“Agreement”) is made and entered into as of May 23, 2007 by and among Home
System Group, a Nevada corporation (the “Company”),
the investors named on Schedule
hereto (each such investor is referred to herein as an “Investor” and
collectively as the “Investors”).
Certain terms used and not otherwise defined in the text of this Agreement
defined in Article 7 of this Agreement.
I T N E S S E T H
Company desires to issue and to sell to the Investors,
Investors desire to purchase from the Company, an aggregate of ten million
(10,000,000) shares of Common Stock at an average per share purchase price
$4.00, for an aggregate purchase price of Forty Million Dollars ($40,000,000),
all in accordance with the terms and provisions of this Agreement.
consideration of the foregoing and the mutual representations, warranties
covenants herein contained, the parties hereto hereby agree as
Prior to the Closing Date, the Company’s Board of Directors shall have taken all
action necessary to authorize the issuance and sale of 10,000,000 shares
Common Stock (the “Securities”)
to the Investors pursuant to the terms set forth herein. The purchase price
the Securities shall be paid as per the terms set forth under Section 3.3(b)
hereunder, with each Investor issuing the Company a promissory note (the
“Promissory Note”) as payment for a portion of the Purchase Price (as defined
PURCHASE OF THE SECURITIES
to the terms and conditions set forth in this Agreement, each Investor hereby
subscribes for and agrees to acquire from the Company at the Closing, and
Company hereby agrees that it shall issue to each Investor at the Closing,
and clear of any Encumbrances, the number of shares of Common Stock set forth
opposite such Investor's name on Schedule
hereto against payment of the purchase price (the “Purchase
set forth on Schedule
hereto. Each Investor acknowledges that the Securities acquired hereunder
subject to restrictions on transfer under both the federal securities laws
the U.S. and applicable state securities laws in the U.S., and the terms
Agreement and the Promissory Note.
The closing of the sale to, and purchase by, the Investors of the Securities
shall occur at the offices of the Company, or at such other location or by
other means as the parties hereto may agree, on the date hereof or at such
time and place as the parties hereto may agree (the “Closing
In the event that such date is not a Business Day, the Closing Date shall
deemed to be the first Business Day following such date.
by the Investors.
At the Closing, each Investor shall deliver to the Company:
cash component of the Purchase Price, which calculates to 16.25% of the Purchase
Price payable by wire transfer of immediately available funds to an account
the Company designated in writing to each Investor prior to the Closing Date
such other funds as the Company may accept;
executed Promissory Note in the form annexed hereto as Exhibit B, for the
payment of the remaining 83.75% of the Purchase Price;
executed Subscription Agreement;
executed Accredited Investor Questionnaire;
executed Stock Power in the form annexed hereto as Exhibit C.
other documents as are required to be delivered by the Investor to the Company
or that are, in the opinion of legal counsel to the Company, necessary or
advisable for the completion of the transaction.
At the Closing, the Company and the Investors will deliver such duly executed
Transaction Documents as are required to be executed by the parties hereunder
WARRANTIES AND COVENANTS OF THE INVESTORS
Investor acknowledges that this Agreement is made with the Company in reliance
upon Investor’s representation to the Company. Each Investor, severally as to
itself and not jointly, represents and warrants to and agrees with the Company
S Representations and Warranties.
Investor represents that it is not an “U.S. Person” as that term is defined in
Rule 902(k) of Regulation S promulgated under the Securities Act, that the
Investor resides outside of the United States, and that the Investor has
accurately completed the accredited investor questionnaire set forth as
attached hereto. At the time of the origination of contact concerning this
Agreement and the date of the execution and delivery of this Agreement, the
Subscriber was outside of the United States. The transactions contemplated
this Agreement have not been pre-arranged with a buyer located in the United
States or with a U.S. Person, and are not part of a plan or scheme to evade
registration requirements of the Securities Act.
Investor represents that it is not a distributor or dealer as such term is
defined in Section 2(a)(12) of the Securities Act, or a person receiving
selling concession, fee or other remuneration in connection with the
Investor understands that the Securities have not been, and will not upon
issuance be, registered under the Securities Act of 1933, as amended (the
and further understands that the Securities are “restricted securities” as such
term is defined in Rule 144 promulgated under the Act and may be resold without
registration under the Act and the applicable rules and regulations under
Act, only in very limited circumstances. In this connection, Investor represents
that it is familiar with the terms and provisions of Regulation S (including
Rule 903 and Rule 904 promulgated under the Securities Act) and Rule 144
promulgated under the Securities Act, as presently in effect, and understands
the resale limitations imposed thereby and by the Securities Act. Investor
further agrees that all offers and sales of the Securities prior to the
expiration of the one year distribution compliance period shall be made in
accordance with the terms and provisions of the Securities Act including
limitation Rules 144, 903 and 904 promulgated under the Securities Act, pursuant
to a registration of the Securities under the Securities Act, or pursuant
available exemption from the registration requirements of the Securities
Neither the undersigned nor or any person acting on its behalf has engaged,
will engage, in any directed selling efforts to U.S. Persons with respect
Shares and the undersigned and any person acting on its behalf have complied
will comply with the "offering restrictions" requirements of Regulation S
the Securities Act.
Investor agrees not to engage in hedging transactions with regard to the
Securities prior to the expiration of the one-year distribution compliance
Investor further understands that the certificates evidencing the Securities
shall bear one or more of the following legends:
securities have not been registered under the Securities Act of 1933, as
may not be sold, offered for sale, pledged or hypothecated in the absence
registration statement in effect with respect to the securities under the
unless an opinion of counsel to the Company is delivered to the effect that
registration is not required or that the securities are being sold pursuant
Rule 144 of the Act and therefore this legend should be removed.”
of these securities is prohibited except in accordance with the provisions
Regulation S promulgated under the Securities Act of 1933, as amended (the
“Act”), pursuant to registration under the Act, or pursuant to an available
exemption from registration. Hedging transactions involving these securities
not be conducted unless in compliance with the Act.”
securities are subject to the provisions of that certain Subscription Agreement
and Promissory Note between the Company and the original holder hereof, and
not be sold, offered for sale, pledged or hypothecated unless permitted under
legend required by the securities laws of any applicable
for Own Account.
Investor hereby confirms that the Securities will be acquired for investment
Investor’s own account, not as a nominee or agent and not with a view to the
resale or distribution of any part thereof, not for the benefit or the account
of a U.S. Person, and that Investor does not have any present intention of
selling, granting any participation in or otherwise distributing any such
Securities. Investor further represents that Investor does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer, encumber, pledge, hypothecate or grant participations to such person
or to any third person, with respect to any of the Securities.
Public Review/ No Soliciting Materials.
Investor understands that no federal or state agency has recommended or endorsed
the purchase of the Securities or passed on the adequacy or accuracy of the
information set forth in this Agreement. Investor acknowledges that it has
seen, received, been presented with, or been solicited by any leaflet, public
promotional meeting, newspaper or magazine article or advertisement, radio
television advertisement, or any other form of advertising or general
solicitation with respect to the sale of the Securities.
Representations and Warranties.
If Investor is an entity, Investor is validly existing and in good standing
under the laws of its jurisdiction of organization, and has all requisite
and authority to enter into this Agreement and consummate the transactions
The execution, delivery and performance of this Agreement, and the other
documents and instruments referred to herein, in each case to which Investor
a party, and the consummation of the transactions contemplated hereby, have
duly authorized by all necessary action on the part of Investor. This Agreement
and each other Transaction Document have been duly and validly executed and
delivered by Investor and assuming their due authorization, execution and
delivery by the Company constitute a valid and binding obligation of Investor,
enforceable against it in accordance with the terms of each Transaction
Document, subject to bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium and other similar laws now or hereafter in effect relating
to or affecting creditors' rights generally and the rights of creditors of
insurance companies generally.
Investor acknowledges that it has received or has had the opportunity to
all the information it considers necessary or appropriate for deciding whether
to purchase the Securities. Investor further represents that it has had an
opportunity to ask questions and receive answers from the Company regarding
terms and conditions of the offering of the Securities and the business,
properties, prospects and financial condition of the Company. Investor further
acknowledges that it has been advised to, and has, carefully reviewed the
Company’s filings with the U.S. Securities and Exchange Commission.
Investor is an investor in securities of companies in the development stage
acknowledges that it is able to fend for itself, can bear the economic risk
its investment and has such knowledge and experience in financial or business
matters such that it is capable of evaluating the merits and risks of the
investment in the Securities. If the Investor is an entity, Investor represents
that it has not been organized for the purpose of acquiring the Securities.
Investor understands the risks involved in investing in the Company and
represents that it can bear the full loss of its investment in the
Investor is aware that there can be no assurance regarding the federal, state
local tax consequences of an investment in the Company, nor can there be
assurance that the Code or the regulations promulgated thereunder or other
applicable laws and regulations will not be amended at some future time in
manner as to deprive the Company and its stockholders of any tax benefits
might be received. In making this investment, Investor is relying upon the
advice of its personal tax advisor with respect to the tax aspects of an
investment in the Company and not on the Company or any agent
Investor understands that taxable income and gain allocated to the Investor
the Company and the tax on the portion thereof allocated to the Investor
year may exceed the cash distributions from the Company to the Investor and,
so, the Investor will have to look to sources other than distributions from
Company to pay such tax.
There is no broker, investment banker, financial advisor, finder or other
which has been retained by or is authorized to act on behalf of Investor
might be entitled to any fee or commission for which the Company will be
in connection with the execution of this Agreement.
WARRANTIES AND COVENANTS BY THE COMPANY
Company represents and warrants to and agrees with each Investor as
The Company makes no representations or warranties other than the
representations and warranties contained in this Agreement.
Issuance and Authorization of Capital Stock.
All of the outstanding shares of capital stock of the Company have been validly
issued and are fully paid and nonassessable. No shares of capital stock of
Company are subject to any lien, claim, judgment, charge, mortgage, security
interest, pledge, escrow equity or other encumbrance of any kind (including
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, and any lease in the nature thereof, but specifically
excluding any restrictive legend required by applicable US Securities Laws)
any option, trust or other preferential arrangement having the practical
of any of the foregoing (collectively, “Encumbrances”)
and the sale and delivery of the Securities to the Investor pursuant to the
terms hereof will vest in the Investor legal and valid title to such Securities
free and clear of all Encumbrances.
The Company is a corporation validly existing and in good standing under
laws of the State of Nevada.
The Company has all requisite corporate power and has taken all necessary
corporate action required for the due authorization, execution, delivery
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby (including, without limitation, the issuance
Upon issuance against payment of the Purchase Price, the Securities will
authorized, validly issued, fully paid and non-assessable, and such Securities
will be free from all taxes, liens, claims and Encumbrances, and will not
personal liability upon the holder thereof.
The Company shall use commercially reasonable efforts to file with the SEC
Registration Statement covering the resale of the Securities within two months
of the date of this Agreement. The Company shall use commercially reasonable
efforts to cause the Registration Statement to be declared effective within
months of the date of this Agreement. If the Registration Statement
required to be filed by the Company is not declared effective by the SEC
prior to close of business on the nine month anniversary of the date hereof,
then the Company will pay to the Investors, pro rata, an aggregate amount
$65,000. It shall be a condition precedent to the obligations of the Company
complete the registration pursuant to this Agreement with respect to the
Securities that such Investor shall furnish to the Company such information
regarding itself, the Securities held by it and the intended method of
disposition of the Securities held by it as shall be reasonably required
effect the registration of such Securities and shall execute such documents
connection with such registration as the Company may reasonably
OFFERING INVOLVES AN EXTREMELY HIGH DEGREE OF RISK. IT IS POSSIBLE THAT EACH
INVESTOR MAY LOSE HIS ENTIRE INVESTMENT IN THE COMPANY. THERE CAN BE NO
ASSURANCE THAT AN ADEQUATE MARKET WILL DEVELOP IN THE SECURITIES OF THE COMPANY
NECESSARY TO SELL THE SECURITIES. THE SECURITIES ARE SUBJECT TO SUBSTANTIAL
RESTRICTIONS ON TRANSFER THAT MAY MAKE IT DIFFICULT FOR INVESTORS TO LIQUIDATE
THEIR INVESTMENT IN THE COMPANY. THESE RISK FACTORS ARE NOT, AND ARE NOT
TO BE, COMPLETE. INVESTORS SHOULD CAREFULLY CONSIDER ALL RISKS ASSOCIATED
THE INVESTMENT, AND SHOULD CAREFULLY REVIEW THE COMPANY’S FILINGS WITH THE
SECURITIES AND EXCHANGE COMMISSION.
Unless the context otherwise requires, the terms defined in this Section
shall have the meanings specified for all purposes of this
otherwise expressly provided, all accounting terms used in this Agreement,
whether or not defined in this Section 7.1, shall be construed in accordance
with United States generally accepted accounting principles.
of any Person means any other Person which directly, or indirectly through
or more intermediaries, controls, or is controlled by, or is under common
control with, such Person. The term “control” (including the terms “controlled
by” and “under common control with”) as used with respect to any Person means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
means this Subscription Agreement.
Day” means a day other than a Saturday, Sunday or day on which banking
institutions in Los Angeles, California are authorized or required to remain
shall mean the By-Laws of the Company as in effect on the Closing Date and
hereafter from time to time amended, modified, supplemented or
Stock” means the shares of the Company's common stock with a par value of $0.001
per share authorized in, and designated as, “Common Stock” in the Company's
Articles of Incorporation.
has the meaning assigned to it in Section 3.1 hereof.
Date” has the meaning assigned to it in Section 3.1 hereof.
means the Internal Revenue Code of 1986, as amended.
has the meaning assigned to it in Section 5.2 hereof.
Period” shall have the meaning set forth in Section 8.3.
Party” shall have the meaning set forth in Section 8.3.
Party” shall have the meaning set forth in Section 8.3.
has the meaning set forth in the recitals.
shall have the meaning set forth in Section 8.3.
means any individual, sole proprietorship, partnership, limited liability
company, joint venture, trust, incorporated organization, association,
corporation, institution, public benefit corporation, government (whether
federal, state, country, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department thereof)
or other entity.
Price” has the meaning assigned it in Section 2.1 hereof.
Statement” shall mean the registration statement to be filed by the Company with
the SEC under the Securities Act for the resale of the Securities by the
means the Securities and Exchange Commission.
shall have the meaning assigned to such term in Section 1.1 hereof.
Act” or “Act” means the Securities Act of 1933, as amended.
Party Claimant” shall have the meaning set forth in Section 8.3.
Documents” shall mean this Agreement and all other documents as are required to
be delivered by the Investor to the Company pursuant to this
means the United States of America.
Upon the approval of the Company, and the written consent of the each of
Investors (a) the obligations of the Company, and the rights of an Investor
under this Agreement may be waived (either generally or in a particular
instance, either retroactively or prospectively and either for a specified
period of time or indefinitely), and (b) the Company, may enter into a
supplemental agreement for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement, or
supplemental agreement or modifying in any manner the rights and obligations
hereunder or thereunder of the Investors and the Company; provided, however,
that without each Investor's written consent, no such amendment or waiver
affect adversely such Investor's rights hereunder in a discriminatory manner
inconsistent with its adverse effects on rights of other Investors hereunder
(other than as reflected by the different number of shares held by such
this Agreement, nor any provision hereof, may be changed, waived, discharged
terminated orally or by course of dealing, but only by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, except to the extent provided in this
All notices, requests, consents and other communications required or permitted
hereunder shall be in writing and shall be hand delivered or mailed postage
prepaid by registered or certified mail or transmitted by facsimile transmission
(with immediate telephonic confirmation thereafter),
to an Investor, to the respective addresses set forth on the counterpart
signature pages of this Agreement signed by such
to the Company:
5A, Zuanshi Ge, Fuqiang Yi Tian Ming Yuan,
Tian Qu, Shenzhen City, P.R. China
No.: (213) 223-2276
such other address as the Company or an Investor each may specify by written
notice to the others, and each such notice, request, consent and other
communication shall for all purposes of the Agreement be treated as being
effective or having been given when delivered if delivered personally, upon
receipt of facsimile confirmation if transmitted by facsimile, or, if sent
mail, at the earlier of its receipt or 72 hours after the same has been
deposited in a regularly maintained receptacle for the deposit of United
mail, addressed and postage prepaid as aforesaid.
of the Company.
Investor, severally as to itself and not jointly, hereby indemnifies the
against and agrees to hold the Company harmless from any and all Losses arising
out of any misrepresentation or breach of any representation, warranty or
covenant by such Investor pursuant to this Agreement.
In the event the Company wishes to assert a claim for indemnification hereunder,
it shall deliver written notice (a “Claims
to the applicable Investor (the “Indemnifying
specifying the facts constituting the basis for, and the amount (if known)
the claim asserted.
Upon making any indemnification payment, the Indemnifying Party will, to
extent of such payment, be subrogated to all rights of the Indemnified Party
against any third party in respect of the Loss to which the payment relates;
provided, however, that until the Indemnified Party recovers full payment
Loss, any and all claims of the Indemnifying Party against any such third
on account of the payment are hereby made expressly subordinated and subjected
in right of payment to the Indemnified Party’s rights against such third party.
Without limiting the generality of any other provision hereof, the Indemnified
Party and Indemnifying Party will duly execute upon request all instruments
reasonably necessary to evidence and perfect the above-described subrogation
to Contest Claims of Third Parties.
an Indemnified Party asserts, or may in the future seek to assert, a claim
indemnification hereunder because of any action, cause of action or suit
by any Person not a party to this Agreement (a “Third
that may result in a Loss with respect to which the Indemnified Party would
entitled to indemnification pursuant to this Section 8.3 (an “Asserted
the Indemnified Party shall deliver to the Indemnifying Party a Claims Notice
with respect thereto, which Claims Notice shall, in accordance with the
provisions of Section 8.2 hereof, be delivered as promptly as practicable
an action in connection with such Asserted Liability is commenced against
Indemnifying Party shall have the right, upon written notice to the Indemnified
Party, to investigate, contest, defend or settle any Asserted Liability that
result in a Loss with respect to which the Indemnified Party is entitled
indemnification pursuant to this Section 8.3; provided that (A) the counsel
the Indemnifying Party who conducts the defense of such claim or litigation
reasonably satisfactory to the Indemnified Party, and (B) the Indemnified
may, at its option and at its own expense, participate in the investigation,
contesting, defense or settlement of any such Asserted Liability through
representatives and counsel of its own choosing (it being understood that
Indemnifying Party shall bear the cost of such counsel if the Indemnified
in good faith determines that it may have one or more defenses or counterclaims
that are inconsistent with one or more of those of the Indemnifying Party
respect of the Asserted Liability); and, provided further, that the Indemnifying
Party shall not settle any Asserted Liability unless (i) such settlement
exclusively monetary terms and provides as an unconditional term an immediate
release of the Indemnified Party for all liability with respect to such Asserted
Liability or (ii) the Indemnified Party has consented to the terms of such
settlement. If requested by the Indemnifying Party, the Indemnified Party
at the sole cost and expense of the Indemnifying Party, cooperate with
reasonable requests of the Indemnifying Party and its counsel in contesting
Asserted Liability, including, if appropriate and related to the Asserted
Liability in question, in making any counterclaim against the Third Party
Claimant, or any cross-complaint against any Person (other than the Indemnified
Party or its Affiliates). If the Indemnifying Party fails to undertake the
defense of the Asserted Liability reasonably promptly, the Indemnified Party
may, at its option and at the Indemnifying Party’s expense, to do so in such
manner as it deems appropriate; provided, however, that the Indemnified Party
shall not settle or compromise any Asserted Liability for which it seeks
indemnification hereunder without the prior written consent of the Indemnifying
Party (which shall not be unreasonably withheld or delayed).
Indemnifying Party may participate in (but not control) the defense of any
Asserted Liability that it has not elected to defend with its own counsel
its own expense.
Indemnifying Party and the Indemnified Party shall make mutually available
each other all relevant information in their possession relating to any Asserted
Liability (except to the extent that such action would result in a loss of
attorney-client privilege or would violate any applicable law) and shall
cooperate with each other in the defense thereof.
Duplication; Sole Remedy.
liability for indemnification hereunder shall be determined without duplication
of recovery by reason of the state of facts giving rise to such liability
constituting a breach of more than one representation or warranty.
parties’ respective rights to indemnification provided for in this Section 8.3
shall be the exclusive remedy for any Losses for which indemnification is
provided hereunder; provided, however, that nothing contained herein shall
prevent an Indemnified Party from pursuing remedies that may be available
such party under applicable law in the event of an Indemnifying Party’s failure
to comply with its indemnification obligations under this Section 8.3 or
case of fraud.
of Representations, Warranties and Covenants.
The representations and warranties of the parties hereto made pursuant to
Agreement shall survive the Closing until two (2) years after the Closing
provided that the representations and warranties contained in Sections 4.1,
5.2, and 5.3 shall survive indefinitely.
No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided
All the terms and provisions of this Agreement shall be binding upon and
to the benefit of and be enforceable by the respective parties hereto, the
successors and assigns of the respective Investors and the successors of
Company whether so expressed or not. None of the parties hereto may assign
of its rights or obligations hereunder without the prior written consent
other parties hereto, except that an Investor may, without the prior consent
the Company, assign its rights hereunder to any of its Affiliates. This
Agreement shall not inure to the benefit of or be enforceable by any other
The headings of the Sections and paragraphs of this Agreement have been inserted
for convenience of reference only and do not constitute a part of this
This Agreement will be governed by and construed under the laws of the State
New York without regard to its conflicts of laws rules.
Except as otherwise specifically provided in this Agreement, the parties
Agreement shall bear their respective costs and expenses incurred in connection
with the preparation and execution of this Agreement and the transactions
Any suit, action or proceeding seeking to enforce any provision of, or based
any matter arising out of or in connection with, this Agreement or the
transactions contemplated hereby may be brought in any federal or state court
located in the County of New York and State of New York, and each of the
hereby consents to the exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 8.2 shall be deemed
effective service of process on such party.
of Jury Trial.
EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO
BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
THE TRANSACTIONS CONTEMPLATED HEREBY.
This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, with the same effect as if all parties
had signed the same document. All such counterparts shall be deemed an original,
shall be construed together and shall constitute one and the same instrument.
This Agreement shall become effective when each party hereto has received
counterparts hereof signed by all of the other parties hereto.
This Agreement and the other Transaction Documents contain the entire agreement
among the parties hereto with respect to the subject matter hereof and such
Agreement supersedes and replaces all other prior agreements, written or
among the parties hereto with respect to the subject matter hereof.
If any term, provision, covenant or restriction of this Agreement is held
court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and
in no way be affected, impaired or invalidated so long as the economic or
substance of the transactions contemplated hereby is not affected in any
materially adverse to any party. Upon such a determination, the parties shall
negotiate in good faith to modify this Agreement so as to affect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby are consummated as originally
contemplated to the fullest extent possible.
Following the Closing, except for the payment by each Investor of the Purchase
Price in accordance with the terms hereof, no Investor has any further
obligation to invest in the Company under this Agreement, the other Transaction
Documents, or any of the transactions contemplated hereby or
WITNESS WHEREOF, the Investors hereto have caused this Subscription Agreement
be duly executed as of the day and year first above written.
TOTAL GIANT GROUP LIMITED
Liu, President, Sole Director
TOTAL SHINE GROUP LIMITED
Zhang, President, Sole Director
VICTORY HIGH INVESTMENTS LIMITED
Wang, President, Sole Director
THINK BIG TRADING LIMITED
Mao, President, Sole Director
System Group (the “Company”)
undersigned hereby represents and warrants that the information contained
this accredited investor questionnaire is true and accurate and acknowledges
that the Company is relying thereon.
an “Accredited Investor”. Investor is (check ALL that apply):
person whose individual net worth (assets less liabilities), or joint net
with his or her spouse, exceeds $1,000,000.
person whose individual income was in excess of $200,000, or whose joint
with his or her spouse was in excess of $300,000, in each of the two most
years, and who has a reasonable expectation of reaching the same income level
for the current year.
director or an executive officer of the Company.
insurance company, registered investment business development company, small
business investment company or employee benefit plan.
and loan association, credit union, or similar financial institution, or
registered broker or dealer.
business development company.
organization described in Section 501(c)(3) of the Internal Revenue Code
assets in excess of $5,000,000. Any
organization described in section 501(c)(3) of the Internal Revenue Code,
corporation, Massachusetts or similar business trust, or partnership, not
for the specific purpose of acquiring the securities offered, with total
in excess of $5,000,000.
with assets in excess of $5,000,000.
in which all of the equity owners are accredited investors. Also check the
item(s) [(i)-(ix)] that apply to the equity owners. [This item is not available
to an irrevocable trust.]
self-directed IRA, Keogh, or similar plan of which the individual directing
investments qualifies as an “accredited investor” in one or more of items
(i)-(ix) above. Also check the item(s) [(i)-(ix)] that apply to the
undersigned submits this accredited investor questionnaire as of the date
residing at ________________________ (the “Maker”) promises to pay the principal
amount of $_____________ (the “Principal Amount”) to the order of Home System
Group (the “Payee”), a Nevada corporation, upon the earlier to occur of: (i) two
years from the date of this Note; or (ii) within five business days of written
notification from the Payee that a registration statement (the “Registration
Statement”) pursuant to the Securities Act of 1933, as amended, filed by the
Payee with the Securities and Exchange Commission (the “SEC”) registering the
shares of Payee’s Common Stock was declared effective by the SEC (the “Maturity
Maker's execution and delivery of this Promissory Note and Pledge Agreement
“Note”) and Payee's acceptance of thereof, Maker and Payee acknowledge and agree
that the proceeds of this Note to Maker shall be used to finance the Maker's
purchase of ___________ shares of the Payee's common stock, par value $.001
share (the “Shares”) pursuant to a Subscription Agreement dated the date hereof
(the “Subscription Agreement”).
rights, duties and obligations of (a) Maker under this Note may not be assigned
without the prior consent of Payee and (b) Payee under this Note may be assigned
without the prior consent of Maker.
to secure (i) the due and punctual payment of all monetary obligations hereunder
of Maker to Payee and any reasonable costs and expenses (including, but not
limited to, all legal fees and expenses) of collection or enforcement of
such obligations and (ii) the due and punctual payment of any costs and expenses
incurred in connection with the realization of the security for which this
provides and any reasonable costs and expenses (including, but not limited
all legal fees and expenses) incurred in connection with any proceedings
which this Note may give rise (collectively referred to herein as
“Liabilities”), Maker hereby transfers, assigns, grants, bestows, sells, conveys
and pledges to Payee a first security interest in the Collateral (as herein
defined), which security interest shall remain in full force and effect until
all of the Liabilities shall have been paid in full to Payee, or until this
is cancelled as set forth herein.
purposes of this Note, “Collateral” shall mean all of Maker's right, title and
interest in and to the Shares, represented by the stock certificate to be
to the Payee in connection with the execution of this Note, and all proceeds
products thereof (as the foregoing terms are defined in the Uniform Commercial
Code as in effect in the State of New York).
with the Maker's execution and delivery of this Note, Maker has (a) duly
executed in blank a stock power required by the pledge of the Collateral
hereunder; (b) delivered the stock certificate representing the Collateral
the Payee to be held by the Payee pending the payment in full of this Note;
(c) irrevocably appointed Payee as Maker's attorney-in-fact to complete the
stock power to realize upon the Collateral upon nonpayment of principal or
interest under this Note, with such appointment being coupled with an
may be prepaid in whole or in part without premium or penalty or at any time
from time to time at the option of the Maker. Contemporaneously with Maker's
final payment of all amounts due under this Note, the original copy shall
marked “Paid in Full” and signed by Payee, and the cancelled original copy of
the Note and all Collateral shall be returned by Payee to Maker.
contemplated by this Note, Maker shall not encumber or grant a security interest
in any of the Collateral, without the prior written consent of Payee, and
hereby represents that he has not done so heretofore and, other than the
of the security interest contemplated hereby, the Collateral pledged by him
hereunder is, and will be, owned by him free and clear of all liens and
event the Maker defaults in the payment of this Note, the Payee shall give
written notice of such default to the Maker. In the event the Maker does
all outstanding principal due within five business days of his receipt of
notice, Payee may thereupon proceed against the Maker to collect the Principal
Maker does not pay the Principal Amount to the Payee within such five business
day period, then Payee may, to the extent permitted by applicable law, either
(i) sell for the account of the Maker any and all of the Shares in the Payee's
discretion in such quantities or lots as may seem best to the Payee, at which
sale or sales the maker may bid and purchase, or (ii) return such shares
treasury. After first applying the proceeds of the sale to the payment of
expenses of sale, the Payee shall then apply the proceeds to the satisfaction
this Note, and thereafter may pay any surplus and deliver any unsold Shares
the Maker. In the event that Payee is prohibited by applicable law from selling
the Shares, Payee shall be entitled to retain a sufficient number of Shares
that the product obtained by multiplying the number of shares retained by
hereunder times the officially reported market closing price for comparable
Shares on the date this remedy is exercised shall be equal to the balance
hereunder. Thereupon, all obligations between the Maker and Payee under this
Note and Pledge Agreement shall cease. In the event that the sale of the
amount of Shares does not generate sufficient funds to retire this Note and
satisfy Maker's obligations hereunder, or in the event that the Maker is
prohibited from selling such Shares and retains the Shares as provided herein,
the Maker will be responsible for the balance of the Principal Amount
shall be governed by, and construed in accordance with the internal laws
State of New York without giving effect to the conflict of laws provisions
WITNESS WHEREOF, Maker has executed and delivered this Note and Pledge Agreement
as of the date first above written.
and Agreed to
as of the date first written above.
Weiqiu Li, CEO
RECEIVED, The undersigned does (do) hereby sell, assign and issue
or F. I. D. #
Shares of the Common Stock of Home System Group represented
certificate(s) no(s) ________________________________________________ inclusive,
name of the undersigned on the books of said Company.
undersigned does (do) hereby irrevocably constitute and appoint Home
to transfer the said stock on the books of said Company, with full power
executing this power sign(s) here
of Shares of
TOTAL GIANT GROUP LIMITED
5A, Zuanshi Ge,
Yi Tian Ming Yuan,
Tian Qu, Shenzhen City, P.R. China
TOTAL SHINE GROUP LIMITED
5A, Zuanshi Ge,
Yi Tian Ming Yuan,
Tian Qu, Shenzhen City, P.R. China
VICTORY HIGH INVESTMENTS LIMITED
5A, Zuanshi Ge,
Yi Tian Ming Yuan,
Tian Qu, Shenzhen City, P.R. China
THINK BIG TRADING LIMITED
5A, Zuanshi Ge,
Yi Tian Ming Yuan,
Tian Qu, Shenzhen City, P.R. China