Form 8-K Home System Group

Events or Changes Between Quarterly Reports

What is Form 8-K?
  • Accession No.: 0001204459-07-000992 Act: 34 File No.: 000-49770 Film No.: 07954530
  • CIK: 0001172319
  • Submitted: 2007-07-02
  • Period of Report: 2007-07-02

FORM 8-K HTML

homesystem8k.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

FORM 8-K
 

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported):   July 2, 2007 (July 2, 2007)   

HOME SYSTEM GROUP
(Exact name of registrant as specified in its charter)
     
Nevada 000-49770 43-1954776
(State of Incorporation) (Commission File No.) (IRS Employer ID No.)
 
No. 5A, Zuanshi Ge, Fuqiang Yi Tian Ming Yuan,
Fu Tian Qu, Shenzhen City
People's Republic of China, 518000
(Address of Principal Executive Offices)
   
Registrant's Telephone Number, Including Area Code: 086-755 -83570142
   
N/A
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

£    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

£    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

£    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

£    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 1.01. Entry into a Material Definitive Agreement.

As previously reported, on April 20, 2007, Home System Group (the "Company"), its wholly-owned subsidiary Holy (HK) Limited ("HHK") and HHK's wholly-owned subsidiary Oceanic Well Profit, Inc. ("Oceanic") entered into a Share Exchange Agreement (the "Agreement") with Zhongshan City Juxian Gas Oven Co., Ltd. ("Juxian"), and Juxian's shareholders (the "Shareholders"), pursuant to which the Company became obligated to acquire 100% of Juxian from the Shareholders for $14,000,000 (the "Purchase Price"), $10,000,000 of which is payable in cash and $4,000,000 of which is payable in shares of the Company's common stock (the "Shares"), valued at $4.00 per share. The value of the Shares was determined by reference to the market price of the Company's common stock on the last trading date prior to the execution of the Agreement (i.e., April 19, 2007). On such date, the Company's Common Stock closed at $4.00, therefore, the Company is obligated to issue to 1,000,000 Shares to the Shareholders. The Agreement was required to be closed on or before June 30, 2007.

On June 29, 2007, the parties agreed to postpone the closing of the Agreement until July 2, 2007 (the "Closing"), pursuant to a letter amendment to the Agreement (the "Letter Agreement"). Under the Letter Agreement, Juxian and the Shareholders also made additional representations and warranties to the Company, including representations and warranties regarding their status as non-U.S. persons as defined in Regulation S of the Securities Act of 1933, as amended.

On July 2, 2007, the Company, HHK, Oceanic, Juxian and the Shareholders consummated the transactions contemplated by the Agreement. The obligation to pay the cash portion of the Purchase Price is evidenced by non interest-bearing, unsecured promissory notes (the "Notes") delivered by the Company to each of the Shareholders. Pursuant to the Notes, one-half of the cash portion of the Purchase Price is due and payable on July 2, 2008, the first anniversary of the Closing, and the remaining half is due and payable on July 2, 2009, the second anniversary of the Closing, but all amounts due under the Notes will become immediately due and payable after an event of default. As a result of the transaction, Juxian will become an indirect wholly-owned subsidiary of the Company.

For more details about the terms of the Agreement and the Notes see the Current Report on Form 8-K of the Company filed with the Securities and Exchange Commission on April 20, 2007 ((File No. 000-49770) and Exhibit 10.1 thereto which is incorporated by reference herein. The foregoing description of the terms of the Letter Agreement is qualified in its entirety by reference to the provisions of the Letter Agreement which is included as Exhibit 10.2 of this Current Report and is incorporated by reference herein

Item 2.01 Completion of Acquisition or Disposition of Assets.

On July 2, 2007, the Company and its subsidiaries completed the acquisition of 100% of the issued and outstanding capital stock of Zhongshan City Juxian Gas Oven Co., Ltd. As a result of the transaction, Juxian will become an indirect wholly-owned subsidiary of the Company. Further information regarding the acquisition is provided above under Item 1.01 of this Current Report.

Item 2.03(a) Creation of a Direct Financial Obligation.

On July 2, 2007, the Company became obligated on a direct financial obligation of ten million dollars ($10,000,000) in the aggregate, as evidenced by non interest-bearing, unsecured promissory notes delivered to each of the shareholders of Zhongshan City Juxian Gas Oven Co., Ltd. There are no ratios or tests that the Company is required to meet under the Notes. For details regarding terms of payment and material terms of this direct financial obligation, see Item 1.01 above, which is incorporated herein by reference.

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Item 3.02 Unregistered Sales of Equity Securities.

On July 2, 2007, the Company consummated a Share Exchange Agreement, pursuant to which the Company sold to the shareholders of Zhongshan City Juxian Gas Oven Co., Ltd., 1,000,000 shares of the Company's common stock, for a purchase price, in the aggregate, of $4,000,000 or $4.00 per share. For more details regarding the transaction, see Item 1.01 above.

The foregoing securities were issued to the Shareholders in reliance upon exemptions from the registration requirements of the Securities Act of 1933 (the "Securities Act") pursuant to Regulation S thereunder. The Company's reliance upon Regulation S was based upon the following factors (a) Neither of the Shareholders is a U.S. person or is acquiring the Shares for the account or benefit of any U.S. person, (b) each of the Shareholders agreed not to offer or sell the Shares (including any pre-arrangement for a purchase by a U.S. person or other person in the United States) directly or indirectly, in the United States or to any natural person who is a resident of the United States or to any other U.S. person as defined in Regulation S unless registered under the Securities Act and all applicable state laws or an exemption from the registration requirements of the Securities Act and similar state laws is available, (c) each of the Shareholders made its subscription from its offices at an address outside of the United States and (d) each of the Shareholders or their advisors have such knowledge and experience in financial and business matters to be capable of evaluating the merits and risks of, and protecting its interests in connection with an investment in the Company.

Item 9.01 Financial Statement and Exhibits.

(a)     Financial Statements of Business Acquired.

The financial statements required by Item 9.01 of Form 8-K relating to the acquisition described in Item 2.01 above will be filed by amendment to this Form 8-K not later than 71 days after the date of this Current Report disclosing the acquisition.

(b)     Pro Forma Financial Information.

To the extent that pro forma financial information is required pursuant to Article 11 of Regulation S-X, it will be filed by amendment to this Form 8-K not later than 71 days after the date of this Current Report disclosing the acquisition.

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(d)     Exhibits.

Number Description
   
10.1* Share Exchange Agreement dated as of April 20, 2007, is entered into by and among Home System Group, Holy (HK) Limited, Oceanic Well Profit Inc, Zhongshan City Juxian Gas Oven Co., Ltd., and the shareholders of Zhongshan City Juxian Gas Oven Co., Ltd.
   
10.2 Letter Amendment to Share Exchange Agreement, dated June 29, 2007, among Home System Group, Zhongshan City Juxian Gas Oven Co., Ltd., and the shareholders of Zhongshan City Juxian Gas Oven Co., Ltd.

* Incorporated by reference

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: July 2, 2007 HOME SYSTEM GROUP
   
  By:        /s/ Weiqiu Li  
               Weiqiu Li
               Chief Executive Officer

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EXHIBIT INDEX

Number Description
   
10.1* Share Exchange Agreement dated as of April 20, 2007, is entered into by and among Home System Group, Holy (HK) Limited, Oceanic Well Profit Inc, Zhongshan City Juxian Gas Oven Co., Ltd., and the shareholders of Zhongshan City Juxian Gas Oven Co., Ltd.
   
10.2 Letter Amendment to Share Exchange Agreement, dated June 29, 2007, among Home System Group, Zhongshan City Juxian Gas Oven Co., Ltd., and the shareholders of Zhongshan City Juxian Gas Oven Co., Ltd.

* Incorporated by reference

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EXHIBIT 10.2 HTML

exh102.htm

 


HOME SYSTEM GROUP
Oceanic Industry Park, Sha Gang Highway
Gang Kou Town, Zhongshan City
Guangdong, People's Republic of China, 528447

June 29, 2007

Zhongshan City Juxian Gas Oven Co., Ltd
No.56 Tongan Rd. West
Dongfeng Town, Zhongshan City,
Guangdong, People's Republic of China, 528425

Ladies and Gentlemen:

Reference is made to the Share Exchange Agreement ("Agreement"), dated April 20, 2007, among Home System Group (the "Company"), its wholly-owned subsidiary Holy (HK) Limited, HHK's wholly-owned subsidiary Oceanic Well Profit, Inc., Zhongshan City Juxian Gas Oven Co., Ltd. ("Juxian"), and Juxian's shareholders (the "Shareholders"), pursuant to which the Company became obligated to acquire 100% of Juxian from the Shareholders for $14,000,000, $10,000,000 of which is payable in cash and $4,000,000 of which is payable in shares of the Company's common stock (the "Shares"), valued at $4.00 per share. Terms not defined herein shall have the meanings set forth in the Agreement.

Pursuant to Sections 9(e) and (f) of the Agreement, either Juxian or the Company may terminate the Agreement if the transactions contemplated by the Agreement do not close on or before June 30, 2007. However, because June 30, 2007 falls on a non-business day, Juxian and the Company have agreed to amend Section 9 of the Agreement to postpone the closing until July 2, 2007, the next business day following June 30, 2007.

In addition, Juxian and the Shareholders acknowledge and agree that the Company is issuing the Shares in reliance upon exemptions from the registration requirements of the U. S. Securities Act of 1933 (the "Securities Act"), pursuant to Regulation S thereunder, and that the representations and warranties of the Shareholders in Section 2.29 of the Agreement do not adequately support the reliance. Therefore, the Shareholders have agreed to amend Section 2.29 of the Agreement to provide adequate Shareholder representations and warranties.

Therefore, the Company, Juxian and the Shareholders agree to amend the Agreement (the "Amendment") as hereinafter set forth:

1.     Section 9 - Each occurrence of the date "June 30, 2007" in Subsections (e) and (f) of Section 19 of the Agreement is deleted in its entirety and substituted in its place is the date "July 2, 2007".

2.     Section 2.29 - Section 2.29 of the Agreement is deleted in its entirety and substituted in its place is the following:

2.28     SHAREHOLDER REPRESENTATIONS. Each of the Shareholders understands, acknowledges and agrees that the offering and sale of the Acquisition Shares to the Shareholders has not been registered under the Securities Act or under any state securities laws or regulations and that the Acquisition Shares are being offered and sold to it in reliance on an

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exemption from the registration requirements of United States federal and state securities laws under Regulation S promulgated under the Securities Act and that Home System Group is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of each of the Shareholders set forth herein in order to determine the applicability of such exemptions and the suitability of such Shareholders to acquire the Acquisition Shares. In this regard, each of the Shareholders represents and warrants as follows:

(a) It is not a U.S. Person (as defined below) and is not an affiliate (as defined in Rule 501(b) under the Securities Act) of Zhongshan City Weihe Appliances Co., Ltd. A U.S. Person means any one of the following: (1) any natural person resident in the United States of America; (2) any partnership or corporation organized or incorporated under the laws of the United States of America; (3) any estate of which any executor or administrator is a U.S. person; (4) any trust of which any trustee is a U.S. person; (5) any agency or branch of a foreign entity located in the United States of America; (6) any non discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. person; (7) any discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated or (if an individual) resident in the United States of America; and (8) any partnership or corporation if: (a) organized or incorporated under the laws of any foreign jurisdiction; and (b) formed by a U.S. person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts.

(b) At the time of the origination of contact concerning this contract and the date of the execution and delivery of this contract, each of the Shareholders was outside of the United States.

(c) None of the Shareholders will, during the period commencing on the date of issuance of the Acquisition Shares and ending on the first anniversary of such date, or such shorter period as may be permitted by Regulation S or other applicable securities law (the "Restricted Period"), offer, sell, pledge or otherwise transfer the Acquisition Shares in the United States, or to a U.S. Person for the account or for the benefit of a U.S. Person, or otherwise in a manner that is not in compliance with Regulation S. At no time shall a Shareholder offer or sell the Acquisition Shares unless they are registered under the Securities Act or are exempt from the registration requirements of the Securities Act and any applicable state or foreign securities laws or regulations.

(d) Each of the Shareholders will, after expiration of the Restricted Period, offer, sell, pledge or otherwise transfer the Acquisition Shares only pursuant to registration under the Securities Act or an available exemption therein and, in accordance with all applicable state and foreign securities laws.

(e) No Shareholder has engaged in, and prior to the expiration of the Restricted Period will not directly or indirectly engage in, any short selling of or any hedging or similar transaction with respect to the Acquisition Shares in the United States, including without limitation, any put, call or other option transaction, option writing or equity swap.

(f) Neither a Shareholder nor or any person acting on its behalf has engaged, nor will engage, in any directed selling efforts to a U.S. Person with respect to the Acquisition Shares and the Shareholder and any person acting on its behalf have complied and will comply with the "offering restrictions" requirements of Regulation S under the Securities Act.

(g) The transactions contemplated by this contract have not been prearranged 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 the registration requirements of the Securities Act.

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(h) None of the Shareholders or any person acting on their behalf has undertaken or carried out any activity for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States, its territories or possessions, for any of the Acquisition Shares. Each of the Shareholders agrees not to cause any advertisement of the Acquisition Shares to be published in any newspaper or periodical or posted in any public place and not to issue any circular relating to the Acquisition Shares, except such advertisements that include the statements required by Regulation S under the Securities Act, and only offshore and not in the U.S. or its territories, and only in compliance with any local applicable securities laws.

Each of the Company, Juxian and the Shareholders acknowledges and agrees that, except as specifically set forth in this Amendment, all of the terms and conditions of the Agreement, including, but not limited to, all the obligations of the Company, Juxian and the Shareholders, shall remain unchanged and in full force in affect.

[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

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If the foregoing provisions correctly state our understanding with respect to the above matters, please indicate your agreement by signing two copies of this letter in the space provided below and returning one of the copies to us.

Very truly yours,
 
HOME SYSTEM GROUP
 
By /s/ Weiqiu Li          
      Weiqiu Li
      Chief Executive Officer

Acknowledged this 29th day of June, 2006:

ZHONGSHAN CITY JUXIAN GAS OVEN CO., LTD.

By /s/ Zhenguang Huang           
      Zhenguang Huang
      Chief Executive Officer

SHAREHOLDERS:

By /s/ Zhenbiao Huang              
      Zhenbiao Huang

By /s/ Jingxian Huang                
      Jingxian Huang

Letter Amendment to Juxian Share Exchange Agreement


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