Form 8-K Home System Group

Events or Changes Between Quarterly Reports

What is Form 8-K?
  • Accession No.: 0001204459-07-001173 Act: 34 File No.: 000-49770 Film No.: 071027716
  • CIK: 0001172319
  • Submitted: 2007-08-06
  • Period of Report: 2007-08-06

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):   August 6, 2007 (July 31, 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)
   
086-755 -83570142
(Registrant's telephone number, including area code)
   
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 5.02. Departure off Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On July 31, 2007, the Board of Directors of Home System Group (the "Company"), in accordance with Article Three, Section 1 of the Company's Bylaws, increased the size of the Company's Board of Directors from two to five and elected Guanghan Chen, Binhai Chen, and Jianzhao Zheng (the "Independent Directors") as directors of the Company to fill the vacancies created by such increase, each to serve on the Board of Directors as an "independent director" as defined by Rule 4200(a)(15) of the Marketplace Rules of The Nasdaq Stock Market, Inc. A copy of the press release announcing such elections is attached to this report as Exhibit 99.1.

The Company has entered into separate Independent Director Agreements and Indemnification Agreements with each of the Independent Directors. Under the terms of the Independent Director Agreements, the Company agreed to pay each Independent Director a fee of RMB20,000 (approximately USD$2,647) as compensation for the services to be provided by them as Independent Directors and agreed to reimburse the Independent Directors for pre-approved reasonable business related expenses incurred in good faith in the performance of the their duties for the Company. Under the terms of the Indemnification Agreements, the Company agreed to indemnify the Independent Directors against expenses, judgments, fines, penalties or other amounts actually and reasonably incurred by the Independent Directors in connection with any proceeding if the Independent Director acted in good faith and in the best interests of the Company. This brief description of the terms of the Independent Director Agreements and Indemnification Agreements is qualified by reference to the provisions of the agreements attached to this report as Exhibits 10.1 through 10.6.

Guanghan Chen. Since May 1999, Mr. Chen has served as a professor and senior researcher at the Research Institute of Hong Kong and Macao and the State Council Development Research Center where he teaches courses in economic development theory and policy, industry and regional economics of the Asia-Pacific. Prior to this, Mr. Chen served as deputy director of the Department of Economics in Zhongshan University from June 1997 to May 1999, and as director of the Institute of Hong Kong and Macao and deputy director of the Hong Kong and Macao Research Center from May 1999 to December 2000. Mr. Chen holds a Bachelor's degree in Law and Political Science and a Master's degree in Economics from Huazhong Normal University and a Doctorate in Economics from Wuhan University.

Binhai Chen. Mr. Chen has engaged in accounting, accounting education, auditing, assets evaluation, and tax and management consulting for the past 18 years. Since July 1989, Mr. Binhai Chen has served as an accountant with the Zhongshan City Zhongxin Accounting Firm. Mr. Chen holds a Masters Degree in Accounting from Guangzhou City Jinan University and is a Certified Public Accountant, a Certified Tax Agent and a Certified Public Valuer in China. Mr. Chen is currently the Director of the Guangdong Province Certified Public Accountants Association, the Executive Director of Zhongshan City Certified Public Accountants Association, the Director of Zhongshan City Internal Audit Association and the Director of Zhongshan City Securities Association.

Jianzhao Zheng. Mr. Zheng has engaged in accounting, accounting education, auditing, assets evaluation, and tax and management consulting for the past 10 years and is an expert in the area of auditing and stock restructuring, taxation and corporate mergers and asset reorganization. Since July 1994, Mr. Zheng has served as an accountant with the Zhongshan City Zhongxin Accounting Firm. Mr. Zheng holds a Bachelor Degree in Accounting from Zhongshan City College and holds certifications as a Certified Public Accountant, a Certified Tax Agent and a Certified Public Valuer in China.

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There are no arrangements or understandings between any of the Independent Directors and any other persons pursuant to which they were selected as directors. There are no transactions between the Company and any of the Independent Directors that would require disclosure under Item 404(a) of Regulation S-K.

Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

On July 31, 2007, the Company's Board of Directors adopted Amended and Restated Bylaws, which substantially revised the Company's existing Bylaws. The following is a summary of certain provisions of the Amended and Restated Bylaws adopted by the Board of Directors and is qualified by reference to our Amended and Restated Bylaws, a copy of which is attached as Exhibit 3.1 to this Report.

Generally, the Amended and Restated Bylaws of the Company update the Company's former Bylaws. The modifications to the former Bylaws include:

(a) a new provision providing that in all offerings of securities pursuant to Regulation S of the Securities Act of 1933, as amended (the "Act"), the Company shall require that its stock transfer agent refuse to register any transfer of securities not made in accordance with the provisions of Regulation S, pursuant to registration under the Act or an available exemption thereunder;

(b) special meetings of stockholders may now be called by the chief executive officer, president or the Board of Directors, or by the president or secretary at the request in writing of the holders of not less than one-tenth of all the shares issued, outstanding and entitled to vote, instead of the Company's previous Bylaws which provided that special meetings could be called in accordance with the Nevada Revised Statutes, which state that the entire board of directors, any two directors or the president may call special meetings;

(c) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders is now not less than ten nor more than sixty days prior to such meeting, as opposed to the provision in the Company's previous Bylaws requiring not more than seventy nor less than ten days notice;

(d) a new provision providing that directors may be removed either for or without cause at any special meeting of stockholders by the affirmative vote of at least two-thirds of the voting power of the issued and outstanding stock entitled to vote, provided that notice of intention to act upon such matter was provided in the notice calling such meeting;

(e) a new provision providing that no loans shall be contracted on behalf of the Company and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors, which authority may be general or confined to specific instances; and

(f) a new provision providing that no contract or transaction between the Company and one or more of its directors or officers, or between the Company and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) the fact as to his relationship or interest and as to the contract or transaction is known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the fact as to his relationship or interest and as to the contract or transaction is known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Company as of the time it is authorized, approved, or ratified by the Board of Directors, a committee thereof, or the stockholders.

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Item 5.05. Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics.

On July 31, 2007, the Board of Directors of the Company adopted a Business Ethics Policy and Code of Conduct (the "Ethics Policy") that applies to all of its directors, officers and employees, including its principal executive officer, principal financial officer, and principal accounting officer. The Ethics Policy will serve as the Company's "code of ethics" (as defined in Item 406(b) of Regulation S-K).

The Ethics Policy addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code. A copy of the Ethics Policy is attached to this report as Exhibit 14.1 and is incorporated herein by reference. The Ethics Policy will also be posted on the corporate governance page of the Company's website at www.homesystemgroup.com as soon as practicable.

Item 8.01. Other Events.

On July 31, 2007, the Board of Directors of the Company established an Audit Committee, a Governance and Nominating Committee and a Compensation Committee and appointed each Independent Director to each committee. The Board of Directors will make a determination regarding the Chairs of each Committee at a later date. Copies of the Audit Committee Charter, the Governance and Nominating Committee Charter, and the Compensation Committee Charter are attached to this report as Exhibits 99.2, 99.3 and 99.4, respectively, and are incorporated herein by reference. Each committee charter will also be posted on the corporate governance page of the Company's website at www.homesystemgroup.com as soon as practicable.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No. Description
   
3.1 Amended and Restated Bylaws of Home System Group, adopted July 31, 2007
   
10.1 Home System Group Independent Director Agreement, dated as of July 31, 2007, by and between Home System Group and Guanghan Chen
   
10.2 Home System Group Independent Director Agreement, dated as of July 31, 2007, by and between Home System Group and Binhai Chen
   
10.3 Home System Group Independent Director Agreement, dated as of July 31, 2007, by and between Home System Group and Jianzhao Zheng
   
10.4 Indemnification Agreement, dated as of July 31, 2007, by and between Home System Group and Guanghan Chen
   
10.5 Indemnification Agreement, dated as of July 31, 2007, by and between Home System Group and Binhai Chen

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10.6 Indemnification Agreement, dated as of July 31, 2007, by and between Home System Group and Jianzhao Zheng
14.1 Home System Group Business Ethics Policy and Code of Conduct, adopted July 31, 2007
99.1 Press Release dated August 6, 2007
99.2 Home System Group Audit Committee Charter, adopted July 31, 2007
99.3 Home System Group Governance and Nominating Committee Charter, adopted July 31, 2007
99.4 Home System Group Compensation Committee Charter, adopted July 31, 2007

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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.

    HOME SYSTEM GROUP
       
       
Date: August 6, 2007   By: /s/ Weiqiu Li
      Weiqiu Li
      Chief Executive Officer
       

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EXHIBIT INDEX

Exhibit No. Description
   
3.1 Amended and Restated Bylaws of Home System Group, adopted July 31, 2007
   
10.1 Home System Group Independent Director Agreement, dated as of July 31, 2007, by and between Home System Group and Guanghan Chen
   
10.2 Home System Group Independent Director Agreement, dated as of July 31, 2007, by and between Home System Group and Binhai Chen
   
10.3 Home System Group Independent Director Agreement, dated as of July 31, 2007, by and between Home System Group and Jianzhao Zheng
   
10.4 Indemnification Agreement, dated as of July 31, 2007, by and between Home System Group and Guanghan Chen
   
10.5 Indemnification Agreement, dated as of July 31, 2007, by and between Home System Group and Binhai Chen
   
10.6 Indemnification Agreement, dated as of July 31, 2007, by and between Home System Group and Jianzhao Zheng
   
14.1 Home System Group Business Ethics Policy and Code of Conduct, adopted July 31, 2007
   
99.1 Press Release dated August 6, 2007
   
99.2 Home System Group Audit Committee Charter, adopted July 31, 2007
   
99.3 Home System Group Governance and Nominating Committee Charter, adopted July 31, 2007
   
99.4 Home System Group Compensation Committee Charter, adopted July 31, 2007
   

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EXHIBIT 3.1 HTML

exh31.htm


Exhibit 3.1

AMENDED AND RESTATED BYLAWS

OF

HOME SYSTEM GROUP

(the “Corporation”)

 

Adopted on July 31, 2007

_______________________________________________________

 


ARTICLE I

OFFICES

 

Section 1.1.

Registered Office. The registered office and registered agent of the Corporation shall be as from time to time set forth in the Corporation's Articles of Incorporation.

Section 1.2.

Other Offices. The Corporation may also have offices at such other places, both within and without the State of Nevada, as the Board of Directors may from time to time determine or the business of the Corporation may require.


ARTICLE II

STOCKHOLDERS

 

Section 2.1.

Place of Meetings. All meetings of the stockholders for the election of Directors shall be held at such place, within or without the State of Nevada, as may be fixed from time to time by the Board of Directors.  Meetings of stockholders for any other purpose may be held at such time and place, within or without the State of Nevada, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

Section 2.2.

Annual Meeting. An annual meeting of the stockholders shall be held at such time as may be determined by the Board of Directors, at which meeting the stockholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting.

Section 2.3.

List of Stockholders. At least ten days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, arranged in alphabetical order, with the address of and the number of voting shares registered in the name of each, shall be prepared by the officer or agent having charge of the stock transfer books.  Such list shall be kept on file at the registered office of the Corporation for a period of ten days prior to such meeting and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall be produced and kept open at the time and place of the meeting during the whole time thereof, and shall be subject to the inspection of any stockholder who may be present.

Section 2.4.

Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by law, by the Articles of Incorporation or by these Bylaws, may be called by the Chief Executive Officer (if any) or the President or the Board of Directors, or shall be called by the President or Secretary at the request in writing of the holders of not less than one-tenth of all the shares issued, outstanding and entitled to vote.  Such request shall state the purpose or purposes of the proposed meeting.  Business transacted at all special meetings shall be confined to the purposes stated in the notice of the meeting unless all stockholders entitled to vote are present and consent.


 Section 2.5.

Notice. Written or printed notice stating the place, day and hour of any meeting of the stockholders and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than sixty days before the date of the meeting, either personally or by mail, by or at the direction of the Chief Executive Officer (if any), the President, the Secretary, or the officer or person calling the meeting, to each stockholder of record entitled to vote at the meeting.  If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid.

Section 2.6.

Quorum. At all meetings of the stockholders, the presence in person or by proxy of the holders of a majority of the shares issued and outstanding and entitled to vote shall be necessary and sufficient to constitute a quorum for the transaction of business except as otherwise provided by law, by the Articles of Incorporation or by these Bylaws.  If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented.  If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.

Section 2.7.

Voting. When a quorum is present at any meeting of the Corporation's stockholders, the vote of the holders of a majority of the shares having voting power present in person or represented by proxy at such meeting shall decide any questions brought before such meeting, unless the question is one upon which, by express provision of law, the Articles of Incorporation or these Bylaws, a different vote is required, in which case such express provision shall govern and control the decision of such question.  The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

Section 2.8.

Method of Voting. Each outstanding share of the Corporation’s capital stock, regardless of class, shall be entitled to one vote on each matter submitted to a vote at a meeting of stockholders, except to the extent that the voting rights of the shares of any class or classes are limited or denied by applicable law or the Articles of Incorporation, as amended from time to time.  At any meeting of the stockholders, every stockholder having the right to vote shall be entitled to vote in person or by proxy appointed by an instrument in writing subscribed by such stockholder or by his duly authorized attorney-in-fact and bearing a date not more than 6 months prior to such meeting, unless such instrument provides for a longer period.  Each proxy shall be revocable unless expressly provided therein to be irrevocable and if, and only so long as, it is coupled with an interest sufficient in law to support an irrevocable power.  Such proxy shall be filed with the Secretary of the Corporation prior to or at the time of the meeting.  Voting for directors shall be in accordance with Article III of these Bylaws.  Voting on any question or in any election may be by voice vote or show of hands unless the presiding officer shall order or any stockholder shall demand that voting be by written ballot.

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Section 2.9.

Record Date; Closing Transfer Books. The Board of Directors may fix in advance a record date for the purpose of determining stockholders entitled to notice of or to vote at a meeting of stockholders, such record date to be not less than ten nor more than sixty days prior to such meeting, or the Board of Directors may close the stock transfer books for such purpose for a period of not less than ten nor more than sixty days prior to such meeting.  In the absence of any action by the Board of Directors, the date upon which the notice of the meeting is mailed shall be the record date.

Section 2.10.

Action By Consent. Any action required or permitted by law, the Articles of Incorporation, or these Bylaws to be taken at a meeting of the stockholders of the Corporation may be taken without a meeting if a consent or consents in writing, setting forth the action so taken, shall be signed by stockholders holding at least a majority of the voting power; provided that if a different proportion of voting power is required for such an action at a meeting, then that proportion of written consents is required.  Such signed consent shall be delivered to the Secretary for inclusion in the Minute Book of the Corporation.


ARTICLE III

BOARD OF DIRECTORS

 

Section 3.1.

Management. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, who may exercise all such powers of the Corporation and do all such lawful acts and things as are not by law, the Articles of Incorporation, a stockholders' agreement or these Bylaws directed or required to be exercised or done by the stockholders.

Section 3.2.

Qualification; Election; Term. None of the directors need be a stockholder of the Corporation or a resident of the State of Nevada.  The directors shall be elected by plurality vote at the annual meeting of the stockholders, except as hereinafter provided, and each director elected shall hold office until his successor shall be elected and qualified.

Section 3.3.

Number. The number of directors of the Corporation shall be fixed from time to time by the Board of Directors within the limits specified in the Articles of Incorporation, or if not so specified in the Articles of Incorporation, the number of directors shall be at least one (1) and not more than nine (9).  No decrease in the number of directors shall have the effect of shortening the term of any incumbent director.

Section 3.4.

Removal. Any director may be removed either for or without cause at any special meeting of stockholders by the affirmative vote of at least two-thirds of the voting power of the issued and outstanding stock entitled to vote; provided, however, that notice of intention to act upon such matter shall have been given in the notice calling such meeting.

Section 3.5.

Vacancies. Any vacancy occurring in the Board of Directors by death, resignation, removal or otherwise may be filled by an affirmative vote of at least a majority of the remaining directors though less than a quorum of the Board of Directors.  A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office.  A directorship to be filled by reason of an increase in the number of directors may be filled by the Board of Directors for a term of office only until the next election of one or more directors by the stockholders.

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Section 3.6.

Place of Meetings. Meetings of the Board of Directors, regular or special, may be held at such place within or without the State of Nevada as may be fixed from time to time by the Board of Directors.

Section 3.7.

Annual Meeting. The first meeting of each newly elected Board of Directors shall be held without further notice immediately following the annual meeting of stockholders and at the same place, unless by unanimous consent or unless the directors then elected and serving shall change such time or place.

Section 3.8.

Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by resolution of the Board of Directors.

Section 3.9.

Special Meetings. Special meetings of the Board of Directors may be called by the Chief Executive Officer (if any) or President on oral or written notice to each director, given either personally, by telephone, by telegram or by mail, given at least forty-eight hours prior to the time of the meeting.  Special meetings shall be called by the Chief Executive Officer, President or the Secretary in like manner and on like notice on the written request of at least two directors.  Except as may be otherwise expressly provided by law, the Articles of Incorporation or these Bylaws, neither the business to be transacted at, nor the purpose of, any special meeting need to be specified in a notice or waiver of notice.

Section 3.10.

Quorum. At all meetings of the Board of Directors the presence of a majority of the number of directors shall be necessary and sufficient to constitute a quorum for the transaction of business, and the affirmative vote of at least a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law, the Articles of Incorporation or these Bylaws.  If a quorum shall not be present at any meeting of directors, the directors present thereat may adjourn the meeting from time to time without notice other than announcement at the meeting, until a quorum shall be present.

Section 3.11.

Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers or have a financial interest, shall be void or voidable solely for this reason, solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if: (1) the fact as to his relationship or interest and as to the contract or transaction is known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (2) the fact as to his relationship or interest and as to the contract or transaction is known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (3) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved, or ratified by the Board of Directors, a committee thereof, or the stockholders.  Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

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Section 3.12.

Committees. The Board of Directors may, by resolution passed by a majority of the whole Board, designate committees, each committee to consist of two or more directors of the Corporation, which committees shall have such power and authority and shall perform such functions as may be provided in such resolution.  Such committee or committees shall have such name or names as may be designated by the Board and shall keep regular minutes of their proceedings and report the same to the Board of Directors when required.

Section 3.13.

Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or any committee of the Board of Directors may be taken without such a meeting if a consent or consents in writing, setting forth the action so taken, is signed by all the members of the Board of Directors or such other committee, as the case may be.

Section 3.14.

Compensation of Directors. Directors shall receive such compensation for their services, and reimbursement for their expenses as the Board of Directors, by resolution, shall establish; provided that nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity and receiving compensation therefor.


ARTICLE IV

NOTICE

Section 4.1.

Form of Notice. Whenever required by law, the Articles of Incorporation or these Bylaws, notice is to be given to any director or stockholder, and no provision is made as to how such notice shall be given, such notice may be given: (a) in writing, by mail, postage prepaid, addressed to such director or stockholder at such address as appears on the books of the Corporation; or (b) in any other method permitted by law.  Any notice required or permitted to be given by mail shall be deemed to be given at the time when the same shall be deposited in the United States mail.

Section 4.2.

Waiver. Whenever any notice is required to be given to any stockholder or director of the Corporation as required by law, the Articles of Incorporation or these Bylaws, a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated in such notice, shall be equivalent to the giving of such notice. Attendance of a stockholder or director at a meeting shall constitute a waiver of notice of such meeting, except where such stockholder or director attends for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.


ARTICLE V

OFFICERS AND AGENTS

 

Section 5.1.

In General. The officers of the Corporation shall be elected by the Board of Directors and shall be a President, a Treasurer, and a Secretary.  The Board of Directors may also elect a Chairman of the Board, a Chief Executive Officer, a Chief Operating Officer, a Chief Financial Officer, and one or more Vice Presidents, Assistant Vice Presidents, Assistant Secretaries and Assistant Treasurers.  Any two or more offices may be held by the same person.

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Section 5.2.

Election. The Board of Directors, at its first meeting after each annual meeting of stockholders, shall elect the officers, none of whom need be a member of the Board of Directors.

Section 5.3.

Other Officers and Agents. The Board of Directors may also elect and appoint such other officers and agents as it shall deem necessary, who shall be elected and appointed for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

Section 5.4.

Salaries. The salaries of all officers and agents of the Corporation shall be fixed by the Board of Directors or any committee of the Board, if so authorized by the Board.

Section 5.5.

Term of Office and Removal. Each officer of the Corporation shall hold office until his death, or his resignation or removal from office, or the election and qualification of his successor, whichever shall first occur.  Any officer or agent elected or appointed by the Board of Directors may be removed at any time, for or without cause, by the affirmative vote of a majority of the whole Board of Directors, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.  If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors.

Section 5.6.

Employment and Other Contracts. The Board of Directors may authorize any officer or officers or agent or agents to enter into any contract or execute and deliver any instrument in the name or on behalf of the Corporation, and such authority may be general or confined to specific instances.  The Board of Directors may, when it believes the interest of the Corporation will best be served thereby, authorize executive employment contracts which will contain such terms and conditions as the Board of Directors deems appropriate.  

Section 5.7.

Chairman of the Board. The Chairman of the Board, subject to the direction of the Board of Directors, shall perform such executive, supervisory and management functions and duties as from time to time may be assigned to him or her by the Board of Directors.  The Chairman of the Board shall preside at all meetings of the stockholders of the Corporation and all meetings of the Board of Directors.

Section 5.8.

Chief Executive Officer. The Chief Executive Officer shall have general and active management of the business of the Corporation and shall see that all orders and resolutions of the Board of Directors are carried into effect.  The Chief Executive Officer shall preside at all meetings of the stockholders of the Corporation and all meetings of the Board of Directors in the absence of the Chairman of the Board.

Section 5.9.

President. The President shall be subject to the direction of the Board of Directors and the Chief Executive Officer (if any), and shall have general charge of the business, affairs and property of the Corporation and general supervision over its other officers and agents.  The President shall see that the officers carry all other orders and resolutions of the Board of Directors into effect.  The President shall execute all authorized conveyances, contracts, or other obligations in the name of the Corporation except where required by law to be otherwise signed and executed and except where the signing and execution shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation or reserved to the Board of Directors or any committee thereof.  The President shall preside at all meetings of the stockholders of the Corporation and all meetings of the Board of Directors in the absence of the Chairman of the Board and the Chief Executive Officer.  The President shall perform all duties incident to the office of the President and such other duties as may be prescribed by the Board of Directors from time to time.

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Section 5.10.

Chief Operating Officer. The Chief Operating Officer shall be subject to the direction of the Chief Executive Officer (if any), the President and the Board of Directors and shall have day-to-day managerial responsibility for the operation of the Corporation.

Section 5.11.

Chief Financial Officer. The Chief Financial Officer shall be subject to the direction of the Chief Executive Officer (if any), the President and the Board of Directors and shall have day-to-day managerial responsibility for the finances of the Corporation.

Section 5.12.

Vice Presidents. Each Vice President shall have such powers and perform such duties as the Board of Directors or any committee thereof may from time to time prescribe, or as the President may from time to time delegate to him.  In the absence or disability of the President, any Vice President may perform the duties and exercise the powers of the President.

Section 5.13.

Secretary. The Secretary shall attend all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose.  The Secretary shall perform like duties for the Board of Directors when required.  He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors under whose supervision he shall be.  He shall keep in safe custody the seal of the Corporation. He shall be under the supervision of the President.  He shall perform such other duties and have such other authority and powers as the Board of Directors may from time to time prescribe or as the President may from time to time delegate.

Section 5.14.

Assistant Secretaries. Each Assistant Secretary shall have such powers and perform such duties as the Board of Directors may from time to time prescribe or as the President may from time to time delegate to him.

Section 5.15.

Treasurer. The Treasurer shall have the custody of all corporate funds and securities, shall keep full and accurate accounts of receipts and disbursements of the Corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors.  He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, shall render to the Directors, at the regular meetings of the Board of Directors, or whenever they may require it, an account of all his transactions as Treasurer and of the financial condition of the Corporation, and shall perform such other duties as the Board of Directors may prescribe or the President may from time to time delegate.

Section 5.16.

Assistant Treasurers. Each Assistant Treasurer shall have such powers and perform such duties as the Board of Directors may from time to time prescribe or as the President may from time to time delegate to him.

7


Section 5.17.

Bonding. If required by the Board of Directors, all or certain of the officers shall give the Corporation a bond, in such form, in such sum, and with such surety or sureties as shall be satisfactory to the Board of Directors, for the faithful performance of the duties of their office and for the restoration to the Corporation, in case of their death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in their possession or under their control belonging to the Corporation.


ARTICLE VI

CERTIFICATES OF SHARES

 

Section 6.1.

Form of Certificates. Certificates, in such form as may be determined by the Board of Directors, representing shares to which stockholders are entitled, shall be delivered to each stockholder.  Such certificates shall be consecutively numbered and shall be entered in the stock book of the Corporation as they are issued.  Each certificate shall state on the face thereof the holder's name, the number, class of shares, and the par value of such shares or a statement that such shares are without par value.

Section 6.2.

Lost Certificates. The Board of Directors may direct that a new certificate be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed.  When authorizing such issue of a new certificate, the Board of Directors, in its discretion and as a condition precedent to the issuance thereof, may require the owner of such lost or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond, in such form, in such sum, and with such surety or sureties as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed. When a certificate has been lost, apparently destroyed or wrongfully taken, and the holder of record fails to notify the Corporation within a reasonable time after he has notice of it, and the Corporation registers a transfer of the shares represented by the certificate before receiving such notification, the holder of record is precluded from making any claim against the Corporation for the transfer or a new certificate.

Section 6.3.

Transfer of Shares. Shares of stock shall be transferable only on the books of the Corporation by the holder thereof in person or by his duly authorized attorney. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate representing shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation or the transfer agent of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

Section 6.4.

Registered Stockholders. The Corporation shall be entitled to treat the holder of record of any share or shares of stock as the holder in fact thereof and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by law.

 

8


ARTICLE VII

GENERAL PROVISIONS

 

Section 7.1.

Dividends. Dividends upon the outstanding shares of the Corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting.  Dividends may be declared and paid in cash, in property, or in shares of the Corporation, subject to the provisions of the Nevada Revised Statutes and the Articles of Incorporation.  The Board of Directors may fix in advance a record date for the purpose of determining stockholders entitled to receive payment of any dividend, such record date to be not more than sixty days prior to the payment date of such dividend, or the Board of Directors may close the stock transfer books for such purpose for a period of not more than sixty days prior to the payment date of such dividend.  In the absence of any action by the Board of Directors, the date upon which the Board of Directors adopts the resolution declaring such dividend shall be the record date.

Section 7.2.

Reserves. There may be created by resolution of the Board of Directors out of the surplus of the Corporation such reserve or reserves as the directors from time to time, in their discretion, think proper to provide for contingencies, or to equalize dividends, or to repair or maintain any property of the Corporation, or for such other purpose as the directors shall think beneficial to the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.  Surplus of the Corporation to the extent so reserved shall not be available for the payment of dividends or other distributions by the Corporation.

Section 7.3.

Telephone and Similar Meetings. Stockholders, directors and committee members may participate in and hold a meeting by means of conference telephone or similar communications equipment by which all persons participating in the meeting can hear each other.  Participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground that the meeting is not lawfully called or convened.

Section 7.4.

Books and Records. The Corporation shall keep correct and complete books and records of account and minutes of the proceedings of its stockholders and Board of Directors, and shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its stockholders, giving the names and addresses of all stockholders and the number and class of the shares held by each.

Section 7.5.

Checks and Notes. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

Section 7.6.

Loans. No loans shall be contracted on behalf of the Corporation and no evidence of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances.

Section 7.7.

Fiscal Year. The fiscal year of the Corporation shall be fixed, and shall be subject to change, by the Board of Directors.

9


Section 7.8.

Seal. The Corporation may have a seal, and such seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.  Any officer of the Corporation shall have authority to affix the seal to any document requiring it.

Section 7.9.

Indemnification. The Corporation shall indemnify its directors to the fullest extent permitted by the Nevada Revised Statutes and may, if and to the extent authorized by the Board of Directors, so indemnify its officers and any other person whom it has the power to indemnify against liability, reasonable expense or other matter whatsoever.

Section 7.10.

Insurance. The Corporation may at the discretion of the Board of Directors purchase and maintain insurance on behalf of any person who holds or who has held any position identified in Section 7.9 against any and all liability incurred by such person in any such position or arising out of his status as such.

Section 7.11.

Resignation. Any director, officer or agent may resign by giving written notice to the President or the Secretary.  Such resignation shall take effect at the time specified therein or immediately if no time is specified therein. Unless otherwise specified therein, the acceptance of such resignation shall not be necessary to make it effective.

Section 7.12.

Off-Shore Offerings.  In all offerings of securities pursuant to Regulation S of the Securities Act of 1933, as amended (the “Act”), the Corporation shall require that its stock transfer agent refuse to register any transfer of securities not made in accordance with the provisions of Regulation S, pursuant to registration under the Act or an available exemption thereunder.

Section 7.13.

Amendment of Bylaws. These Bylaws may be altered, amended or repealed at any meeting of the Board of Directors at which a quorum is present, by the affirmative vote of a majority of the Directors present at such meeting.

Section 7.14.

Invalid Provisions. If any part of these Bylaws shall be held invalid or inoperative for any reason, the remaining parts, so far as possible and reasonable, shall be valid and operative.

Section 7.15.

Relation to Articles of Incorporation. These Bylaws are subject to, and governed by, the Articles of Incorporation.

***

 

10



EXHIBIT 10.1 HTML

exh101.htm


Exhibit 10.1

 

HOME SYSTEM GROUP

INDEPENDENT DIRECTOR AGREEMENT

 

      THIS AGREEMENT (The “Agreement”) is made as of the 31st day of July, 2007  and is by and between Home System Group, a Nevada corporation (hereinafter referred to as the “Company”), and Guanghan Chen (hereinafter referred to as the “Director”).

 

BACKGROUND

 

The Board of Directors of the Company desires to appoint the Director to fill an existing vacancy and to have the Director perform the duties of an independent director and the Director desires to be so appointed for such position and to perform the duties required of such position in accordance with the terms and conditions of this Agreement.

 

AGREEMENT

 

In consideration for the above recited promises and the mutual promises contained herein, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Director hereby agree as follows:

 

1.

DUTIES.  The Company requires that the Director be available to perform the duties of an independent director customarily related to this function as may be determined and assigned by the Board of Directors of the Company and as may be required by the Company's constituent instruments, including its certificate or articles of incorporation, bylaws and its corporate governance and board committee charters, each as amended or modified from time to time, and by applicable law, including the Nevada General Corporation Law.  The Director agrees to devote as much time as is necessary to perform completely the duties as the Director of the Company, including duties as a member of the Audit Committee and such other committees as the Director may hereafter be appointed to.  The Director will perform such duties described herein in accordance with the general fiduciary duty of directors arising under the Nevada General Corporation Law and Chapter 78 of the Nevada Revised Statutes.

 

2.

TERM.  The term of this Agreement shall commence as of the date of the Director's appointment by the Board of Directors of the Company (in the event the Director is appointed to fill a vacancy) or the date of the Director's election by the stockholders of the Company and shall continue until the Director's removal or resignation.

 

3.

COMPENSATION.  For all services to be rendered by Director in any capacity hereunder, the Company agrees to pay the Director a fee of RMB$20,000 in cash.  The initial year's base fee is considered earned when paid and is nonrefundable.  Upon execution of this Agreement, the Company shall pay to the Director the pro rata portion of the initial year's base fee in the amount of RMB$10,000.  Thereafter, the rest of the payment shall be due on or before six month later after the signing day.  Such fee may be adjusted from time to time as agreed by the parties.

 


 

4.

EXPENSES.  In addition to the compensation provided in paragraph 3 hereof, the Company will reimburse the Director for pre-approved reasonable business related expenses incurred in good faith in the performance of the Director's duties for the Company.  Such payments shall be made by the Company upon submission by the Director of a signed statement itemizing the expenses incurred.  Such statement shall be accompanied by sufficient documentary matter to support the expenditures.

 

5.

CONFIDENTIALITY.  The Company and the Director each acknowledge that, in order for the intents and purposes of this Agreement to be accomplished, the Director shall necessarily be obtaining access to certain confidential information concerning the Company and its affairs, including, but not limited to business methods, information systems, financial data and strategic plans which are unique assets of the Company (“Confidential Information”).  The Director covenants not to, either directly or indirectly, in any manner, utilize or disclose to any person, firm, corporation, association or other entity any Confidential Information.

 

6.

NON-COMPETE.  During the term of this Agreement and for a period of 6 months following the Director's removal or resignation from the Board of Directors of the Company or any of its subsidiaries or affiliates (the “Restricted Period”), the Director shall not, directly or indirectly, (i) in any manner whatsoever engage in any capacity with any business competitive with the Company's current lines of business or any business then engaged in by the Company, any of its subsidiaries or any of its affiliates (the “Company's Business”) for the Director's own benefit or for the benefit of any person or entity other than the Company or any subsidiary or affiliate; or (ii) have any interest as owner, sole proprietor, shareholder, partner, lender, director, officer, manager, employee, consultant, agent or otherwise in any business competitive with the Company's Business; provided, however, that the Director may hold, directly or indirectly, solely as an investment, not more than two percent (2%) of the outstanding securities of any person or entity which are listed on any national securities exchange or regularly traded in the over-the-counter market notwithstanding the fact that such person or entity is engaged in a business competitive with the Company's Business.  In addition, during the Restricted Period, the Director shall not develop any property for use in the Company's Business on behalf of any person or entity other than the Company, its subsidiaries and affiliates.

 

7.

TERMINATION.  With or without cause, the Company and the Director may each terminate this Agreement at any time upon ten (10) days written notice, and the Company shall be obligated to pay to the Director the compensation and expenses due up to the date of the termination.  Nothing contained herein or omitted herefrom shall prevent the shareholder(s) of the Company from removing the Director with immediate effect at any time for any reason.

 

8.

INDEMNIFICATION.  The Company shall indemnify, defend and hold harmless the Director, to the full extent allowed by the law of the State of Nevada, and as provided by, or granted pursuant to, any charter provision, bylaw provision, agreement (including, without limitation, the Indemnification Agreement executed herewith), vote of stockholders or disinterested directors or otherwise, both as to action in the Director's official capacity and as to action in another capacity while holding such office.  The Company and the Director are executing the Indemnification Agreement in the form attached hereto as Exhibit A.

 

2


 

9.

EFFECT OF WAIVER.  The waiver by either party of the breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.

 

10.

NOTICE.  Any and all notices referred to herein shall be sufficient if furnished in writing at the addresses specified on the signature page hereto or, if to the Company, to the Company's address as specified in filings made by the Company with the U.S. Securities and Exchange Commission and if by fax to 213-223-2276.

  

11.

GOVERNING LAW.  This Agreement shall be interpreted in accordance with, and the rights of the parties hereto shall be determined by, the laws of the State of Nevada without reference to that state's conflicts of laws principles.

 

12.

ASSIGNMENT.  The rights and benefits of the Company under this Agreement shall be transferable, and all the covenants and agreements hereunder shall inure to the benefit of, and be enforceable by or against, its successors and assigns.  The duties and obligations of the Director under this Agreement are personal and therefore the Director may not assign any right or duty under this Agreement without the prior written consent of the Company.

 

13.

MISCELLANEOUS.  If any provision of this Agreement shall be declared invalid or illegal, for any reason whatsoever, then, notwithstanding such invalidity or illegality, the remaining terms and provisions of the this Agreement shall remain in full force and effect in the same manner as if the invalid or illegal provision had not been contained herein.

 

14.

ARTICLE HEADINGS.  The article headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

15.

COUNTERPARTS.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one instrument.  Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.

 

16.

ENTIRE AGREEMENT.  Except as provided elsewhere herein, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter.

 

[Signature Page Follows]

 

 

 

3


 

IN WITNESS WHEREOF, the parties hereto have caused this Independent Director's Contract to be duly executed and signed as of the day and year first above written.

 

HOME SYSTEM GROUP

 

BY:/s/Weiqiu Li                                                         

Name: Weiqiu Li

Title: Chairman and Chief Executive Officer

 

 

INDEPENDENT DIRECTOR

 

/s/Guanghan Chen                                                     

Name: Guanghan Chen

 

Address:         Zhongshan University

No. 74 Zhongshan Er Road

Guangzhou City P.R. China

 

 

 

 


 

EXHIBIT A

 

Form of Indemnification Agreement

 

(See Attached)










EXHIBIT 10.2 HTML

exh102.htm


Exhibit 10.2

 

HOME SYSTEM GROUP

INDEPENDENT DIRECTOR AGREEMENT

 

      THIS AGREEMENT (The “Agreement”) is made as of the 31st day of July, 2007  and is by and between Home System Group, a Nevada corporation (hereinafter referred to as the “Company”), and Binhai Chen (hereinafter referred to as the “Director”).

 

BACKGROUND

 

The Board of Directors of the Company desires to appoint the Director to fill an existing vacancy and to have the Director perform the duties of an independent director and the Director desires to be so appointed for such position and to perform the duties required of such position in accordance with the terms and conditions of this Agreement.

 

AGREEMENT

 

In consideration for the above recited promises and the mutual promises contained herein, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Director hereby agree as follows:

 

1.

DUTIES.  The Company requires that the Director be available to perform the duties of an independent director customarily related to this function as may be determined and assigned by the Board of Directors of the Company and as may be required by the Company's constituent instruments, including its certificate or articles of incorporation, bylaws and its corporate governance and board committee charters, each as amended or modified from time to time, and by applicable law, including the Nevada General Corporation Law.  The Director agrees to devote as much time as is necessary to perform completely the duties as the Director of the Company, including duties as a member of the Audit Committee and such other committees as the Director may hereafter be appointed to.  The Director will perform such duties described herein in accordance with the general fiduciary duty of directors arising under the Nevada General Corporation Law and Chapter 78 of the Nevada Revised Statutes.

 

2.

TERM.  The term of this Agreement shall commence as of the date of the Director's appointment by the Board of Directors of the Company (in the event the Director is appointed to fill a vacancy) or the date of the Director's election by the stockholders of the Company and shall continue until the Director's removal or resignation.

 

3.

COMPENSATION.  For all services to be rendered by Director in any capacity hereunder, the Company agrees to pay the Director a fee of RMB$20,000 in cash.  The initial year's base fee is considered earned when paid and is nonrefundable.  Upon execution of this Agreement, the Company shall pay to the Director the pro rata portion of the initial year's base fee in the amount of RMB$10,000.  Thereafter, the rest of the payment shall be due on or before six month later after the signing day.  Such fee may be adjusted from time to time as agreed by the parties.

  


 

4.

EXPENSES.  In addition to the compensation provided in paragraph 3 hereof, the Company will reimburse the Director for pre-approved reasonable business related expenses incurred in good faith in the performance of the Director's duties for the Company.  Such payments shall be made by the Company upon submission by the Director of a signed statement itemizing the expenses incurred.  Such statement shall be accompanied by sufficient documentary matter to support the expenditures.

 

5.

CONFIDENTIALITY.  The Company and the Director each acknowledge that, in order for the intents and purposes of this Agreement to be accomplished, the Director shall necessarily be obtaining access to certain confidential information concerning the Company and its affairs, including, but not limited to business methods, information systems, financial data and strategic plans which are unique assets of the Company (“Confidential Information”).  The Director covenants not to, either directly or indirectly, in any manner, utilize or disclose to any person, firm, corporation, association or other entity any Confidential Information.

 

6.

NON-COMPETE.  During the term of this Agreement and for a period of 6 months following the Director's removal or resignation from the Board of Directors of the Company or any of its subsidiaries or affiliates (the “Restricted Period”), the Director shall not, directly or indirectly, (i) in any manner whatsoever engage in any capacity with any business competitive with the Company's current lines of business or any business then engaged in by the Company, any of its subsidiaries or any of its affiliates (the “Company's Business”) for the Director's own benefit or for the benefit of any person or entity other than the Company or any subsidiary or affiliate; or (ii) have any interest as owner, sole proprietor, shareholder, partner, lender, director, officer, manager, employee, consultant, agent or otherwise in any business competitive with the Company's Business; provided, however, that the Director may hold, directly or indirectly, solely as an investment, not more than two percent (2%) of the outstanding securities of any person or entity which are listed on any national securities exchange or regularly traded in the over-the-counter market notwithstanding the fact that such person or entity is engaged in a business competitive with the Company's Business.  In addition, during the Restricted Period, the Director shall not develop any property for use in the Company's Business on behalf of any person or entity other than the Company, its subsidiaries and affiliates.

 

7.

TERMINATION.  With or without cause, the Company and the Director may each terminate this Agreement at any time upon ten (10) days written notice, and the Company shall be obligated to pay to the Director the compensation and expenses due up to the date of the termination.  Nothing contained herein or omitted herefrom shall prevent the shareholder(s) of the Company from removing the Director with immediate effect at any time for any reason.

 

8.

INDEMNIFICATION.  The Company shall indemnify, defend and hold harmless the Director, to the full extent allowed by the law of the State of Nevada, and as provided by, or granted pursuant to, any charter provision, bylaw provision, agreement (including, without limitation, the Indemnification Agreement executed herewith), vote of stockholders or disinterested directors or otherwise, both as to action in the Director's official capacity and as to action in another capacity while holding such office.  The Company and the Director are executing the Indemnification Agreement in the form attached hereto as Exhibit A.

 


 

9.

EFFECT OF WAIVER.  The waiver by either party of the breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.

 

10.

NOTICE.  Any and all notices referred to herein shall be sufficient if furnished in writing at the addresses specified on the signature page hereto or, if to the Company, to the Company's address as specified in filings made by the Company with the U.S. Securities and Exchange Commission and if by fax to 213-223-2276.

  

11.

GOVERNING LAW.  This Agreement shall be interpreted in accordance with, and the rights of the parties hereto shall be determined by, the laws of the State of Nevada without reference to that state's conflicts of laws principles.

 

12.

ASSIGNMENT.  The rights and benefits of the Company under this Agreement shall be transferable, and all the covenants and agreements hereunder shall inure to the benefit of, and be enforceable by or against, its successors and assigns.  The duties and obligations of the Director under this Agreement are personal and therefore the Director may not assign any right or duty under this Agreement without the prior written consent of the Company.

 

13.

MISCELLANEOUS.  If any provision of this Agreement shall be declared invalid or illegal, for any reason whatsoever, then, notwithstanding such invalidity or illegality, the remaining terms and provisions of the this Agreement shall remain in full force and effect in the same manner as if the invalid or illegal provision had not been contained herein.

 

14.

ARTICLE HEADINGS.  The article headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

15.

COUNTERPARTS.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one instrument.  Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.

 

16.

ENTIRE AGREEMENT.  Except as provided elsewhere herein, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter.


[Signature Page Follows]

 


IN WITNESS WHEREOF, the parties hereto have caused this Independent Director's Contract to be duly executed and signed as of the day and year first above written.

 

HOME SYSTEM GROUP

 

BY:/s/Weiqiu Li                                                    

Name: Weiqiu Li

Title: Chairman and Chief Executive Officer

 

 

INDEPENDENT DIRECTOR

 

/s/Binhai Chen                                                       

Name: Binhai Chen

 

Address:        No. 12 Dongyuan Road

East Area Zhongshan City

P.R. China



EXHIBIT A

 

Form of Indemnification Agreement

 

(See Attached)









EXHIBIT 10.3 HTML

exh103.htm


Exhibit 10.3


HOME SYSTEM GROUP

INDEPENDENT DIRECTOR AGREEMENT

 

      THIS AGREEMENT (The “Agreement”) is made as of the 31st day of July, 2007  and is by and between Home System Group, a Nevada corporation (hereinafter referred to as the “Company”), and Jianzhao Zheng (hereinafter referred to as the “Director”).

 

BACKGROUND

 

The Board of Directors of the Company desires to appoint the Director to fill an existing vacancy and to have the Director perform the duties of an independent director and the Director desires to be so appointed for such position and to perform the duties required of such position in accordance with the terms and conditions of this Agreement.

 

AGREEMENT

 

In consideration for the above recited promises and the mutual promises contained herein, the adequacy and sufficiency of which are hereby acknowledged, the Company and the Director hereby agree as follows:

 

1.

DUTIES.  The Company requires that the Director be available to perform the duties of an independent director customarily related to this function as may be determined and assigned by the Board of Directors of the Company and as may be required by the Company’s constituent instruments, including its certificate or articles of incorporation, bylaws and its corporate governance and board committee charters, each as amended or modified from time to time, and by applicable law, including the Nevada General Corporation Law.  The Director agrees to devote as much time as is necessary to perform completely the duties as the Director of the Company, including duties as a member of the Audit Committee and such other committees as the Director may hereafter be appointed to.  The Director will perform such duties described herein in accordance with the general fiduciary duty of directors arising under the Nevada General Corporation Law and Chapter 78 of the Nevada Revised Statutes.

 

2.

TERM.  The term of this Agreement shall commence as of the date of the Director’s appointment by the Board of Directors of the Company (in the event the Director is appointed to fill a vacancy) or the date of the Director’s election by the stockholders of the Company and shall continue until the Director’s removal or resignation.

 

3.

COMPENSATION.  For all services to be rendered by Director in any capacity hereunder, the Company agrees to pay the Director a fee of RMB$20,000 in cash.  The initial year’s base fee is considered earned when paid and is nonrefundable.  Upon execution of this Agreement, the Company shall pay to the Director the pro rata portion of the initial year’s base fee in the amount of RMB$10,000.  Thereafter, the rest of the payment shall be due on or before six month later after the signing day.  Such fee may be adjusted from time to time as agreed by the parties.  

 


 

4.

EXPENSES.  In addition to the compensation provided in paragraph 3 hereof, the Company will reimburse the Director for pre-approved reasonable business related expenses incurred in good faith in the performance of the Director’s duties for the Company.  Such payments shall be made by the Company upon submission by the Director of a signed statement itemizing the expenses incurred.  Such statement shall be accompanied by sufficient documentary matter to support the expenditures.

 

5.

CONFIDENTIALITY.  The Company and the Director each acknowledge that, in order for the intents and purposes of this Agreement to be accomplished, the Director shall necessarily be obtaining access to certain confidential information concerning the Company and its affairs, including, but not limited to business methods, information systems, financial data and strategic plans which are unique assets of the Company (“Confidential Information”).  The Director covenants not to, either directly or indirectly, in any manner, utilize or disclose to any person, firm, corporation, association or other entity any Confidential Information.

 

6.

NON-COMPETE.  During the term of this Agreement and for a period of 6 months following the Director’s removal or resignation from the Board of Directors of the Company or any of its subsidiaries or affiliates (the “Restricted Period”), the Director shall not, directly or indirectly, (i) in any manner whatsoever engage in any capacity with any business competitive with the Company’s current lines of business or any business then engaged in by the Company, any of its subsidiaries or any of its affiliates (the “Company's Business”) for the Director’s own benefit or for the benefit of any person or entity other than the Company or any subsidiary or affiliate; or (ii) have any interest as owner, sole proprietor, shareholder, partner, lender, director, officer, manager, employee, consultant, agent or otherwise in any business competitive with the Company's Business; provided, however, that the Director may hold, directly or indirectly, solely as an investment, not more than two percent (2%) of the outstanding securities of any person or entity which are listed on any national securities exchange or regularly traded in the over-the-counter market notwithstanding the fact that such person or entity is engaged in a business competitive with the Company's Business.  In addition, during the Restricted Period, the Director shall not develop any property for use in the Company's Business on behalf of any person or entity other than the Company, its subsidiaries and affiliates.

 

7.

TERMINATION.  With or without cause, the Company and the Director may each terminate this Agreement at any time upon ten (10) days written notice, and the Company shall be obligated to pay to the Director the compensation and expenses due up to the date of the termination.  Nothing contained herein or omitted herefrom shall prevent the shareholder(s) of the Company from removing the Director with immediate effect at any time for any reason.

 

8.

INDEMNIFICATION.  The Company shall indemnify, defend and hold harmless the Director, to the full extent allowed by the law of the State of Nevada, and as provided by, or granted pursuant to, any charter provision, bylaw provision, agreement (including, without limitation, the Indemnification Agreement executed herewith), vote of stockholders or disinterested directors or otherwise, both as to action in the Director’s official capacity and as to action in another capacity while holding such office.  The Company and the Director are executing the Indemnification Agreement in the form attached hereto as Exhibit A.

 

2


9.

EFFECT OF WAIVER.  The waiver by either party of the breach of any provision of this Agreement shall not operate as or be construed as a waiver of any subsequent breach thereof.

 

10.

NOTICE.  Any and all notices referred to herein shall be sufficient if furnished in writing at the addresses specified on the signature page hereto or, if to the Company, to the Company’s address as specified in filings made by the Company with the U.S. Securities and Exchange Commission and if by fax to 213-223-2276.

  

11.

GOVERNING LAW.  This Agreement shall be interpreted in accordance with, and the rights of the parties hereto shall be determined by, the laws of the State of Nevada without reference to that state’s conflicts of laws principles.

 

12.

ASSIGNMENT.  The rights and benefits of the Company under this Agreement shall be transferable, and all the covenants and agreements hereunder shall inure to the benefit of, and be enforceable by or against, its successors and assigns.  The duties and obligations of the Director under this Agreement are personal and therefore the Director may not assign any right or duty under this Agreement without the prior written consent of the Company.

 

13.

MISCELLANEOUS.  If any provision of this Agreement shall be declared invalid or illegal, for any reason whatsoever, then, notwithstanding such invalidity or illegality, the remaining terms and provisions of the this Agreement shall remain in full force and effect in the same manner as if the invalid or illegal provision had not been contained herein.

 

14.

ARTICLE HEADINGS.  The article headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

15.

COUNTERPARTS.  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one instrument.  Facsimile execution and delivery of this Agreement is legal, valid and binding for all purposes.

 

16.

ENTIRE AGREEMENT.  Except as provided elsewhere herein, this Agreement sets forth the entire agreement of the parties with respect to its subject matter and supersedes all prior agreements, promises, covenants, arrangements, communications, representations or warranties, whether oral or written, by any officer, employee or representative of any party to this Agreement with respect to such subject matter.

 

[Signature Page Follows]

 

 

3


IN WITNESS WHEREOF, the parties hereto have caused this Independent Director’s Contract to be duly executed and signed as of the day and year first above written.

 

HOME SYSTEM GROUP

 

BY:/s/Weiqiu Li                                                            

Name: Weiqiu Li

Title: Chairman and Chief Executive Officer

 

 

INDEPENDENT DIRECTOR

 

/s/ Jianzhao Zheng                                                         

Name: Jianzhao Zheng

 

Address:         No. 12 Dongyuan Road

East Area Zhongshan City

P.R. China



EXHIBIT A

 

Form of Indemnification Agreement

 

(See Attached)










                      


EXHIBIT 10.4 HTML

exh104.htm


Exhibit 10.4

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement, dated as of July 31, 2007 is made by and between Home System Group, a Nevada corporation (the “Company”), and Guanghan Chen, a director of the Company (the “Indemnitee”).

 

RECITALS

 

A.

The Company and the Indemnitee recognize that the present state of the law is too uncertain to provide the Company’s officers and directors with adequate and reliable advance knowledge or guidance with respect to the legal risks and potential liabilities to which they may become personally exposed as a result of performing their duties for the Company;

 

B.

The Company and the Indemnitee are aware of the substantial growth in the number of lawsuits filed against corporate officers and directors in connection with their activities in such capacities and by reason of their status as such;

 

C.

The Company and the Indemnitee recognize that the cost of defending against such lawsuits, whether or not meritorious, is typically beyond the financial resources of most officers and directors of the Company;

 

D.

The Company and the Indemnitee recognize that the legal risks and potential liabilities, and the threat thereof, associated with proceedings filed against the officers and directors of the Company bear no reasonable relationship to the amount of compensation received by the Company’s officers and directors;

 

E.

The Company, after reasonable investigation prior to the date hereof, has determined that the liability insurance coverage available to the Company as of the date hereof is inadequate, unreasonably expensive or both.  The Company believes, therefore, that the interest of the Company and its current and future stockholders would be best served by a combination of (i) such insurance as the Company may obtain pursuant to the Company’s obligations hereunder and (ii) a contract with its officers and directors, including the Indemnitee, to indemnify them to the fullest extent permitted by law (as in effect on the date hereof, or, to the extent any amendment may expand such permitted indemnification, as hereafter in effect) against personal liability for actions taken in the performance of their duties to the Company;

 

F.

Section 78.7502 of the Nevada Revised Statutes empowers Nevada corporations to indemnify their officers and directors and further states that the indemnification provided by Section 78.7502 shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office; thus, Section 78.7502 does not by itself limit the extent to which the Company may indemnify persons serving as its officers and directors;

 


 

G.

The Company's Articles of Incorporation and Bylaws authorize the indemnification of the officers and directors of the Company in excess of that expressly permitted by Section 78.7502;

 

H.

The Board of Directors of the Company has concluded that, to retain and attract talented and experienced individuals to serve as officers and directors of the Company and to encourage such individuals to take the business risks necessary for the success of the Company, it is necessary for the Company to contractually indemnify its officers and directors, and to assume for itself liability for expenses and damages in connection with claims against such officers and directors in connection with their service to the Company, and has further concluded that the failure to provide such contractual indemnification could result in great harm to the Company and its shareholders;

 

I.

The Company desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company, free from undue concern for the risks and potential liabilities associated with such services to the Company; and

 

J.

The Indemnitee is willing to serve, or continue to serve, the Company, provided, and on the expressed condition, that the Indemnitee is furnished with the indemnification provided for herein.

 

AGREEMENT

 

NOW, THEREFORE, the Company and the Indemnitee agree as follows:

 

1.

Definitions.

 

(a)

Expenses” means, for the purposes of this Agreement, all direct and indirect costs of any type or nature whatsoever (including, without limitation, any fees and disbursements of Indemnitee’s counsel, accountants and other experts and other out-of-pocket costs) actually and reasonably incurred by the Indemnitee in connection with the investigation, preparation, defense or appeal of a Proceeding; provided, however, that Expenses shall not include judgments, fines, penalties or amounts paid in settlement of a Proceeding.

 

(b)

Proceeding” means, for the purposes of this Agreement, any threatened, pending or completed  action or  proceeding,  whether  civil, criminal, administrative or investigative (including an action brought by or in the right of the Company) in which the Indemnitee may be or may have been involved as a party or otherwise, by reason of the fact that the Indemnitee is or was a director or officer of the Company, by reason of any action taken by her or of any inaction on his or her part while acting as such director or officer or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director or officer of the foreign or domestic corporation which was a predecessor corporation to the Company or of another enterprise at the request of such predecessor corporation, whether or not the Indemnitee is serving in such capacity at the time any liability or expense is incurred for which indemnification or reimbursement can be provided under this Agreement.

 

2


 

2.

Agreement to Serve.

The Indemnitee agrees to serve or continue to serve as a director of the Company  to the best of his or her abilities at the will of the Company or under separate contract, if such contract exists, for so long as the Indemnitee is duly elected or appointed and qualified or until such time as the Indemnitee tenders his or her resignation in writing.  Nothing contained in this Agreement is intended to create in the Indemnitee any right to continued employment.

 

3.

Indemnification.  

 

(A)

Third Party Proceedings.  The Company shall indemnify the Indemnitee against Expenses, judgments, fines, penalties or amounts paid in settlement (if the settlement is approved in advance by the Company) actually and reasonably incurred by Indemnitee in connection with a Proceeding (other than a Proceeding by or in the right of the Company) if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful.  The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in the best interests of the Company, or, with respect to any criminal Proceeding, had no reasonable cause to believe that the Indemnitee's conduct was unlawful.

 

(b)

Proceedings by or in the Right of the Company.  To the fullest extent permitted by law, the Company shall indemnify the Indemnitee against Expenses and amounts paid in settlement, actually and reasonably incurred by the Indemnitee in connection with a Proceeding by or in the right of the Company to procure a judgment in its favor if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in the best interests of the Company and its stockholders.  Notwithstanding the foregoing, no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged liable to the Company in the performance of the Indemnitee's duty to the Company and its stockholders unless and only to the extent that the court in which such action or Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for Expenses and then only to the extent that the court shall determine.

 

(c)

Scope.  Notwithstanding any other provision of this Agreement but subject to Section 14(b), the Company shall indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by other provisions of this Agreement, the Company's Articles of Incorporation, the Company's Bylaws or by statute.

 

4.

Limitations on Indemnification.  Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

 

3


 

(a)

Excluded Acts.  To indemnify the Indemnitee for any acts or omissions or transactions from which a director may not be relieved of liability under applicable law;

 

(b)

Excluded Indemnification Payments.  To indemnify or advance Expenses in violation of any prohibition or limitation on indemnification under the statutes, regulations or rules promulgated by any state or federal regulatory agency having jurisdiction over the Company;

 

(c)

Claims Initiated by Indemnitee.  To indemnify or advance Expenses to the Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by the Indemnitee and not by way of defense, except with respect to Proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 78.7502 of the Nevada Revised Statutes, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit;

 

(d)

Lack of Good Faith.  To indemnify the Indemnitee for any Expenses incurred by the Indemnitee with respect to any Proceeding instituted by the Indemnitee to enforce or  interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such Proceeding was not made in good faith or was frivolous;

 

(e)

Insured Claims.  To indemnify the Indemnitee for Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to or on behalf of the Indemnitee by an insurance carrier under a policy of directors’ and officers’ liability insurance maintained by the Company or any other policy of insurance maintained by the Company or the Indemnitee; or

 

(f)

Claims Under Section 16(b).  To indemnify the Indemnitee for Expenses and the payment of profits arising from the purchase and sale by the Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

 

5.

Determination of Right to Indemnification.  Upon receipt of a written claim addressed to the Board of Directors for indemnification pursuant to Section 3, the Company shall determine by any of the methods set forth in Section 78.751 of the Nevada Revised Statutes whether the Indemnitee has met the applicable standards of conduct which makes it permissible under applicable law to indemnify the Indemnitee.  If a claim under Section 3 is not paid in full by the Company within ninety (90) days after such written claim has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, unless such action is dismissed by the court as frivolous or brought in bad faith, the Indemnitee shall be entitled to be paid also the expense of prosecuting such claim.  The court in which such action is brought shall determine whether the Indemnitee or the Company shall have the burden of proof concerning whether the Indemnitee has or has not met the applicable standard of conduct.

 

4


 

6.

Advancement and Repayment of Expenses.  Subject to Section 4 hereof, the Expenses incurred by Indemnitee in defending and investigating any Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding within 30 days after receiving from the Indemnitee the copies of invoices presented to the Indemnitee for such Expenses, if the Indemnitee shall provide an undertaking to the Company to repay such amount to the extent it is ultimately determined that the Indemnitee is not entitled to indemnification.  In determining whether or not to make an advance hereunder, the ability of the Indemnitee to repay shall not be a factor.  Notwithstanding the foregoing, in a proceeding brought by the Company directly, in its own right (as distinguished from an action bought derivatively or by any receiver or trustee), the Company shall not be required to make the advances called for hereby if the Board of Directors determines, in its sole discretion, that it does not appear that the Indemnitee has met the standards of conduct which make it permissible under applicable law to indemnify the Indemnitee and the advancement of Expenses would not be in the best interests of the Company and its stockholders.


 

7.

Partial Indemnification.  If the Indemnitee is entitled under any provision of this Agreement to indemnification or advancement by the Company of some or a portion of any Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, penalties, and amounts paid in settlement) incurred by him in the investigation, defense, settlement or appeal of a Proceeding, but is not entitled to indemnification or advancement of the total amount thereof, the Company shall nevertheless indemnify or pay advancements to the Indemnitee for the portion of such Expenses or liabilities to which the Indemnitee is entitled.

 

8.

Notice to Company by Indemnitee.  The Indemnitee shall notify the Company in writing of any matter with respect to which the Indemnitee intends to seek indemnification hereunder as soon as reasonably practicable following the receipt by the Indemnitee of written notice thereof; provided, however, that any delay in so notifying the Company shall not constitute a waiver by the Indemnitee of her rights hereunder.  The written notification to the Company shall be addressed to the Board of Directors and shall include a description of the nature of the Proceeding and the facts underlying the Proceeding and be accompanied by copies of any documents filed with the court in which the Proceeding is pending.  In addition, the Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within the Indemnitee’s power.

 

9.

Maintenance of Liability Insurance.

 

(a)

Subject to Section 4 hereof, the Company hereby agrees that so long as the Indemnitee shall continue to serve as a director of the Company and thereafter so long as the Indemnitee shall be subject to any possible Proceeding, the Company, subject to Section 9(B), shall use reasonable commercial efforts to obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) which provides the Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors.

 

(b)

Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or the Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company.

 

5


 

(c)

If, at the time of the receipt of a notice of a claim pursuant to Section 8 hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

10.

Defense of Claim.  In the event that the Company shall be obligated under Section 6 hereof to pay the Expenses of any Proceeding against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel approved by the Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so.  After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same Proceeding, provided that (i) the Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by the Indemnitee has been previously authorized by the Company, or (B) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of the Indemnitee’s counsel shall be at the expense of the Company.

 

11.

Attorneys' Fees.  In the event that the Indemnitee or the Company institutes an action to enforce or interpret any terms of this Agreement, the Company shall reimburse the Indemnitee for all of the Indemnitee’s reasonable fees and expenses in bringing and pursuing such action or defense, unless as part of such action or defense, a court of competent jurisdiction determines that the material assertions made by the Indemnitee as a basis for such action or defense were not made in good faith or were frivolous.

 

12.

Continuation of Obligations.  

All agreements and obligations of the Company contained herein shall continue during the period the Indemnitee is a director or officer of the Company, or is or was serving at the request of the Company as a director, officer, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall continue thereafter so long as the Indemnitee shall  be subject to any possible proceeding by reason of the fact that the Indemnitee served in any capacity referred to herein.

 

13.

Successors and Assigns.  This Agreement establishes contract rights that shall be binding upon, and shall inure to the benefit of, the successors, assigns, heirs and legal representatives of the parties hereto.

 

6


 

14.

Non-Exclusivity.

 

(a)

The provisions for indemnification and advancement of expenses set forth in this Agreement shall not be deemed to be exclusive of any other rights that the Indemnitee may have under any provision of law, the Company’s Articles of Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested directors, other agreements or otherwise, both as to action in the Indemnittee’s official capacity and action in another capacity while occupying the Indemnitee’s position as a director or officer of the Company.

 

(b)

In the event of any changes, after the date of this Agreement, in any applicable law, statute, or rule which expand the right of a Nevada corporation to indemnify its officers and directors, the Indemnitee’s rights and the Company’s obligations under this Agreement shall be expanded to the full extent permitted by such changes.  In the event of any changes in any applicable law, statute or rule, which narrow the right of a Nevada corporation to indemnify a director or officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

 

15.

Effectiveness of Agreement.  To the extent that the indemnification permitted under the terms of certain provisions of this Agreement exceeds the scope of the indemnification provided for in the Nevada Revised Statutes, such provisions shall not be effective unless and until the Company’s Articles of Incorporation authorize such additional rights of indemnification.  In all other respects, the balance of this Agreement shall be effective as of the date set forth on the first page and may apply to acts of omissions of the Indemnitee which occurred prior to such date if the Indemnitee was an officer, director, employee or other agent of the Company, or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, at the time such act or omission occurred.

 

16.

Severability.  Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law.  The Company’s inability,  pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement.  The provisions of this Agreement shall be severable as provided in this Section 16.  If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify the Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

 

17.

Governing Law.  This Agreement shall be interpreted and enforced in accordance with the laws of the State of Nevada, without reference to its conflict of law principals.  To the extent permitted by applicable law, the parties hereby waive any provisions of law which render any provision of this Agreement unenforceable in any respect.

 

18.

Notices.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee or (ii) if mailed by certified or registered mail with postage prepaid, on the third business day after the mailing date.  Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

 

7


 

19.

Mutual Acknowledgment.  Both the Company and the Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise.  The Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the appropriate state or federal regulatory agency to submit for approval any request for indemnification, and has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify the Indemnitee.

 

20.

Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

 

21.

Amendment and Termination.  No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.


[Signature Page Follows]



8


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year set forth above.

 

COMPANY:


Home System Group



By:/s/Weiqiu Li                                  


Name: Weiqiu Li

Title: Chairman and Chief Executive Officer


Address: No. 5A, Zuanshi Ge

               Fuqiang Yi Tian Ming Yuan

               Fu Tian Qu, Shenzhen City

               People’s Republic of China, 518000


INDEMNITEE:





/s/Guanghan Chen      

 

Name: Guanghan Chen

 


Address: Zhongshan University

No. 74 Zhongshan Er Road

Guangzhou City P.R. China




EXHIBIT 10.5 HTML

exh105.htm


Exhibit 10.5

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement, dated as of July 31, 2007 is made by and between Home System Group, a Nevada corporation (the “Company”), and Binhai Chen, a director of the Company (the “Indemnitee”).

 

RECITALS

 

A.

The Company and the Indemnitee recognize that the present state of the law is too uncertain to provide the Company’s officers and directors with adequate and reliable advance knowledge or guidance with respect to the legal risks and potential liabilities to which they may become personally exposed as a result of performing their duties for the Company;

 

B.

The Company and the Indemnitee are aware of the substantial growth in the number of lawsuits filed against corporate officers and directors in connection with their activities in such capacities and by reason of their status as such;

 

C.

The Company and the Indemnitee recognize that the cost of defending against such lawsuits, whether or not meritorious, is typically beyond the financial resources of most officers and directors of the Company;

 

D.

The Company and the Indemnitee recognize that the legal risks and potential liabilities, and the threat thereof, associated with proceedings filed against the officers and directors of the Company bear no reasonable relationship to the amount of compensation received by the Company’s officers and directors;

 

E.

The Company, after reasonable investigation prior to the date hereof, has determined that the liability insurance coverage available to the Company as of the date hereof is inadequate, unreasonably expensive or both.  The Company believes, therefore, that the interest of the Company and its current and future stockholders would be best served by a combination of (i) such insurance as the Company may obtain pursuant to the Company’s obligations hereunder and (ii) a contract with its officers and directors, including the Indemnitee, to indemnify them to the fullest extent permitted by law (as in effect on the date hereof, or, to the extent any amendment may expand such permitted indemnification, as hereafter in effect) against personal liability for actions taken in the performance of their duties to the Company;

 

F.

Section 78.7502 of the Nevada Revised Statutes empowers Nevada corporations to indemnify their officers and directors and further states that the indemnification provided by Section 78.7502 shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office; thus, Section 78.7502 does not by itself limit the extent to which the Company may indemnify persons serving as its officers and directors;

 


 

G.

The Company's Articles of Incorporation and Bylaws authorize the indemnification of the officers and directors of the Company in excess of that expressly permitted by Section 78.7502;

 

H.

The Board of Directors of the Company has concluded that, to retain and attract talented and experienced individuals to serve as officers and directors of the Company and to encourage such individuals to take the business risks necessary for the success of the Company, it is necessary for the Company to contractually indemnify its officers and directors, and to assume for itself liability for expenses and damages in connection with claims against such officers and directors in connection with their service to the Company, and has further concluded that the failure to provide such contractual indemnification could result in great harm to the Company and its shareholders;

 

I.

The Company desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company, free from undue concern for the risks and potential liabilities associated with such services to the Company; and

 

J.

The Indemnitee is willing to serve, or continue to serve, the Company, provided, and on the expressed condition, that the Indemnitee is furnished with the indemnification provided for herein.

 

AGREEMENT

 

NOW, THEREFORE, the Company and the Indemnitee agree as follows:

 

1.

Definitions.

 

(a)

Expenses” means, for the purposes of this Agreement, all direct and indirect costs of any type or nature whatsoever (including, without limitation, any fees and disbursements of Indemnitee’s counsel, accountants and other experts and other out-of-pocket costs) actually and reasonably incurred by the Indemnitee in connection with the investigation, preparation, defense or appeal of a Proceeding; provided, however, that Expenses shall not include judgments, fines, penalties or amounts paid in settlement of a Proceeding.

 

(b)

Proceeding” means, for the purposes of this Agreement, any threatened, pending or completed  action or  proceeding,  whether  civil, criminal, administrative or investigative (including an action brought by or in the right of the Company) in which the Indemnitee may be or may have been involved as a party or otherwise, by reason of the fact that the Indemnitee is or was a director or officer of the Company, by reason of any action taken by her or of any inaction on his or her part while acting as such director or officer or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director or officer of the foreign or domestic corporation which was a predecessor corporation to the Company or of another enterprise at the request of such predecessor corporation, whether or not the Indemnitee is serving in such capacity at the time any liability or expense is incurred for which indemnification or reimbursement can be provided under this Agreement.

 

2


 

2.

Agreement to Serve.

The Indemnitee agrees to serve or continue to serve as a director of the Company  to the best of his or her abilities at the will of the Company or under separate contract, if such contract exists, for so long as the Indemnitee is duly elected or appointed and qualified or until such time as the Indemnitee tenders his or her resignation in writing.  Nothing contained in this Agreement is intended to create in the Indemnitee any right to continued employment.

 

3.

Indemnification.  

 

(A)

Third Party Proceedings.  The Company shall indemnify the Indemnitee against Expenses, judgments, fines, penalties or amounts paid in settlement (if the settlement is approved in advance by the Company) actually and reasonably incurred by Indemnitee in connection with a Proceeding (other than a Proceeding by or in the right of the Company) if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful.  The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in the best interests of the Company, or, with respect to any criminal Proceeding, had no reasonable cause to believe that the Indemnitee's conduct was unlawful.

 

(b)

Proceedings by or in the Right of the Company.  To the fullest extent permitted by law, the Company shall indemnify the Indemnitee against Expenses and amounts paid in settlement, actually and reasonably incurred by the Indemnitee in connection with a Proceeding by or in the right of the Company to procure a judgment in its favor if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in the best interests of the Company and its stockholders.  Notwithstanding the foregoing, no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged liable to the Company in the performance of the Indemnitee's duty to the Company and its stockholders unless and only to the extent that the court in which such action or Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for Expenses and then only to the extent that the court shall determine.

 

(c)

Scope.  Notwithstanding any other provision of this Agreement but subject to Section 14(b), the Company shall indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by other provisions of this Agreement, the Company's Articles of Incorporation, the Company's Bylaws or by statute.

 

4.

Limitations on Indemnification.  Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

 

3


 

(a)

Excluded Acts.  To indemnify the Indemnitee for any acts or omissions or transactions from which a director may not be relieved of liability under applicable law;

 

(b)

Excluded Indemnification Payments.  To indemnify or advance Expenses in violation of any prohibition or limitation on indemnification under the statutes, regulations or rules promulgated by any state or federal regulatory agency having jurisdiction over the Company;

 

(c)

Claims Initiated by Indemnitee.  To indemnify or advance Expenses to the Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by the Indemnitee and not by way of defense, except with respect to Proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 78.7502 of the Nevada Revised Statutes, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit;

 

(d)

Lack of Good Faith.  To indemnify the Indemnitee for any Expenses incurred by the Indemnitee with respect to any Proceeding instituted by the Indemnitee to enforce or  interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such Proceeding was not made in good faith or was frivolous;

 

(e)

Insured Claims.  To indemnify the Indemnitee for Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to or on behalf of the Indemnitee by an insurance carrier under a policy of directors’ and officers’ liability insurance maintained by the Company or any other policy of insurance maintained by the Company or the Indemnitee; or

 

(f)

Claims Under Section 16(b).  To indemnify the Indemnitee for Expenses and the payment of profits arising from the purchase and sale by the Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

 

5.

Determination of Right to Indemnification.  Upon receipt of a written claim addressed to the Board of Directors for indemnification pursuant to Section 3, the Company shall determine by any of the methods set forth in Section 78.751 of the Nevada Revised Statutes whether the Indemnitee has met the applicable standards of conduct which makes it permissible under applicable law to indemnify the Indemnitee.  If a claim under Section 3 is not paid in full by the Company within ninety (90) days after such written claim has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, unless such action is dismissed by the court as frivolous or brought in bad faith, the Indemnitee shall be entitled to be paid also the expense of prosecuting such claim.  The court in which such action is brought shall determine whether the Indemnitee or the Company shall have the burden of proof concerning whether the Indemnitee has or has not met the applicable standard of conduct.

 

4


 

6.

Advancement and Repayment of Expenses.  Subject to Section 4 hereof, the Expenses incurred by Indemnitee in defending and investigating any Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding within 30 days after receiving from the Indemnitee the copies of invoices presented to the Indemnitee for such Expenses, if the Indemnitee shall provide an undertaking to the Company to repay such amount to the extent it is ultimately determined that the Indemnitee is not entitled to indemnification.  In determining whether or not to make an advance hereunder, the ability of the Indemnitee to repay shall not be a factor.  Notwithstanding the foregoing, in a proceeding brought by the Company directly, in its own right (as distinguished from an action bought derivatively or by any receiver or trustee), the Company shall not be required to make the advances called for hereby if the Board of Directors determines, in its sole discretion, that it does not appear that the Indemnitee has met the standards of conduct which make it permissible under applicable law to indemnify the Indemnitee and the advancement of Expenses would not be in the best interests of the Company and its stockholders.
 

 

7.

Partial Indemnification.  If the Indemnitee is entitled under any provision of this Agreement to indemnification or advancement by the Company of some or a portion of any Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, penalties, and amounts paid in settlement) incurred by him in the investigation, defense, settlement or appeal of a Proceeding, but is not entitled to indemnification or advancement of the total amount thereof, the Company shall nevertheless indemnify or pay advancements to the Indemnitee for the portion of such Expenses or liabilities to which the Indemnitee is entitled.

 

8.

Notice to Company by Indemnitee.  The Indemnitee shall notify the Company in writing of any matter with respect to which the Indemnitee intends to seek indemnification hereunder as soon as reasonably practicable following the receipt by the Indemnitee of written notice thereof; provided, however, that any delay in so notifying the Company shall not constitute a waiver by the Indemnitee of her rights hereunder.  The written notification to the Company shall be addressed to the Board of Directors and shall include a description of the nature of the Proceeding and the facts underlying the Proceeding and be accompanied by copies of any documents filed with the court in which the Proceeding is pending.  In addition, the Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within the Indemnitee’s power.

 

9.

Maintenance of Liability Insurance.

 

(a)

Subject to Section 4 hereof, the Company hereby agrees that so long as the Indemnitee shall continue to serve as a director of the Company and thereafter so long as the Indemnitee shall be subject to any possible Proceeding, the Company, subject to Section 9(B), shall use reasonable commercial efforts to obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) which provides the Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors.

 

(b)

Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or the Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company.

 

5


 

(c)

If, at the time of the receipt of a notice of a claim pursuant to Section 8 hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

10.

Defense of Claim.  In the event that the Company shall be obligated under Section 6 hereof to pay the Expenses of any Proceeding against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel approved by the Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so.  After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same Proceeding, provided that (i) the Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by the Indemnitee has been previously authorized by the Company, or (B) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of the Indemnitee’s counsel shall be at the expense of the Company.

 

11.

Attorneys' Fees.  In the event that the Indemnitee or the Company institutes an action to enforce or interpret any terms of this Agreement, the Company shall reimburse the Indemnitee for all of the Indemnitee’s reasonable fees and expenses in bringing and pursuing such action or defense, unless as part of such action or defense, a court of competent jurisdiction determines that the material assertions made by the Indemnitee as a basis for such action or defense were not made in good faith or were frivolous.

 

12.

Continuation of Obligations.  

All agreements and obligations of the Company contained herein shall continue during the period the Indemnitee is a director or officer of the Company, or is or was serving at the request of the Company as a director, officer, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall continue thereafter so long as the Indemnitee shall  be subject to any possible proceeding by reason of the fact that the Indemnitee served in any capacity referred to herein.

 

13.

Successors and Assigns.  This Agreement establishes contract rights that shall be binding upon, and shall inure to the benefit of, the successors, assigns, heirs and legal representatives of the parties hereto.

 

6


 

14.

Non-Exclusivity.

 

(a)

The provisions for indemnification and advancement of expenses set forth in this Agreement shall not be deemed to be exclusive of any other rights that the Indemnitee may have under any provision of law, the Company’s Articles of Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested directors, other agreements or otherwise, both as to action in the Indemnittee’s official capacity and action in another capacity while occupying the Indemnitee’s position as a director or officer of the Company.

 

(b)

In the event of any changes, after the date of this Agreement, in any applicable law, statute, or rule which expand the right of a Nevada corporation to indemnify its officers and directors, the Indemnitee’s rights and the Company’s obligations under this Agreement shall be expanded to the full extent permitted by such changes.  In the event of any changes in any applicable law, statute or rule, which narrow the right of a Nevada corporation to indemnify a director or officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

 

15.

Effectiveness of Agreement.  To the extent that the indemnification permitted under the terms of certain provisions of this Agreement exceeds the scope of the indemnification provided for in the Nevada Revised Statutes, such provisions shall not be effective unless and until the Company’s Articles of Incorporation authorize such additional rights of indemnification.  In all other respects, the balance of this Agreement shall be effective as of the date set forth on the first page and may apply to acts of omissions of the Indemnitee which occurred prior to such date if the Indemnitee was an officer, director, employee or other agent of the Company, or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, at the time such act or omission occurred.

 

16.

Severability.  Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law.  The Company’s inability,  pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement.  The provisions of this Agreement shall be severable as provided in this Section 16.  If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify the Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

 

17.

Governing Law.  This Agreement shall be interpreted and enforced in accordance with the laws of the State of Nevada, without reference to its conflict of law principals.  To the extent permitted by applicable law, the parties hereby waive any provisions of law which render any provision of this Agreement unenforceable in any respect.

 

18.

Notices.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee or (ii) if mailed by certified or registered mail with postage prepaid, on the third business day after the mailing date.  Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

 

7


 

19.

Mutual Acknowledgment.  Both the Company and the Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise.  The Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the appropriate state or federal regulatory agency to submit for approval any request for indemnification, and has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify the Indemnitee.

 

20.

Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

 

21.

Amendment and Termination.  No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.


[Signature Page Follows]



8


 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year set forth above.

 

COMPANY:


Home System Group



By:/s/Weiqiu Li                                                       


Name: Weiqiu Li

Title: Chairman and Chief Executive Officer


Address: No. 5A, Zuanshi Ge

               Fuqiang Yi Tian Ming Yuan

               Fu Tian Qu, Shenzhen City

               People’s Republic of China, 518000


INDEMNITEE:





/s/Binhai Chen                                         
Name: Binhai Chen


 

 

Address: No. 12 Dongyuan Road

 East Area Zhongshan City

 People’s Republic of China




EXHIBIT 10.6 HTML

exh106.htm


Exhibit 10.6

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement, dated as of July 31, 2007 is made by and between Home System Group, a Nevada corporation (the “Company”), and Jianzhao Zheng, a director of the Company (the “Indemnitee”).

 

RECITALS

 

A.

The Company and the Indemnitee recognize that the present state of the law is too uncertain to provide the Company’s officers and directors with adequate and reliable advance knowledge or guidance with respect to the legal risks and potential liabilities to which they may become personally exposed as a result of performing their duties for the Company;

 

B.

The Company and the Indemnitee are aware of the substantial growth in the number of lawsuits filed against corporate officers and directors in connection with their activities in such capacities and by reason of their status as such;

 

C.

The Company and the Indemnitee recognize that the cost of defending against such lawsuits, whether or not meritorious, is typically beyond the financial resources of most officers and directors of the Company;

 

D.

The Company and the Indemnitee recognize that the legal risks and potential liabilities, and the threat thereof, associated with proceedings filed against the officers and directors of the Company bear no reasonable relationship to the amount of compensation received by the Company’s officers and directors;

 

E.

The Company, after reasonable investigation prior to the date hereof, has determined that the liability insurance coverage available to the Company as of the date hereof is inadequate, unreasonably expensive or both.  The Company believes, therefore, that the interest of the Company and its current and future stockholders would be best served by a combination of (i) such insurance as the Company may obtain pursuant to the Company’s obligations hereunder and (ii) a contract with its officers and directors, including the Indemnitee, to indemnify them to the fullest extent permitted by law (as in effect on the date hereof, or, to the extent any amendment may expand such permitted indemnification, as hereafter in effect) against personal liability for actions taken in the performance of their duties to the Company;

 

F.

Section 78.7502 of the Nevada Revised Statutes empowers Nevada corporations to indemnify their officers and directors and further states that the indemnification provided by Section 78.7502 shall not be deemed exclusive of any other rights to which those seeking indemnification may be entitled under the articles of incorporation or any bylaw, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in an official capacity and as to action in another capacity while holding such office; thus, Section 78.7502 does not by itself limit the extent to which the Company may indemnify persons serving as its officers and directors;

 


 

G.

The Company's Articles of Incorporation and Bylaws authorize the indemnification of the officers and directors of the Company in excess of that expressly permitted by Section 78.7502;

 

H.

The Board of Directors of the Company has concluded that, to retain and attract talented and experienced individuals to serve as officers and directors of the Company and to encourage such individuals to take the business risks necessary for the success of the Company, it is necessary for the Company to contractually indemnify its officers and directors, and to assume for itself liability for expenses and damages in connection with claims against such officers and directors in connection with their service to the Company, and has further concluded that the failure to provide such contractual indemnification could result in great harm to the Company and its shareholders;

 

I.

The Company desires and has requested the Indemnitee to serve or continue to serve as a director or officer of the Company, free from undue concern for the risks and potential liabilities associated with such services to the Company; and

 

J.

The Indemnitee is willing to serve, or continue to serve, the Company, provided, and on the expressed condition, that the Indemnitee is furnished with the indemnification provided for herein.

 

AGREEMENT

 

NOW, THEREFORE, the Company and the Indemnitee agree as follows:

 

1.

Definitions.

 

(a)

Expenses” means, for the purposes of this Agreement, all direct and indirect costs of any type or nature whatsoever (including, without limitation, any fees and disbursements of Indemnitee’s counsel, accountants and other experts and other out-of-pocket costs) actually and reasonably incurred by the Indemnitee in connection with the investigation, preparation, defense or appeal of a Proceeding; provided, however, that Expenses shall not include judgments, fines, penalties or amounts paid in settlement of a Proceeding.

 

(b)

Proceeding” means, for the purposes of this Agreement, any threatened, pending or completed  action or  proceeding,  whether  civil, criminal, administrative or investigative (including an action brought by or in the right of the Company) in which the Indemnitee may be or may have been involved as a party or otherwise, by reason of the fact that the Indemnitee is or was a director or officer of the Company, by reason of any action taken by her or of any inaction on his or her part while acting as such director or officer or by reason of the fact that he or she is or was serving at the request of the Company as a director, officer, employee or agent of another foreign or domestic corporation, partnership, joint venture, trust or other enterprise, or was a director or officer of the foreign or domestic corporation which was a predecessor corporation to the Company or of another enterprise at the request of such predecessor corporation, whether or not the Indemnitee is serving in such capacity at the time any liability or expense is incurred for which indemnification or reimbursement can be provided under this Agreement.

 

2


 

2.

Agreement to Serve.

The Indemnitee agrees to serve or continue to serve as a director of the Company  to the best of his or her abilities at the will of the Company or under separate contract, if such contract exists, for so long as the Indemnitee is duly elected or appointed and qualified or until such time as the Indemnitee tenders his or her resignation in writing.  Nothing contained in this Agreement is intended to create in the Indemnitee any right to continued employment.

 

3.

Indemnification.  

 

(A)

Third Party Proceedings.  The Company shall indemnify the Indemnitee against Expenses, judgments, fines, penalties or amounts paid in settlement (if the settlement is approved in advance by the Company) actually and reasonably incurred by Indemnitee in connection with a Proceeding (other than a Proceeding by or in the right of the Company) if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee's conduct was unlawful.  The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of NOLO CONTENDERE or its equivalent, shall not, of itself, create a presumption that the Indemnitee did not act in good faith and in a manner which the Indemnitee reasonably believed to be in the best interests of the Company, or, with respect to any criminal Proceeding, had no reasonable cause to believe that the Indemnitee's conduct was unlawful.

 

(b)

Proceedings by or in the Right of the Company.  To the fullest extent permitted by law, the Company shall indemnify the Indemnitee against Expenses and amounts paid in settlement, actually and reasonably incurred by the Indemnitee in connection with a Proceeding by or in the right of the Company to procure a judgment in its favor if the Indemnitee acted in good faith and in a manner the Indemnitee reasonably believed to be in the best interests of the Company and its stockholders.  Notwithstanding the foregoing, no indemnification shall be made in respect of any claim, issue or matter as to which the Indemnitee shall have been adjudged liable to the Company in the performance of the Indemnitee's duty to the Company and its stockholders unless and only to the extent that the court in which such action or Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to indemnity for Expenses and then only to the extent that the court shall determine.

 

(c)

Scope.  Notwithstanding any other provision of this Agreement but subject to Section 14(b), the Company shall indemnify the Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by other provisions of this Agreement, the Company's Articles of Incorporation, the Company's Bylaws or by statute.

 

4.

Limitations on Indemnification.  Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

 

3


 

(a)

Excluded Acts.  To indemnify the Indemnitee for any acts or omissions or transactions from which a director may not be relieved of liability under applicable law;

 

(b)

Excluded Indemnification Payments.  To indemnify or advance Expenses in violation of any prohibition or limitation on indemnification under the statutes, regulations or rules promulgated by any state or federal regulatory agency having jurisdiction over the Company;

 

(c)

Claims Initiated by Indemnitee.  To indemnify or advance Expenses to the Indemnitee with respect to Proceedings or claims initiated or brought voluntarily by the Indemnitee and not by way of defense, except with respect to Proceedings brought to establish or enforce a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 78.7502 of the Nevada Revised Statutes, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board of Directors has approved the initiation or bringing of such suit;

 

(d)

Lack of Good Faith.  To indemnify the Indemnitee for any Expenses incurred by the Indemnitee with respect to any Proceeding instituted by the Indemnitee to enforce or  interpret this Agreement, if a court of competent jurisdiction determines that each of the material assertions made by the Indemnitee in such Proceeding was not made in good faith or was frivolous;

 

(e)

Insured Claims.  To indemnify the Indemnitee for Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, ERISA excise taxes or penalties, and amounts paid in settlement) which have been paid directly to or on behalf of the Indemnitee by an insurance carrier under a policy of directors’ and officers’ liability insurance maintained by the Company or any other policy of insurance maintained by the Company or the Indemnitee; or

 

(f)

Claims Under Section 16(b).  To indemnify the Indemnitee for Expenses and the payment of profits arising from the purchase and sale by the Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, as amended, or any similar successor statute.

 

5.

Determination of Right to Indemnification.  Upon receipt of a written claim addressed to the Board of Directors for indemnification pursuant to Section 3, the Company shall determine by any of the methods set forth in Section 78.751 of the Nevada Revised Statutes whether the Indemnitee has met the applicable standards of conduct which makes it permissible under applicable law to indemnify the Indemnitee.  If a claim under Section 3 is not paid in full by the Company within ninety (90) days after such written claim has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim and, unless such action is dismissed by the court as frivolous or brought in bad faith, the Indemnitee shall be entitled to be paid also the expense of prosecuting such claim.  The court in which such action is brought shall determine whether the Indemnitee or the Company shall have the burden of proof concerning whether the Indemnitee has or has not met the applicable standard of conduct.

 

4


 

6.

Advancement and Repayment of Expenses.  Subject to Section 4 hereof, the Expenses incurred by Indemnitee in defending and investigating any Proceeding shall be paid by the Company in advance of the final disposition of such Proceeding within 30 days after receiving from the Indemnitee the copies of invoices presented to the Indemnitee for such Expenses, if the Indemnitee shall provide an undertaking to the Company to repay such amount to the extent it is ultimately determined that the Indemnitee is not entitled to indemnification.  In determining whether or not to make an advance hereunder, the ability of the Indemnitee to repay shall not be a factor.  Notwithstanding the foregoing, in a proceeding brought by the Company directly, in its own right (as distinguished from an action bought derivatively or by any receiver or trustee), the Company shall not be required to make the advances called for hereby if the Board of Directors determines, in its sole discretion, that it does not appear that the Indemnitee has met the standards of conduct which make it permissible under applicable law to indemnify the Indemnitee and the advancement of Expenses would not be in the best interests of the Company and its stockholders.


 

7.

Partial Indemnification.  If the Indemnitee is entitled under any provision of this Agreement to indemnification or advancement by the Company of some or a portion of any Expenses or liabilities of any type whatsoever (including, but not limited to, judgments, fines, penalties, and amounts paid in settlement) incurred by him in the investigation, defense, settlement or appeal of a Proceeding, but is not entitled to indemnification or advancement of the total amount thereof, the Company shall nevertheless indemnify or pay advancements to the Indemnitee for the portion of such Expenses or liabilities to which the Indemnitee is entitled.

 

8.

Notice to Company by Indemnitee.  The Indemnitee shall notify the Company in writing of any matter with respect to which the Indemnitee intends to seek indemnification hereunder as soon as reasonably practicable following the receipt by the Indemnitee of written notice thereof; provided, however, that any delay in so notifying the Company shall not constitute a waiver by the Indemnitee of her rights hereunder.  The written notification to the Company shall be addressed to the Board of Directors and shall include a description of the nature of the Proceeding and the facts underlying the Proceeding and be accompanied by copies of any documents filed with the court in which the Proceeding is pending.  In addition, the Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within the Indemnitee’s power.

 

9.

Maintenance of Liability Insurance.

 

(a)

Subject to Section 4 hereof, the Company hereby agrees that so long as the Indemnitee shall continue to serve as a director of the Company and thereafter so long as the Indemnitee shall be subject to any possible Proceeding, the Company, subject to Section 9(B), shall use reasonable commercial efforts to obtain and maintain in full force and effect directors’ and officers’ liability insurance (“D&O Insurance”) which provides the Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors.

 

(b)

Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain D&O Insurance if the Company determines in good faith that such insurance is not reasonably available, the premium costs for such insurance are disproportionate to the amount of coverage provided, the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or the Indemnitee is covered by similar insurance maintained by a subsidiary or parent of the Company.

 

5


 

(c)

If, at the time of the receipt of a notice of a claim pursuant to Section 8 hereof, the Company has D&O Insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.  The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of the Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies.

 

10.

Defense of Claim.  In the event that the Company shall be obligated under Section 6 hereof to pay the Expenses of any Proceeding against the Indemnitee, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel approved by the Indemnitee, which approval shall not be unreasonably withheld, upon the delivery to Indemnitee of written notice of its election to do so.  After delivery of such notice, approval of such counsel by the Indemnitee and the retention of such counsel by the Company, the Company will not be liable to the Indemnitee under this Agreement for any fees of counsel subsequently incurred by the Indemnitee with respect to the same Proceeding, provided that (i) the Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by the Indemnitee has been previously authorized by the Company, or (B) the Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and the Indemnitee in the conduct of such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of the Indemnitee’s counsel shall be at the expense of the Company.

 

11.

Attorneys' Fees.  In the event that the Indemnitee or the Company institutes an action to enforce or interpret any terms of this Agreement, the Company shall reimburse the Indemnitee for all of the Indemnitee’s reasonable fees and expenses in bringing and pursuing such action or defense, unless as part of such action or defense, a court of competent jurisdiction determines that the material assertions made by the Indemnitee as a basis for such action or defense were not made in good faith or were frivolous.

 

12.

Continuation of Obligations.  

All agreements and obligations of the Company contained herein shall continue during the period the Indemnitee is a director or officer of the Company, or is or was serving at the request of the Company as a director, officer, fiduciary, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, and shall continue thereafter so long as the Indemnitee shall  be subject to any possible proceeding by reason of the fact that the Indemnitee served in any capacity referred to herein.

 

13.

Successors and Assigns.  This Agreement establishes contract rights that shall be binding upon, and shall inure to the benefit of, the successors, assigns, heirs and legal representatives of the parties hereto.

 

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14.

Non-Exclusivity.

 

(a)

The provisions for indemnification and advancement of expenses set forth in this Agreement shall not be deemed to be exclusive of any other rights that the Indemnitee may have under any provision of law, the Company’s Articles of Incorporation or Bylaws, the vote of the Company’s stockholders or disinterested directors, other agreements or otherwise, both as to action in the Indemnittee’s official capacity and action in another capacity while occupying the Indemnitee’s position as a director or officer of the Company.

 

(b)

In the event of any changes, after the date of this Agreement, in any applicable law, statute, or rule which expand the right of a Nevada corporation to indemnify its officers and directors, the Indemnitee’s rights and the Company’s obligations under this Agreement shall be expanded to the full extent permitted by such changes.  In the event of any changes in any applicable law, statute or rule, which narrow the right of a Nevada corporation to indemnify a director or officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement, shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

 

15.

Effectiveness of Agreement.  To the extent that the indemnification permitted under the terms of certain provisions of this Agreement exceeds the scope of the indemnification provided for in the Nevada Revised Statutes, such provisions shall not be effective unless and until the Company’s Articles of Incorporation authorize such additional rights of indemnification.  In all other respects, the balance of this Agreement shall be effective as of the date set forth on the first page and may apply to acts of omissions of the Indemnitee which occurred prior to such date if the Indemnitee was an officer, director, employee or other agent of the Company, or was serving at the request of the Company as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, at the time such act or omission occurred.

 

16.

Severability.  Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law.  The Company’s inability,  pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement.  The provisions of this Agreement shall be severable as provided in this Section 16.  If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify the Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

 

17.

Governing Law.  This Agreement shall be interpreted and enforced in accordance with the laws of the State of Nevada, without reference to its conflict of law principals.  To the extent permitted by applicable law, the parties hereby waive any provisions of law which render any provision of this Agreement unenforceable in any respect.

 

18.

Notices.  All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed duly given (i) if delivered by hand and receipted for by the party addressee or (ii) if mailed by certified or registered mail with postage prepaid, on the third business day after the mailing date.  Addresses for notice to either party are as shown on the signature page of this Agreement, or as subsequently modified by written notice.

 

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19.

Mutual Acknowledgment.  Both the Company and the Indemnitee acknowledge that in certain instances, federal law or applicable public policy may prohibit the Company from indemnifying its directors and officers under this Agreement or otherwise.  The Indemnitee understands and acknowledges that the Company has undertaken or may be required in the future to undertake with the appropriate state or federal regulatory agency to submit for approval any request for indemnification, and has undertaken or may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company’s right under public policy to indemnify the Indemnitee.

 

20.

Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall constitute an original.

 

21.

Amendment and Termination.  No amendment, modification, termination or cancellation of this Agreement shall be effective unless in writing signed by both parties hereto.


[Signature Page Follows]



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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year set forth above.

 

COMPANY:


Home System Group



By:/s/Weiqiu Li                                  


Name: Weiqiu Li

Title: Chairman and Chief Executive Officer


Address: No. 5A, Zuanshi Ge

               Fuqiang Yi Tian Ming Yuan

               Fu Tian Qu, Shenzhen City

               People’s Republic of China, 518000


INDEMNITEE:





/s/ Jianzhao Zheng                                         
Name: Jianzhao Zheng




Address: No. 12 Dongyuan Road

 East Area Zhongshan City

 People’s Republic of China


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EXHIBIT 14.1 HTML

exh141.htm


Exhibit 14.1

BUSINESS ETHICS POLICY AND

CODE OF CONDUCT FOR

HOME SYSTEM GROUP

(As adopted on July 31, 2007)

SCOPE: This Business Ethics Policy and Code of Conduct (the or this “Policy”) applies to all directors on the Company’s board of directors (the “Board”), officers and employees of Home System Group (the “Company”) and its subsidiary entities, including all principal executive officers and principal financial officers (collectively, the “Covered Persons”).  

POLICY: All Covered Persons must abide by the highest standards of business ethics and avoid any actual or apparent conflict of interest as described in this Policy.  This Policy establishes minimum standards required of all Covered Persons, which are in addition to the requirements of other Company policies.  The Company requires that upon commencement of employment, or election to the Board, each Covered Persons acknowledges that he or she has read and understands this Policy and has reported, or will report as they arise, all potential conflicts of interest as required by this Policy.  Failure to comply with this Policy and the procedures established to implement it can result in disciplinary action, termination from employment, removal from the Board, and/or initiation of appropriate legal action, as the Company deems appropriate.

PURPOSE: Establishes the requirement that all Covered Persons use the highest degree of business ethics and provides minimum standards of business ethics and conduct. Simply reading these standards, however, does not necessarily lead to ethical conduct.  The Covered Person must understand, support and adhere to these standards on a daily basis, which will enable the Company to achieve both its business objectives and strict conformity with the law.  Violations of this Policy could expose the Company and the individual involved to civil and criminal actions, fines, revocation of licenses and other legal remedies.  To ensure on-going compliance with this Policy, the Company requires all Covered Persons on an annual basis to acknowledge that they have read and understand this Policy and have reported all potential conflicts of interest as required by the Policy.

 


INDEX OF PROCEDURES OR GUIDELINES:

1.0 ORGANIZATION AND ADMINISTRATION OF THE POLICY

2.0 CONFLICTS OF INTEREST

3.0 CONFIDENTIAL INFORMATION

4.0 INSIDE INFORMATION

5.0 PROHIBITED RECEIPTS AND PAYMENTS

6.0 POLITICAL ACTIVITY AND CAMPAIGN CONTRIBUTIONS

7.0 PERSONAL USE OF COMPANY PROPERTY & SERVICES

8.0 COMPANY BOOKS AND RECORDS

9.0 COMPLIANCE WITH TAX LAWS

10.0 COMPLIANCE WITH LAWS RULES AND REGULATIONS

11.0 COMPLIANCE AND ACCOUNTABILITY

12.0 WAIVER

13.0 CONCLUSION

14.0 REPORTING NONCOMPLIANCE

15.0 NO RETALIATION POLICY

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1.0  ORGANIZATION AND ADMINISTRATION OF THE POLICY

1.1 Overall Policy Responsibility

A. Providing guidance on matters of business ethics.

B. Monitoring compliance with this Policy and applicable laws to ensure consistency with the Company’s goals of promoting fair and ethical conduct and avoiding undesirable relationships in all of its activities.

C. Toward that end, the Committee shall use the services of a Designated Ethics Officer (“DEO”), the internal audit and legal staff and the Company’s independent public accountants.

D. Provide full, fair, accurate, timely and understandable disclosure in reports and documents the Company files with or submits to the SEC and-in other public communications.

E. Report to the DEO and/or the Audit Committee of the Board or, if no Audit Committee then the Board (the Audit Committee or the Board, as applicable, is referred to herein as, the “Oversight Authority”), any conflict of interest that may arise and any material transaction or relationship that reasonably could be expected to give rise to a conflict.

F. Ensure Covered Persons promptly report violations of this Policy to the Oversight Authority.

1.2 Definitions

A. “CEO” - The person designated by the Board as the Chief Executive Officer, or persons performing similar functions.

B. “CFO” - The person designated by the Board as the Chief Financial Officer, or persons performing similar functions.

C. “Company” - Home System Group, including its subsidiaries and affiliates.

D. “DEO” - Designated Ethics Officer. The Company’s DEO shall be recommended by the CEO and appointed to serve at the pleasure of the Board.

E. “Covered Persons” - All directors on the Company’s board of directors, all officers and all employees of Concept Ventures Corporation and its subsidiary entities, including all principal executive officers and principal financial officers.

F. “FCPA” - Foreign Corrupt Practices Act.

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G. “Officers - The CEO, President, CFO, Chief Accounting Officer, Secretary and Treasurer, or persons performing similar functions and any other officer designated by the Board as an “Officer” for purposes of this Policy.

H. “Oversight Authority” - The Audit Committee of the Board or, if no Audit Committee exists then the Board.

I.  “President” - The person designated by the Board as the President of the Company.

J. “Policy” - The Company’s Business Ethics Policy and Code of Conduct.

K. “SEC” - Securities and Exchange Commission.

L. “You” - The Covered Person.

M. “Your” - Belonging to the Covered Person.

1.3 The DEO/Oversight Authority Relationship

The DEO shall report directly to the Oversight Authority.  Under the Oversight Authority’s general supervision, the DEO shall monitor compliance with this Policy, and shall promptly report violations or threatened violations to the Oversight Authority. The DEO shall also make recommendations to the Oversight Authority for improving the monitoring of and compliance with this Policy.

1.4 The DEO’s Responsibility And Authority

The DEO shall direct such training and investigations as may be appropriate to ascertain compliance with this Policy at all levels of the Company. The DEO shall also propose for adoption by the Oversight Authority internal reporting systems as may be required or desirable for effective administration of the policy.

2.0 CONFLICTS OF INTEREST

2.1 Conflict Of Interest Defined

Of all corporate activities involving employee conduct, among the most important involves avoiding actual or potential conflicts of interest. A conflict of interest arises when an employee’s judgment in acting on the Company’s behalf is, or appears to be, influenced by an actual or potential personal benefit from an investment, business interest, or some other association or relationship. Conflicts occur most often in cases where You or a member of Your household or Your immediate family (spouse, child, parent or sibling) obtains some personal benefit at the expense of the Company’s best interests. However, they may arise in other circumstances, as well. Keep in mind that for the purposes of this Policy, in general, You will be regarded as having an interest in any property owned, or any transactions entered into, by members of Your household or Your immediate family.

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2.2 Common Conflict of Interest Situations

Conflicts of interest can arise in many different situations, and it is not possible to describe all circumstances in which they may exist. The following three sections describe common categories of conflicts of interest. They also illustrate Your responsibility and the Company’s policy in each situation.

A. Employee Relationships with Parties in Company-Related Transactions.

You must fully disclose details when You or a member of Your household or Your immediate family has an interest in, or a relationship with, any party that transacts business with the Company, such as a supplier or vendor, lessor, lessee, licensor, or licensee, when:

1. You are in a position to make or influence decisions pertaining to the transactions, and

2. Your interest or relationship is substantial enough to appear to a reasonable person that Your decision-making regarding the transaction may be affected.

3. Examples of these relationships include when You or a member of Your household or Your immediate family:

a. Has any position or employment, including work performed as an officer, partner, employee, director or consultant of the other company that is a party to the transaction;

b. Receives any compensation, discounts, rebates, kickbacks, credit, loans, gifts or other perquisites from the other company;

c. Acquires, directly or indirectly, an interest in, or rights to the profit or income of the other party.

4. You do not need to disclose the mere ownership or securities of the other party if it is listed on a national stock exchange as long as the amount You or members of Your household or immediate family own is less than one percent (1%) of the class of securities outstanding, and does not equal or exceed ten percent (10%) of Your (their) net worth.

B. Accepting Gifts or Favors.

You must not accept gifts or favors from any individual or entity that You know or should know transacts business, or may seek to transact business with the Company, unless the gift or favor is a common courtesy usually associated with customary business practices. You must never accept a gift in the form of cash or a cash equivalent. All offers of gifts or favors should be reported immediately in writing to Your supervisor and the DEO.

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C. Nepotism.

Nepotism occurs when preferential treatment is given on the basis of close personal relationships, as opposed to merit. You must not grant preferential treatment to relatives or friends within the Company in conflict with the Company’s best interests. You must also avoid situations in which conflicts may arise. For example, no employee should supervise or be supervised by, or work in the same department on the same shift as, a member of his or her immediate family. Exceptions must be approved in writing and in advance by the Department Director and the DEO and the CEO or CFO.

2.3 Your Responsibility To Avoid Or Eliminate Conflicts Of Interest

You must avoid any relationship, influence, activity, or investment that might impair, or even appear to impair Your ability to make objective and fair decisions in the Company’s best interest. Compliance with this Policy also requires You to take any actions regarded by the Company as necessary to eliminate or satisfactorily regulate an actual or potential conflict of interest situation. When in doubt, share the facts of the situation with the DEO or the Chairman of the Oversight Authority before taking any action.

2.4 Your Responsibility To Disclose All Possible Conflicts

Periodically, You will be required to complete a disclosure statement setting forth any financial interests, business and/or other relationships that might present a conflict of interest. In addition, You must provide full and immediate disclosure of any interest that You may have at the time of hire or during employment which creates, or appears to create, a possible conflict of interest.

2.5 An Important Note About The Company’s Disclosure Requirement

This disclosure requirement in no way represents the Company’s intention to police or interfere with its employees’ activities. Rather, the requirement is intended to assist employees in realizing the fullest freedom consistent with their own best interests, and those of the Company and its stockholders, by protecting all parties from the harmful effects of any subsequent revelation of activities, associations or interests that might constitute a prohibited conflict of interest. The disclosure requirement is merely a recognition of the fact that very few substantial questions of conflict of interest can exist where there is full knowledge by the Company of all the facts. In the few instances where such a question might exist after full disclosure, corrective steps generally can be taken to avoid potential problems without interfering with the outside interests of the employee.

2.6 Confidentiality

With respect to any disclosure of information furnished by an employee in accordance with this Policy, the Company will endeavor to protect such information and handle it on a strictly confidential basis. Notwithstanding the foregoing, disclosure by the Company to the appropriate personnel in order to avoid or abate actual or potential conflicts of interest discovered to protect the best interests of the Company may be required.

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2.7 Related Party Transactions

Notwithstanding the provisions above, all related party transactions involving any Director or Executive Officer of the Company must be approved by the Oversight Authority or other designated committee of the Board.

3.0 CONFIDENTIAL INFORMATION

3.1 Confidential Information Defined

Confidential information means all non-public information regarding the Company’s operations and business activities and those of its customers and suppliers. Non-public means any information that is not officially disclosed through means such as press releases or other forms of publication, or is not common knowledge.

3.2 Examples Of Confidential Information

Confidential information includes items such as customer lists, any and all customer information, employee information, policies, systems and procedures, trade secrets, financial information, business plans, contract negotiations, contractual agreements, blueprints, marketing and promotional plans and ideas (including new products and programs, pricing strategies and advertising campaigns), or other information or material unique to the Company.

3.3 Your Responsibility Regarding Confidential Information

Do not disclose confidential information to any unauthorized person, either during or after termination of Your employment. Unauthorized persons include anyone who does not have a business need to know such information for the express benefit of the Company, excluding: agencies which have jurisdiction over the Company, and other authorized state and federal law enforcement officers in the course of their assigned duties. Do not hesitate to ask the DEO or your Department Director if you have any question regarding a particular individual’s authorization to obtain confidential information. Upon Your departure, You must not take any documents or records belonging to the Company and You must return to your supervisor all such documents and records in Your possession.

3.4 Your Responsibility Not To Profit From Confidential Information

Do not profit from confidential information of which You have become aware during the course of Your employment. For example, do not acquire an interest in property that You know the Company is considering purchasing. Similarly, You should not acquire any security of another entity, if You are aware that the Company is considering purchasing that entity’s securities. These may also constitute conflicts of interest.

3.5 Your Responsibility Not To Compete With Company

You must not compete with the Company in pursuing any business opportunities which come to Your attention during the course of Your employment with the Company. Before personally pursuing or profiting from any venture which could be viewed as competing with the Company, You must disclose the opportunity to the DEO or Chairman of the Oversight Authority and obtain the Oversight Authority’s positive written affirmation either that the venture is not in competition with the Company or that the Company has no interest in pursuing the venture.

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4.0 INSIDE INFORMATION

4.1 Inside Information Defined

Inside information is similar to confidential information, and refers to all material non-public information. Information is material if it could affect the market price of a security, or if a reasonable investor would consider the information important in deciding whether to buy, sell or hold a security. In this context, “security” is referring to the Company’s common stock (or other securities that may be issued by the Company in the future), or the common stock or other securities of other companies, which due to your relationship with the Company, you may discover is engaged in negotiations with or otherwise entering into a substantial business transaction with the Company. Information is considered public only if it has been effectively disclosed to the investing public (for example, by press release) and enough time (typically two trading days after the information has been announced publicly) has elapsed to permit the investment market to absorb and evaluate the information. Inside information is not limited to information about the Company. It also includes material norm-public information about other corporations with which the Company has business relationships.

4.2 Example Of Inside Information

Examples of inside information include, but are not limited to, non-public information about:

A. Earnings results;

B. Future earnings, losses or stock splits as estimated or projected by the Company’s officers;

C. Changes in management or dividend policies; and

D. Events or business operations which are likely to affect future revenues or earnings (for example, the development of a new casino property; joint ventures with other companies; mergers and acquisitions; or lawsuits and settlements).

4.3 Prohibited Use Of Inside Information

Company policy, state and federal laws and regulations prohibit the use of inside information when trading in or recommending the Company’s or anyone else’s securities. Federal securities laws impose potentially onerous civil and criminal penalties on persons who, in connection with a purchase or sale of securities, improperly obtain and use inside information about such securities. Persons who fail to prevent others from using inside information may also be liable for civil penalties under federal law.

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4.4 Your Responsibility Regarding Inside Information

You must not disclose inside information to persons outside the Company or other persons within the Company who are not authorized to receive such information. It is illegal to pass on inside information to another individual who buys or sells a security on the basis of that information. In fact, it is illegal to suggest buying or selling a security while in the possession of inside information, even if You do not actually disclose that information.

4.5 Do Not Trade On Company Inside Information

You, any party related to You, or any party to whom You provide (improperly or otherwise) inside information, must not trade in Company securities while possessing inside information until the pertinent information has been disclosed by the Company through public announcements or filings with the SEC and the public has had sufficient time to assimilate it for not less than two full business days after the Company has publicly disclosed the information.

4.6 Do Not Trade On Any Other Company Inside Information

You, any party related to You, or any party to whom You provide (improperly or otherwise) inside information, must not trade in the securities of another corporation if the value of such securities is likely to be affected by actions of the Company of which You are-aware and which have not been disclosed to the public. For example, if a vendor is developing and testing a new product in conjunction with the Company, employees should not trade in the securities of that vendor until such information becomes public knowledge.

4.7 Prevent Others From Insider Trading

It is also illegal for certain persons to fail to prevent insider trading by others. Individual employees with managerial or supervisory responsibilities over an employee and, in some cases, officers, directors, and controlling stock holders of the Company (collectively referred to as “controlling persons”), may be liable for civil penalties under insider trading laws for the violations of an employee if the controlling person knew or recklessly disregarded the fact that the employee was likely to engage in a violation, and failed to take appropriate steps to prevent that violation before it occurred.

4.8 Questions Regarding Inside Information

Before disclosing or using information in Your possession which could be considered inside information and, therefore, subject to this Policy, You must obtain the written approval from the DEO, CEO or CFO. If such approval is not given, then you should not use or disclose such information.

5.0 PROHIBITED RECEIPTS AND PAYMENTS

5.1 Your Use Of Company Assets

The use of Company funds or assets for any unlawful purpose is strictly prohibited. You must not establish undisclosed or unrecorded funds or assets of the Company for any purpose, or engage in any arrangement that results in prohibited acts. No payments shall be approved or made with the intention or understanding that any part of such payment is to be used for any purpose other than that described by the materials supporting the disbursement.

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5.2 Your Authorization To Use Company Assets

You must not authorize or make any payment, whether in money, property or services, either Company or personal, for a bribe, kickback, or any other similar payment, to any person or organization designed to secure favored treatment for the Company. These payments are highly improper and could adversely reflect on the Company’s integrity and reputation.

5.3 Your Responsibility To Report Prohibited Act

If You have information regarding any prohibited act or payments, You must promptly report the matter to the DEO or Chairman of the Oversight Authority.

6.0  POLITICAL ACTIVITY AND CAMPAIGN CONTRIBUTIONS

6.1 Political Campaign Contributions Defined

Political campaign contributions mean:

A. Direct expenditures or contributions, in cash or property, to candidates for nomination or election to public office or to political parties; and

B. Indirect assistance or support, such as the furnishing of goods, services or equipment, or other political fund raising support.

6.2 Prohibited Domestic Political Contributions

The Company does not make political contributions for candidates for federal office and in the United States it would be a crime for the Company to do so. It is also Company policy not to make political contributions for candidates for state and local office, except in those states where such payments are legal and such payments have been authorized in writing, in advance, by the Company Co-Chairs.

6.3 Prohibited Foreign Political Contributions

It is Company policy not to make political contributions to foreign political parties or candidates for public office except in countries where such payments are legal under local law, and have been approved in writing, in advance, by the Company Co-Chairs.

 

6.4 Individual Employee Political Participation

The Company encourages political participation by employees in their individual capacities, including the making of voluntary contributions to candidates of the employee’s choice in accordance with legal limitations. In compliance with federal laws and regulations, the Company will not reimburse any employee directly or indirectly for any political contributions made by the employee. Furthermore, employees must not engage in political activities during working hours.

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6.5 International Business

In addition to the general principles set out in this section, the Company has detailed policies governing compliance with laws and regulations concerning exports, economic sanctions, international boycotts, the United States Foreign Corrupt Practices Act (“FCPA”), gifts to and entertainment of foreign officials, and other aspects of international business operations.  Some of these policies are summarized below.  If You are involved in the Company’s international business activities, You are required to familiarize yourself with, and comply with, all Company policies relating to international business operations.

 

A. Foreign Corrupt Practices Act and International Bribery Laws

The FCPA prohibits the offer or payment of money or anything of value to an official of a foreign country or public international organization, foreign political party or official thereof, or any candidate for political office of a foreign country (each a “foreign official”) with the intent or purpose of inducing the foreign official to use his or her influence to affect a government act or decision in order to obtain, retain or direct any business or to obtain any other improper advantage.  The prohibition applies both to offers and to payments made directly by the Company, and to any offers or payments made indirectly through intermediaries such as marketing agents, brokers, distributors, joint venture partners and similar parties.  Directors, officers and employees of government-owned or controlled companies, and members of royal families may be considered to be foreign officials subject to these restrictions.  Prohibited offers or payments can include entertainment and gifts, as well as money.  Actions that violate the FCPA may also violate the laws of the foreign countries in which the Company does business.  Violation of any of these laws can result in severe criminal or civil penalties for the Company and for the individuals involved, including imprisonment.

Because determining whether international business dealings are compliant with foreign and domestic laws is complicated, You must consult with the DEO before initiating any direct or indirect business relationships with foreign companies, foreign officials, and foreign nationals, and obtain prior written approval for any expenses You incur in connection with such business relationships.  

B. United States Sanctions Restricting Exports and Transactions

United States economic sanctions laws and regulations also restrict exports and other transactions with the governments of, and persons and entities associated with, sanctioned countries such as Cuba, Iran, Libya, and North Korea, among others, and with specially designated individuals and entities affiliated with these and other countries.  It is against Company policy to engage in exports to or other transactions with sanctioned countries, entities or individuals.

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C. United States Anti-boycott Laws and Regulations

The United States anti-boycott laws prohibit the Company from complying with or supporting a country’s boycott of another country that is “friendly” to the United States.  Even when a company refuses to comply with a prohibited boycott, United States law requires companies to report promptly to the United States government any request that the company receives to support or furnish information regarding a boycott.  The rules governing the Company’s obligations under the United States anti-boycott laws are complex, and the penalties for violating them are severe.  You should be attentive to situations where boycott requests may occur and should inform the DEO if any such situations arise.

 

7.0 PERSONAL USE OF COMPANY PROPERTY AND SERVICES

7.1 Your Use Of Company Property

The use of Company owned land, materials, equipment, or other property, and the use of services provided by Company employees on Company time under any other circumstances are strictly prohibited, except as approved in advance by the person to whom such approval authority has been delegated. For instance, you may not use Company employees to perform home improvement or any other personal work for Your benefit on Company time.

7.2 Your Responsibility To Obtain Authorization

You must not sell, loan, give away or otherwise dispose of Company property, regardless of condition or value, except with proper prior authorization.

7.3 Your Responsibility Not To Profit From Company Time Or Property

You may not engage in activities on Company time or use, or cause to be used, Company facilities, equipment, materials or supplies for Your personal profit.

8.0 COMPANY BOOKS AND RECORDS

8.1 Your Responsibility Regarding Company Books And Records

It is Company policy that all books and records of the Company be maintained so that they fully and fairly reflect all of the Company’s receipts and expenditures, assets and liabilities. The integrity of the Company’s records and other business information is based on the accuracy and completeness of the information supporting the entries to the Company’s books of account.  The integrity of the Company’s products is dependent upon the accuracy of the Company’s records and business information derived from its operations.  Therefore, if You are involved in creating, processing or recording such information, You are responsible for its accuracy and completeness. You must not make false or artificial entries in the books and records of the Company for any reason.

You must not establish any funds or accounts outside the books and records of the Company. All bank accounts set up on behalf of the company, foreign or domestic, must be approved by the CFO and shall be controlled, recorded and reconciled under the direction of the CFO.

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8.2 Your Responsibility For Full Disclosure

Federal laws prohibit materially false or misleading statements or omission of facts by officers and directors in connection with the audit or examination of the Company’s financial statements or the preparation of its required SEC (Securities and Exchange Commission) filings. The FCPA requires the Company to develop and maintain a system of internal accounting controls to help assure the Company’s books and records accurately reflect its transactions and dispositions of assets. The FCPA and securities laws apply to indirect as well as direct falsification, misrepresentation or omission. Federal laws impose civil and criminal penalties on individuals and companies who violate these requirements. If Your duties include participation in the preparation of Company press releases or filings with the SEC, You must use Your best efforts to assure that such press releases and/or SEC filings fully, fairly and accurately disclose the material information required to be contained therein.

No employee, officer or director shall make any statement to (i) any stockholder, director, officer or employee of the Company, (ii) any auditor, lawyer or accountant retained by the Company, or (iii) any government agency, if the statement relates to the Company’s business and the employee, officer or director knows or has reason to believe that such statement is false or misleading in any material respect.

Direct or indirect falsification of documents, whether by alteration, destruction, intentional omission, misstatement or otherwise, is strictly prohibited and is grounds for immediate termination of employment or service to the Company.

9.0 COMPLIANCE WITH TAX LAWS

9.1 Your Responsibility Regarding Personal Taxes

It is against Company policy for any employee, with fraudulent intent, to misrepresent any employee’s income, fail to withhold applicable income taxes as required by law, or to take any other action to illegally evade taxes on, or with respect to, income from the Company.

9.2 Your Responsibility Regarding Company Taxes

It also is Company policy to comply with all applicable tax statutes and regulations. It is a violation of Company policy for any employee to take any action for the purpose of illegally evading taxes due on the Company’s operations.

9.3 Questions Regarding Tax Compliance

Any questions in this regard must be reviewed in advance with the CFO.

10.0 COMPLIANCE WITH LAWS, RULES AND REGULATIONS

10.1 Your Responsibility Regarding All Applicable Laws. Rules and Regulations

It is against Company policy for any employee, with intent, to violate any applicable law, rule or regulation issued by a governmental body. Notwithstanding the foregoing, good faith efforts to contest laws, rules and/or regulations as permitted by law and authorized by management of the Company shall not be prohibited.

13


10.2 Questions Regarding Legal Compliance

Any questions in this regard must be reviewed in advance with the DEO.

11.0 COMPLIANCE AND ACCOUNTABILITY

This Policy is not intended as a comprehensive review of laws related to the principles and practices regulating all Covered Persons and the policies and practices related to conflicts of interests, relationships with public officials, prohibited receipts and payments and antitrust laws. This Policy is not a substitute for expert advice. If any Covered Person has questions concerning a specific situation, the Covered Person should contact the DEO and/or the Oversight Authority or the Company’s general counsel or corporate counsel before taking action.

12.0 WAIVER

Any Request for a waiver of any provision of this Policy must be in writing and addressed to the DEO and/or Oversight Authority. Any waiver of this Policy with respect to an officer or director on the Board must be approved by the Board, after consultation with the Company’s corporate or outside counsel, and will be disclosed promptly on Form 8-K or any other means approved by the SEC.

13.0 CONCLUSION

13.1 Your Responsibility For Business Ethics

You must maintain the highest standards of ethical conduct in all Your business dealings. The Board adopted this Policy to help You achieve and maintain that vital goal. You must endeavor to read, understand, and abide by it.

13.2 Required Acknowledgment

You are required to complete the “Business Ethics Policy Acknowledgment and conflict of Interest Statement” (see Attachment 1) upon accepting any appointment as director, beginning employment or upon the institution of this Policy, and on an annual basis thereafter.

14.0 REPORTING NON-COMPLIANCE

 

14.1 Reporting Actual or Suspected Violations

 

All Covered Persons have a duty to report promptly, verbally or in writing, any evidence of any improper practice of which they are aware in connection with the operations or activities of the Company or any of its subsidiaries. This obligation requires that any Covered Person who becomes aware of any actual or suspected violation of this Policy, any applicable law, or any of the Company's policies or procedures must report it promptly to his or her supervisor, to the DEO or the Oversight Authority.

14


 

You may submit a report by phone or in writing.

 

All reports will be treated in a confidential manner, except where disclosure is required to properly investigate the matter or is mandated by law.

 

The Company prefers that you identify yourself when reporting violations so that we may follow up with you, as necessary, for additional information. If you prefer to submit your report anonymously, however, you may do so by phone or in writing. Both telephone reports and reports in writing will remain anonymous if anonymity has been requested.

 

14.2  Receipt of a Report

 

Based on the nature of the comment provided, an alert will be sent to the appropriate Company representative(s), who will review the reported issue, concern or complaint. If the alleged violation involves an executive officer or a director, the Chief Executive Officer and Board of Directors will be informed of the alleged violation. The responsible party or parties will determine whether it is necessary to conduct an informal inquiry or a formal investigation and, if so, will initiate such inquiry or investigation. The results of any such inquiry or investigation, together with a recommendation as to disposition of the matter, will be provided to the Company's senior management team (or a designated committee) or, if the alleged violation involves an executive officer or a director, to the Board (or a committee thereof). Senior management (or a designated committee), or, if an executive officer or director is involved, the Board (or a committee thereof), will determine whether there has been a violation and, if so, shall determine the disciplinary measures to be taken against any employee, officer or director who has violated this Policy.

 

Any employee who has concerns regarding questionable accounting or auditing matters or complaints regarding accounting, internal accounting controls or auditing matters may confidentially, and anonymously if they wish, submit such concerns or complaints to the DEO or the Oversight Authority.

 

14.3 Cooperation and Commitment

 

Employees, officers and directors are expected to cooperate fully with any inquiry or investigation by the Company regarding an alleged violation of this Policy. Failure to cooperate with any such inquiry or investigation may result in disciplinary action, up to and including discharge.

 

Because it is impossible to describe every potential situation that relates to our standards of conduct and business ethics, the Company relies on the commitment of its employees, officers and directors to exercise sound judgment, to seek advice when appropriate and to adhere to the highest ethical standards in the conduct of professional and personal affairs.

 

15


 

Customary day-to-day issues (such as questions or concerns regarding paid time off, your compensation, or employee relations) typically should be addressed to your supervisor or to the Human Resources Department.

 

15.0 NO RETALIATION POLICY

 

The Company will not discriminate against or retaliate against any employee, officer or director who reports a complaint or concern, unless it is determined that the report was made with knowledge that it was false. This Policy should not be construed to prohibit you from testifying, participating or otherwise assisting in any state or federal administrative, judicial or legislative proceeding or investigation.

 

 

 

 

 

 

 

 

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EXHIBIT 99.1 HTML

exh991.htm


Exhibit 99.1

Home System Group, Inc. Appoints Three New Independent Directors

Independent Directors Bring International Finance, Accounting and Business Experience

LOS ANGELES, August 6, 2007 -- Home System Group (OTC Bulletin Board: HSYT) ("Home System" or the "Company"), an international manufacturer and distributor of home appliance products to major global retailers, today announced the appointment of three new independent members to its Board of Directors, Mr. Binhai Chen, Mr. Jianzhao Zheng and Mr. Guanghan Chen.

Mr. Binhai Chen's career includes over 18 years of experience in the fields of finance and accounting. Currently, he is a Senior Accountant and Director with Zhongshan City Zhongxin, an auditing firm based in Guangdong, Province, China, which is in close proximity to Home System's headquarters. Mr. Chen is currently the Director of the Guangdong Province Certified Public Accountants Association, the Executive Director of Zhongshan City Certified Public Accountants Association, the Director of Zhongshan City Internal Audit Association and the Director of Zhongshan City Securities Association. Since 1993, Mr. Chen has been a Chinese CPA, CPV (Certified Public Valuer), and CTA (Certified Tax Agent) and he received his Master's degree in Accounting from Guangzhou City Jinan University in 1998. Additionally in 2007, Mr. Chen was the recipient of the "The CPA Software News Gold Cup Award," a distinction which is awarded to the top professionals in the international accounting field.

Mr. Jianzhao Zheng, currently an accountant with Zhongshan City Zhongxin, will bring over 10 years of accounting experience to Home System's Board of Directors. Mr. Zheng has gained experience in accounting, auditing, asset evaluation, corporate mergers, as well as tax and management consulting. He was also certified in 2001 as a CPA, CPV (Certified Public Valuer), and CTA (Certified Tax Agent) in China. Mr. Zheng received his Bachelors degree in Accounting in 1992 from Zhongshan City College.

Mr. Guanghan Chen brings over 25 years of experience in international business and macro economic expertise to Home System's Board of Directors. Mr. Chen has served as a Lecturer of Economic Principles at Central China Shifan University in Wuhan and over the last two decades he served as a Professor at Zhongshan University's Lingnan College and Hong Kong Research Institute. Mr. Chen has garnered significant international business experience by teaching in Taiwan, Japan and the U.S and he holds several highly regarded designations including the Directorship of China's Foreign Economic Association. Mr. Chen has also published on tariffs, international trade, developing country economics, foreign trade relations and related topics. Mr. Chen holds a Bachelor's degree in Law and Political Science and a Master's degree in Economics from Huazhong Normal University and a Doctorate in Economics from Wuhan University.

"We are pleased with the addition of Messrs. Chen, Zheng and Chen to our Board of Directors and look forward to benefiting from their collective financial experience," said Mr. Li Wei Qui, CEO and Chairman of Home System Group. "Our continued efforts to add qualified independent directors will assist in improving our internal controls and disclosures while helping Home System meet some of the necessary requirements towards achieving a listing on a national market."


About Home System Group

Based in Guangdong Province, People's Republic of China, Home System Group, through its wholly owned distributors, Oceanic International (Hong Kong), Ltd. and Oceanic Well Profit, Inc., produces and distributes home appliances, including stainless steel gas grills, residential water pumps, electronic fans, fruit processors, and other electrical appliances to retailers in the United States, Europe and Australia. The Company became public through a reverse merger on October 4, 2006. To learn more about the Company, please visit the Company's website at: http://www.homesystemgroup.com.

Safe Harbor Statement

Certain statements in this news release may contain certain forward-looking statements about Home System Group's business and products, including, but not limited to, statements regarding Home System Group's ability to improve its internal controls and disclosures or achieve a listing on a national market. Actual results may differ materially from the results expressed in the forward-looking statements due to a number of risk factors including, but not limited to: general economic and business conditions globally; product development; shipments to end customers; market acceptance of new and existing products; additional competition from existing and new competitors; changes in technology; economic, political, and social events in China and other regions and markets; securities markets trends; regulations of the U. S. Securities and Exchange Commission (SEC) and various other factors beyond the Company's control. All forward-looking statements are expressly qualified in their entirety by this cautionary statement and by the risk factors detailed in the Company's reports filed with the SEC. Home System Group undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.

For more information, please contact:

Michelle Zheng
Home System Group
Tel: +1-213-223-2277
Email: [email protected]

Matt Hayden
HC International, Inc.
Tel: +1-858-704-5065
Email: [email protected]



EXHIBIT 99.2 HTML

exh992.htm


Exhibit 99.2

HOME SYSTEM GROUP

 

AUDIT COMMITTEE CHARTER


The Purpose of the Audit Committee

 

The purpose of the Audit Committee of Home System Group (the “Company”) is to represent and assist the board of directors in its general oversight of the Company’s accounting and financial reporting processes, audits of the financial statements, and internal control and audit functions.  Management is responsible for (a) the preparation, presentation and integrity of the Company’s financial statements; (b) accounting and financial reporting principles; and (c) the Company’s internal controls and procedures designed to promote compliance with accounting standards and applicable laws and regulations.  The Company’s independent auditing firm is responsible for performing an independent audit of the consolidated financial statements in accordance with generally accepted auditing standards.

 

The Audit Committee members are not professional accountants or auditors and their functions are not intended to duplicate or to certify the activities of management and the independent auditor.  Consequently, it is not the duty of the Audit Committee to conduct audits or to determine that the Company’s financial statements and disclosures are complete and accurate and are in accordance with generally accepted accounting principles and applicable rules and regulations.  These are the responsibilities of management and the independent auditor.  Nor is it the duty of the Audit Committee to conduct investigations, to resolve disagreements, if any, between management and the independent auditor or to assure compliance with laws and regulations and the Company’s Code of Ethics.  The Audit Committee serves a board level oversight role where it oversees the relationship with the independent auditor, as set forth in this charter, receives information and provides advice, counsel and general direction, as it deems appropriate, to management and the auditors, taking into account the information it receives, discussions with the auditor, and the experience of the Audit Committee's members in business, financial and accounting matters.

 

Membership and Structure

 

The Audit Committee is comprised of at least three directors determined by the board of directors to meet the director and audit committee member independence requirements and financial literacy requirements of The NASDAQ Stock Market, Inc. (“NASDAQ”), the Securities and Exchange Commission or any other applicable requirements.  At least one member of the Audit Committee must be financially sophisticated, as determined by the Board, and no Audit Committee member may have participated in the preparation of the financial statements of the Company or any of the Company's current subsidiaries at any time during the past three years, each as required by NASDAQ listing standards.  Appointment to the Audit Committee, including the designation of the Chair of the Audit Committee and the designation of any Audit Committee members as “audit committee financial experts”, shall be made on an annual basis by the full Board upon recommendation of the Governance and Nominating Committee.  Meetings of the Audit Committee shall be held at such times and places as the Audit Committee shall determine, including by written consent.  When necessary, the Audit Committee shall meet in executive session outside of the presence of any senior executive officer of the Company.  The Chair of the Audit Committee shall report on activities of the Audit Committee to the full Board.  In fulfilling its responsibilities the Audit Committee shall have authority to delegate its authority to subcommittees, in each case to the extent permitted by applicable law.

 


 

Operations

 

The Audit Committee meets at least four times a year, on a quarterly basis.  Additional meetings may occur as the Audit Committee or its chairperson deems advisable.  The Audit Committee shall meet in executive session privately, with the independent auditor, without the chief internal auditor and management present, not less frequently than quarterly.  The Audit Committee will cause adequate minutes of all its proceedings to be kept, and will report on its actions and activities at the next quarterly meeting of the board of directors of the Company.  Audit Committee members will be furnished with copies of the minutes of each meeting and any action taken by unanimous consent.  The Audit Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the board of directors of the Company.  The Audit Committee is authorized to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Company, or (c) the laws of the state of Nevada.

 

The Chairman of the Audit Committee is to be contacted directly by the chief internal auditor or the independent auditor (1) to review items of a sensitive nature that can impact the accuracy of financial reporting or (2) to discuss significant issues relative to the overall Board responsibility that have been communicated to management but, in their judgment, may warrant follow-up by the Audit Committee.

 

Authority

 

The Audit Committee will have the resources and authority necessary to discharge its duties and responsibilities.  The Audit Committee shall have the authority to engage independent legal, accounting and other advisers, as it determines necessary to carry out its duties. The Audit Committee shall have sole authority to approve related fees and retention terms.  Any communications between the Audit Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Audit Committee will take all necessary steps to preserve the privileged nature of those communications.

 

The Audit Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Audit Committee.

 

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Responsibilities

 

The Audit Committee:

 

1.

is directly responsible for the appointment, replacement, compensation, and oversight of the work of the independent auditor, who shall report directly to the Audit Committee;

 

2.

obtains and reviews annually a report by the independent auditor describing the firm’s internal quality-control procedures; any material issues raised by the most recent internal quality-control review or peer review or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more independent audits carried out by the firm, and any steps taken to deal with any such issues;

 

3.

reviews and discusses with the independent auditor the written statement from the independent auditor concerning any relationship between the auditor and the Company or any other relationships that may adversely affect the independence of the auditor, and, based on such review, assesses the independence of the auditor;

 

4.

establishes policies and procedures for the review and pre-approval by the Audit Committee of all auditing services and permissible non-audit services (including the fees and terms thereof) to be performed by the independent auditor;

 

5.

reviews and discusses with the independent auditor: (a) its audit plans, and audit procedures, including the general audit approach, scope, staffing, fees and timing of the audit; (b) the results of the annual audit examination and accompanying management letters; and (c) the results of the independent auditor's procedures with respect to interim periods;

 

6.

reviews and discusses reports from the independent auditor on (a) all critical accounting policies and practices used by the Company, (b) alternative accounting treatments within GAAP related to material items that have been discussed with management, including the ramifications of the use of the alternative treatments and the treatment preferred by the independent auditor, and (c) other material written communications between the independent auditor and management;

 

7.

reviews and discusses with the independent auditor the independent auditor's judgments as to the quality, not just the acceptability, of the Company’s accounting principles and such further matters as the independent auditors present the Audit Committee under generally accepted auditing standards;

 

8.

discusses with management and the independent auditor quarterly earnings press releases, including the interim financial information and business discussion included therein, reviews and discusses with management and independent auditor the unaudited quarterly or interim financial statements and the management discussion and analysis in the quarterly report or the annual report, the year-end audited financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" and, if deemed appropriate, recommends to the board of directors that the audited financial statements be included in the Annual Report on Form 10-K for the year;

 

3


 

9.

reviews and discusses with management and the independent auditor various topics and events that may have significant financial impact on the Company or that are the subject of discussions between management and the independent auditors;

 

10.

reviews and discusses with management the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures;

 

11.

reviews and approves related-party transactions (as defined in the relevant NASDAQ requirements);

 

12.

reviews and discusses with management, the independent auditor, and the Company's chief internal auditor: (a) the adequacy and effectiveness of the Company's internal controls (including any significant deficiencies and significant changes in internal controls reported to the Audit Committee by the independent auditor or management); (b) the Company’s internal audit procedures; and (c) the adequacy and effectiveness of the Company’s disclosure controls and procedures, and management reports thereon;

 

13.

reviews annually with the chief internal auditor the scope of the internal audit program, and reviews annually the performance of both the internal audit group and the independent auditor in executing their plans and meeting their objectives;

 

14.

reviews and concurs in the appointment, replacement, reassignment, or dismissal of any chief internal auditor of the Company;

 

15.

reviews the use of auditors other than the independent auditor in cases such as management’s request for second opinions;

 

16.

reviews matters related to the corporate compliance activities of the Company;

 

17.

establishes procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

 

18.

establishes policies for the hiring of employees and former employees of the independent auditor;

 

19.

publishes the report of the Audit Committee required by the rules of the Securities and Exchange Commission to be included in the Company's annual proxy statement;

 

20.

periodically reviews with the Company’s in-house and independent counsel any legal matters that could have a significant impact on the Company’s financial statements, the Company’s compliance with applicable laws and regulations, and any material reports or inquiries received from regulators or governmental agencies;

 

4


 

21.

obtains timely reports from management and the Company’s senior internal auditing executive and counsel that the Company and its subsidiaries are in conformity with applicable legal requirements and the Company’s Code of Ethics, including disclosures of insider and affiliated party transactions;

 

22.

advises the Board of Directors with respect to the Company’s policies and procedures regarding compliance with applicable laws and regulations and with the Company’s Code of Ethics;

 

23.

reviews and approves the Company’s Code of Ethics, as it may be amended and updated from time to time, and ensures that management has implemented a compliance program to enforce such Code; ensures that such compliance program includes reporting violations of such Code of Ethics to the Audit Committee;

 

24.

reviews reported violations of the Company’s Code of Ethics;

 

25.

reviews and approves (a) any change or waiver in the Company’s Code of Ethics for principal executives and senior financial officers and (b) any disclosures made on Form 8-K regarding such change or waiver;

 

26.

when appropriate, designates one or more of its members to perform certain of its duties on its behalf, subject to such reporting to or ratification by the Audit Committee as the Audit Committee shall direct;

 

27.

will engage in an annual self-assessment with the goal of continuing improvement, and will annually review and reassess the adequacy of its charter, and recommends any changes to the full Board; and

 

28.

shall consult with management but may not delegate these responsibilities, except as specifically provided for above.

 

Adopted by the Board of Directors on July 31, 2007


5



EXHIBIT 99.3 HTML

exh993.htm


Exhibit 99.3

HOME SYSTEM GROUP

GOVERNANCE AND NOMINATING COMMITTEE CHARTER

 

The Purpose of the Governance and Nominating Committee

 

The purpose of the Governance and Nominating Committee of Home System Group (the “Company”), is to determine the slate of director nominees for election to the Company’s Board of Directors, to identify and recommend candidates to fill vacancies occurring between annual stockholder meetings, to review, evaluate and recommend changes to the Company’s Corporate Governance Guidelines, and to review the Company’s policies and programs that relate to matters of corporate responsibility, including public issues of significance to the Company and its stakeholders.

 

Membership and Structure

 

The membership of the Governance and Nominating Committee consists of at least two directors, each of whom shall meet the independence requirements established by the Board of Directors and applicable laws, regulations and listing requirements of the NASDAQ Stock Market, Inc.  The Board of Directors of the Company appoints the members of the Governance and Nominating Committee and the chairperson. The Board of Directors of the Company may remove any member from the Governance and Nominating Committee at any time with or without cause.

 

Operations

 

The Governance and Nominating Committee meets at least twice a year.  Additional meetings may occur as the Governance and Nominating Committee or its chairperson deems advisable.  The Governance and Nominating Committee will cause to be kept adequate minutes of all its proceedings, and will report on its actions and activities at the next quarterly meeting of the Board of Directors of the Company.  The Governance and Nominating Committee members will be furnished with copies of the minutes of each meeting and any action taken by unanimous consent.  The Governance and Nominating Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board of Directors of the Company.  The Governance and Nominating Committee is authorized and empowered to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Company, or (c) the laws of the state of Nevada.

 

Authority

 

The Governance and Nominating Committee will have the resources and authority necessary to discharge its duties and responsibilities.  The Governance and Nominating Committee has sole authority to retain and terminate outside counsel, any search firm used to identify director candidates, or other experts or consultants, as it deems appropriate, including sole authority to approve the firms' fees and other retention terms.  Any communications between the Governance and Nominating Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Governance and Nominating Committee will take all necessary steps to preserve the privileged nature of those communications.

 


 

The Governance and Nominating Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Governance and Nominating Committee.

 

Responsibilities

 

Subject to the provisions of the Corporate Governance Guidelines, the principal responsibilities and functions of the Governance and Nominating Committee are as follows:

 

1.

Annually evaluate and report to the Board of Directors of the Company on the performance and effectiveness of the Board of Directors to facilitate the directors fulfilling their responsibilities in a manner that serves the interests of the Company’s stockholders.

 

2.

Annually present to the Board of Directors a list of individuals recommended for nomination for election to the Board of Directors of the Company at the annual meeting of stockholders, and for appointment to the committees of the Board of Directors (including this Governance and Nominating Committee).

 

3.

Before recommending an incumbent, replacement or additional director, review his or her qualifications, including capability, availability to serve, conflicts of interest, and other relevant factors.

 

4.

Assist in identifying, interviewing and recruiting candidates for the Board of Directors.

 

5.

Annually review the composition of each committee and present recommendations for committee memberships to the Board of Directors of the Company as needed.

 

6.

Periodically review the compensation paid to non-employee directors for annual retainers (including the Board of Directors of the Company and committee Chairs) and meeting fees, if any, and make recommendations to the Board of Directors for any adjustments.  No member of the Governance and Nominating Committee will act to fix his or her own compensation except for uniform compensation to directors for their services as such.

 

7.

Develop and periodically review and recommend to the board appropriate revisions to the Company's Corporate Governance Guidelines.

 

2


8.

Monitor compliance with the Corporate Governance Guidelines.

 

9.

Regularly review and make recommendations about changes to the charter of the Governance and Nominating Committee.

 

10.

Regularly review and make recommendations about changes to the charters of other board committees after consultation with the respective committee chairs.

 

11.

Obtain or perform an annual evaluation of the Governance and Nominating Committee's performance and make applicable recommendations.

 

12.

Assist the Chairman of the Board of Directors of the Company, if the Chairman is a non-management director, or otherwise the Chairman of the Governance and Nominating Committee acting as Lead Independent Director, in leading the Board of Directors’ annual review of the Chief Executive Officer’s performance.

 

Adopted by the Board of Directors on July 31, 2007


 

3



EXHIBIT 99.4 HTML

exh994.htm


Exhibit 99.4

HOME SYSTEM GROUP

 

COMPENSATION COMMITTEE CHARTER

 

The Purpose of the Compensation Committee

 

The purpose of the compensation committee is to discharge the responsibilities of the board of directors of Home System Group (the “Company”) relating to compensation of the Company’s executives, to interact with management on the latter’s production of compensation discussion and analysis of executive compensation for inclusion in the Company’s proxy statement (the “CD&A”), review the final CD&A and to oversee and advise the board of directors of the Company on the adoption of policies that govern the Company’s compensation programs, including stock and benefit plans.

 

Membership and Structure

 

The membership of the Compensation Committee consists of at least three directors, all of whom shall (a) meet the independence requirements established by the board of directors of the Company and applicable laws, regulations and listing requirements of The NASDAQ Stock Market, Inc., (b) be a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, and (c) be an “outside director” within the meaning of Section 162(m) of the Internal Revenue Code. The board of directors of the Company appoints the members of the Compensation Committee and the chairperson of the Compensation Committee.  The board of directors of the Company may remove any member from the Compensation Committee at any time with or without cause.

 

Operations

 

The Compensation Committee meets at least two times a year.  Additional meetings may occur as the Compensation Committee or its chairperson deems advisable. The Compensation Committee will cause adequate minutes of all its proceedings to be kept, and will report on its actions and activities at the next quarterly meeting of the board of directors of the Company. Compensation Committee members will be furnished with copies of the minutes of each meeting and any action taken by unanimous consent.  The Compensation Committee is governed by the same rules regarding meetings (including meetings by conference telephone or similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the board of directors of the Company. The Compensation Committee is authorized to adopt its own rules of procedure not inconsistent with (a) any provision of this Charter, (b) any provision of the Bylaws of the Company, or (c) the laws of the state of Nevada.

 

Authority

 

The Compensation Committee will have the resources and authority necessary to discharge its duties and responsibilities.  The Compensation Committee has sole authority to retain and terminate outside counsel, compensation consultants retained to assist the Compensation Committee in determining the compensation of the Chief Executive Officer or senior executive officers, or other experts or consultants, as it deems appropriate, including sole authority to approve the firms’ fees and other retention terms.  Any communications between the Compensation Committee and legal counsel in the course of obtaining legal advice will be considered privileged communications of the Company and the Compensation Committee will take all necessary steps to preserve the privileged nature of those communications.

 


 

The Compensation Committee may form and delegate authority to subcommittees and may delegate authority to one or more designated members of the Compensation Committee.

 

Responsibilities

 

Subject to the provisions of the Company’s Corporate Governance Guidelines, the principal responsibilities and functions of the Compensation Committee are as follows:

 

1.

Review the competitiveness of the Company’s executive compensation programs to ensure (a) the attraction and retention of corporate officers, (b) the motivation of corporate officers to achieve the Company’s business objectives, and (c) the alignment of the interests of key leadership with the long-term interests of the Company’s shareholders.

 

2.

Review trends in management compensation, oversee the development of new compensation plans, and, when necessary, approve the revision of existing plans.

 

3.

Review and approve the compensation structure for corporate officers at the level of corporate vice president and above.

 

4.

Oversee an evaluation of the performance of the Company's executive officers and approve the annual compensation, including salary, bonus, incentive and equity compensation, for the executive officers.

 

5.

Review and approve Chairman and CEO goals and objectives, evaluate Chairman and CEO performance in light of these corporate objectives, and set Chairman and CEO compensation consistent with Company philosophy.  The CEO may not be present during deliberations or voting concerning the CEO's compensation.  The CEO will also be reviewed by the Chairman of the Nominating Committee acting as the Lead Independent Director.  The results of the annual CEO evaluation will be considered in setting CEO salary and other compensation.

 

6.

Review and approve compensation packages for new corporate officers and termination packages for corporate officers as requested by management.

 

7.

Review and discuss with the Board and senior officers plans for officer development and corporate succession plans for the CEO and other senior officers.

 

8.

Review and make recommendations concerning long-term incentive compensation plans, including the use of equity-based plans.  Except as otherwise delegated by the board of directors of the Company, the compensation committee will act on behalf of the board of directors as the “Committee” established to administer equity-based and employee benefit plans, and as such will discharge any responsibilities imposed on the Compensation Committee under those plans, including making and authorizing grants, in accordance with the terms of those plans.

 

2


 

9.

Review periodic reports from management on matters relating to the Company’s personnel appointments and practices.

 

10.

Produce an annual report of the Compensation Committee on executive compensation for the Company’s annual proxy statement in compliance with applicable Securities and Exchange Commission rules and regulations and relevant listing authority and review the final CD&A.

 

11.

Regularly review and make recommendations about changes to the charter of the Committee.

 

12.

Obtain or perform an annual evaluation of the Compensation Committee's performance and make applicable recommendations.

 

Adopted by the Board of Directors on July 31, 2007


 

3