
of the Option Shares. |
2.7 | The Parties agree to complete the transactions contemplated by the Put Option within 30 days
from the date of the Put Option Notice and whereupon : |
(a) | Chairman of CNinsure, his Affiliates and/or the third party purchaser (whichever
the case maybe) shall deliver to the relevant Existing Shareholder a bank draft(s) or
cash in the amount of the Consideration payable to that Existing Shareholder and/or
other forms of payment as may be agreed by the Parties; |
(b) | the relevant Existing Shareholder shall deliver a certified copy of the
resolution(s) of the board of directors of that Existing Shareholder approving and
authorizing the sale of the Shares held by that Existing Shareholder; |
(c) | if applicable, Chairman of CNinsures Affiliates and/or the third party purchaser
(whichever the case maybe) shall deliver a certified copy of the resolution(s) of the
board of directors of Chairman of CNinsures Affiliates and/or the third party purchaser
(whichever the case maybe) approving and authorizing the purchase of the Shares held by
the relevant Existing Shareholder; and |
(d) | instrument(s) of transfer duly executed by all relevant parties. |
2.8 | For the purpose of this Clause 2, Option Price means, a price that is equivalent to the
original purchase and/or issuance price of such Share plus an interest over such amount
calculated at the rate of 6 percent per annum calculated on a simple interest basis for the
period from the acquisition of such Share by the Existing Shareholder to the date of payment
of the Consideration. |
2.9 | Any of the rights, powers, discretions and consents of WSCP and HPC under this Agreement may
be exercised either by its general partner or by the management company authorised from time
to time to act on its behalf or by some other Person or Persons nominated by WSCP or HPC,
whichever the case maybe, for the time being and such manager or such Person or Persons may
enforce such rights directly as if it were a Party to this Agreement. |
2.10 | Chairman of CNinsure acknowledges that Apollo has on or about the date of this Agreement
entered into a Share Mortgage mortgaging or charging all of its Shares in the Company in favor
of WSCP and HPC. In the event that WSCP and HPC exercise their rights under the Share
Mortgage to enforce against the Shares held by Apollo in the Company, Apollo hereby
irrevocably appoints the WSCP and HPC and the persons deriving title under them (including,
but without any limitation, any receiver) jointly and also severally (with full power of
substitution and delegation) to be its attorney-in-fact (i) so as to enable WSCP and HPC to
carry out in the name of Apollo all rights and discretions to which Apollo are entitled under
this Agreement (including the execution and delivery of any documents and notices that are
required under this Agreement to be given and to date, deliver, |
6
3 | ENTIRE AGREEMENT |
4 | CONFIDENTIALITY |
4.1 | Subject to Clauses 4.2, each of the Parties shall treat as strictly confidential and not
disclose, use or release to any person any information received or obtained as a result of
entering into this Agreement (or any agreement entered into pursuant to this Agreement) before
or after Completion which relates to: |
(a) | the existence and the provisions of this Agreement; or |
||
(b) | the negotiations relating to this Agreement. |
4.2 | Clause 4.1 shall not prohibit disclosure or use of any information if and to the extent: |
(a) | the disclosure or use is required by law, any regulatory body or any recognised
stock exchange; |
(b) | the disclosure or use is required to vest the full benefit of this Agreement in
any of the Parties; |
(c) | the disclosure or use is required for the purpose of any judicial proceedings
arising out of this Agreement or any other agreement entered into under or pursuant to
this Agreement or the disclosure is made to a tax authority in connection with
tax-related affairs of the disclosing party; |
(d) | the disclosure is made to professional advisers or actual or potential financiers
of any Party on terms that such professional advisers or financiers undertake to comply
with the provisions of Clause 4.1 in respect of such information as if they were a Party
to this Agreement; |
7
(e) | the information is or becomes publicly available (other than by breach of this
Agreement); or |
(f) | the other Parties have given prior written approval (not to be delayed or
withheld unreasonably) to the disclosure or use, provided that prior to disclosure or
use of any information pursuant to Clause 4.2(a), 4.2(b) or 4.2(c) except in the case of
disclosure to a tax authority, the Party concerned shall promptly notify the other
Parties of such requirement with a view to providing other Parties with the opportunity
to contest such disclosure or use or otherwise to agree the timing and content of such
disclosure or use. |
5 | NOTICE AND OTHER COMMUNICATION |
5.1 | Any notice or other communication to be given under this Agreement shall be in writing and
may be given by hand, by post, facsimile or electronic mail to the following address/number of
the Party to be served or to such other address/number as shall be notified by such Party to
the other in writing :- |
HU Yinan |
||
Address
|
||
Facsimile No. :
|
[020-61262893] | |
Email Address :
|
huyn@cninsure.net | |
Apollo |
||
Address :
|
||
Attention :
|
Mr. Tian Yuan () | |
Facsimile No. :
|
0755-83521432 | |
Email Address :
|
waynetian@instech.com.cn | |
WSCP |
||
Address :
|
31/F, China United Center, 28 Marble Road, North Point, Hong Kong | |
Attention :
|
Mr. Sing Wang and Ms. Ka Yik Kwok | |
Facsimile No. :
|
(852)31071233 | |
Email Address :
|
kyliekwok@amerinvest.com.hk | |
sing@amerinvest.com.hk |
8
HPC |
||
Address :
|
525 University Avenue, Suite 100, | |
Palo Alto, California 94301, USA. | ||
Attention :
|
Mr. Stuart Kwok and Mr. Kent Ho | |
Facsimile No. :
|
+1-650-322-8092 | |
Email Address :
|
stuart@harborpac.com | |
kent@harborpac.com |
5.2 | Any such notice or communication shall be sent to the Party to whom it is addressed and must
contain sufficient reference and/or particulars to render it readily identifiable with the
subject-matter of this Agreement. If so given by hand, facsimile or electronic mail, such
notice or communication shall be deemed received on the date of dispatch provided (where
appropriate) the relevant answerback or remote terminal identification is received and if so
sent by post shall be deemed received 2 Business Days after the date of dispatch or, if sent
to an address outside of Hong Kong and sent by first class air-mail, shall be deemed received
7 Business Days after the date of dispatch. |
6 | GENERAL |
6.1 | No waiver of any provision of this Agreement shall be effective unless set forth in a written
instrument signed by the Party waiving such provision. No failure or delay by a Party in
exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of the same preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. Without limiting the
foregoing, no waiver by a Party of any breach by any other Party of any provision hereof shall
be deemed to be a waiver of any subsequent breach of that or any other provision hereof. The
rights and remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law. |
6.2 | The waiver, express or implied, by any Party of any right under this Agreement or any failure
to perform or breach by another Party shall not constitute or be deemed a waiver of any other
right under this Agreement. |
6.3 | No amendment, change or addition hereto shall be effective or binding on any Party unless
reduced to writing and executed by all the Parties for the time being. |
6.4 | No Party to this Agreement may assign or transfer any of its rights or delegate any of its
obligations under this Agreement without the express prior written consent of the other
Parties. Any purported transfer in contravention of this Clause 6.4 shall be null and void ab
initio. |
6.5 | This Agreement may be executed in several counterparts (whether original or facsimile
counterparts) and, upon due execution of all such counterparts by one or more Parties, each
counterpart shall be deemed to be an original hereof, and all such counterparts shall together
constitute one and the same instrument. |
9
6.6 | If any provision of this Agreement is or at any time becomes invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not be affected or impaired thereby. |
6.7 | This Agreement shall inure to the benefit of and be binding upon the Parties and their
respective successors and permitted assigns. No party shall take any steps to assign,
transfer, charge or otherwise deal with all or any of its rights and/or obligations under or
pursuant to this Agreement without the prior written consent of the other parties. In the
absence of the prior written consent of the parties, this Agreement shall not be capable of
assignment. |
6.8 | Each Party shall give such further assurance, provide such further information, take such
further actions and execute and deliver such further documents and instruments as are, in each
case, within its power to give, provide and take so as to give full effect to the provisions
of this Agreement. |
7 | APPLICABLE LAW AND JURISDICTION |
7.1 | This Agreement is governed by and is to be construed in accordance with the laws of Hong
Kong. |
7.2 | Each of the Parties irrevocably submits to the non-exclusive jurisdiction of the courts of
the arbitration seat to support and assist the arbitration process pursuant to Clause 8,
including if necessary the grant of interlocutory relief pending the outcome of that process. |
8 | ARBITRATION |
8.1 | The Parties shall use their reasonable endeavours to settle any dispute, controversy or claim
in connection with this Agreement through friendly consultations. |
8.2 | The Parties irrevocably agree that any dispute arising out of or in connection with this
Agreement shall be finally resolved by arbitration pursuant to UNCITRAL arbitration rules as
in force at the date of this Agreement and as amended by this Clause 8. Any Party (Plaintiff
Party) may refer any such dispute to arbitration to be conducted in accordance with this
Clause 8 if such dispute fails to be resolved pursuant to Clause 8.1 within 10 Business Days
after a notice of dispute has been served in writing by a Party on the relevant Party or
Parties (Defendant Party). |
8.3 | Any arbitration commenced pursuant to Clause 8 shall have its seat in Hong Kong to be held in
Hong Kong International Arbitration Centre conducted in English by a tribunal consisting of
three arbitrators to be appointed in accordance with Clause 8.4 and be administered by the
Hong Kong International Arbitration Centre. |
8.4 | Unless the Parties agree otherwise: |
(a) | the Plaintiff Party shall appoint one arbitrator; and the Defendant Party shall
appoint one arbitrator; |
(b) | the third arbitrator, who shall act as chairman of the tribunal, shall be chosen
by the two arbitrators appointed by or on behalf of the Plaintiff Party and the
Defendant Party. If he is not chosen by the two arbitrators within 10 Business Days of
the date of appointment of the later of the two party-appointed arbitrators to be
appointed, he shall be appointed by the Hong Kong International Arbitration Centre; and |
(c) | arbitral proceedings shall be conducted in English. |
(d) | Any arbitral award shall be final and binding upon the Parties and shall be
enforceable in any court of competent jurisdiction in accordance with its terms. |
10
SIGNED, SEALED and DELIVERED |
) | |||||||
by Yinan Hu |
) | /s/ Yinan Hu | ||||||
in the presence of |
) | [Seal is affixed | ||||||
/s/ Zhu Jiusheng |
||||||||
SEALED with the COMMON SEAL of |
) | |||||||
Apollo & Muse Holding Limited |
||||||||
and signed by |
) | /s/ Tian Yuan | ||||||
Yuan Tian |
) | [Common Seal is affixed] | ||||||
in the presence of |
) | |||||||
/s/ Xiao Fei |
||||||||
SEALED with the COMMON SEAL of |
) | |||||||
Wang Strategic Capital Partners (II) |
) | |||||||
Limited |
) | |||||||
and signed by |
) | /s/ Sing Wang | ||||||
Sing Wang |
) | |||||||
in the presence of |
) | |||||||
/s/ Rebecca |
||||||||
SEALED with the COMMON SEAL of |
) | |||||||
Harbor Pacific Capital LLC |
) | |||||||
as general partner of |
) | |||||||
Harbor Pacific Capital Partners I, LP |
) | |||||||
and signed by |
) | /s/ Stuart Kwok | ||||||
Stuart Kwok |
) | |||||||
in the presence of |
) | |||||||
/s/ Bonwoong Koo |
11
Signed for and on behalf of
|
Signed for and on behalf of | |
Wang Strategic Capital Partners (II) Limited
|
Harbor Pacific Capital LLC, as general partner of Harbor Pacific Capital Partners I,LP | |
Authorised Signatory
|
Authorised Signatory | |
(In the case where Apollo & Muse Holding Limited exercise the Put Option): | ||
Signed for and on behalf of |
||
Apollo & Muse Holding Limited |
||
Authorised Signatory |
12
1. | Party A is a wholly foreign-owned enterprise duly incorporated under the laws of the Peoples
Republic of China (the PRC); |
2. | Party B is a Chinese citizen and holds 95% equity interest of Shenzhen Xinbao Investment Management Co.,
Ltd. ( Shenzhen Xinbao); |
3. | Party B desires to borrow a loan from Party A by pledging its equity interest in Shenzhen Xinbao, and Party A agrees to extend a loan of Twenty-Eight Thousand Five Hundred Renminbi
(RMB28,500) to Party B. |
1. | In accordance with the terms and conditions of this Agreement, Party A agrees to grant an
interest-free loan of Twenty-Eight Thousand Five Hundred Renminbi (RMB28,500) to Party B, and
Party B agrees to accept such loan. |
2. | The term of the loan under this Agreement shall start from the date when the loan is
withdrawn until ten (10) years after signing this Agreement, and may be extended subject to
the mutual agreement between both parties. During the loan term or any extension thereof,
Party A shall have the right, by giving written notice to Party B, to decide that the loan
under this Agreement is due immediately and request Party B to repay the loan in the manner as
specified herein if Party B has any of the following circumstances: |
2.1 | Party B resigns from or is dismissed by Party A or any of its affiliates; |
||
2.2 | Party B dies or loses its civil capacity or its capacity for civil conduct is restricted; |
||
2.3 | Party B commits a crime or is involved in a crime; |
2.4 | Any other third party claims more than One Hundred Thousand Renminbi (RMB100,000)
against Party B; or |
2.5 | Party A has given to Party B a written notice regarding the purchase of Party Bs
equity interest in Shenzhen Xinbao according to the provisions of the Exclusive
Purchase Option Agreement as set forth in Article 3 hereof to exercise its call option. |
3. | Both parties hereby agree and acknowledge that, subject to the permission of and to the
extent permitted by the PRC laws, Party A shall be entitled but not obliged to, at any time,
purchase, or designate other person (including natural person, legal person or any other
entity), to purchase all or part of the equity interest held by Party B in Shenzhen Xinbao (the Call Option), provided, however, that Party A gives a written notice about equity
purchase to Party B. Once such written notice about exercising the Call Option is given by
Party A, Party B shall, according to Party As intention and instructions, transfer its equity
interest in Shenzhen Xinbao to Party A or other person designated by Party A at its original
investment price (the Original Investment Price) or if otherwise specified by laws, at an
other price agreed upon by Party A. Both parties hereby agree and acknowledge that when Party
A exercises the Call Option, if the lowest equity price permitted by the applicable laws and
regulations then in effect is higher than the Original Investment Price, the purchase price
for Party A or its designee shall be the lowest price permitted by laws. Both parties agree to
execute the Exclusive Purchase Option Agreement with respect thereto. |
4. | Both parties hereby agree and acknowledge that Party B shall repay the loan in the manner as
given below only: when the loan is due, Party B (or any of its successors, heirs or assignees)
shall, at Party As written request, transfer its equity interest in Shenzhen Xinbao to
Party A or its designee subject to the permission of the PRC laws, and shall use the proceeds
from such equity transfer to repay the loan under this Agreement. |
5. | Both parties hereby agree and acknowledge that except as otherwise provided for herein, the
loan under this Agreement is interest-free. But when the loan is due and Party B needs to
transfer its equity interest hereunder to Party A or its designee, if the actual equity
transfer price is higher than Party Bs loan principal due to legal requirements or other
reasons, the excess shall be deemed as loan interest or fund utilization costs to the extent
permitted by laws, and shall paid to Party A together with loan principal. |
6. | Both parties hereby agree and acknowledge that Party Bs obligations under this Agreement are
deemed to be fully performed only if all the following conditions are met: |
6.1 | Party B has transferred all its equity interest in Shenzhen Xinbao to Party A
and/or its designee; and |
6.2 | Party B has paid to Party A as loan repayment all proceeds from equity transfer or
the maximum amount permitted by laws (including principal and the highest loan interest
permitted by applicable laws then in force). |
2
7. | To secure the performance of the debts under this Agreement, Party B agrees to pledge all its
equity interest in Shenzhen Xinbao to Party A (the Equity Pledge). Both parties agree to
execute an Equity Pledge Agreement with respect thereto. |
8. | As of the execution date of this Agreement, Party A hereby represents and warrants to Party B
that: |
8.1 | Party A is a wholly foreign-owned enterprise incorporated and validly existing under
the PRC laws; |
8.2 | Party A has the authority to execute and perform this Agreement. The execution and
performance by Party A of this Agreement comply with its business scope, articles of
association or other organizational documents, and Party A has obtained all necessary and
appropriate approvals and authorizations with respect to the execution and performance of
this Agreement; |
8.3 | The execution and performance of this Agreement by Party A do not violate any laws,
regulations, government approvals, authorizations, notices or other government documents
binding upon or influencing it, any agreement signed by it with any third party or any
undertaking made by it to any third party; and |
8.4 | Once executed, this Agreement constitutes a legal, valid and binding obligation of
Party A, enforceable against Party A in accordance with its provisions. |
9. | From the execution date of this Agreement until the termination hereof, Party B hereby
represents and warrants to Party A that: |
9.1 | Shenzhen Xinbao is a limited liability company incorporated and validly existing
under the PRC laws, whose registered capital has been paid up and which has obtained
capital verification report issued by a qualified accounting firm. Shenzhen Xinbao has
completed all government approvals, authorizations, licenses, registrations, filing, etc
necessary to carry out the business activities within its business scope and to possess
its assets; |
||
9.2 | Party B legally owns 95% equity interest of Shenzhen Xinbao; |
9.3 | Party B has the authority to execute and perform this Agreement. The execution and
performance by Party B of this Agreement comply with the articles of association or other
organizational documents of Shenzhen Xinbao, and Party B has obtained all necessary and
appropriate approvals and authorizations with respect to the execution and performance of
this Agreement; |
9.4 | The execution and performance of this Agreement by Party B do not violate any laws,
regulations, government approvals, authorizations, notices or other government documents
binding upon or influencing it, any agreement signed by it with any third party or any
undertaking made by it to any third party; |
3
9.5 | Once executed, this Agreement constitutes a legal, valid and binding obligation of
Party B, enforceable against Party B in accordance with its provisions; |
9.6 | Except for the provisions stipulated in the Equity Pledge Agreement and Exclusive
Purchase Option Agreements, Party B has not mortgaged, pledged or otherwise encumbered
its equity interest in Shenzhen Xinbao, given an offer about the transfer of such equity
interest to any third party, made any commitment about the offer of any third party to
purchase its equity interest, or executed any agreement with any third party to transfer
its equity interest in Shenzhen Xinbao; |
9.7 | There are no existing or potential disputes, litigations, arbitrations,
administrative proceedings or other legal proceedings in connection with Party Bs equity
interest in Shenzhen Xinbao. |
10. | Party B covenants that it shall, during the term of this Agreement: |
10.1 | Without Party As prior written consent, not sell, transfer, mortgage or otherwise
dispose of or cause any other security interest to be created on its equity interest or
other interests in Shenzhen Xinbao, except for the equity pledge and other rights
created for the benefit of Party A; |
10.2 | Without Party As prior written consent, not vote for or support or execute at the
shareholders meetings of Shenzhen Xinbao any shareholders resolution approving the
sale, transfer, mortgage or otherwise disposal of, or causing any other security interest
to be created on, its legal or beneficial interest in the equity interest of Shenzhen Xinbao, except to Party A and its designee; |
10.3 | Without Party As prior written consent, not vote for or support or execute at the
shareholders meetings of Shenzhen Xinbao any resolution approving Shenzhen Xinbao to
be merged or consolidated with, acquire or invest in, any person; |
10.4 | Promptly inform Party A of any existing or potential litigation, arbitration or
administrative proceedings relating to Party Bs equity interest in Shenzhen Xinbao; |
10.5 | Execute all necessary or appropriate documents, take all necessary or appropriate
actions and bring all necessary or appropriate lawsuits or make all necessary and
appropriate defenses against all claims in order to maintain the ownership over its equity
interest in Shenzhen Xinbao; |
10.6 | Not do any act and/or omission that may materially affect the assets, business and
liabilities of Shenzhen Xinbao without Party As prior written consent; |
10.7 | At Party As request, appoint any person nominated by Party A as the director of
Shenzhen Xinbao; |
4
10.8 | When Party A exercises its Call Option described herein, transfer all of Party Bs
equity interest in Shenzhen Xinbao promptly and unconditionally to Party A and/or its
designee subject to the permission of and to the extent permitted by the PRC laws; |
||
10.9 | Not request Shenzhen Xinbao to distribute dividends or profits to it; |
10.10 | In case its equity interest in Shenzhen Xinbao is transferred to Party A or its
designee, Party B will, subject to compliance with legal requirements, pay all equity
transfer proceeds to Party A as the loan principal and as the loan interests or fund
utilization costs permitted by laws; |
10.11 | Comply strictly with the provisions of this Agreement, fully perform its obligations
under this Agreement and not do any act/omission that affects or impairs the validity and
enforceability of this Agreement. |
11. | Party B undertakes that within the term of this Agreement, it will, in the capacity of the
shareholder of Shenzhen Xinbao, cause Shenzhen Xinbao: |
11.1 | Not to supplement, amend or modify its articles of association in any way, or to
increase or decrease its registered capital, or to change its capital structure in any way
without Party As prior written consent; |
11.2 | To maintain its existence, and to operate its business and deal with matters
prudently and effectively, subject to good financial and business rules and practices; |
11.3 | Not to sell, transfer, mortgage or otherwise dispose of, or cause any other security
interest to be created on, the legal or beneficial interests in any of its assets,
business or income at any time after the signing of this Agreement without Party As prior
written consent; |
11.4 | Not to create, succeed to, guarantee or permit any liability, without Party As prior
written consent, except (i) the liability arising from the normal course of business, but
not arising from the loan; and (ii) the liability disclosed to Party A and approved by
Party A in writing; |
11.5 | To operate persistently all the business in the normal course of business to maintain
the value of its assets; |
11.6 | Not to execute any material contracts (a contract will be deemed material if its
value exceeds On Hundred Thousand Renminbi (RMB100,000)), without Party As prior written
consent, other than those executed during the normal course of business; |
5
11.7 | To provide information concerning all of its operations and financial performance at
Party As request; |
11.8 | Not to be merged or consolidated with, acquire or invest in, any other person without
Party As prior written consent; |
11.9 | Not to distribute dividends to each shareholder in any way without Party As prior
written consent. However, Shenzhen Xinbao shall promptly distribute all its
distributable profits to Party As shareholders upon Party As request; |
11.10 | To inform promptly Party A of any existing or potential litigation, arbitration or
administrative proceedings concerning its assets, business or income; |
11.11 | To execute all necessary or appropriate documents, to take all necessary or
appropriate actions and to bring all necessary or appropriate lawsuits or to make all
necessary and appropriate defenses against all claims in order to maintain the ownership
over all its assets; |
11.12 | To comply strictly with the Service Agreement and other agreements executed by it
with Party As affiliates, to perform its obligations under the Service Agreements and
other agreements, and not to do any act/omission that affects the validity and
enforceability of such agreements. |
12. | This Agreement shall be binding on and inure to the benefit of both parties hereto and their
respective successors, heirs and permitted assignees. Without the prior written approval of
Party A, Party B shall not transfer, pledge or otherwise assign any of its rights, benefits or
obligations under this Agreement. |
13. | Party B hereby agrees that Party A may assign its rights and obligations under this Agreement
to any other third parties when necessary. Party A shall only be required to notify Party B
in writing when such transfer occurs and no further consent from Party B shall be needed in
respect of the transfer. |
14. | The formation, validity, interpretation, performance, amendment and termination of and
resolution of disputes in connection with this Agreement shall be governed by the PRC laws. |
|
15. | Arbitration |
15.1 | Any dispute, controversy or claim arising from the interpretation and performance in
connection with this Agreement (including any question regarding its existence, validity
or termination) shall be settled by both parties through friendly consultations. In case
no settlement can be reached within thirty (30) days after one party makes a request for
settlement, either party may submit such dispute to the China International Economic and
Trade Arbitration Commission (CIETAC) for arbitration in accordance with its
arbitration rules then in effect at the time of applying for arbitration. The
arbitration award shall be final and binding upon both parties; |
6
15.2 | The seat of arbitration shall be Shenzhen; |
||
15.3 | The language of arbitration proceedings shall be Chinese. |
16. | This Agreement shall be formed on its signing date. Both parties agree and acknowledge that
the terms and conditions of this Agreement shall be effective as of the date on which the loan
is released until both parties have performed their obligations under this Agreement. |
17. | Party B shall not terminate or revoke this Agreement unless (a) Party A commits a gross
negligence, fraud or other material illegal acts; or (b) Party A goes bankrupt. |
18. | This Agreement shall not be amended or modified except with the written consent of both
parties. In case of anything not covered herein, both parties may make supplements hereto by
signing a written agreement. Any amendment, modification, supplement or annex to this
Agreement shall form an integral part of this Agreement. |
19. | This Agreement constitutes the entire agreement between both parties with respect to the
transactions contemplated herein and supersedes all prior oral discussions or written
agreements reached by both parties with respect to the transactions mentioned above. |
20. | This Agreement is severable. If any provision of this Agreement is held to be invalid or
unenforceable, such provision shall not affect the validity and enforceability of the
remainder of this Agreement. |
21. | Each party hereto shall keep in strict confidence the information concerning the other
partys business, operation, financial performance or other confidential data obtained under
this Agreement or during the performance of this Agreement. |
22. | Any obligation arising out of this Agreement or that is due before the expiration or early
termination of this Agreement shall survive such expiration or early termination. Articles 14,
15 and 21 hereof shall survive the termination of this Agreement. |
23. | This Agreement is executed in two originals, with each of Party A and Party B holding one
original. All originals have the same legal effect. |
7
Party B:
|
Chunlin Wang | |||
Signature:
|
/s/ Chunlin Wang
|
8
1. | Party A is a wholly foreign-owned enterprise incorporated in the Peoples Republic of China
(hereinafter the PRC). |
|
2. | Party B is a citizen of the PRC and holds 95% equity interest in
Shenzhen Xinbao Investment Management Co.,
Ltd. (hereinafter Shenzhen Xinbao), a limited liability company incorporated in Shenzhen,
China. |
|
3. | Party A and Party B signed the Loan Agreement on December 3, 2010, pursuant to which,
Party A will provide an interest-free loan in the total amount of Twenty-Eight Thousand Five
Hundred Renminbi (RMB28,500) to Party B (hereinafter the Loan) to Party B, and Party B will
pledge all of his equity interest in Shenzhen Xinbao to Party A as a guarantee for the Loan. |
1. | Definitions |
|
Unless otherwise provided in this Agreement, the following terms shall have the following
meanings: |
1.1 | Right of Pledge: refers to all the contents as set forth in Article 2 hereunder. |
||
1.2 | Equity Interest:
refers to all the equity interest legally held by the Pledgor in Shenzhen Xinbao. |
1.3 | Event of Default: refers to any circumstances set forth in Article 7.1 hereof. |
||
1.4 | Notice of Default: refers to the notice of default issued by the Pledgee in accordance
with this Agreement, declaring the occurrence of an Event of Default. |
2. | Right of Pledge |
3. | Registration of Pledge |
3.1 | Within one (1) week after the signing of this Agreement, the Pledgor shall cause Shenzhen Xinbao to record the Pledgees Right of Pledge over his Equity Interest in the register of
shareholders and deliver the copy of the register of shareholders bearing the common seal of Shenzhen Xinbao, as well as the original of equity contribution certificate of Shenzhen Xinbao to the
Pledgee for safe-keeping. |
||
3.2 | Both parties agree that if conditions permit, they will make their best effort to file,
and cause the pledge under this Agreement to be filed, with the industrial and commercial
administrative department in the place where Shenzhen Xinbao is registered, but both parties
confirm that unless compulsorily stipulated by the PRC laws and regulations, whether this Agreement
is filed as above or not will not affect the validity of this Agreement. |
4. | Rights of the Pledgee |
4.1 | Where the Pledgor does not perform his liabilities, the Pledgee shall be entitled to be
first compensated from the money converted from, or the proceeds from the auction or sale of, the
Equity Interest of Shenzhen Xinbao that is pledged. |
||
4.2 | The Pledgee shall be entitled to the bonus arising from the Equity Interest that is
pledged. |
5. | Representation and Warranty of the Pledgor |
5.1 | The Pledgor is the legal owner of the pledged Equity Interest. |
||
5.2 | Except for the interest of the Pledgee, the Pledgor has not created other pledges or any
other kinds of rights over the Equity Interest. |
||
5.3 | The pledge of the Equity Interest by the Pledgor has obtained the consent of the other
shareholders of Shenzhen Xinbao, and other shareholders have unanimously agreed that they will
give up the exercise of their respective preemptive right when the Pledgee actually exercises the
Right of Pledge. |
6. | Undertakings by the Pledgor |
6.1 | During the term of this Agreement, the Pledgor undertakes to the Pledgee for the benefit
of the Pledgee that he will: |
6.1.1 | Not transfer or assign the Equity Interest, nor create or cause to be created any pledge
which may affect the rights and interests of the Pledgee without the prior written consent of the
Pledgee; |
2
6.1.2 | Comply with the laws and regulations with respect to the pledge of rights; present to
the Pledgee the notices, orders or suggestions with respect to the Right of Pledge issued or made
by the competent authority within five (5) days upon receipt thereof; and comply with such notices,
orders or suggestions; or make an objection to or a statement on the foregoing matters at the
reasonable request of the Pledgee or with the consent of the Pledgee; |
||
6.1.3 | Timely notify the Pledgee of any events or any received notices which may affect the
Pledgors right over the Equity Interest or any part thereof, or may change the Pledgors any
warranty and obligation under this Agreement or may have effects on it. |
6.2 | The Pledgor agrees that the Pledgees right to exercise the Right of Pledge obtained
pursuant to this Agreement shall not be interrupted or hindered by the Pledgor or any of its
successors or principals or any other person through legal proceedings. |
||
6.3 | The Pledgor undertakes to the Pledgee that in order to protect or improve the guarantee
for the repayment of the loan under this Agreement, the Pledgor will execute in good faith and
cause other interested persons relating to the Right of Pledge to execute all right certificates
and contracts required by the Pledgee and/or perform and cause other interested persons to perform
the acts required by the Pledgee and facilitate the exercise of the rights and authority granted to
the Pledgee under this Agreement. |
||
6.4 | The Pledgor undertakes to the Pledgee that he will execute all documents for the change of
equity certificate (if applicable and necessary) with the Pledgee and any persons designated by it
(natural persons/ legal persons) and shall, within a reasonable period, provide to the Pledgee all
notices, orders and decisions about the Right of Pledge as it deems necessary. |
||
6.5 | The Pledgor undertakes to the Pledgee that for the purpose of the Pledgees benefits, he
will comply with and perform all warranties, undertakings, agreements, representations and
conditions. Where the Pledgor does not perform, in whole or in part, his warranties, undertakings,
agreements, representations and conditions, the Pledgor shall compensate all losses suffered by the
Pledgee arising therefrom. |
7. | Event of Default |
7.1 | The following events shall be regarded as the Events of Default: |
7.1.1 | The Pledgor fails to perform his obligations under the Loan Agreement; |
||
7.1.2 | Any representation or warranty made by the Pledgor in Article 5 hereof contains
misleading or false information that is material and/or the Pledgor breaches any warranty in
Article 5 hereof; |
||
7.1.3 | The Pledgor breaches the undertakings under Article 6 hereof; |
3
7.1.4 | The Pledgor breaches any of the other provisions of this Agreement; |
||
7.1.5 | The Pledgor waives the pledged Equity Interest or transfers or assigns the pledged
Equity Interest without the prior written consent of the Pledgee; |
||
7.1.6 | Any borrowing, guarantee, compensation, undertaking or other debt liabilities of the
Pledgor (1) is required to be repaid or performed in advance due to a default; or (2) has been due
but cannot be repaid or performed on time, which, in the opinion of the Pledgee, would have
affected the ability of the Pledgor in performing his obligations under this Agreement; |
||
7.1.7 | Shenzhen Xinbao is incapable of repaying the general debts or other debts; |
||
7.1.8 | This Agreement becomes illegal or the Pledgor fails to continue to perform his
obligations herein due to any cause other than force majeure; |
||
7.1.9 | The properties owned by the Pledgor have significant adverse changes, which, in the
opinion of the Pledgee, would have affected the ability of the Pledgor in performing his
obligations under this Agreement; |
||
7.1.10 | The breach by the Pledgor due to his act or omission regarding the other provisions of
this Agreement. |
7.2 | If the Pledgor knows or finds that any matter stated in Article 7.1 hereof or any event
possibly resulting in any of the above matters has occurred, he shall immediately inform the
Pledgee in writing. |
||
7.3 | Unless the Events of Default listed in this Article 7.1 has been resolved to the
satisfactory of the Pledgee, the Pledgee may give a written Notice of Default to the Pledgor at any
time when the Pledgor is in default or thereafter, requesting the Pledgor to immediately pay the
outstanding debts and other payables under the Loan Agreement or requesting to dispose of the Right
of Pledge according to Article 8 hereof. |
8. | Exercise of the Right of Pledge |
8.1 | The Pledgor shall not transfer or assign the pledged Equity Interest before his
obligations under the Loan Agreement have been fully performed and without the prior written
consent of the Pledgee. |
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8.2 | The Pledgee shall give a Notice of Default to the Pledgor when the Pledgee exercises the
Right of Pledge. |
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8.3 | Subject to Article 7.3, the Pledgee may exercise the right to dispose of the Right of
Pledge when it gives a Notice of Default in accordance with Article 7.3 or at any time thereafter. |
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8.4 | The Pledgee shall be entitled to be first compensated from the money converted from, or
the proceeds from auction or sale of, all or part of the Equity Interest hereunder in accordance
with statutory procedures until the outstanding debts and all other payables of the Pledgor under
the Loan Agreement are repaid. |
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8.5 | When the Pledgee disposes of the Right of Pledge in accordance with this Agreement, the
Pledgor shall not pose any obstacles, and shall give necessary assistance in this regard so that
the Pledgee can realize its Right of Pledge. |
9. | Assignment of this Agreement |
9.1 | The Pledgor shall have no right to transfer any of his rights and obligations under this
Agreement unless with the prior consent of the Pledgee. |
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9.2 | This Agreement shall be binding upon the Pledgor and his successors or heirs, and shall be
valid and binding upon the Pledgee and each of its successors, heirs or permitted assigns. |
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9.3 | The Pledgee may, at any time and to the extent permitted by laws, transfer or assign all
or any of its rights and obligations under the Loan Agreement to any person designated by it
(natural person or legal person). In this case, such assignee shall have the same rights and
obligations hereunder as those of the Pledgee as if the assignee is a party hereto. When the
Pledgee transfers or assigns the rights and obligations under the Loan Agreement, a written notice
shall be only given by the Pledgee to the Pledgor, and the Pledgor shall, at the request of the
Pledgee, execute the relevant agreements and/or documents with respect to such transfer or
assignment. |
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9.4 | A new pledge contract shall be signed between the new parties to the pledge after the
change of the Pledgee as result of the transfer. |
10. | Effectiveness and Term |
11. | Termination |
12. | Handling Charges and Other Expenses |
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13. | Force Majeure |
13.1 | Force Majeure means any event that is beyond the reasonable control of either party and
unavoidable or unpreventable after he/it gives reasonable attention, including but not limited to
government act, act of God, fire, explosion, storm, flood, earthquake, tide, lightning or war, but
shortage of credit, funds or financing shall not be deemed to be the event beyond the reasonable
control of either party. The party who is affected by the Force Majeure shall inform the other
party as soon as possible of the event, in respect of which the exemption from such obligations is
sought. |
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13.2 | Should the performance of this Agreement be delayed or prevented due to any Force
Majeure defined above, the party who is affected by the Force Majeure shall not be required to
assume any liabilities hereunder to the extent that it is within the scope of the delay or
prevention. The party so affected shall take appropriate measures to minimize or eliminate the
impact of Force Majeure, and make endeavors to resume the performance of the obligations delayed
or prevented by the Force Majeure. Both parties agree to make their best efforts to resume the
performance of this Agreement once the Force Majeure is eliminated. |
14. | Confidentiality |
15.1 | This Agreement shall be governed by and construed in accordance with the PRC laws. |
||
15.2 | Any dispute between the parties arising from the interpretation and performance of the
provisions of this Agreement shall be settled by both parties in good faith through negotiations.
In case no settlement can be reached by both parties, either party may refer such dispute to the
China
International Economic and Trade Arbitration Commission (CIETAC) for arbitration in accordance
with its arbitration rules then in effect. The seat of arbitration shall be Shenzhen and the
language of proceedings shall be Chinese. The arbitral award shall be final and binding upon both
parties. |
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16. | Notice |
17. | Integrity of this Agreement |
18. | Severability of this Agreement |
19. | Amendment or Supplement to this Agreement |
19.1 | The parties hereto may make amendments or supplements to this Agreement by written
agreement. All amendment agreements and supplemental agreements in relation to this Agreement that
are duly signed by both parties shall form an integral part of this Agreement, and shall have the
same legal effect as this Agreement. |
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19.2 | This Agreement and any amendments, supplements or changes thereof shall be in writing and
will come into effect upon being executed and sealed by both parties hereto. |
20. | Counterparts |
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1. | Party A is a wholly foreign-owned enterprise incorporated under the laws of the Peoples
Republic of China (hereinafter the PRC); |
|
2. | Party C is a limited liability company incorporated in Shenzhen, the PRC; |
3. | Party B is a shareholder of Party C. Party B holds 95% equity interest in Party C
(hereinafter the Equity Interest); |
4. | Party A and Party B signed the Loan Agreement on December 3, 2010, pursuant to which
Party B will borrow a loan of Twenty-Eight Thousand Five Hundred Renminbi (RMB28,500) from
Party A; |
5. | Party A and Party B signed the Equity Pledge Agreement on December 3, 2010, pursuant
to which Party B will pledge his Equity Interest in Party C as a guarantee for the loan under
the Loan Agreement; |
6. | Party B intends to grant an exclusive purchase option to Party A so that Party A may request
Party B to sell his Equity Interest to it upon certain conditions are met. |
7. | Simultaneously with the execution hereof, Party A signed the Exclusive Purchase Option
Agreements with Yuan Tian, another shareholder of Party C, pursuant to the terms similar to
this Agreement. In accordance with the Exclusive Purchase Option Agreement, Yuan Tian will
grant to Party A an exclusive purchase option for the purchase of his Equity Interest in Party
C. |
1.1 | Grant of Option |
||
Party B hereby irrevocably grants to Party A an option to purchase or cause any person or
persons designated by Party A (hereinafter the Designee) to purchase from Party B
all or part of his Equity Interest in Party C (hereinafter the Call
Option) at any time according to the steps determined by Party A at its own discretion
to the extent permitted by PRC Laws and at the price specified in Article 1.3 of this
Agreement. No Call Option shall be granted to any other third person other than
Party A and/or the Designee. Party B shall not sell, offer to sell, transfer or
offer as gift any Equity Interest to any other third person. Party C hereby agrees to the
grant of the Call Option by Party B to Party A and/or the Designee. The
person set forth in this Article and this Agreement includes an individual, corporation,
joint venture, partnership, enterprise, trust or a non-corporate body. |
|||
1.2 | Exercising Steps |
||
Subject to the PRC laws and regulations, Party A and/or the Designee may exercise the Call
Option by giving a written notice (hereinafter the Equity Purchase Notice) to Party B,
which specifies the Equity Interest to be purchased from Party B (hereinafter the
Purchased Equity) and the manner in which purchase is made. |
|||
1.3 | Purchase Price |
1.3.1 | When Party A exercises the Call Option, the purchase price of the
Purchased Equity (the Purchase Price) shall be equal to the actual
capital contribution made by Party B for the Purchased Equity, unless
an appraisal is required to be made in respect of the Equity Interest by applicable PRC
laws and regulations then in effect or there are other restrictions imposed by such PRC
laws and regulations on the price of Equity Interest. |
1.3.2 | If an appraisal is required to be made in respect of the Equity Interest by
the PRC laws and regulations that are applicable at the time when Party A exercises its
Call Option or there are other restrictions imposed by such PRC laws and regulation on
the price of Equity Interest, the
Parties agree that the Purchase Price shall be the lowest price permitted by
applicable laws. |
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1.4 | Transfer of the Purchased Equity |
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At each exercise of the Call Option: |
1.4.1 | Party B shall cause Party C to convene a shareholders meeting in a
timely manner, during which a resolution approving the transfer by Party B of
his Equity Interest to Party A and/or the Designee shall be passed; |
||
1.4.2 | Party B shall, pursuant to the requirements of this Agreement and the Equity
Purchase Notice in connection with the Purchased Equity, enter into an equity transfer agreement
with Party A and/or the Designee (as applicable) for each transfer; |
||
1.4.3 | The related parties shall execute all other necessary contracts, agreements or
documents, obtain all necessary government approvals and consents and take all necessary actions to
grant the valid ownership of the Purchased Equity to Party A and/or the Designee without any
security interest being attached thereto and cause Party A and/or the Designee to be the registered
owner of the Purchased Equity. In this Article and this Agreement, Security Interest includes
guarantee, mortgage, pledge, third party right or interest, any share option, right of acquisition,
right of first refusal, right of set-off, ownership detainment or other security arrangements, but
excluding any security interest arising under the Equity Pledge Agreement. |
1.5 | Payment |
||
The payment method of the Purchase Price shall be determined by Party A and/or the
Designee and Party B through negotiation according to the laws applicable at the time when
the Call Option is exercised. The Parties hereby agree that Party B shall refund to Party A
any amount that is paid by Party A and/or the Designee to Party B with respect to the
Purchased Equity in accordance with laws so as to repay his loan principal under the Loan
Agreement as well as the loan interest or fund utilization costs permitted by laws. |
2. | Undertakings Relating to the Equity Interest |
2.1 | Undertakings by Party C |
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Party B and Party C hereby undertake: |
2.1.1 | Not to supplement, amend or modify Party Cs articles of association in any way, or to
increase or decrease its registered capital, or to change its registered capital structure in any
way without Party As prior written consent; |
||
2.1.2 | To maintain its existence, and to operate its business and deal with matters prudently
and effectively, subject to good financial and business rules and practices; |
3
2.1.3 | Not to sell, transfer, mortgage or otherwise dispose of, or cause any other security
interest to be created on, the legal or beneficial interests in any of Party Cs assets, business
or income at any time after the signing of this Agreement without Party As prior written consent; |
||
2.1.4 | Not to create, succeed to, guarantee or permit any liability, without Party As prior
written consent, except (i) the liability arising from the usual or normal course of business, but
not arising from the loan; and (ii) the liability disclosed to Party A and approved by Party A in
writing; |
||
2.1.5 | To operate persistently all the business in the normal course of business to maintain
the value of Party Cs assets, and not to do any act/omission affecting its operations and asset
value; |
||
2.1.6 | Without the prior written consent of Party A, not to enter into any material agreement,
other than the agreements in the normal course of business (for the purpose of this Agreement, an
agreement will be deemed material if its value exceeds One Hundred Thousand Renminbi (RMB100,000); |
||
2.1.7 | Without the prior written consent of Party A, not to provide loan or credit to any
person; |
||
2.1.8 | To provide information concerning Party Cs operations and financial condition at Party
As request; |
||
2.1.9 | To purchase and maintain the insurance at the insurance company acceptable to Party A,
whose amount and type shall be the same as those of the insurance normally procured by the
companies engaged in similar businesses and possessing similar properties or assets in the area
where Party C is located; |
||
2.1.10 | Not to be merged or consolidated with, acquire or invest in, any other person without
Party As prior written consent; |
||
2.1.11 | To inform promptly Party A of any existing or potential litigation, arbitration or
administrative proceedings concerning Party Cs assets, business or income; |
||
2.1.12 | To execute all necessary or appropriate documents, to take all necessary or appropriate
actions and to bring all necessary or appropriate claims or to make all necessary and appropriate
defenses against all claims in order for Party C to maintain the ownership over all its assets; |
||
2.1.13 | Not to distribute dividends to Party Cs shareholders in any way without Party As
prior written consent. However, Party C shall promptly distribute all or part of its distributable
profits to Party As shareholders upon Party As request; |
||
2.1.14 | At the request of Party A, to appoint any person nominated by Party A as the director
of Party C. |
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2.2 | Undertakings by Party B |
||
Party B hereby undertakes: |
2.2.1 | Not to sell, transfer, pledge or otherwise dispose of, or cause any other security
interest to be created on, the legal or beneficial interest in his Equity Interest at any time
after the signing of this Agreement without Party As prior written consent, but except the right
of pledge created on Party Bs Equity Interest in accordance with the Equity Pledge Agreement; |
||
2.2.2 | Without Party As prior written consent, not to vote for or support or execute at
shareholders meetings of Party C any shareholders resolution approving the sale, transfer,
mortgage or otherwise disposal of, or causing any other security interest to be created on, his
legal or beneficial interest in the Equity Interest of Party C, except to Party A or its Designee; |
||
2.2.3 | Without Party As prior written consent, not to vote for or support or execute at
shareholders meetings of Party C any resolution approving Party C to be merged or consolidated
with, acquire or invest in, any person; |
||
2.2.4 | To irrevocably agree to the grant by Party Cs another shareholder, Yuan Tian, of an
exclusive Call Option to Party A, and to irrevocably waive his preemptive right to such Equity
Interest to be transferred by Yuan Tian to Party A when Party A exercises its Call Option; |
||
2.2.5 | To promptly inform Party A of any existing or potential litigation, arbitration or
administrative proceedings with respect to his Equity Interest; |
||
2.2.6 | To cause the shareholders meeting of Party C to approve the transfer of the Purchased
Equity under this Agreement; |
||
2.2.7 | To execute all necessary or appropriate documents, to take all necessary or appropriate
actions and to bring all necessary or appropriate claims or to make all necessary and appropriate
defenses against all claims in order to maintain the ownership over his Equity Interest; |
||
2.2.8 | At Party As request, to appoint any person nominated by Party A as the director of
Party C; |
||
2.2.9 | To strictly comply with the provisions of this Agreement and other agreements
entered into jointly or severally by and among Party B, Party C and Party A, to perform all
obligations under these agreements and not to do any act/omission that affects or impairs the
validity and enforceability of these agreements. |
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3. | Representations and Warranties |
|
As of the execution date of this Agreement and every transfer date, Party B and Party C hereby
represent and warrant to Party A as follows: |
3.1 | They have the power to execute and deliver this Agreement and any equity transfer agreement
(each, a Transfer Agreement) to which they are a party and which is entered into in respect of
each transfer of the Purchased Equity under this Agreement and to perform their respective
obligations under this Agreement and any Transfer Agreement. Once executed, this Agreement and any
Transfer Agreement to which they are a party will constitute a legal, valid and binding obligation
and shall be enforceable against them in accordance with the provisions thereof; |
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3.2 | The execution, delivery and performance of this Agreement or any Transfer Agreement and the
performance of their respective obligations under this Agreement or any Transfer Agreement shall
not: (i) violate any relevant PRC laws and regulations; (ii) conflict with their Articles of
Association or other organizational documents; (iii) violate any contract or instrument to which
they are a party or that binds upon them; (iv) violate any permit or approval granted to them
and(or) any condition remaining in force; or (v) cause any permit or approval granted to them to be
suspended, cancelled or attached with additional conditions; |
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3.3 | Party C has good and saleable ownership over all assets. Party C has not created any security
interest on the above assets; |
||
3.4 | Party C has no outstanding debts, except (i) debts arising from its normal course of business;
and (ii) debts disclosed to Party A and approved by Party A in writing; |
||
3.5 | Party C complies with all the PRC laws and regulations applicable to the acquisition of assets; |
||
3.6 | Currently, there are no existing, pending or threatened litigation, arbitration or
administrative proceedings related to the Equity Interest and Party Cs assets or Party C; and |
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3.7 | Party B has good and saleable ownership over all his Equity Interest and has not created any
security interest on such Equity Interest, but excluding the security interest under the Equity
Pledge Agreement. |
4. | Assignment of this Agreement |
4.1 | Party B and Party C shall not transfer any of their rights and obligations under this Agreement
to any third party without the prior written consent of Party A. |
6
4.2 | Party B and Party C hereby agree that Party A shall have the right to transfer all of its
rights and obligations under this Agreement to other third parties when necessary. Party A
shall only be required to serve written notice to Party B and Party C when such transfer is
made, and no consent shall be further required from Party B and Party C in respect of such
transfer. |
5. | Effectiveness and Term |
5.1 | This Agreement shall become effective as of the date first above written. |
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5.2 | The term of this Agreement shall be ten (10) years unless it is early terminated in accordance
with the provisions of this Agreement or the relevant agreements separately signed by the Parties.
The term of this Agreement may be extended with the written confirmation of Party A before its
expiration. The extension thereof shall be agreed upon by the Parties through negotiation. |
||
5.3 | If the operation term (including any extension thereof) of Party A or Party C expires or
either Party terminates for other reasons within the term set forth in Article 5.2, this
Agreement shall be terminated at the time of the termination of such Party, unless Party A has
transferred its rights and obligations in accordance with Article 4.2 hereof. |
6. | Applicable Law and Dispute Resolution |
6.1 | Applicable Law |
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The formation, validity, interpretation and performance of and settlement of disputes
under this Agreement shall be protected and governed by the laws of PRC. |
|||
6.2 | Dispute Resolution |
||
Any dispute arising from the interpretation and performance of the provisions of this
Agreement shall be resolved by the Parties through amicable negotiation. In case no
resolution can be reached by the Parties within thirty (30) days after either party makes
a request for dispute resolution through negotiation, either party may refer such dispute
to China International Economic and Trade Arbitration Commission for arbitration in
accordance with its arbitration rules then in effect. The seat of arbitration shall be
Shenzhen and the language of proceedings shall be Chinese. The arbitral award shall be
final and binding upon the Parties. |
7. | Taxes and Expenses |
|
Every Party shall bear any and all transfer and registration taxes, expenses and charges
incurred by or levied on it in accordance with the PRC laws in connection with the
preparation and execution of this Agreement and each Transfer Agreement, and the
consummation of the transactions contemplated under this Agreement and each Transfer
Agreement. |
7
8. | Notices |
|
Any notice or other communications required to be given by either party pursuant to this
Agreement shall be written in English or Chinese and delivered to the following address of
the other Party by hand delivery, mail or facsimile. Such notice shall be deemed to be duly
served: (a) if by hand delivery, on the date of delivery; (b) if by mail, on the tenth
(10th) day after the date of posting (as indicated on the postmark) of air
registered mail (postage prepaid), or if by courier service, on the fourth (4th)
day after being delivered to an internationally recognized courier service; or (c) if by fax,
at the receiving time as indicated in the transmission confirmation of the relevant document. |
9. | Confidentiality |
(a) | the information that is or will be known to the public (provided that it is not disclosed
to the public without authorization by the information receiving party); |
||
(b) | the information required to be disclosed by applicable laws or stock exchanges rules or
regulations; or |
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(c) | the information required to be disclosed by either Party to his/its legal or financial
advisors with respect to the transaction contemplated under this Agreement, for which such legal or
financial advisors shall also comply with the confidentiality obligations similar to those stated
in this Article. Any divulgence of confidential information by any personnel of either Party or any
institutions engaged by him/it shall be deemed as the divulgence of confidential information by
such Party, and such Party shall be liable for the breach pursuant to this Agreement. This article
shall survive regardless of whether this Agreement is invalid, discharged, terminated or cannot be
operated due to any reason. |
10. | Further Assurance |
|
The Parties agree to promptly execute the documents reasonably required to perform the
provisions and the aim of this Agreement or beneficial to it, and to take the further actions
reasonably required to perform the provisions and the aim of this Agreement or beneficial to
it. |
||
11. | Miscellaneous |
11.1 | Amendment, Modification and Supplement |
||
The Parties may make amendments or supplements to this Agreement by written agreement.
All amendment agreements and supplemental agreements to this Agreement that are duly
signed by the Parties shall form an integral part of this Agreement, and shall have
the same legal effect as this Agreement. |
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11.2 | Integrity of this Agreement |
11.3 | Severability of this Agreement |
11.4 | Headings |
11.5 | Language and Counterparts |
11.6 | Successors |
11.7 | Survival |
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11.8 | Waiver |
10
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/s/ Chunlin Wang | ||||
December 3, 2010 |
1. | Party A is a wholly foreign-owned enterprise duly incorporated under the laws of the Peoples
Republic of China (the PRC); |
2. | Party B is a Chinese citizen and holds 5% equity interest of
Shenzhen Xinbao Investment Management Co.,
Ltd. (Shenzhen Xinbao); |
3. | Party B desires to borrow a loan from Party A by pledging its equity interest in Shenzhen Xinbao, and Party A agrees to extend a loan of One Thousand Five Hundred Renminbi
(RMB1,500) to Party B. |
1. | In accordance with the terms and conditions of this Agreement, Party A agrees to grant an
interest-free loan of One Thousand Five Hundred Renminbi (RMB1,500) to Party B, and Party B
agrees to accept such loan. |
2. | The term of the loan under this Agreement shall start from the date when the loan is
withdrawn until ten (10) years after signing this Agreement, and may be extended subject to
the mutual agreement between both parties. During the loan term or any extension thereof,
Party A shall have the right, by giving written notice to Party B, to decide that the loan
under this Agreement is due immediately and request Party B to repay the loan in the manner as
specified herein if Party B has any of the following circumstances: |
2.1 | Party B resigns from or is dismissed by Party A or any of its affiliates; |
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2.2 | Party B dies or loses its civil capacity or its capacity for civil conduct is restricted; |
||
2.3 | Party B commits a crime or is involved in a crime; |
2.4 | Any other third party claims more than One Hundred Thousand Renminbi (RMB100,000) against
Party B; or |
2.5 | Party A has given to Party B a written notice regarding the purchase of Party Bs
equity interest in Shenzhen Xinbao according to the provisions of the Exclusive
Purchase Option Agreement as set forth in Article 3 hereof to exercise its call option. |
3. | Both parties hereby agree and acknowledge that, subject to the permission of and to the
extent permitted by the PRC laws, Party A shall be entitled but not obliged to, at any time,
purchase, or designate other person (including natural person, legal person or any other
entity), to purchase all or part of the equity interest held by Party B in Shenzhen Xinbao
(the Call Option), provided, however, that Party A gives a written notice about equity
purchase to Party B. Once such written notice about exercising the Call Option is given by
Party A, Party B shall, according to Party As intention and instructions, transfer its equity
interest in Shenzhen Xinbao to Party A or other person designated by Party A at its original
investment price (the Original Investment Price) or if otherwise specified by laws, at an
other price agreed upon by Party A. Both parties hereby agree and acknowledge that when Party
A exercises the Call Option, if the lowest equity price permitted by the applicable laws and
regulations then in effect is higher than the Original Investment Price, the purchase price
for Party A or its designee shall be the lowest price permitted by laws. Both parties agree to
execute the Exclusive Purchase Option Agreement with respect thereto. |
4. | Both parties hereby agree and acknowledge that Party B shall repay the loan in the manner as
given below only: when the loan is due, Party B (or any of its successors, heirs or assignees)
shall, at Party As written request, transfer its equity interest in Shenzhen Xinbao to
Party A or its designee subject to the permission of the PRC laws, and shall use the proceeds
from such equity transfer to repay the loan under this Agreement. |
5. | Both parties hereby agree and acknowledge that except as otherwise provided for herein, the
loan under this Agreement is interest-free. But when the loan is due and Party B needs to
transfer its equity interest hereunder to Party A or its designee, if the actual equity
transfer price is higher than Party Bs loan principal due to legal requirements or other
reasons, the excess shall be deemed as loan interest or fund utilization costs to the extent
permitted by laws, and shall paid to Party A together with loan principal. |
6. | Both parties hereby agree and acknowledge that Party Bs obligations under this Agreement are
deemed to be fully performed only if all the following conditions are met: |
6.1 | Party B has transferred all its equity interest in Shenzhen Xinbao to Party A
and/or its designee; and |
6.2 | Party B has paid to Party A as loan repayment all proceeds from equity transfer or
the maximum amount permitted by laws (including principal and the highest loan interest
permitted by applicable laws then in force). |
2
7. | To secure the performance of the debts under this Agreement, Party B agrees to pledge all its
equity interest in Shenzhen Xinbao to Party A (the Equity Pledge). Both parties agree to
execute an Equity Pledge Agreement with respect thereto. |
8. | As of the execution date of this Agreement, Party A hereby represents and warrants to Party B
that: |
8.1 | Party A is a wholly foreign-owned enterprise incorporated and validly existing under
the PRC laws; |
8.2 | Party A has the authority to execute and perform this Agreement. The execution and
performance by Party A of this Agreement comply with its business scope, articles of
association or other organizational documents, and Party A has obtained all necessary and
appropriate approvals and authorizations with respect to the execution and performance of
this Agreement; |
8.3 | The execution and performance of this Agreement by Party A do not violate any laws,
regulations, government approvals, authorizations, notices or other government documents
binding upon or influencing it, any agreement signed by it with any third party or any
undertaking made by it to any third party; and |
8.4 | Once executed, this Agreement constitutes a legal, valid and binding obligation of
Party A, enforceable against Party A in accordance with its provisions. |
9. | From the execution date of this Agreement until the termination hereof, Party B hereby
represents and warrants to Party A that: |
9.1 | Shenzhen Xinbao is a limited liability company incorporated and validly existing
under the PRC laws, whose registered capital has been paid up and which has obtained
capital verification report issued by a qualified accounting firm. Shenzhen Xinbao has
completed all government approvals, authorizations, licenses, registrations, filing, etc
necessary to carry out the business activities within its business scope and to possess
its assets; |
9.2 | Party B legally owns 5% equity interest of Shenzhen Xinbao; |
9.3 | Party B has the authority to execute and perform this Agreement. The execution and
performance by Party B of this Agreement comply with the articles of association or other
organizational documents of Shenzhen Xinbao, and Party B has obtained all necessary and
appropriate approvals and authorizations with respect to the execution and performance of
this Agreement; |
9.4 | The execution and performance of this Agreement by Party B do not violate any laws,
regulations, government approvals, authorizations, notices or other government documents
binding upon or influencing it, any agreement signed by it with any third party or any
undertaking made by it to any third party; |
3
9.5 | Once executed, this Agreement constitutes a legal, valid and binding obligation of
Party B, enforceable against Party B in accordance with its provisions; |
9.6 | Except for the provisions stipulated in the Equity Pledge Agreement and Exclusive
Purchase Option Agreements, Party B has not mortgaged, pledged or otherwise encumbered
its equity interest in Shenzhen Xinbao, given an offer about the transfer of such equity
interest to any third party, made any commitment about the offer of any third party to
purchase its equity interest, or executed any agreement with any third party to transfer
its equity interest in Shenzhen Xinbao; |
9.7 | There are no existing or potential disputes, litigations, arbitrations,
administrative proceedings or other legal proceedings in connection with Party Bs equity
interest in Shenzhen Xinbao. |
10. | Party B covenants that it shall, during the term of this Agreement: |
10.1 | Without Party As prior written consent, not sell, transfer, mortgage or otherwise
dispose of or cause any other security interest to be created on its equity interest or
other interests in Shenzhen Xinbao, except for the equity pledge and other rights
created for the benefit of Party A; |
10.2 | Without Party As prior written consent, not vote for or support or execute at the
shareholders meetings of Shenzhen Xinbao any shareholders resolution approving the
sale, transfer, mortgage or otherwise disposal of, or causing any other security interest
to be created on, its legal or beneficial interest in the equity interest of Shenzhen Xinbao, except to Party A and its designee; |
10.3 | Without Party As prior written consent, not vote for or support or execute at the
shareholders meetings of Shenzhen Xinbao any resolution approving Shenzhen Xinbao to
be merged or consolidated with, acquire or invest in, any person; |
10.4 | Promptly inform Party A of any existing or potential litigation, arbitration or
administrative proceedings relating to Party Bs equity interest in Shenzhen Xinbao; |
10.5 | Execute all necessary or appropriate documents, take all necessary or appropriate
actions and bring all necessary or appropriate lawsuits or make all necessary and
appropriate defenses against all claims in order to maintain the ownership over its equity
interest in Shenzhen Xinbao; |
10.6 | Not do any act and/or omission that may materially affect the assets, business and
liabilities of Shenzhen Xinbao without Party As prior written consent; |
10.7 | At Party As request, appoint any person nominated by Party A as the director of
Shenzhen Xinbao; |
4
10.8 | When Party A exercises its Call Option described herein, transfer all of Party Bs
equity interest in Shenzhen Xinbao promptly and unconditionally to Party A and/or its
designee subject to the permission of and to the extent permitted by the PRC laws; |
||
10.9 | Not request Shenzhen Xinbao to distribute dividends or profits to it; |
10.10 | In case its equity interest in Shenzhen Xinbao is transferred to Party A or its
designee, Party B will, subject to compliance with legal requirements, pay all equity
transfer proceeds to Party A as the loan principal and as the loan interests or fund
utilization costs permitted by laws; |
10.11 | Comply strictly with the provisions of this Agreement, fully perform its obligations
under this Agreement and not do any act/omission that affects or impairs the validity and
enforceability of this Agreement. |
11. | Party B undertakes that within the term of this Agreement, it will, in the capacity of the
shareholder of Shenzhen Xinbao, cause Shenzhen Xinbao: |
11.1 | Not to supplement, amend or modify its articles of association in any way, or to
increase or decrease its registered capital, or to change its capital structure in any way
without Party As prior written consent; |
11.2 | To maintain its existence, and to operate its business and deal with matters
prudently and effectively, subject to good financial and business rules and practices; |
11.3 | Not to sell, transfer, mortgage or otherwise dispose of, or cause any other security
interest to be created on, the legal or beneficial interests in any of its assets,
business or income at any time after the signing of this Agreement without Party As prior
written consent; |
11.4 | Not to create, succeed to, guarantee or permit any liability, without Party As prior
written consent, except (i) the liability arising from the normal course of business, but
not arising from the loan; and (ii) the liability disclosed to Party A and approved by
Party A in writing; |
11.5 | To operate persistently all the business in the normal course of business to maintain
the value of its assets; |
11.6 | Not to execute any material contracts (a contract will be deemed material if its
value exceeds On Hundred Thousand Renminbi (RMB100,000)), without Party As prior written
consent, other than those executed during the normal course of business; |
5
11.7 | To provide information concerning all of its operations and financial performance at
Party As request; |
11.8 | Not to be merged or consolidated with, acquire or invest in, any other person without
Party As prior written consent; |
11.9 | Not to distribute dividends to each shareholder in any way without Party As prior
written consent. However, Shenzhen Xinbao shall promptly distribute all its
distributable profits to Party As shareholders upon Party As request; |
11.10 | To inform promptly Party A of any existing or potential litigation, arbitration or
administrative proceedings concerning its assets, business or income; |
11.11 | To execute all necessary or appropriate documents, to take all necessary or
appropriate actions and to bring all necessary or appropriate lawsuits or to make all
necessary and appropriate defenses against all claims in order to maintain the ownership
over all its assets; |
11.12 | To comply strictly with the Service Agreement and other agreements executed by it
with Party As affiliates, to perform its obligations under the Service Agreements and
other agreements, and not to do any act/omission that affects the validity and
enforceability of such agreements. |
12. | This Agreement shall be binding on and inure to the benefit of both parties hereto and their
respective successors, heirs and permitted assignees. Without the prior written approval of
Party A, Party B shall not transfer, pledge or otherwise assign any of its rights, benefits or
obligations under this Agreement. |
13. | Party B hereby agrees that Party A may assign its rights and obligations under this Agreement
to any other third parties when necessary. Party A shall only be required to notify Party B
in writing when such transfer occurs and no further consent from Party B shall be needed in
respect of the transfer. |
14. | The formation, validity, interpretation, performance, amendment and termination of and
resolution of disputes in connection with this Agreement shall be governed by the PRC laws. |
15. | Arbitration |
15.1 | Any dispute, controversy or claim arising from the interpretation and performance in
connection with this Agreement (including any question regarding its existence, validity
or termination) shall be settled by both parties through friendly consultations. In case
no settlement can be reached within thirty (30) days after one party makes a request for
settlement, either party may submit such dispute to the China International Economic and
Trade Arbitration Commission (CIETAC) for arbitration in accordance with its
arbitration rules then in effect at the time of applying for arbitration. The
arbitration award shall be final and binding upon both parties; |
6
15.2 | The seat of arbitration shall be Shenzhen; |
||
15.3 | The language of arbitration proceedings shall be Chinese. |
16. | This Agreement shall be formed on its signing date. Both parties agree and acknowledge that
the terms and conditions of this Agreement shall be effective as of the date on which the loan
is released until both parties have performed their obligations under this Agreement. |
17. | Party B shall not terminate or revoke this Agreement unless (a) Party A commits a gross
negligence, fraud or other material illegal acts; or (b) Party A goes bankrupt. |
18. | This Agreement shall not be amended or modified except with the written consent of both
parties. In case of anything not covered herein, both parties may make supplements hereto by
signing a written agreement. Any amendment, modification, supplement or annex to this
Agreement shall form an integral part of this Agreement. |
19. | This Agreement constitutes the entire agreement between both parties with respect to the
transactions contemplated herein and supersedes all prior oral discussions or written
agreements reached by both parties with respect to the transactions mentioned above. |
20. | This Agreement is severable. If any provision of this Agreement is held to be invalid or
unenforceable, such provision shall not affect the validity and enforceability of the
remainder of this Agreement. |
21. | Each party hereto shall keep in strict confidence the information concerning the other
partys business, operation, financial performance or other confidential data obtained under
this Agreement or during the performance of this Agreement. |
22. | Any obligation arising out of this Agreement or that is due before the expiration or early
termination of this Agreement shall survive such expiration or early termination. Articles 14,
15 and 21 hereof shall survive the termination of this Agreement. |
23. | This Agreement is executed in two originals, with each of Party A and Party B holding one
original. All originals have the same legal effect. |
7
Party A: Ying Si Kang Information Technology (Shenzhen) Co., Ltd. |
||||
Legal Representative/Authorized Representative: Chop: [Chop affixed] |
/s/ Yuan Tian
|
Party B: Yuan Tian |
||||
Signature:
|
/s/ Tian Yuan
|
8
1. | Party A is a wholly foreign-owned enterprise incorporated in the
Peoples Republic of China (hereinafter the PRC). |
|
2. | Party B is a citizen of the PRC and holds 5% equity interest in
Shenzhen Xinbao Investment Management Co., Ltd. (hereinafter Shenzhen Xinbao), a limited liability company incorporated in Shenzhen,
China. |
|
3. | Party A and Party B signed
the Loan Agreement on December 3, 2010,
pursuant to which, Party A will provide an interest-free loan in the
total amount of One Thousand Five Hundred Renminbi (RMB1,500) to Party
B (hereinafter the Loan) to Party B, and Party B will pledge all of
his equity interest in Shenzhen Xinbao to Party A as a guarantee for
the Loan. |
1. | Definitions |
1.1 | Right of Pledge: refers to all the contents as set forth in Article 2 hereunder. |
||
1.2 | Equity Interest: refers to all the equity interest legally held by the Pledgor
in Shenzhen Xinbao. |
||
1.3 | Event of Default: refers to any circumstances set forth in Article 7.1 hereof. |
||
1.4 | Notice of Default: refers to the notice of default issued by the Pledgee in
accordance with this Agreement, declaring the occurrence of an Event of Default. |
2. | Right of Pledge |
3. | Registration of Pledge |
3.1 | Within one (1) week after the signing of this Agreement, the Pledgor
shall cause Shenzhen Xinbao to record the Pledgees Right of Pledge
over his Equity Interest in the register of shareholders and deliver
the copy of the register of shareholders bearing the common seal of
Shenzhen Xinbao, as well as the original of equity contribution
certificate of Shenzhen Xinbao to the Pledgee for safe-keeping. |
||
3.2 | Both parties agree that if conditions permit, they will make their
best effort to file, and cause the pledge under this Agreement to be
filed, with the industrial and commercial administrative department in
the place where Shenzhen Xinbao is registered, but both parties
confirm that unless compulsorily stipulated by the PRC laws and
regulations, whether this Agreement is filed as above or not will not
affect the validity of this Agreement. |
4. | Rights of the Pledgee |
4.1 | Where the Pledgor does not perform his liabilities, the Pledgee shall be entitled to be
first compensated from the money converted from, or the proceeds from the auction or sale
of, the Equity Interest of Shenzhen Xinbao that is pledged. |
||
4.2 | The Pledgee shall be entitled to the bonus arising from the Equity Interest that is pledged. |
5. | Representation and Warranty of the Pledgor |
5.1 | The Pledgor is the legal owner of the pledged Equity Interest. |
||
5.2 | Except for the interest of the Pledgee, the Pledgor has not created
other pledges or any other kinds of rights over the Equity Interest. |
||
5.3 | The pledge of the Equity Interest by the Pledgor has obtained the
consent of the other shareholders of Shenzhen Xinbao, and other
shareholders have unanimously agreed that they will give up the
exercise of their respective preemptive right when the Pledgee
actually exercises the Right of Pledge. |
6. | Undertakings by the Pledgor |
6.1 | During the term of this Agreement, the Pledgor undertakes to
the Pledgee for the benefit of the Pledgee that he will: |
6.1.1 | Not transfer or assign the Equity
Interest, nor create or cause to be
created any pledge which may affect the
rights and interests of the Pledgee
without the prior written consent of the
Pledgee; |
2
6.1.2 | Comply with the laws and regulations with
respect to the pledge of rights; present
to the Pledgee the notices, orders or
suggestions with respect to the Right of
Pledge issued or made by the competent
authority within five (5) days upon
receipt thereof; and comply with such
notices, orders or suggestions; or make an
objection to or a statement on the
foregoing matters at the reasonable
request of the Pledgee or with the consent
of the Pledgee; |
||
6.1.3 | Timely notify the Pledgee of any events or
any received notices which may affect the
Pledgors right over the Equity Interest
or any part thereof, or may change the
Pledgors any warranty and obligation
under this Agreement or may have effects
on it. |
6.2 | The Pledgor agrees that the Pledgees right to exercise
the Right of Pledge obtained pursuant to this Agreement
shall not be interrupted or hindered by the Pledgor or any
of its successors or principals or any other person
through legal proceedings. |
||
6.3 | The Pledgor undertakes to the Pledgee that in order to
protect or improve the guarantee for the repayment of the
loan under this Agreement, the Pledgor will execute in
good faith and cause other interested persons relating to
the Right of Pledge to execute all right certificates and
contracts required by the Pledgee and/or perform and cause
other interested persons to perform the acts required by
the Pledgee and facilitate the exercise of the rights and
authority granted to the Pledgee under this Agreement. |
||
6.4 | The Pledgor undertakes to the Pledgee that he will execute
all documents for the change of equity certificate (if
applicable and necessary) with the Pledgee and any persons
designated by it (natural persons/ legal persons) and
shall, within a reasonable period, provide to the Pledgee
all notices, orders and decisions about the Right of
Pledge as it deems necessary. |
||
6.5 | The Pledgor undertakes to the Pledgee that for the purpose
of the Pledgees benefits, he will comply with and perform
all warranties, undertakings, agreements, representations
and conditions. Where the Pledgor does not perform, in
whole or in part, his warranties, undertakings,
agreements, representations and conditions, the Pledgor
shall compensate all losses suffered by the Pledgee
arising therefrom. |
7. | Event of Default |
7.1 | The following events shall be regarded as the Events of Default: |
7.1.1 | The Pledgor fails to perform his obligations under the Loan Agreement; |
||
7.1.2 | Any representation or warranty made by the Pledgor in Article 5
hereof contains misleading or false information that is material
and/or the Pledgor breaches any warranty in Article 5 hereof; |
||
7.1.3 | The Pledgor breaches the undertakings under Article 6 hereof; |
3
7.1.4 | The Pledgor breaches any of the other provisions of this Agreement; |
||
7.1.5 | The Pledgor waives the pledged Equity Interest or transfers or assigns the
pledged Equity Interest without the prior written consent of the Pledgee; |
||
7.1.6 | Any borrowing, guarantee, compensation, undertaking or other debt
liabilities of the Pledgor (1) is required to be repaid or performed in
advance due to a default; or (2) has been due but cannot be repaid or
performed on time, which, in the opinion of the Pledgee, would have
affected the ability of the Pledgor in performing his obligations under
this Agreement; |
||
7.1.7 | Shenzhen Xinbao is incapable of repaying the general debts or other debts; |
||
7.1.8 | This Agreement becomes illegal or the Pledgor fails to continue to perform
his obligations herein due to any cause other than force majeure; |
||
7.1.9 | The properties owned by the Pledgor have significant adverse changes,
which, in the opinion of the Pledgee, would have affected the ability of
the Pledgor in performing his obligations under this Agreement; |
||
7.1.10 | The breach by the Pledgor due to his act or omission regarding the other
provisions of this Agreement. |
7.2 | If the Pledgor knows or finds that any matter stated in Article 7.1 hereof or any event
possibly resulting in any of the above matters has occurred, he shall immediately inform
the Pledgee in writing. |
||
7.3 | Unless the Events of Default listed in this Article 7.1 has been resolved to the
satisfactory of the Pledgee, the Pledgee may give a written Notice of Default to the
Pledgor at any time when the Pledgor is in default or thereafter, requesting the Pledgor to
immediately pay the outstanding debts and other payables under the Loan Agreement or
requesting to dispose of the Right of Pledge according to Article 8 hereof. |
8. | Exercise of the Right of Pledge |
8.1 | The Pledgor shall not transfer or assign the pledged Equity Interest
before his obligations under the Loan Agreement have been fully
performed and without the prior written consent of the Pledgee |
||
8.2 | The Pledgee shall give a Notice of Default to the Pledgor when the
Pledgee exercises the Right of Pledge. |
||
8.3 | Subject to Article 7.3, the Pledgee may exercise the right to dispose
of the Right of Pledge when it gives a Notice of Default in accordance
with Article 7.3 or at any time thereafter. |
||
8.4 | The Pledgee shall be entitled to be first compensated from the money
converted from, or the proceeds from auction or sale of, all or part
of the Equity Interest hereunder in accordance with statutory
procedures until the outstanding debts and all other payables of the
Pledgor under the Loan Agreement are repaid. |
||
8.5 | When the Pledgee disposes of the Right of Pledge
in accordance with this Agreement, the Pledgor
shall not pose any obstacles, and shall give
necessary assistance in this regard so that the
Pledgee can realize its Right of Pledge. |
4
9. | Assignment of this Agreement |
9.1 | The Pledgor shall have no right to transfer any of his rights and
obligations under this Agreement unless with the prior consent of the
Pledgee. |
||
9.2 | This Agreement shall be binding upon the Pledgor and his successors or
heirs, and shall be valid and binding upon the Pledgee and each of its
successors, heirs or permitted assigns. |
||
9.3 | The Pledgee may, at any time and to the extent permitted by laws,
transfer or assign all or any of its rights and obligations under the
Loan Agreement to any person designated by it (natural person or legal
person). In this case, such assignee shall have the same rights and
obligations hereunder as those of the Pledgee as if the assignee is a
party hereto. When the Pledgee transfers or assigns the rights and
obligations under the Loan Agreement, a written notice shall be only
given by the Pledgee to the Pledgor, and the Pledgor shall, at the
request of the Pledgee, execute the relevant agreements and/or
documents with respect to such transfer or assignment. |
||
9.4 | A new pledge contract shall be signed between the new parties to the
pledge after the change of the Pledgee as result of the transfer. |
10. | Effectiveness and Term |
11. | Termination |
12. | Handling Charges and Other Expenses |
5
13. | Force Majeure |
13.1 | Force Majeure means any event that is beyond the
reasonable control of either party and unavoidable or
unpreventable after he/it gives reasonable attention,
including but not limited to government act, act of God,
fire, explosion, storm, flood, earthquake, tide,
lightning or war, but shortage of credit, funds or
financing shall not be deemed to be the event beyond the
reasonable control of either party. The party who is
affected by the Force Majeure shall inform the other
party as soon as possible of the event, in respect of
which the exemption from such obligations is sought. |
||
13.2 | Should the performance of this Agreement be delayed or
prevented due to any Force Majeure defined above, the
party who is affected by the Force Majeure shall not
be required to assume any liabilities hereunder to the
extent that it is within the scope of the delay or
prevention. The party so affected shall take
appropriate measures to minimize or eliminate the impact
of Force Majeure, and make endeavors to resume the
performance of the obligations delayed or prevented by
the Force Majeure. Both parties agree to make their
best efforts to resume the performance of this Agreement
once the Force Majeure is eliminated. |
14. | Confidentiality |
15. | Dispute Resolution |
15.1 | This Agreement shall be governed by and construed in accordance with the PRC laws. |
15.2 | Any dispute between the parties arising from the
interpretation and performance of the provisions of
this Agreement shall be settled by both parties in
good faith through negotiations. In case no
settlement can be reached by both parties, either
party may refer such dispute to the China
International Economic and Trade Arbitration
Commission (CIETAC) for arbitration in accordance
with its arbitration rules then in effect. The seat
of arbitration shall be Shenzhen and the language of
proceedings shall be Chinese. The arbitral award
shall be final and binding upon both parties. |
6
16. | Notice |
17. | Integrity of this Agreement |
18. | Severability of this Agreement |
19. | Amendment or Supplement to this Agreement |
19.1 | The parties hereto may make amendments or supplements to
this Agreement by written agreement. All amendment
agreements and supplemental agreements in relation to this
Agreement that are duly signed by both parties shall form
an integral part of this Agreement, and shall have the
same legal effect as this Agreement. |
||
19.2 | This Agreement and any amendments, supplements or changes
thereof shall be in writing and will come into effect upon
being executed and sealed by both parties hereto. |
20. | Counterparts |
7
Pledgee: Ying Si Kang Information Technology (Shenzhen) Co., Ltd. |
||||
Legal Representative/Authorized Representative:
|
/s/ Yuan Tian
|
|||
Chop: [Chop affixed] |
Pledgor:
|
Yuan Tian | |||
Signature:
|
/s/ Yuan Tian
|
Third Party: Shenzhen Xinbao Investment Management Co., Ltd. |
||||
Legal Representative/Authorized Representative:
|
/s/ Yuan Tian | |||
Chop: [Chop affixed] |
8
1. | Party A is a wholly foreign-owned enterprise incorporated under the laws of the Peoples Republic of China (hereinafter the PRC); | |
2. | Party C is a limited liability company incorporated in Shenzhen, the PRC; |
3. | Party B is a shareholder of Party C. Party B holds 5% equity interest in Party C (hereinafter the Equity Interest); |
4. | Party A and Party B signed the Loan Agreement on December 3, 2010, pursuant to which Party B will borrow a loan of One Thousand Five Hundred Renminbi (RMB1,500) from Party A; |
5. | Party A and Party B signed the Equity Pledge Agreement on December 3, 2010, pursuant to which Party B will pledge his Equity Interest in Party C as a guarantee for the loan under the Loan Agreement; |
6. | Party B intends to grant an exclusive purchase option to Party A so that Party A may request Party B to sell his Equity Interest to it upon certain conditions are met. |
7. | Simultaneously with the execution hereof, Party A signed the Exclusive Purchase Option Agreements with Chunlin Wang, another shareholder of Party C, pursuant to the terms similar to this Agreement. In accordance with the Exclusive Purchase Option Agreement, Chunlin Wang will grant to Party A an exclusive purchase option for the purchase of his Equity Interest in Party C. |
1.1 | Grant of Option |
1.2 | Exercising Steps |
1.3 | Purchase Price |
1.3.1 | When Party A exercises the Call Option, the purchase price of the Purchased Equity (the Purchase Price) shall be equal to the actual capital contribution made by Party B for the Purchased Equity, unless an appraisal is required to be made in respect of the Equity Interest by applicable PRC laws and regulations then in effect or there are other restrictions imposed by such PRC laws and regulations on the price of Equity Interest. |
1.3.2 | If an appraisal is required to be made in respect of the Equity Interest by the PRC laws and regulations that are applicable at the time when Party A exercises its Call Option or there are other restrictions imposed by such PRC laws and regulation on the price of Equity Interest, the Parties agree that the Purchase Price shall be the lowest price permitted by applicable laws. |
1.4 | Transfer of the Purchased Equity |
2
1.4.1 | Party B shall cause Party C to convene a shareholders meeting in a timely manner, during which a resolution approving the transfer by Party B of his Equity Interest to Party A and/or the Designee shall be passed; |
1.4.2 | Party B shall, pursuant to the requirements of this Agreement and the Equity Purchase Notice in connection with the Purchased Equity, enter into an equity transfer agreement with Party A and/or the Designee (as applicable) for each transfer; | ||
1.4.3 | The related parties shall execute all other necessary contracts, agreements or documents, obtain all necessary government approvals and consents and take all necessary actions to grant the valid ownership of the Purchased Equity to Party A and/or the Designee without any security interest being attached thereto and cause Party A and/or the Designee to be the registered owner of the Purchased Equity. In this Article and this Agreement, Security Interest includes guarantee, mortgage, pledge, third party right or interest, any share option, right of acquisition, right of first refusal, right of set-off, ownership detainment or other security arrangements, but excluding any security interest arising under the Equity Pledge Agreement. |
1.5 | Payment |
2. | Undertakings Relating to the Equity Interest |
2.1 | Undertakings by Party C | ||
Party B and Party C hereby undertake: |
2.1.1 | Not to supplement, amend or modify Party Cs articles of association in any way, or to increase or decrease its registered capital, or to change its registered capital structure in any way without Party As prior written consent; | ||
2.1.2 | To maintain its existence, and to operate its business and deal with matters prudently and effectively, subject to good financial and business rules and practices; |
3
2.1.3 | Not to sell, transfer, mortgage or otherwise dispose of, or cause any other security interest to be created on, the legal or beneficial interests in any of Party Cs assets, business or income at any time after the signing of this Agreement without Party As prior written consent; | ||
2.1.4 | Not to create, succeed to, guarantee or permit any liability, without Party As prior written consent, except (i) the liability arising from the usual or normal course of business, but not arising from the loan; and (ii) the liability disclosed to Party A and approved by Party A in writing; | ||
2.1.5 | To operate persistently all the business in the normal course of business to maintain the value of Party Cs assets, and not to do any act/omission affecting its operations and asset value; | ||
2.1.6 | Without the prior written consent of Party A, not to enter into any material agreement, other than the agreements in the normal course of business (for the purpose of this Agreement, an agreement will be deemed material if its value exceeds One Hundred Thousand Renminbi (RMB100,000); | ||
2.1.7 | Without the prior written consent of Party A, not to provide loan or credit to any person; | ||
2.1.8 | To provide information concerning Party Cs operations and financial condition at Party As request; | ||
2.1.9 | To purchase and maintain the insurance at the insurance company acceptable to Party A, whose amount and type shall be the same as those of the insurance normally procured by the companies engaged in similar businesses and possessing similar properties or assets in the area where Party C is located; | ||
2.1.10 | Not to be merged or consolidated with, acquire or invest in, any other person without Party As prior written consent; | ||
2.1.11 | To inform promptly Party A of any existing or potential litigation, arbitration or administrative proceedings concerning Party Cs assets, business or income; | ||
2.1.12 | To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or to make all necessary and appropriate defenses against all claims in order for Party C to maintain the ownership over all its assets; | ||
2.1.13 | Not to distribute dividends to Party Cs shareholders in any way without Party As prior written consent. However, Party C shall promptly distribute all or part of its distributable profits to Party As shareholders upon Party As request; | ||
2.1.14 | At the request of Party A, to appoint any person nominated by Party A as the director of Party C. |
4
2.2 | Undertakings by Party B | |
Party B hereby undertakes: |
2.2.1 | Not to sell, transfer, pledge or otherwise dispose of, or cause any other security interest to be created on, the legal or beneficial interest in his Equity Interest at any time after the signing of this Agreement without Party As prior written consent, but except the right of pledge created on Party Bs Equity Interest in accordance with the Equity Pledge Agreement; | ||
2.2.2 | Without Party As prior written consent, not to vote for or support or execute at shareholders meetings of Party C any shareholders resolution approving the sale, transfer, mortgage or otherwise disposal of, or causing any other security interest to be created on, his legal or beneficial interest in the Equity Interest of Party C, except to Party A or its Designee; | ||
2.2.3 | Without Party As prior written consent, not to vote for or support or execute at shareholders meetings of Party C any resolution approving Party C to be merged or consolidated with, acquire or invest in, any person; | ||
2.2.4 | To irrevocably agree to the grant by Party Cs another shareholder, Chunlin Wang, of an exclusive Call Option to Party A, and to irrevocably waive his preemptive right to such Equity Interest to be transferred by Chunlin Wang to Party A when Party A exercises its Call Option; | ||
2.2.5 | To promptly inform Party A of any existing or potential litigation, arbitration or administrative proceedings with respect to his Equity Interest; | ||
2.2.6 | To cause the shareholders meeting of Party C to approve the transfer of the Purchased Equity under this Agreement; | ||
2.2.7 | To execute all necessary or appropriate documents, to take all necessary or appropriate actions and to bring all necessary or appropriate claims or to make all necessary and appropriate defenses against all claims in order to maintain the ownership over his Equity Interest; | ||
2.2.8 | At Party As request, to appoint any person nominated by Party A as the director of Party C; | ||
2.2.9 | To strictly comply with the provisions of this Agreement and other agreements entered into jointly or severally by and among Party B, Party C and Party A, to perform all obligations under these agreements and not to do any act/omission that affects or impairs the validity and enforceability of these agreements. |
5
3. | Representations and Warranties |
3.1 | They have the power to execute and deliver this Agreement and any equity transfer agreement (each, a Transfer Agreement) to which they are a party and which is entered into in respect of each transfer of the Purchased Equity under this Agreement and to perform their respective obligations under this Agreement and any Transfer Agreement. Once executed, this Agreement and any Transfer Agreement to which they are a party will constitute a legal, valid and binding obligation and shall be enforceable against them in accordance with the provisions thereof; | ||
3.2 | The execution, delivery and performance of this Agreement or any Transfer Agreement and the performance of their respective obligations under this Agreement or any Transfer Agreement shall not: (i) violate any relevant PRC laws and regulations; (ii) conflict with their Articles of Association or other organizational documents; (iii) violate any contract or instrument to which they are a party or that binds upon them; (iv) violate any permit or approval granted to them and(or) any condition remaining in force; or (v) cause any permit or approval granted to them to be suspended, cancelled or attached with additional conditions; | ||
3.3 | Party C has good and saleable ownership over all assets. Party C has not created any security interest on the above assets; | ||
3.4 | Party C has no outstanding debts, except (i) debts arising from its normal course of business; and (ii) debts disclosed to Party A and approved by Party A in writing; | ||
3.5 | Party C complies with all the PRC laws and regulations applicable to the acquisition of assets; | ||
3.6 | Currently, there are no existing, pending or threatened litigation, arbitration or administrative proceedings related to the Equity Interest and Party Cs assets or Party C; and | ||
3.7 | Party B has good and saleable ownership over all his Equity Interest and has not created any security interest on such Equity Interest, but excluding the security interest under the Equity Pledge Agreement. |
6
4. | Assignment of this Agreement |
4.1 | Party B and Party C shall not transfer any of their rights and obligations under this Agreement to any third party without the prior written consent of Party A. | ||
4.2 | Party B and Party C hereby agree that Party A shall have the right to transfer all of its rights and obligations under this Agreement to other third parties when necessary. Party A shall only be required to serve written notice to Party B and Party C when such transfer is made, and no consent shall be further required from Party B and Party C in respect of such transfer. |
5. | Effectiveness and Term |
5.1 | This Agreement shall become effective as of the date first above written. | ||
5.2 | The term of this Agreement shall be ten (10) years unless it is early terminated in accordance with the provisions of this Agreement or the relevant agreements separately signed by the Parties. The term of this Agreement may be extended with the written confirmation of Party A before its expiration. The extension thereof shall be agreed upon by the Parties through negotiation. | ||
5.3 | If the operation term (including any extension thereof) of Party A or Party C expires or either Party terminates for other reasons within the term set forth in Article 5.2, this Agreement shall be terminated at the time of the termination of such Party, unless Party A has transferred its rights and obligations in accordance with Article 4.2 hereof. |
6. | Applicable Law and Dispute Resolution |
6.1 | Applicable Law |
6.2 | Dispute Resolution |
7. | Taxes and Expenses |
7
8. | Notices |
9. | Confidentiality |
(a) | the information that is or will be known to the public (provided that it is not disclosed to the public without authorization by the information receiving party); | ||
(b) | the information required to be disclosed by applicable laws or stock exchanges rules or regulations; or | ||
(c) | the information required to be disclosed by either Party to his/its legal or financial advisors with respect to the transaction contemplated under this Agreement, for which such legal or financial advisors shall also comply with the confidentiality obligations similar to those stated in this Article. Any divulgence of confidential information by any personnel of either Party or any institutions engaged by him/it shall be deemed as the divulgence of confidential information by such Party, and such Party shall be liable for the breach pursuant to this Agreement. This article shall survive regardless of whether this Agreement is invalid, discharged, terminated or cannot be operated due to any reason. |
10. | Further Assurance |
11. | Miscellaneous |
11.1 | Amendment, Modification and Supplement |
8
11.2 | Integrity of this Agreement |
11.3 | Severability of this Agreement |
11.4 | Headings |
11.5 | Language and Counterparts |
11.6 | Successors |
11.7 | Survival |
9
11.8 | Waiver |
10
Party A: Ying Si Kang Information Technology (Shenzhen) Co., Ltd. |
||||
Legal Representative/Authorized Representative:
|
/s/ Yuan Tian
|
|||
Chop: [Chop affixed] |
Party B:
|
Yuan Tian | |||
Signature:
|
/s/ Yuan Tian
|
Party C: Shenzhen Xinbao Investment Management Co., Ltd. |
||||
Legal Representative/Authorized Representative:
|
/s/ Yuan Tian
|
|||
Chop: [Chop affixed] |
11
/s/ Yuan Tian | ||||
December 3, 2010 |
2
3
4
5
6
WINNER SIGHT GLOBAL LIMITED |
||||
By: | /s/ Timothy J. Curt | |||
Name: | Timothy J. Curt | |||
Title: | Director | |||
CISG HOLDINGS LTD. |
||||
By: | /s/ Hu Yinan | |||
Name: | Hu Yinan | |||
Title: | ||||
DATONG INTERNATIONAL HOLDINGS LIMITED |
||||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | ||||
In his personal capacity: |
||||
/s/ Keping Lin | ||||
KEPING LIN | ||||
EXPERT CENTRAL LIMITED |
||||
By: | s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | ||||
MANCINI HOLDINGS LIMITED |
||||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | ||||
Name of Shareholders | Class of Shares | Number of Shares | % of Share Capital | |||||||||
Winner Sight Global Limited |
Class B Ordinary Shares | 9,438,220 | 1.0 | % | ||||||||
CISG Holdings Ltd. |
Class B Ordinary Shares | 513,333,767 | 54.4 | % | ||||||||
Mancini Holdings Limited |
Class A Ordinary Shares | 210,525,000 | 22.3 | % | ||||||||
Expert Central Limited |
Class A Ordinary Shares | 210,525,000 | 22.3 | % |
Page | ||||
ARTICLE 1 Definitions |
||||
Section 1.01. Definitions |
2 | |||
Section 1.02. Other Definitional and Interpretative Provisions |
10 | |||
ARTICLE 2 Purchase and Sale |
||||
Section 2.01. Purchase and Sale |
11 | |||
Section 2.02. Closing Deliverables |
11 | |||
Section 2.03. Closing |
12 | |||
ARTICLE 3 Representations and Warranties of Seller Companies |
||||
Section 3.01. Corporate Status |
13 | |||
Section 3.02. Authority |
13 | |||
Section 3.03. No Breach |
14 | |||
Section 3.04. Ownership |
14 | |||
Section 3.05. Litigation |
14 | |||
Section 3.06. Representations |
15 | |||
ARTICLE 4 Representations and Warranties of the Founder |
||||
Section 4.01. Status; Authority |
15 | |||
Section 4.02. No Breach |
16 | |||
Section 4.03. Ownership |
16 | |||
Section 4.04. Non-competition |
17 | |||
Section 4.05. Litigation |
17 | |||
Section 4.06. Representations |
17 | |||
ARTICLE 5 Representations and Warranties Regarding the Group Companies |
||||
Section 5.01. Corporate Status |
17 | |||
Section 5.02. Power and Authority; Corporate Authorization |
18 | |||
Section 5.03. Enforceability |
18 | |||
Section 5.04. Governmental Authorization; Third-Party Consent |
19 | |||
Section 5.05. Non contravention |
19 | |||
Section 5.06. Capitalization |
19 | |||
Section 5.07. Financial Statements |
20 |
i
Page | ||||
Section 5.08. Books and Records |
21 | |||
Section 5.09. Absence of Certain Changes |
21 | |||
Section 5.10. No Undisclosed Material Liabilities |
21 | |||
Section 5.11. Intercompany Accounts |
21 | |||
Section 5.12. Material Contracts |
22 | |||
Section 5.13. No Litigation |
23 | |||
Section 5.14. Compliance with Laws |
23 | |||
Section 5.15. Properties |
24 | |||
Section 5.16. Tax |
25 | |||
Section 5.17. No Illegal or Improper Transactions |
26 | |||
Section 5.18. Intellectual Property |
26 | |||
Section 5.19. Insurance Coverage |
27 | |||
Section 5.20. Licenses and Permits |
28 | |||
Section 5.21. Receivables |
28 | |||
Section 5.22. Employees, Contracted Agents, Labor Matters, Etc. |
28 | |||
Section 5.23. Settlement |
30 | |||
Section 5.24. Finders Fees |
30 | |||
Section 5.25. Representations |
30 | |||
ARTICLE 6 Representations and Warranties of Buyer |
||||
Section 6.01. Corporate Existence and Power |
30 | |||
Section 6.02. Corporate Authorization |
30 | |||
Section 6.03. Governmental Authorization |
31 | |||
Section 6.04. Noncontravention |
31 | |||
Section 6.05. Purchase for Investment |
31 | |||
Section 6.06. Litigation |
32 | |||
Section 6.07. No Other Representations and Warranties |
32 | |||
ARTICLE 7 Covenants of Seller Companies, the Founder and the Group Companies |
||||
Section 7.01. Conduct of the Group Companies |
32 | |||
Section 7.02. Access to Information; Confidentiality |
34 | |||
Section 7.03. Other Transaction Documents |
36 | |||
Section 7.04. Intercompany Accounts |
36 | |||
Section 7.05. Tax |
36 | |||
Section 7.06. Notices of Certain Events |
36 | |||
Section 7.07. Resignations and Appointment of Directors |
37 | |||
Section 7.08. PFIC |
37 | |||
ARTICLE 8 Covenants of Buyer |
||||
Section 8.01. Confidentiality |
38 | |||
Section 8.02. Tax Matters |
39 |
ii
Page | ||||
ARTICLE 9 Covenants of parties |
||||
Section 9.01. Reasonable Efforts; Further Assurances |
39 | |||
Section 9.02. Certain Filings |
40 | |||
Section 9.03. Public Announcements |
40 | |||
Section 9.04. Non-solicitation |
40 | |||
Section 9.05. Transfer Taxes |
41 | |||
Section 9.06. Onshore SPA |
41 | |||
ARTICLE 10 Conditions to Closing |
||||
Section 10.01. Conditions to Obligations of Buyer and Seller |
42 | |||
Section 10.02. Conditions to Obligation of Buyer |
42 | |||
Section 10.03. Conditions to Obligation of Seller |
43 | |||
ARTICLE 11 Survival; Indemnification |
||||
Section 11.01. Survival |
44 | |||
Section 11.02. Indemnification |
44 | |||
Section 11.03. Tax Indemnity |
45 | |||
Section 11.04. Limitations on Indemnification |
46 | |||
Section 11.05. Third Party Claim Procedures |
48 | |||
Section 11.06. Direct Claim Procedures |
49 | |||
ARTICLE 12 Termination |
||||
Section 12.01. Grounds for Termination |
50 | |||
Section 12.02. Effect of Termination |
50 | |||
Section 12.03. Reversal of Transfer of Onshore Interest |
50 | |||
ARTICLE 13 Miscellaneous |
||||
Section 13.01. Notices |
50 | |||
Section 13.02. Amendments and Waivers |
52 | |||
Section 13.03. Expenses |
52 | |||
Section 13.04. Successors and Assigns |
52 | |||
Section 13.05. Governing Law |
53 | |||
Section 13.06. Arbitration |
53 | |||
Section 13.07. Counterparts; Effectiveness; Third Party Beneficiaries |
54 | |||
Section 13.08. Entire Agreement |
54 | |||
Section 13.09. Severability |
54 | |||
Section 13.10. Specific Performance |
54 |
iii
Page | ||||
Section 13.11. Joint Drafting |
54 | |||
Section 13.12. Share Subscription Agreement |
54 |
iv
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4
5
6
7
(i) | this Agreement, | ||
(ii) | the Shareholders Agreement, | ||
(iii) | the Amended and Restated Memorandum and Articles, | ||
(iv) | the Share Subscription Agreement, | ||
(v) | the Onshore SPA, | ||
(vi) | the VIE Agreements, |
8
(vii) | the IT Agreement, | ||
(viii) | the Settlement Agreement, and | ||
(ix) | the Supplemental Minority Interests Holding Agreement. |
Term | Section | |||
Agreement
|
Preamble | |||
Arbitration
|
11.05 | (a) | ||
Benefits
|
5.22 | (f) | ||
Books and Records
|
5.07 | |||
Buyer
|
Preamble | |||
Buyer Designee
|
Recitals | |||
Buyer Indemnitee
|
11.02 | (a) | ||
CNI
|
Preamble | |||
Closing
|
2.02 | (c) | ||
Company
|
Preamble |
9
Term | Section | |||
Covered Tax Claim
|
11.05 | (a) | ||
Covered Tax Loss
|
11.03 | |||
Damages
|
11.02 | |||
Datong Investment
|
Preamble | |||
Datong Insurance
|
Preamble | |||
Deductible
|
11.05 | (a) | ||
Dispute
|
11.05 | (a) | ||
e-mail
|
13.01 | |||
Expert Central
|
Preamble | |||
Founder
|
Preamble | |||
Government Officials
|
5.17 | |||
Group Company Securities
|
5.06 | (g) | ||
HK Company
|
Preamble | |||
HKIAC
|
11.05 | (a) | ||
Indemnified Party
|
11.05 | (a) | ||
Indemnifying Party
|
11.05 | (a) | ||
Intercompany Account Balances
|
5.11 | |||
Key Employees
|
5.22 | (a) | ||
Management Accounts
|
5.07 | |||
Mancini
|
Preamble | |||
Material Contracts
|
5.12 | (b) | ||
Meidiya
|
Preamble | |||
Mr. Lin
|
Preamble | |||
Notice of Arbitration
|
13.06 | (d) | ||
Onshore Companies
|
Preamble | |||
Ordinary Shares
|
Recitals | |||
Permits
|
5.20 | |||
PFIC
|
5.16 | |||
Pre-Closing Tax Return
|
8.02 | (b) | ||
Purchase Price
|
2.01 | |||
Real Property
|
5.15 | |||
Seller
|
Preamble | |||
Seller Companies
|
Preamble | |||
Seller Indemnitee
|
13.06 | (d) | ||
Social Insurance
|
5.22 | (f) | ||
Subject Shares
|
Recitals | |||
Third Party Claim
|
13.06 | (d) | ||
Tribunal
|
13.06 | (d) | ||
Warranty Breaches
|
11.04 | |||
WFOE
|
Recitals |
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
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WINNER SIGHT GLOBAL LIMITED |
||||
By: | /s/ Timothy J. Curt | |||
Name: | Timothy J. Curt | |||
Title: | Authorized Signatory | |||
CNINSURE INC. |
||||
By: | /s/ Hu Yinan | |||
Name: | Hu Yinan | |||
Title: | Chairman and CEO | |||
CISG HOLDINGS LTD. |
||||
By: | /s/ Hu Yinan | |||
Name: | Hu Yinan | |||
Title: | Chairman and CEO | |||
GUANGDONG MEIDIYA INVESTMENT CO., LTD. |
||||
By: | /s/ Lai Qiuping | |||
Name: | Lai Qiuping | |||
Title: | President & Director |
/s/ Keping Lin | ||||
KEPING LIN | ||||
EXPERT CENTRAL LIMITED |
||||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | Director | |||
MANCINI HOLDINGS LIMITED |
||||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | Director | |||
DATONG INTERNATIONAL HOLDINGS LIMITED |
||||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | Director | |||
DATONG GROUP LIMITED |
||||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | Director | |||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | Director | |||
BEIJING FANHUA DATONG INVESTMENT MANAGEMENT CO., LTD. |
||||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | Chief Director | |||
By: | /s/ Lin Keping | |||
Name: | Lin Keping | |||
Title: | Executive Director | |||
1. | ||
(Datong Insurance Sales & Service Company Limited) | ||
2. | ||
(Guangzhou Datong Insurance Agency Co., Ltd.) | ||
3. | ||
(Sichuan Datong Insurance Agency Co., Ltd.) | ||
4. | ||
(Liaoning Datong Insurance Agency Co., Ltd.) | ||
5. | ||
(Hunan Datong Insurance Agency Co., Ltd.) | ||
6. | ||
(Henan Datong Insurance Agency Co., Ltd.) | ||
7. | ||
(Shaanxi Datong Insurance Agency Co., Ltd.) | ||
8. | ||
(Shandong Datong Insurance Agency Co., Ltd.) | ||
9. | ||
(Hebei Datong Insurance Agency Co., Ltd.) | ||
10. | ||
(Jiangsu Datong Insurance Agency Co., Ltd.) | ||
11. | ||
(Hainan Datong Insurance Agency Co., Ltd.) | ||
12. | ||
(Yunnan Datong Insurance Agency Co., Ltd.) |
1. | Beijing Fanhua Datong Investment Management Co., Ltd. (Datong Investment) is a limited
liability company jointly invested and established by the Transferor and Keping Lin under the
laws of the Peoples Republic of China (the PRC) and was duly incorporated on July 8, 2008,
with a registered capital of RMB20 million, of which RMB11 million were contributed by
Guangdong Meidiya, representing 55% of the equity interests in Datong Investment, and RMB9
million were contributed by Keping Lin, representing 45% of the equity interests in Datong
Investment. |
2. | Guangdong Meidiya agrees to transfer all of its 55% equity interests in Datong Investment to
Min Si Lian Hua (the Equity Transfer). Min Si Lian Hua agrees to accept the transfer of such
equity interests. Keping Lin, the Third Party, agrees to waive the right of first refusal in
respect of the Equity Transfer. |
1. | Equity Transfer |
1.1 | The Transferor agrees to transfer all of its 55% equity interests in Datong
Investment to the Transferee, and the Transferee agrees to accept the transfer of the
said equity interests, at an equity transfer price of RMB11 million (the Equity Transfer
Price). |
1.2 | Keping Lin, the Third Party, agrees to waive the right of first refusal in respect
of the Equity Transfer. |
1.3 | The Transferor and the Transferee shall cooperate with each other to complete the
transfer of any equity interests under the Equity Transfer and the payment of the Equity
Transfer Price pursuant to this Agreement. |
1.4 | Upon completion of the Equity Transfer, the Transferee and Keping Lin, the Third
Party, shall hold 55% and 45% equity interests in Datong Investment, respectively. |
2. | Representations and Warranties of the Transferor |
2.1 | The Transferor is a limited company duly incorporated and validly existing under
the PRC laws, which has full capacity for civil conduct, and has full capacity to
undertake civil liabilities under the PRC laws. This Agreement, once executed by the
parties hereto, constitutes its lawful, valid and binding obligations and is enforceable
against the Transferor. |
2
2.2 | The Transferor has obtained appropriate internal approval for the Equity Transfer in
accordance with this Agreement. The execution and performance of this Agreement by the
Transferor will not breach any agreements executed with any third parties. |
2.3 | The Transferor has full, valid and sufficient rights to own and dispose of any
equity interest transferred to the Transferee hereunder, and no pledge, security interest
or third party interest has been created over such equity interests. |
2.4 | The Transferor shall be liable for any loss suffered by the Transferee in
connection with any inconsistency between their representations and warranties mentioned
above and the facts. |
3. | Representations and Warranties of the Transferee |
3.1 | The Transferee is a limited company duly incorporated and validly existing under
the PRC laws, which has full capacity for civil conduct, and has full capacity to
undertake civil liabilities under the PRC laws. This Agreement, once executed by the
parties hereto, constitutes its lawful, valid and binding obligations and is enforceable
against the Transferee. |
3.2 | Party B has obtained appropriate internal approval for the Equity Transfer pursuant
to this Agreement. The execution and performance of this Agreement by the Transferee
will not breach any agreements executed with any third parties. |
3.3 | The Transferee shall be liable for any loss suffered by the Transferee in
connection with any inconsistency between their representations and warranties mentioned
above and the facts. |
4. | Payment of the Equity Transfer Price |
4.1 | The Transferee shall pay the Equity Transfer Price of RMB11 million to the
Transferor on the second working days after the satisfaction of all of the following
conditions (the Closing): |
(1) | this Agreement has been duly executed; and |
(2) | other documents that shall be signed by the Transferor for the change of
registration with the industrial and commercial administration department in respect
of the Equity Transfer, including but not limited to the shareholders resolution
adopted by the original shareholders meeting of Datong Investment for the approval
of the Equity Transfer, have been duly executed. |
5. | Obligations of Each Party |
5.1 | The Transferor shall, on the date of receiving the Equity Transfer Price from the
Transferee, issue written confirmation for the receipt of payment to the Transferee, and
shall issue an invoice of the said payment to the Transferee within 5 days. |
5.2 | The parties hereto confirm and agree that they shall work together and cooperate
with each other to execute other documents with respect to the Equity Transfer on the
date hereof, including but not limited to, the new articles of association of Datong
Investment signed between the Transferee and the Third Party, its amendments and the
shareholders resolution of Datong Investment signed between the Transferee and the Third
Party with respect to the matters such as election of directors. |
5.3 | The parties hereto confirm and agree that they shall exert their utmost efforts to
ensure Datong Investment to complete the all formalities in relation to the application
for change of registration to the relevant industrial and commercial departments in
respect of the Equity Transfer and the change of Datong Investments directors on the
Closing date of the Equity Transfer. |
3
5.4 | The parties hereto confirm and agree that they shall work together to cause all filing
and registration formalities in relation to the change of Datong Investments
shareholders and its board members with respect to the Equity Transfer to be completed
within forty-five days from the Closing date hereof. |
5.5 | The parties hereto confirm and agree that the beneficial owner of the 55% equity
interests in Datong Investment shall be changed from the Transferor to the Transferee
from the Closing date of the Equity Transfer. This means that the Transferee shall
become the beneficial owner of the 55% equity interests of Datong Investment from the
above date. |
6. | Undertaking of Taxes |
7. | Confidentiality |
8. | Governing Law and Dispute Settlement |
8.1 | This Agreement shall be governed by the PRC laws. |
8.2 | Any dispute arising out of this Agreement shall be resolved by the parties through
amicable negotiation. If the parties cannot resolve the dispute through amicable
negotiation within thirty days after the occurrence thereof, either party shall have the
right to submit such dispute to the China International Economic and Trade Arbitration
Commission, Beijing Branch, for arbitration (by a panel of three arbitrators) according
to its arbitration rules then in effect at the time of applying for arbitration. The
party that initiates the arbitration and the other party to the dispute shall be entitled
to appoint an arbitrator and the third arbitrator shall be appointed by the China
International Economic and Trade Arbitration Commission, Beijing Branch. The arbitral
award is final and binding upon all parties hereto. In the course of arbitration, the
parties shall continue to perform their respective obligations hereunder, except for
those matters or obligations in dispute that have been submitted for arbitration. |
9. | Liability for Breach and Termination of this Agreement |
9.1 | Within forty-five days after the Closing hereof and to the extent that the
Transferee has fully paid the Equity Transfer Price to the Transferor, if Datong
Investment fails to complete the formalities in relation to the change of filing for the
Equity Transfer with the industrial and commercial administration department for whatever
reasons, the Transferee shall be entitled to terminate this Agreement unilaterally. If
the Transferee chooses to terminate this Agreement, the parties hereto shall exert their
utmost efforts to restore all issues relating to this Agreement to their original status. |
9.2 | Under the circumstance set forth in Article 9.1 above, if the Transferee chooses
not to terminate this Agreement, the parties hereto shall exert their utmost efforts to
complete the formalities in relation to the change of filing for the Equity Transfer
with the industrial and commercial administration department. |
9.3 | If the Equity Transfer hereunder cannot be completed due to the occurrence of any
other matters, the parties hereto shall use their best effort to restore all issues
relating to this Agreement to their original status. |
9.4 | If any party hereto does not actually perform its obligations hereunder and thus
causes losses to other parties, the breaching party shall indemnify the non-breaching
party against all actual losses suffered by it. |
4
10. | Miscellaneous |
5
6
1. | In accordance with the Share Transfer Agreement signed by the Parties on the same date of
this Agreement, the Transferor agrees to transfer to the Transferee, and the Transferee agrees
to accept the transfer from the Transferor all of its 55% equity interest in Beijing Fanhua
Datong Investment Management Co., Ltd. (Datong Investment) (the Equity Transfer). |
2. | The Parties agree to enter into the following supplemental agreement in respect of the
effectiveness and termination of the Share Transfer Agreement mentioned above. |
1. | The Share Transfer Agreement shall automatically terminate and become invalid if one of the
following circumstances occurs: |
(i) | if the Transferee fails to pay to the Transferor the Equity Transfer Price of
RMB11 million in full within two workings days from the execution of the Share
Transfer Agreement; or |
(ii) | if the Closing of the Share Purchase Agreement entered into by and among
Winner Sight Global Limited, CNinsure Inc., CISG Holdings Ltd., Guangdong Meidiya
Investment Co., Ltd., Keping Lin, Expert Central Limited, Mancini Holdings Limited,
Datong International Holdings Limited, Datong Group Limited, Beijing Dahua Rongjin
Information Technology Co., Ltd., Beijing Fanhua
Datong Investment Management Co., Ltd. and Datong Insurance Sales & Service Company
Limited in relation to the trading of Class B common shares of Datong International
Holdings Limited does not take place within two working days from the execution of the
Share Transfer Agreement. |
2. | If the Share Transfer Agreement automatically terminates pursuant to the above requirements: |
(i) | the Parties shall use their best effort to offer cooperation to cause the
equity interest of the Transferor in Datong Investment to resume to its original
status, and the actions to be taken shall include but not limit to withdrawing any
application documents submitted to the relevant industrial and commercial
administrative bureau with respect to the Equity Transfer; |
(ii) | to the extent that the Share
Transfer Agreement terminates due to the
occurrence of the circumstance described in paragraph 1(ii) above, if the Transferee
has paid the Equity Transfer Price of RMB11 million, the Transferor shall return the
full amount of payment to the Transferee within two working days of the receipt of
such payment. |
3. | Unless otherwise herein required, the other provisions of the Share Transfer Agreement shall
remain unchanged. |
4. | This Agreement and the dispute resolution in connection therewith shall be governed by
Article 8 of the Share Transfer Agreement. |
5. | This Agreement is written in Chinese and shall become effective once it is signed by the
Parties on the date as first written above. This Agreement is executed in four originals with
each of the Parties and Datong Investment holding one original. All of them shall have the
same legal effect. |
1. | Party C (or Datong Investment) is a limited liability company jointly invested by Party A
and Party B and duly incorporated under the laws of the Peoples Republic of China (the PRC)
on July 8, 2008, with a registered capital of RMB20 million, of which RMB11 million were
contributed by Party A, representing 55% of the equity interests in Datong Investment, and
RMB9 million were contributed by Party B, representing 45% of the equity interests in Datong
Investment; |
2. | Party A and Party B have executed several agreements (Original Shareholders Agreements) in
respect of the rights and obligations between Datong Investment and Party A and Party B; |
3. | Party A intends to transfer all of its 55% equity interests in Datong Investment to Beijing
Min Si Lian Hua Investment Management Co., Ltd. (Min Si Lian Hua) (Equity Transfer), and
Min Si Lian Hua agrees to acquire the said equity interests; |
4. | CISG Holdings Ltd., the affiliated company of Party A, Winner Sight Global Limited, the
affiliated company of Min Si Lian Hua, and other related parties execute a SHARE PURCHASE
AGREEMENT (Offshore Agreement) on the date hereof in respect of the transfer by CISG
Holdings Ltd. of its equity interests in Datong International Holdings Limited to Winner Sight
Global Limited. |
1. | Party A shall return RMB69.7 million in the remaining security deposit to the account
designated by Party B after receiving the full payment made by Min Si Lian Hua with respect to
the Equity Transfer; the security deposit of RMB4 million shall be returned to the account
designated by Party B within ten (10) working days upon the completion of the 2010 annual
audit of CNinsure Inc., the affiliated company of Party A, or on May 31, 2011, whichever is
earlier. |
2. | Party B and Party C undertake as follows: |
(1) | to fully cooperate with CNinsure Inc, the affiliated company of Party A, in
preparing for the 2010 annual audit on Datong Investment and its subsidiaries; |
(2) | to fully cooperate with the auditors engaged by CNinsure Inc., the affiliated
company of Party A, in completing the 2010 annual audit on Datong Investment and its
subsidiaries; |
(3) | to provide Party A with the financial statements of Datong Investment and its
subsidiaries for January 2011 for its review. |
1. | The Parties hereto unanimously agree that Datong Investment shall pay RMB10 million to Party
A as dividend distribution and shall make such payment to Party A before December 31, 2012.
Notwithstanding the foregoing, Datong Investment did not distribute and will not distribute
any dividends to Party A, and Datong Investment bears no obligation to distribute dividends to
Party A in the past or in the future. |
2. | The Parties hereto further agree that if Datong Investment, Datong International Holdings
Limited and its subsidiaries raise funds through issuing shares publicly or by private
placement before December 31, 2012 (not including any funds raised through equity financing or
by the issuance of shares in any form in connection with the incentive of staff) and the
raised fund is more than USD15 million, Datong Investment shall distribute the dividend of
RMB10 million to Party A within 10 working days after the raised fund has been transferred to
the accounts of Datong Investment, Datong International Holdings Limited and its subsidiaries. |
2 / 5
3. | In accordance with the Original
Shareholders Agreements, Party A shall
be entitled to all consolidated net
profits (book value) of Datong
Investment from January 1, 2009 to
December 31, 2012, and 80% of its
consolidated net profits (book value)
for the year 2013. Meanwhile, Party B
shall assume all losses incurred by
Datong Investment from January 1, 2009
to December 31, 2013, and shall be
entitled to 20% of the consolidated net
profits (book value) of Datong
Investment for the year 2013. The
Parties hereto unanimously agree that
the aforementioned shall be terminated
in all aspects as of the date of the
effectiveness of this Agreement. |
3 / 5
4 / 5
5 / 5
Party B:
|
|
Address:
|
|
(1) | Party A is an enterprise duly incorporated under the laws of the Peoples Republic of China (hereinafter referred to as the PRC) with expertise in the technological development of IT platform equipment, economic information consulting service and training, and has a team of professionals in areas such as insurance technology, risk consulting, risk assessment and risk management, and has extensive experience in the organization and management of enterprises, as well as their operation and planning. |
(2) | Party B is an insurance intermediary firm duly incorporated under the PRC laws and the relevant regulations of the China Insurance Regulatory Commission (hereinafter referred to as CIRC), which is engaged in the provision of insurance intermediary services. |
(3) | Based on their respective industry advantages and needs, Party A and Party B agree to sign a written agreement to define their respective rights and obligations with respect to the provision by Party A of the training service in relation to IT platform and the internal control and compliance consulting service to Party B. |
1. | Consulting and Service: Sole and exclusive interest |
1.1 | During the term of this Agreement, Party A agrees to, as the provider of IT platform training and internal control and compliance consulting service to Party B, provide the IT platform training, and internal control and compliance consulting service to Party B (the details of which are set forth in the annex attached hereto) subject to the terms and conditions hereof. If Party B makes a request and such request is approved by Party A, Party A may provide Party B with any other consulting and services beyond the scope set out in the annex hereto. |
1.2 | Party B agrees to accept the training and consulting service provided by Party A, and Party B further agrees that, during the term of this Agreement, it will not accept any technology consulting and service in relation to the aforesaid business provided by any third party without the prior written consent of Party A. |
2. | Calculation and Payment of Training and Consulting Service Fee (hereinafter referred to as the Consulting Service Fee) |
2.1 | Both parties agree that the Consulting Service Fee under this Agreement shall be calculated and paid in the manner set forth in the annex hereto. |
2.2 | Both parties agree that if Party B requests Party A to provide any services not covered in the annex hereto, both parties may determine the sum of the Consulting Service Fee through consultation according to the scope of specific service and the market condition. |
2.3 | Both parties agree to negotiate the scope of specific service, as well as the calculation and payment method of the Consulting Service Fee every three months based on the market situation and their business development. Appropriate adjustments can be made if both parties reach an agreement through consultation. |
3. | Intellectual Property Rights |
3.1 | Party A shall be entitled to any copyrights in connection with the consulting and training services and IT platform provided by Party B, as well as the intellectual property rights of all research and development products obtained by Party A through research and development due to its performance of this Agreement and/or other agreements jointly signed by both parties, and any rights derived therefrom shall belong to Party A. The rights described above shall include but not limit to patent application right, copyrights or other intellectual property rights of the software, technical files and materials as carrier and the right to license or transfer such intellectual properties, etc. |
3.2 | During the performance of this Agreement, if Party B needs to use Party As software programs or systems, both parties will separately agree on the scope of the relevant software licenses, their form and license fees by agreement. |
4. | Representations and Warranties |
4.1 | Party A hereby represents and warrants as follows: |
4.1.1 | Party A is a consulting service enterprise duly incorporated and validly existing under the PRC laws; |
4.1.2 | The execution and performance of this Agreement by Party A are within its corporate power and business scope. Party A has adopted all requisite corporate actions and authorization and has obtained all necessary consents and approvals from third parties and government departments, and this Agreement is not in violation of the legal and contractual restrictions binding upon or influencing Party A; |
4.1.3 | Once executed, this Agreement will constitute its legal, valid and binding obligation and shall be enforceable against Party A in accordance with the provisions hereof. |
4.2 | Party B hereby represents and warrants as follows: |
4.2.1 | Party B is an investment intermediary firm duly incorporated and validly existing under the PRC laws and the relevant regulations of the CIRC; |
4.2.2 | The execution and performance of this Agreement by Party B are within its corporate power and business scope. Party B has adopted all requisite corporate actions and authorization and has obtained all necessary consents and approvals from third parties and government departments, and this Agreement is not in violation of the legal and contractual restrictions binding upon or influencing Party B; |
4.2.3 | Once executed, this Agreement will constitute its legal, valid and binding obligation and shall be enforceable against Party B in accordance with the provisions hereof. |
5. | Confidentiality |
5.1 | Party A and Party B undertake that they will use their best effort to take all reasonable measures to keep confidential any confidential data and information of the other party known to or given access to them due to the provision or acceptance of consulting and service to and from the other party (hereinafter referred to as the Confidential Information). No party shall disclose, give or transfer any such Confidential Information to any third party without the prior written consent of the other party. Once this Agreement terminates, the parties shall, at the request of the other party, return to the other party or destroy by themselves all documents, materials or software containing the Confidential Information, and delete any Confidential Information from all related memory devices, and shall not continue to use such Confidential Information. |
5.2 | The parties hereto acknowledge and confirm that any oral or written materials exchanged between them in connection with this Agreement shall be confidential information. Each party shall keep confidential all such information, and shall not disclose any of the information to any third party without the prior written consent of the other party, except for the following: (a) the information that is or will be known to the public (provided that it is not disclosed to the public without authorization by the information receiving party); (b) the information required to be disclosed by applicable laws or stock exchanges rules or regulations; or (c) the information required to be disclosed by either party to its legal or financial advisors with respect to the transaction contemplated under this Agreement, for which such legal or financial advisors shall also comply with the confidentiality obligations similar to those as stated in this Article. Any divulgence of confidential information by any personnel of either party or any institutions engaged by it shall be deemed as the divulgence of confidential information by such party, and such party shall be liable for such breach pursuant to this Agreement. |
5.3 | Both parties agree that this Article 5 shall survive regardless of whether this Agreement is invalid, changed, discharged, terminated or cannot be operated. |
6. | Indemnification |
7. | Effectiveness and Term |
7.1 | This Agreement shall be signed or sealed and become effective as of the date first above written. |
7.2 | The term of this Agreement shall be one (1) year unless it is early terminated in accordance with the provisions of this Agreement or the relevant agreements separately entered into by both parties. |
7.3 | With the written consent of Party A and Party B, this Agreement may be extended upon its expiration, and the extension thereof shall be determined by the parties through consultation. If both parties fail to reach an agreement on such extension, this Agreement shall be extended for one (1) year automatically upon its expiration (including expiration of any extension), unless Party A gives a written notice not to extend the term of this Agreement prior to the expiration hereof. |
7.4 | If the operation term (including any extension thereof) of either party expires or either party terminates for other reasons within the term set forth in Articles 7.2 and 7.3 hereof, this Agreement shall be terminated at the time of the termination of such party, unless such party has assigned its rights and obligations in accordance with Article 13 hereof. |
8. | Termination |
8.1 | Termination upon Expiration. This Agreement shall be terminated on its expiry date, unless it is extended in accordance with the relevant provisions hereof. |
8.2 | Early Termination. During the term of this Agreement, Party B shall not terminate this Agreement prior to its expiry date, unless Party A is involved in any gross negligence, fraud or other illegal acts or goes bankrupt. Notwithstanding the foregoing, Party A shall have the right to terminate this Agreement at any time by giving a prior written notice of thirty (30) days to Party B. If, during the term of this Agreement, Party B breaches this Agreement and fails to cure its breach within fourteen (14) days upon receipt of Party As written notice regarding such breach, Party A may inform Party B in writing to terminate this Agreement. |
8.3 | Survival. The rights and obligations of both parties under Articles 5, 10 and 12 shall survive the termination of this Agreement. |
9. | Governing Law |
10. | Settlement of Disputes |
11. | Force Majeure |
11.1 | Force Majeure means any event that is beyond the reasonable control of either party and unavoidable or unpreventable after it gives reasonable attention, including but not limited to government act, act of God, fire, explosion, storm, flood, earthquake, tide, lightning or war, but shortage of credit, funds or financing shall not be deemed to be the event beyond the reasonable control of either party. The party seeking the exemption from its liabilities under this Agreement due to the effect of the Force Majeure shall inform the other party as soon as possible of such event and the steps that need to be taken to perform its liabilities. |
11.2 | Should the performance of this Agreement be delayed or prevented due to any Force Majeure defined above, the party who is affected by the Force Majeure shall not be required to assume any liabilities hereunder to the extent that it is within the scope of the delay or prevention. The party so affected shall take appropriate measures to minimize or eliminate the impact of Force Majeure, and make endeavors to resume the performance of the obligations delayed or prevented by the Force Majeure. Both parties agree to make their best effort to resume the performance of this Agreement once the Force Majeure is eliminated. |
12. | Notices |
13. | Assignment of this Agreement |
13.1 | Party B shall not assign any of its rights or obligations under this Agreement to any third party unless with the prior written consent of Party A. |
13.2 | Party B hereby agrees that Party A may assign any of its rights and obligations under this Agreement to any other third parties when necessary. Party A shall only be required to serve written notice to Party B when such transfer is made, and no consent shall be further required from Party B in respect of such transfer. |
14. | Integrity of this Agreement |
15. | Severability of this Agreement |
16. | Amendment and Supplement to this Agreement |
17. | Counterparts |
(1) | Scope of consulting and service, and calculation of the Consulting Service Fee |
Scope of Service | Basis for Pricing | Calculation Standard | ||||
Internal control and compliance consulting fee |
To be charged at a ratio of the total operating revenue to the total revenue | 20 | % | |||
Training fee
|
To be charged at a ratio of the total operating revenue to the total revenue | 10 | % |
(2) | Payment method |
1. | Party A shall prepare, on a quarterly basis, a settlement list based on the scope of service provided to Party B and deliver it to Party B in written form. Party B shall verify and confirm the service according to the settlement list of Party A. | ||
2. | Party B shall pay the Consulting Service Fee to the account designated by Party A within the payment term indicated by Party A in the settlement list. | ||
3. | For any other services requested by Party B, the service fees shall be determined by Party A and Party B through consultation. |
(1) | Party A is an enterprise duly incorporated under the laws of the Peoples Republic of China (hereinafter referred to as the PRC) with expertise in the technological development of computer hardware and technological consulting service, and has a team of professionals in areas such as insurance technology, finance, taxation and management, and has extensive experience in the organization and management of enterprises, as well as their operation and planning. It is also engaged in the corporate image design and planning, design of industrial products and economic information consulting. In addition, it owns the right to use the Fanhua brand. |
(2) | Party B is an insurance intermediary firm duly incorporated under the PRC laws and the relevant regulations of the China Insurance Regulatory Commission (hereinafter referred to as CIRC), which is engaged in the provision of insurance intermediary services. |
(3) | Based on their respective industry advantages and needs, Party A and Party B agree to sign a written agreement to define their respective rights and obligations with respect to the grant by Party A to Party B of the right to use Party As brand, and the provision of the relevant services such as consulting service and training on finance and taxation to Party B. |
1. | Consulting and Service |
1.1 | During the term of this Agreement, Party A agrees to, as the brand and consulting service provider of Party B, provide the related brand and consulting service to Party B (the details of which are set forth in the annex attached hereto) subject to the terms and conditions hereof. If Party B makes a request and such request is approved by Party A, Party A may provide Party B with any other consulting and services beyond the scope set out in the annex hereto. |
1.2 | Party B agrees to use Fanhua brand and accept the consulting and service provided by Party A, and Party B further agrees that, during the term of this Agreement, it will not use brands of any third parties, nor accept any consulting and service in relation to the aforesaid business provided by any third party without the prior written consent of Party A. |
2. | Calculation and Payment of Brand License Fee, and Consulting and Service Fee (hereinafter referred to as the Consulting Service Fee) |
2.1 | Both parties agree that the brand license fee and the Consulting Service Fee under this Agreement shall be calculated and paid in the manner set forth in the annex. |
2.2 | Both parties agree that if Party B requests Party A to provide any services not covered in the annex hereto, both parties may determine the sum of the Consulting Service Fee through consultation according to the scope of specific service and the market condition. |
2.3 | Both parties agree to negotiate the scope of specific service, as well as the calculation and payment method of the Consulting Service Fee every three months based on the market situation and their business development. Appropriate adjustments can be made if both parties reach an agreement through consultation. |
3. | Intellectual Property Rights |
3.1 | All trademark rights of Party A and the copyrights of its technology information, as well as the intellectual property rights of all research and development products obtained by Party A through research and development due to its performance of this Agreement and/or other agreements jointly signed by both parties, and any rights derived therefrom shall belong to Party A. The rights described above shall include but not limit to patent application right, copyrights or other intellectual property rights of the software, technical files and materials as carrier and the right to license or transfer such intellectual properties, etc. |
3.2 | During the performance of this Agreement, if Party B needs to use Party As software programs or systems, both parties will separately agree on the scope of the relevant software licenses, their form and license fees by agreement. |
4. | Representations and Warranties |
4.1 | Party A hereby represents and warrants as follows: |
4.1.1 | Party A is a consulting service enterprise duly incorporated and validly existing under the PRC laws; | ||
4.1.2 | The execution and performance of this Agreement by Party A are within its corporate power and business scope. Party A has adopted all requisite corporate actions and authorization and has obtained all necessary consents and approvals from third parties and government departments, and this Agreement is not in violation of the legal and contractual restrictions binding upon or influencing Party A; | ||
4.1.3 | Once executed, this Agreement will constitute its legal, valid and binding obligation and shall be enforceable against Party A in accordance with the provisions hereof. |
4.2 | Party B hereby represents and warrants as follows: |
4.2.1 | Party B is an investment intermediary firm duly incorporated and validly existing under the PRC laws and the relevant regulations of the CIRC; | ||
4.2.2 | The execution and performance of this Agreement by Party B are within its corporate power and business scope. Party B has adopted all requisite corporate actions and authorization and has obtained all necessary consents and approvals from third parties and government departments, and this Agreement is not in violation of the legal and contractual restrictions binding upon or influencing Party B; | ||
4.2.3 | Once executed, this Agreement will constitute its legal, valid and binding obligation and shall be enforceable against Party B in accordance with the provisions hereof. |
5. | Confidentiality |
5.1 | Party A and Party B undertake that they will use their best effort to take all reasonable measures to keep confidential any confidential data and information of the other party known to or given access to them due to the provision or acceptance of consulting and service to and from the other party (hereinafter referred to as the Confidential Information). No party shall disclose, give or transfer any such Confidential Information to any third party without the prior written consent of the other party. Once this Agreement terminates, the parties shall, at the request of the other party, return to the other party or destroy by themselves all documents, materials or software containing the Confidential Information, and delete any Confidential Information from all related memory devices, and shall not continue to use such Confidential Information. |
5.2 | The parties hereto acknowledge and confirm that any oral or written materials exchanged between them in connection with this Agreement shall be confidential information. Each party shall keep confidential all such information, and shall not disclose any of the information to any third party without prior the written consent of the other party, except for the following: (a) the information that is or will be known to the public (provided that it is not disclosed to the public without authorization by the information receiving party); (b) the information required to be disclosed by applicable laws or stock exchanges rules or regulations; or (c) the information required to be disclosed by either party to its legal or financial advisors with respect to the transaction contemplated under this Agreement, for which such legal or financial advisors shall also comply with the confidentiality obligations similar to those as stated in this Article. Any divulgence of confidential information by any personnel of either party or any institutions engaged by it shall be deemed as the divulgence of confidential information by such party, and such party shall be liable for such breach pursuant to this Agreement. |
5.3 | Both parties agree that this Article 5 shall survive regardless of whether this Agreement is invalid, changed, discharged, terminated or cannot be operated. |
6. | Indemnification |
7. | Effectiveness and Term |
7.1 | This Agreement shall be signed or sealed and become effective as of the date first above written. |
7.2 | The term of this Agreement shall be one (1) year unless it is early terminated in accordance with the provisions of this Agreement or the relevant agreements separately entered into by both parties. |
7.3 | With the written consent of Party A and Party B, this Agreement may be extended upon its expiration, and the extension thereof shall be determined by both parties through consultation. If both parties fail to reach an agreement on such extension, this Agreement shall be extended for one (1) year automatically upon its expiration (including expiration of any extension), unless Party A gives a written notice not to extend the term of this Agreement prior to the expiration hereof. |
7.4 | If the operation term (including any extension thereof) of either party expires or either party terminates for other reasons within the term set forth in Articles 7.2 and 7.3 hereof, this Agreement shall be terminated at the time of the termination of such party, unless such party has assigned its rights and obligations in accordance with Article 13 hereof. |
8. | Termination |
8.1 | Termination upon Expiration. This Agreement shall be terminated on its expiry date, unless it is extended in accordance with the relevant provisions hereof. |
8.2 | Early Termination. During the term of this Agreement, Party B shall not terminate this Agreement prior to its expiry date, unless Party A is involved in any gross negligence, fraud or other illegal acts or goes bankrupt. Notwithstanding the foregoing, Party A shall have the right to terminate this Agreement at any time by giving a prior written notice of thirty (30) days to Party B. If, during the term of this Agreement, Party B breaches this Agreement and fails to cure its breach within fourteen (14) days upon receipt of Party As written notice regarding such breach, Party A may inform Party B in writing to terminate this Agreement. |
8.3 | Survival. The rights and obligations of both parties under Articles 5, 10 and 12 shall survive the termination of this Agreement. |
9. | Governing Law |
10. | Settlement of Disputes |
11. | Force Majeure |
11.1 | Force Majeure means any event that is beyond the reasonable control of either party and unavoidable or unpreventable after it gives reasonable attention, including but not limited to government act, act of God, fire, explosion, storm, flood, earthquake, tide, lightning or war, but shortage of credit, funds or financing shall not be deemed to be the event beyond the reasonable control of either party. The party seeking the exemption from its liabilities under this Agreement due to the effect of Force Majeure shall inform the other party as soon as possible of such event and the steps that need to be taken to perform its liabilities. |
11.2 | Should the performance of this Agreement be delayed or prevented due to any Force Majeure defined above, the party who is affected by the Force Majeure shall not be required to assume any liabilities hereunder to the extent that it is within the scope of the delay or prevention. The party so affected shall take appropriate measures to minimize or eliminate the impact of Force Majeure, and make endeavors to resume the performance of the obligations delayed or prevented by the Force Majeure. Both parties agree to make their best effort to resume the performance of this Agreement once the Force Majeure is eliminated. |
12. | Notices |
13. | Assignment of this Agreement |
13.1 | Party B shall not assign any of its rights or obligations under this Agreement to any third party unless with the prior written consent of Party A. |
13.2 | Party B hereby agrees that Party A may assign any of its rights and obligations under this Agreement to any other third parties when necessary. Party A shall only be required to serve written notice to Party B when such transfer is made, and no consent shall be further required from Party B in respect of such transfer. |
14. | Integrity of this Agreement |
15. | Severability of this Agreement |
16. | Amendment and Supplement to this Agreement |
17. | Counterparts |
(1) | Scope of consulting and service, and calculation of the Consulting Service Fee |
Scope of Service | Basis for Pricing | Calculation Standard | ||||
Brand license fee |
To be charged at a ratio of the total operating revenue to the total revenue | 10% | ||||
Consulting fee in relation to finance/taxation |
To be charged at a ratio of the total operating revenue to the total revenue | 20% |
(2) | Payment method |
1. | Party A shall prepare, on a quarterly basis, a settlement list based on the scope of service provided to Party B and deliver it to Party B in written form. Party B shall verify and confirm the service according to settlement list of Party A. | ||
2. | Party B shall pay the related Fees to the account designated by Party A within the payment term indicated by Party A in the settlement list. | ||
3. | For any other services requested by Party B, the service fees shall be determined by Party A and Party B through consultation. |
1. | Service items |
|
During the term of the system platform service, Party A shall be entitled to the following
services: |
(1) | Service for the provision of spaces: Party B shall provide spaces for system
operation and data storage to Party A s system platform so as to ensure the smooth
operation of Party A s system within reasonable space; |
(2) | Data maintenance service: It shall include the daily maintenance and backup of data,
as well as the specific data maintenance service provided by Party B s specialists with
expertise in technologies in connection with any data errors caused by Party A due to
whatever reasons during its use of the system platform. |
(3) | Service in relation to the system safety and efficiency: Party B shall provide
operation and maintenance services for the operating system, high availability cluster
multi-processing (HACMP), database, middleware and backup software on which the platform
system of the customer runs in order to improve the safety, stability, efficiency and
rationality of the system platform of Party A; |
(4) | On-site support service: Party A may enjoy on-site support service provided by the
technical advisors of Party B; |
(5) | Software maintenance of the system platform: It shall include maintenance services,
such as optimizing some functions of the system, adding minor functions and making minor
adjustments to the operation and operating process etc. |
2. | Term of service |
3. | Service fees |
4. | Settlement of service fees |
5. | Payment method |
6. | Liabilities of Party A |
1. | Party A shall ensure the use and management of the system platform. It shall also
ensure the safety of the permitted operation environment (including computers, printers
and other related hardware equipments), which will provide a safeguard for the normal
operation of the system platform; |
2. | Party A shall regularly back up any data in the system and keep them properly; |
3. | When Party B provides the system platform service, Party A shall designate its
employees to cooperate with Party B and provide necessary equipment according to the
requirements of Party B; |
4. | When Party B completes the system platform service, Party A shall cooperate with
Party B to check if the operation of the system is normal. |
7. | Liabilities of Party B |
8. | Amendment, termination and discharge of this Agreement |
1. | After this Agreement comes into effect, neither party shall at its own discretion
amend, terminate and discharge this Agreement without a unanimous agreement between the
parties through consultation. |
2. | This Agreement may be amended or discharged after a unanimous agreement is made by the
parties through consultation, and a supplemental agreement shall be signed in respect
thereof. |
9. | Liabilities for breach |
1. | After this Agreement comes into effect, Party A and Party B shall fully perform their
respective obligations hereunder. Any party who breaches this Agreement shall indemnify
the other party against all losses resulting from such breach. |
2. | If Party A fails to pay the contractual sum of this Agreement as scheduled, Party B
shall be entitled to request Party A to make such payment at once. |
10. | Miscellaneous |
1. | Any disputes between Party A and Party B in connection with this Agreement shall be
settled by both parties hereto through consultation, and if no settlement can be reached
through consultation, any party
may bring a legal action in the court at the place where the defendant is domiciled and
the disputes shall be judged pursuant to the laws of the PRC. |
2. | This Agreement shall become effective once it is signed or sealed by the legal
representative or authorized representative of the parties. |
3. | This Agreement is executed in two originals, with each of Party A and Party B holding
one original. |
Party A:
|
Party B: Litian Zhuoyue Software (Beijing) Co., Ltd. | |||
Representative:
|
Representative:
|
|||
Date:
_____(mm)_____(dd)_____(yy) |
Date: _____(mm)_____(dd)_____(yy) |
Percentage | ||||||||
attributable to our | Place of | |||||||
Subsidiaries | company | incorporation | ||||||
1. CISG Holdings Ltd. |
100 | % | BVI | |||||
2. CNinsure Holdings Ltd. |
100 | % | BVI | |||||
3. Intense Rise Limited |
100 | % | Hong Kong | |||||
4. Fanhua Zhonglian Enterprise Image Planning
(Shenzhen) Co., Ltd. (formerly known as
Haidileji Enterprise Image Planning
(Shenzhen) Co., Ltd.). |
100 | % | PRC | |||||
5. Fanhua Xinlian Information Technology
Consulting (Shenzhen) Co., Ltd. (formerly
known as Yiqiman Enterprise Management
Consulting (Shenzhen) Co., Ltd.) |
100 | % | PRC | |||||
6. Shenzhen Fanhua Nanfeng Investment Holding
Co., Ltd. (formerly known as Shenzhen Fanhua
Nanfeng Enterprise Management Consulting Co.,
Ltd.) |
100 | % | PRC | |||||
7. Guangzhou Zhongqi Enterprise Management
Consulting Co., Ltd. |
100 | % | PRC | |||||
8. Beijing Ruisike Management Consulting Co.,
Ltd. |
100 | % | PRC | |||||
9. Beijing Fanlian Investment Co., Ltd. |
100 | % | PRC | |||||
10. Litian Zhuoyue Software (Beijing) Co.,
Ltd. |
100 | % | PRC | |||||
11. Sincere Fame International Limited |
18.16 | % | BVI | |||||
12. Fanhua Puyi Investment Management Co.,
Ltd. |
19.48 | % | PRC | |||||
13. InsCom Holdings Limited |
65.1 | % | BVI | |||||
14. InsCom Group Limited(1) |
65.1 | % | BVI | |||||
15. InsCom HK Limited(1) |
65.1 | % | Hong Kong | |||||
16. Ying Si Kang Information Technology
(Shenzhen) Co., Ltd. (1) |
65.1 | % | PRC | |||||
17. Shenzhen Bangbang Auto Services Co., Ltd. |
100 | % | PRC |
Percentage | ||||||||
attributable to | ||||||||
Yihe Investment, | ||||||||
Meidiya | ||||||||
Investment and/or | ||||||||
Xinbao | Place of | |||||||
Consolidated Affiliated Entities | Investment | incorporation | ||||||
1. Guangdong Meidiya Investment Co., Ltd. |
| PRC | ||||||
2. Sichuan Yihe Investment Co., Ltd. |
| PRC | ||||||
3. Shenzhen Xinbao Investment Management Co., Ltd. |
| PRC | ||||||
4. Shenzhen InsCom E-commerce Co., Ltd.(2) |
100 | % | PRC | |||||
5. Fujian Fanhua Investment Co., Ltd. |
100 | % | PRC | |||||
6. Shijiazhuang Fanhua Anxin Investment Co., Ltd. |
55 | % | PRC | |||||
7. Guangdong Fanhua Fangzhong Investment Management Co.
Ltd. (formerly known as Guangdong Fangzhong Insurance
Surveyors & Loss Adjustors Co., Ltd.) |
51 | % | PRC | |||||
8. Shenzhen Fanhua Software Co., Ltd. (3) |
51 | % | PRC | |||||
Claims Adjusting Firms |
||||||||
9. Fanhua Insurance Surveyors & Loss Adjustors Co., Ltd.
(formerly known as Shenzhen Khubon Insurance Surveyors &
Loss Adjustors Co., Ltd.) (4) |
51 | % | PRC | |||||
10. Shanghai Fanhua Teamhead Insurance Loss & Adjustors
Co., Ltd. (formerly known as Shanghai Teamhead
Insurance Loss & Adjustors Co., Ltd.) (3) |
51 | % | PRC | |||||
11. Shenzhen Fanhua Property and Casualty Insurance
Surveyors & Loss Adjustors Co., Ltd. (formerly known as
Shenzhen Hongzhengda Insurance Surveyors & Loss Adjustors
Co., Ltd.) (3) |
51 | % | PRC | |||||
Life Insurance Agencies |
||||||||
12. Fujian Fanhua Xinheng Insurance Agency Co., Ltd.
(formerly known as Fujian Xinheng Insurance Agency Co.,
Ltd.) |
100 | % | PRC | |||||
13. Fuzhou Fanhua Lianxin Insurance Agency Co., Ltd.
(5) |
51 | % | PRC | |||||
14. Nanping Fanhua Jinying Insurance Agency Co.,
Ltd.(5) |
51 | % | PRC | |||||
15. Sichuan Fanhua Xintai Insurance Agency Co., Ltd.
(formerly known as Sichuan Xintai Insurance Agency
Co., Ltd.) |
70 | % | PRC | |||||
16. Chengdu Fanhua Dezhong Insurance Agency Co.,
Ltd. (formerly known as Suining Fanhua Insurance Agency Co.,
Ltd.) (6) |
39 | % | PRC |
Percentage | ||||||||
attributable to | ||||||||
Yihe Investment, | ||||||||
Meidiya | ||||||||
Investment and/or | ||||||||
Xinbao | Place of | |||||||
Consolidated Affiliated Entities | Investment | incorporation | ||||||
17. Hebei Fanhua Anxin Insurance Agency Co., Ltd. (formerly
known as Hebei Anxin Insurance Agency Co., Ltd.)
(7) |
55 | % | PRC | |||||
18. Hunan Fanhua Insurance Agency Co., Ltd. |
55 | % | PRC | |||||
19. Jiangsu Fanhua Lianchuang Insurance Agency Co., Ltd. |
70 | % | PRC | |||||
20. Shandong Fanhua Xintai Insurance Agency Co., Ltd.
|
63 | % | PRC | |||||
21. Jinan Fanhua Rongtai Insurance Agency Co., Ltd.
(formerly known as Jinan Fanrong Insurance Agency
Co., Ltd.) (8) |
35 | % | PRC | |||||
22. Liaoning Fanhua Gena Insurance Agency Co., Ltd.
|
60 | % | PRC | |||||
23. Zhejiang Fanhua Tongchuang Insurance Agency Co.,
Ltd. |
60 | % | PRC | |||||
24. Hubei Fanhua East Century Insurance Agency Co., Ltd.
(formerly known as Hubei East Century Insurance Agency Co.,
Ltd.) |
60 | % | PRC | |||||
25. Shanghai Fanhua Guosheng Insurance Agency Co., Ltd. |
55 | % | PRC | |||||
26. Jiangxi Fanhua Insurance Agency Co., Ltd. |
70 | % | PRC | |||||
27. Fanhua Lianxing Insurance Sales Co., Ltd. |
100 | % | PRC | |||||
28. Shenyang Fanhua Rongcheng Insurance Agency Co., Ltd.
(9) |
33 | % | PRC | |||||
29. Huaihua Jixiang Insurance Agency Co., Ltd.
(10) |
30 | % | PRC | |||||
P&C Insurance Agencies and Brokerage Firms |
||||||||
30. Beijing Fanhua Insurance Agency Co., Ltd. |
100 | % | PRC | |||||
31. Beijing Fanlian Insurance Agency Co., Ltd. |
100 | % | PRC | |||||
32. Beijing Fanhua Fumin Insurance Agency Co., Ltd.
(formerly known as Beijing Fumin Insurance Agency Co.,
Ltd.) |
100 | % | PRC | |||||
33. Guangdong Fanhua Nanfeng Insurance Agency Co., Ltd.
(formerly known as Guangdong Nanfeng Insurance Agency Co.,
Ltd.) |
100 | % | PRC | |||||
34. Guangdong Fanhua Kafusi Insurance Brokerage Co., Ltd.
(formerly Known as Guangdong Kafusi Insurance Brokerage
Co., Ltd.) |
100 | % | PRC | |||||
35. Guangzhou Desheng Insurance Brokerage Co., Ltd.
|
51 | % | PRC |
Percentage | ||||||||
attributable to | ||||||||
Yihe Investment, | ||||||||
Meidiya | ||||||||
Investment and/or | ||||||||
Xinbao | Place of | |||||||
Consolidated Affiliated Entities | Investment | incorporation | ||||||
36. Guangzhou Fanhua Insurance Agency Co., Ltd. (formerly
known as Guangzhou Xiangxing Insurance Agency Co., Ltd.) |
100 | % | PRC | |||||
37. Guangzhou Fanhua Yian Insurance Agency Co., Ltd.
(formerly known as Guangzhou Yian Insurance Agency Co.,
Ltd.) |
100 | % | PRC | |||||
38. Shenzhen Fanhua Nanfeng Insurance Agency Co., Ltd.
(formerly known as Shenzhen Nanfeng Insurance Agency Co.,
Ltd.) (11) |
100 | % | PRC | |||||
39. Dongguan Nanfeng Jiayu Insurance Agency Co., Ltd. |
100 | % | PRC | |||||
40. Foshan Tuohua Insurance Agency Co., Ltd. |
100 | % | PRC | |||||
41. Jiangmen Fanhua Zhicheng Insurance Agency Co., Ltd.
|
70 | % | PRC | |||||
42. Sichuan Fanhua Insurance Agency Co., Ltd. |
100 | % | PRC | |||||
43. Fanhua Bocheng Insurance Brokerage Co., Ltd (formerly
known as Sichuan Fanhua Bocheng Insurance Brokerage Co.,
Ltd.) |
100 | % | PRC | |||||
44. Hebei Lianda Insurance Agency Co., Ltd. (12) |
39 | % | PRC | |||||
45. Hebei Fanlian Insurance Agency Co., Ltd. |
51 | % | PRC | |||||
46. Shandong Fanhua Mintai Insurance Agency Co., Ltd. |
51 | % | PRC | |||||
47. Shenyang Fangda Insurance Agency Co., Ltd. |
51 | % | PRC | |||||
48. Fujian Fanhua Guoxin Insurance Agency Co., Ltd.
(formerly known as Fuzhou Guoxin Insurance Agency Co.,
Ltd.)(13) |
70 | % | PRC | |||||
49. Henan Fanhua Anlian Insurance Agency Co., Ltd.
(formerly known as Zhengzhou Fanhua Anlian Insurance Agency
Co., Ltd.)(14) |
51 | % | PRC | |||||
50. Changsha Lianyi Insurance Agency Co.,
Ltd.(13) |
70 | % | PRC | |||||
51. Hangzhou Fanhua Zhixin Insurance Agency Co.,
Ltd.(14) |
51 | % | PRC | |||||
52. Ningbo Baolian Insurance Agency Co., Ltd.
(14) |
51 | % | PRC | |||||
53. Tianjin Fanhua Xianghe Insurance Agency Co., Ltd.
(13) |
70 | % | PRC |
(1) | 100% of the equity interests in each of these companies are held directly by InsCom
Holdings Limited |
|
(2) | 100% of the equity interests in this company are held directly by Shenzhen Xinbao Investment
Management Co., Ltd. |
|
(3) | 100% of the equity interests in each of these companies are held directly by Fanhua Insurance
Surveyors & Loss Adjustors Co., Ltd. (formerly known as Shenzhen Khubon Insurance Surveyors &
Loss Adjustors Co., Ltd.), which is 100% owned by Guangdong Fanhua Fangzhong Investment
Management Co. Ltd. |
|
(4) | 100% of the equity interests in this company are held by Guangdong Fanhua Fangzhong
Investment Management Co. Ltd., which is 51% owned by Guangdong Meidiya Investment Co., Ltd. |
|
(5) | 51% of the equity interests in each of these companies are held directly by Fujian Fanhua
Investment Co., Ltd. |
|
(6) | 55% of the equity interests in this company are held directly by Sichuan Fanhua Xintai
Insurance Agency Co., Ltd. |
|
(7) | 100% of the equity interests in this company are held directly by Shijiazhuang Fanhua Anxin
Investment Co., Ltd. |
|
(8) | 55% of the equity interests in this company are direcly by Shandong Fanhua Xintai Insurance
Agency Co., Ltd. |
|
(9) | 55% of the equity interests in this company are held directly by Liaoning Fanhua Gena
Insurance Agency Co., Ltd. |
|
(10) | 55% of the equity interests in this company are held directly by Hunan Fanhua Insurance
Agency Co., Ltd. |
|
(11) | 100% of the equity interests in this company are held directly by Guangdong Fanhua Nanfeng
Insurance Agency Co., Ltd. |
|
(12) | 70% of the equity interests in this company are directly held by Shijiazhuang Fanhua Anxin
Investment Co., Ltd. |
|
(13) | 70% of the equity interests in each of these companies are held directly by Shenzhen Xinbao
Investment Management Co., Ltd. |
|
(14) | 51% of the equity interests in each of these companies are held directly by Shenzhen Xinbao
Investment Management Co., Ltd. |
(a) | Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the Company, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which
this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; |
(c) | Evaluated the effectiveness of the Companys disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
(d) | Disclosed in this report any change in the Companys internal control over
financial reporting that occurred during the period covered by this annual report that
has materially affected, or is reasonably likely to materially affect, the Companys
internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely to
adversely affect the Companys ability to record, process, summarize and report
financial information; and |
(b) | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Companys internal control over financial
reporting. |
By: | /s/ Yinan Hu | |||
Name: | Yinan Hu | |||
Title: | Chief Executive Officer |
(a) | Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that material
information relating to the Company, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly during the period in which
this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles; |
(c) | Evaluated the effectiveness of the Companys disclosure controls and
procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and |
(d) | Disclosed in this report any change in the Companys internal control over
financial reporting that occurred during the period covered by this annual report that
has materially affected, or is reasonably likely to materially affect, the Companys
internal control over financial reporting; and |
(a) | All significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are reasonably likely to
adversely affect the Companys ability to record, process, summarize and report
financial information; and |
(b) | Any fraud, whether or not material, that involves management or other
employees who have a significant role in the Companys internal control over financial
reporting. |
By: | /s/ Peng Ge | |||
Name: | Peng Ge | |||
Title: | Chief Financial Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and |
||
(2) | The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company. |
By: | /s/ Yinan Hu | |||
Name: | Yinan Hu | |||
Title: | Chief Executive Officer |
(1) | The Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934; and |
||
(2) | The information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company. |
By: | /s/ Peng Ge | |||
Name: | Peng Ge | |||
Title: | Chief Financial Officer |
Our ref
|
VZL\628018\4489002v1 | |
Direct tel
|
+852 2971 3095 | |
Email
|
valerie.law@maplesandcalder.com |
Yours faithfully |
||||
/s/ Maples and Calder | ||||
Maples and Calder | ||||
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