Reclassification Agreement

 

This Reclassification Agreement (the “Agreement”) is made on July 2, 2012, by
and between China United Insurance Service, Inc. (the “Company”) and Mr.
Yi-Hsiao Mao (“Mr. Mao”, each a “Party” and collectively “Parties”).

 

WHEREAS,

 

1.The Company has been conducting insurance agency and brokerage business in
People’s Republic of China through its subsidiaries and VIE entities and has
been operating under loss ever since its establishment;    

2.Mr. Mao has extensive experience in insurance agency and brokerage industry
and has acted as the chairman of the board of Law Insurance Broker Co., Ltd.
(“Taiwan DingLv”), one of the top insurance brokerage firms in Taiwan. Under the
leadership of Mr. Mao, Taiwan DingLv has sustained a stable growth for the past
decade and generated substantial shareholder value for its stockholders;    

3.The aggregate number of shares the Company shall have the authority to issue
is 110,000,000 shares of capital stock, of which 100,000,000 shares are Common
Stock, $0.00001 par value per share (the “Common Stock”) and 10,000,000 shares
are preferred stock, $0.00001 par value per share (the “Preferred Stock”). As of
July 2, 2012, the issued and outstanding Common Stock of the Company is
20,100,503 and none of the Preferred Stock has been issued and outstanding;    

4.In order to induce Mr. Mao to join the Company as the new Chief Executive
Officer, the Company intends to issue 1,000,000 shares of Series A Convertible
Preferred Stock to Mr. Mao in replacement of 1,000,000 Common Stock previously
held by Mr. Mao pursuant to a share reclassification and Mr. Mao agrees to
accept such reclassification.

 

NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:

 

1.Reclassification    

(1)1,000,000 issued and outstanding shares of Common Stock held by Mr. Mao (the
“Reclassified Shares”), par value $0.00001 per share shall be reclassified into
1,000,000 shares of Series A Convertible Preferred Stock (the “Series A
Preferred Stock”), par value $0.00001 per share, on a share-for-share basis (the
“Reclassification”).    

(2)Pursuant to the Reclassification and within three days of the execution of
this Agreement, Mr. Mao shall submit the original stock certificate representing
such 1,000,000 Common Stock together with any other necessary documents to
Globex Transfer, LLC, the transfer agent of the Company (the “Transfer Agent”),
for cancellation.    

(3)The Company shall, through its board or shareholder resolutions or any other
documents necessary, cause the Transfer Agent to (i) issue the stock certificate
representing 1,000,000 shares of Series A Preferred Stock to Mr. Mao; and (ii)
issue a new stock certificate representing the remaining common stock held by
Mr. Mao subsequent to the Reclassification.

 

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(4)Other than the Reclassified Shares submitted pursuant to the preceding
Sections above, no additional consideration is required to be paid by Mr. Mao in
connection with the Reclassification.    

(5)As the director of the Company, Mr. Mao is hereby authorized to take any
further actions on behalf of the Company as necessary to consummate the
Reclassification.    

(6)The Certificate of Incorporation and By-laws of the Company shall have been
amended accordingly to reflect the contemplated Reclassification. Such Amended
and Restated Certificate of Incorporation and By-laws shall have been duly
adopted by all necessary actions of the Board of Directors and/or the
stockholders of the Company, and shall have been duly filed with the Secretary
of State of the State of Delaware.    

(7)The Reclassification had the following effects, among others, on the holders
of Common Stock and Series A Preferred Stock:

 

Voting Power. The holders of Common Stock and Series A Preferred Stock shall at
all times vote together as a single class on all matters (including election of
directors) submitted to a vote of the stockholders of the Company. Each holder
of Common Stock shall be entitled to one vote for each share of Common Stock
held of record by such holder as of the applicable record date on any matter
that is submitted to a vote of the stockholders of the Company; while each
holder of Series A Preferred Stock shall be entitled to ten votes for each share
of Series A Preferred Stock held of record by such holder as of the applicable
record date on any matter that is submitted to a vote of the stockholders of the
Company. In addition, the provisions of Delaware law that entitled the Common
Stock and Series A Preferred Stock, under certain circumstances, to separate
class voting rights are applicable as a result of the Reclassification.

 

Economic Interests. The Reclassification had no impact on the economic interest
of holders of Common Stock and Series A Preferred Stock, including with regard
to dividends and liquidation rights.

 

Capitalization. The Reclassification has no impact on the total number of
authorized capital stock of the Company, which prior to the Reclassification
was, and remains, 110,000,000 shares, of which 100,000,000 shares are Common
Stock, $0.00001 par value per share and 10,000,000 shares are preferred stock,
$0.00001 par value per share. Immediately subsequent to the Reclassification,
the issued and outstanding Common Stock has decreased to 19,100503 shares while
the issued and outstanding Series A Preferred Stock is 1,000,000 shares.

 

Conversion. Each share of Series A Preferred Stock shall be convertible into one
fully paid and non-assessable share of Common Stock at the option of the holder
thereof at any time, and from time to time, upon written notice to the transfer
agent of the Company.

Resale of Common Stock and Series A Preferred Stock. Shares of the Common Stock
and Series A Preferred Stock may be sold in the same manner as the Common Stock
were previously sold. The Company’s affiliates and holders of any shares that
constitute restricted securities will continue to be subject to the restrictions
specified in Rule 144 under the Securities Act of 1933.

 

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2.Lock-up    

Mr. Mao agrees that (i) he will not, for a period of 3 years commencing from
June 30, 2012, offer to sell, contract to sell or otherwise sell (including
without limitation in a short sale) or dispose (“Transfer”) of any of the
1,000,000 Series A Preferred Stock of the Company; (ii) he may, commencing from
July 1, 2015, Transfer up to 200,000 Series A Preferred Stock; (iii) he may,
commencing from July 1, 2016, Transfer up to 300,000 of the Series A Preferred
Stock; and (iv) he may, commencing from July 1, 2017, freely Transfer any and
all Series A Preferred Stock then held by him.

 

3.Commitment to Act as Chief Executive Officer of the Company    

If the Company so desires, Mr. Mao agrees to be engaged by the Company as its
Chief Executive Officer within 6 months after the date hereof or the time table
otherwise agreed upon between the Parties.

 

4.Governing Law and Settlement of Disputes    

(1)This Agreement shall be governed by and construed in accordance with the Law
of Taiwan as to matters within the scope thereof, without regard to its
principles of conflicts of laws.    

(2)Any dispute, controversy or claim arising out of or relating to this
Agreement, or the interpretation, breach, termination or validity hereof, shall
first be subject to resolution through consultation of the parties to such
dispute, controversy or claim. Such consultation shall begin within seven (7)
days after one Party hereto has delivered to the other Parties involved a
written request for such consultation. If within thirty (30) days following the
commencement of such consultation the dispute cannot be resolved, the dispute
shall be submitted to Taiwan Taipei District Court by either Party.

 

5.Effective Date    

This Agreement shall be effective as of the date first indicated above.

 

[Remainder of Page Intentionally Left Blank]

 

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IN WITNESS WHEREOF, the parties have executed this Reclassification Agreement as
of the date first written above.

 

Company: China United Insurance Service, Inc.       By: /s/ Lo Chung Mei  
Name:  Lo Chung Mei    Title:   Chief Executive Officer 

 

Yi-Hsiao Mao:             By: /s/ Yi-Hsiao Mao    Name: Yi-Hsiao Mao

 

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