Form 8-K Home System Group

Events or Changes Between Quarterly Reports

What is Form 8-K?
  • Accession No.: 0001204459-07-001199 Act: 34 File No.: 000-49770 Film No.: 071039421
  • CIK: 0001172319
  • Submitted: 2007-08-09
  • Period of Report: 2007-08-08

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 9, 2007 (August 7, 2007)   

HOME SYSTEM GROUP
(Exact name of registrant as specified in its charter)
     
Nevada 000-49770 43-1954776
(State or other jurisdiction of (Commission File Number) (IRS Employer Identification
incorporation or organization)   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)
   
86-755-83570142
(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 August 7, 2007, the Board of Directors of Home System Group (the "Company"), in accordance with Section 3 of the Company’s Amended and Restated Bylaws, increased the size of the Company’s Board of Directors from five to six, and elected Mr. Richard Randall as a director of the Company to fill the vacancy created by such increase, 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. (the "Marketplace Rules"). A copy of the press release announcing such election is attached to this report as Exhibit 99.1.

The Board of Directors appointed Mr. Randall to the Company’s Audit Committee, Governance and Nominating Committee and Compensation Committee and appointed Mr. Randall as the Chair of the Audit Committee. The Board of Directors also determined that Mr. Randall possesses accounting or related financial management experience that qualifies him as financially sophisticated within the meaning of Rule 4350(d)(2)(A) of the Marketplace Rules, and determined that he is an "audit committee financial expert" as defined by the rules and regulations of the Securities and Exchange Commission.

On August 7, 2007, the Company entered into an Independent Director Agreement and Indemnification Agreement with Mr. Randall. Under the terms of the Independent Director Agreement, the Company agreed to pay Mr. Randall an annual fee of USD$30,000 as compensation for the services to be provided by him as a director of the Company and agreed to reimburse him for pre-approved reasonable business related expenses incurred in good faith in the performance of the his duties for the Company. In addition, the Company granted to Mr. Randall an option to purchase 100,000 shares of the Company’s common stock, at an exercise price of $6.00 per share, which was the closing price of the Company’s common stock on the OTC Bulletin Board on August 7, 2007 the date of grant. The option is exercisable until June 1, 2017. The option vested with respect to 33,333 of the underlying shares immediately on the date of grant, and the remaining underlying shares will vest with respect to 33,333 and 33,334 shares on July 1, 2008 and 2009, respectively; provided that, in the case of the options to vest in 2008 and 2009, Mr. Randall is still a director of or is otherwise engaged by the Company on such dates.

Under the terms of the Indemnification Agreement, the Company agreed to indemnify Mr. Randall against expenses, judgments, fines, penalties or other amounts actually and reasonably incurred by him in connection with any proceeding brought against him in connection with his actions as a director of the Company, if he acted in good faith and in the best interests of the Company. This brief description of the terms of the Independent Director Agreement and Indemnification Agreement is qualified by reference to the provisions of the agreements attached to this report as Exhibits 10.1 and 10.2, respectively.

Richard Randall. Mr. Randall’s career includes extensive financial and accounting experience as a Chief Financial Officer and Board Member for several U.S. publicly traded companies and he is currently Chairman of the Audit Committee for Steve Madden Ltd., a publicly traded international designer, marketer and retailer of footwear for women, men and children. From 2002 to 2005, Mr. Randall served as the Executive Vice President, Chief Operating Officer and Chief Financial Officer of Direct Holdings Worldwide, the parent of Lillian Vernon Corp. and Time Life, where he was responsible for orchestrating the sale of the Company, and from 2000 to 2001, Mr. Randall served as the Senior Vice President and the Chief Financial Officer of Coach, Inc, a publicly traded international designer and marketer of handbags and accessories, where he oversaw the auditing process and SEC compliance. Mr. Randall has also provided consulting services to Supreme International (renamed Perry Ellis International), Mondo, Inc., and Revlon and is a member of the American Institute of CPAs and New York Society of CPAs. Mr. Randall received a degree in accounting from the City University of New York, Baruch College in 1964 and has been certified as a CPA in New York State.

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There are no arrangements or understandings between Mr. Randall and any other persons pursuant to which he was selected as a director. There are no transactions between the Company and Mr. Randall that would require disclosure under Item 404(a) of Regulation S-K.

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 the Company’s independent directors, Mr. Guanghan Chen, Mr. Binhai Chen, and Mr. Jianzhao Zheng to each committee, however, the Company did not appoint the Chairs of each committee at such time. On August 7, 2007, concurrent with the election of Mr. Richard Randall as an independent director of the Company and his appointment to each committee, the Board of Directors of the Company appointed the Chairs of the Company’s Audit Committee, Governance and Nominating Committee and Compensation Committee. Mr. Richard Randall was appointed as the Chair of the Audit Committee, Mr. Guanghan Chen was appointed as the Chair of the Governance and Nominating Committee and Mr. Binhai Chen was appointed as the Chair of the Compensation Committee.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits
 

Exhibit No. Description
   
10.1 Home System Group Independent Director Agreement, dated as of August 7, 2007, by and between Home System Group and Richard Randall
   
10.2 Indemnification Agreement, dated as of August 7, 2007, by and between Home System Group and Richard Randall
   
99.1 Press Release, dated August 9, 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 9, 2007   By: /s/ Weiqiu Li
      Weiqiu Li
      Chief Executive Officer
       

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EXHIBIT INDEX

Exhibit No. Description
   
10.1 Home System Group Independent Director Agreement, dated as of August 7, 2007, by and between Home System Group and Richard Randall
   
10.2 Indemnification Agreement, dated as of August 7, 2007, by and between Home System Group and Richard Randall
   
99.1 Press Release, dated August 9, 2007

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EXHIBIT 10.1 HTML

exhibit101.htm


Exhibit 10.1


HOME SYSTEM GROUP

INDEPENDENT DIRECTOR AGREEMENT


      THIS AGREEMENT (“Agreement”) is entered into and is effective as of August 7, 2007, by and between Home System Group, a Nevada corporation (the “Company”) and Richard P. Randall, an individual resident in the State of Connecticut (“Director” or “Mr. Randall”).


Preliminary Statement


The Board of Directors of the Company desires to appoint Mr. Randall to fill an existing vacancy and to have Mr. Randall perform the duties of an independent director and Mr. Randall 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.


            NOW, THEREFORE, in consideration of the mutual promises and agreements

set forth below, the Company and Mr. Randall hereby agree as follows:


1.

Appointment.  The Board of Directors of the Company has appointed Mr. Randall, and Mr. Randall has agreed to accept his appointment, to serve as a member of the Board of Directors of the Company, effective as of the date of this agreement.   The Company requires that Mr. Randall 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.  Mr. Randall agrees to devote as much time as is necessary to perform completely the duties as a director of the Company, including duties as a member of the Audit Committee and such other committees as Mr. Randall may hereafter be appointed to.  Mr. Randall 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.

Compensation. For the duties and services to be performed by him under this agreement, the Company will pay to Mr. Randall, and Mr. Randall agrees to accept, the compensation described below in this Section 2.


a.

Directors’ Fees.  The Company will pay Mr. Randall a director's fee of $30,000 per annum, payable in equal monthly installments. This fee represents a retainer for services rendered as a member of its Board of Directors, and is in addition to any fees to which Mr. Randall may be entitled under guidelines and rules established by the Company from time to time for compensating non-employee directors for serving on, and attending meetings of, committees of its Board of Directors and the board of directors of its subsidiaries.

 


b.

Equity Component. In addition to the cash fee(s) described in subsection (a), on the date of this agreement, the Company will grant Mr. Randall options to purchase a total of 100,000 shares of the Company’s common stock. The exercise price of these options will be the closing sale price of a share of the Company’s common stock on the OTC Bulletin Board on the date of this agreement.  Options to purchase 33,333 shares shall vest and may be exercised immediately; options to purchase an additional 33,333 shares shall vest and may be exercised commencing July 1, 2008, and options to purchase the remaining 33,334 shares shall vest and may be exercised commencing July 1, 2009, provided that in the case of the options to vest in 2008 and 2009, Mr. Randall is still a director of or otherwise engaged by the Company on such dates.  Subject to the foregoing vesting provisions, the options may be exercised until June 1, 2017.


c.

Audit Committee.   Randall agrees to serve as Chairman of the Audit Committee and for so long as he serves in such position he will receive non-additional compensation.


3.

Expenses. The Company will reimburse Mr. Randall for reasonable expenses incurred by him in furtherance of his performance of duties hereunder, provided that such expenses are substantiated in accordance with the Company’s policies applicable to members of its Board of Directors.


4.

Fringe and Medical Benefits. Mr. Randall may participate in any of the Company's medical, dental and other benefit programs as are available to non-employee members of its Board.


5.

Term and Termination.


a.

General. The term of this Agreement will commence as of the date the Board of Directors appoints Mr. Randall a director of the Company and shall continue until the Director’s removal or resignation.  The Company has no obligation to cause the nomination or recommend the election of Mr. Randall to the Board for any period of time in the future. Upon the termination of Mr. Randall's tenure as a member of the Board, the Company will promptly pay to Mr. Randall, or to his estate if his service is terminated upon his death, all fees accrued for services rendered as a member of the Board and committees thereof and expense reimbursements due as of the date of termination.


b.

Termination.  With or without cause, the Company and Mr. Randall may each terminate this Agreement at any time upon ten (10) days written notice, and the Company shall be obligated to pay to Mr. Randall 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 Mr. Randall with immediate effect at any time for any reason.


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c.

Continuation of Health Benefits. To the extent that health insurance benefits are provided to Mr. Randall under Section 4 of this Agreement at the time Mr. Randall's tenure as a member of the Board terminates, other than as a result of his voluntary resignation, for a period of six-months immediately after termination, the Company will maintain in effect, and pay the cost associated with, health insurance for Mr. Randall with the same coverage provided him prior to termination (e.g. medical, dental, optical, mental health) and in all other respects significantly comparable to those in place immediately prior to termination


6.

Indemnification. The Company shall indemnify, defend and hold harmless Mr. Randall, 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 Mr. Randall’s official capacity and as to action in another capacity while holding such office.  The Company and Mr. Randall are executing the Indemnification Agreement in the form attached hereto as Exhibit A.


7.

Non-Exclusive. Nothing in this agreement will prevent Mr. Randall (1) from serving as an employee, officer or director of any other company, provided that such performance is consistent with Mr. Randall's duty of loyalty to the Company, (2) from serving on voluntary, community service committees and boards, and (3) from owning shares representing less than 5% of the outstanding equity securities of a company that is a competitor of the Company.  Mr. Randall will comply with and be bound by the Company's policies, procedures and practices applicable to members of its Board of Directors from time to time in effect during the term of this agreement.                                    


8.

Conflicts. Mr. Randall represents that his performance of this agreement will not conflict with or breach any other agreement to which he is a party or may be bound. Mr. Randall has not, and will not during the term of this agreement, enter into any oral or written agreement in conflict with any of the provisions of this agreement. Mr. Randall represents and warrants that he is not bound by any agreements which prohibit or restrict him from: (a) competing with, or in any way participating in a business that competes with, any former employer or business of any former employer to the extent that Mr. Randall's performance of his duties under this agreement would be deemed to constitute such competition; (b) soliciting personnel of a former employer or business to leave such former employer's employment or to leave such business; or (c) soliciting customers, suppliers, financing sources or other entities having a substantial relationship with a former employer or business.


9.

Confidentiality.  The Company and Mr. Randall each acknowledge that, in order for the intents and purposes of this Agreement to be accomplished, Mr. Randall 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”).  Mr. Randall 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.

 

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10.

Governing Law; Mediation & Arbitration. This agreement will be governed by, and construed in accordance with the laws of the State of New York, without regard to choice-of-law principles, as if made and to be performed solely in New York.


11.

Notices. All notices or other communications which are required or permitted hereunder will be in writing and sufficient if delivered personally or sent by air courier or first class certified or registered mail, return receipt requested and postage prepaid, addressed as follows:


           If to Mr. Randall, to:                  131 Peaceable Street

 Redding, Connecticut  06896


With a copy to:

Goetz Fitzpatrick Most & Bruckman

One Penn Plaza, Suite 4401

New York, New York 10119

Attn: Jack Most, Esq.


         

           If to the Company, to:              633 West Fifth Street Floor 2600

Los Angeles, CA 90071

                                                                Attention: President

        

            with a copy to

Thelen Reid Brown Raysman & Steiner LLP

701 Eighth Street, NW

Washington, DC  20001

Attn: Dawn M. Bernd-Schulz, Esq.


or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. All notices and other communications given to any party hereto in accordance with the provisions of this agreement shall be deemed to have been given on the date of delivery if personally delivered; on the business day after the date when sent if sent by air courier; and on the third business day after the date when sent if sent by mail, in each case addressed to such party as provided in this Section or in accordance with the latest written direction from such party.


12.

Entire Agreement. This agreement constitutes the sole agreement of the parties and supersedes all oral negotiations and prior writings, including any and all prior agreements between Mr. Randall and the Company, with respect to the subject matter hereof.


13.

Advice of Counsel. EACH PARTY TO THIS AGREEMENT ACKNOWLEDGES THAT, IN EXECUTING THIS AGREEMENT, SUCH PARTY HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS AGREEMENT. THIS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.


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14.

Counterparts. This agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.


15.

Amendments. No modification, waiver, amendment, discharge or change of this agreement shall be valid unless the same is in writing and signed by the party against which the enforcement of said modification, waiver, amendment, discharge or change is sought.


16.

Severability. If any portion of any provision of this agreement, or the application of such provision or any portion thereof to any person or circumstance shall be held invalid or unenforceable, the remaining portions of such provision or portion of such provisions of this agreement or the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those to which it is held invalid or unenforceable, shall not be effected thereby.


[signature page appears on the following page]


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The parties, by signing below, agree to the terms and conditions set forth in this agreement.


COMPANY:


Home System Group

 

By:/s/Weiqiu Li                                  


Name: Weiqiu Li

Title: Chairman and Chief Executive Officer

DIRECTOR:


 


/s/Richard P. Randall             


Richard P. Randall

                                              
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EXHIBIT A


Form of Indemnification Agreement


(See Attached)

 



EXHIBIT 10.2 HTML

exhibit102.htm


Exhibit 10.2



INDEMNIFICATION AGREEMENT


This Indemnification Agreement, dated as of August 7, 2007 is made by and between Home System Group, a Nevada corporation (the “Company”), and Richard P. Randall, 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.


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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:


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(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.


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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.


14.

Non-Exclusivity.


6
 


(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.

Effectivenss 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 or other communications which are required or permitted hereunder will be in writing and sufficient if delivered personally or sent by air courier or first class certified or registered mail, return receipt requested and postage prepaid, addressed as follows:


7
 


 

           If to Mr. Randall, to:                  131 Peaceable Street

 Redding, Connecticut  06896


With a copy to:

Goetz Fitzpatrick Most & Bruckman

One Penn Plaza, Suite 4401

New York, New York 10119

Attn: Jack Most, Esq.


         

           If to the Company, to:              633 West Fifth Street Floor 2600

Los Angeles, CA 90071

                                                                Attention: President

        

            with a copy to

Thelen Reid Brown Raysman & Steiner LLP

701 Eighth Street, NW

Washington, DC  20001

Attn: Dawn M. Bernd-Schulz, Esq.


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

INDEMNITEE:



 

/s/Richard P. Randall             


Richard P. Randall


9
 



PRESS RELEASE DATED AUGUST 9, 2007 HTML

exhibit991.htm


Exhibit 99.1

Home System Group, Inc. Appoints New Independent Director and Chairman of the Audit Committee

Independent Director brings over 40 Years of Industry Experience in Retail, Manufacturing, International Trade in addition to Corporate Governance and Capital Markets Expertise

LOS ANGELES, August 9, 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 Mr. Richard P. Randall as a new independent member of the Company’s Board of Directors and the Chairman of its new Audit Committee.

Mr. Randall’s career includes extensive financial and accounting experience as a Chief Financial Officer and Board Member for several U.S. publicly traded companies and he is currently Chairman of the Audit Committee for Steve Madden Ltd. a publicly traded international designer, marketer and retailer of footwear for women, men and children. From 2002 to 2005, Mr. Randall served as the Executive Vice President, Chief Operating Officer and Chief Financial Officer of Direct Holdings Worldwide, the parent of Lillian Vernon Corp. and Time Life, where he was responsible for orchestrating the sale of the Company, and from 2000 to 2001, Mr. Randall served as the Senior Vice President and the Chief Financial Officer of Coach, Inc, a publicly traded international designer and marketer of handbags and accessories, where he oversaw the auditing process, SEC compliance and was instrumental in the Company’s successful initial public offering (IPO). Mr. Randall has also provided consulting services to Supreme International (renamed Perry Ellis International), Mondo, Inc., and Revlon and is a member of the American Institute of CPAs and New York Society of CPAs. Mr. Randall received a degree in accounting in 1964, from the City University of New York, Baruch College and is a Certified Public Accountant.

"We are pleased with the addition of Mr. Randall to our Board of Directors," said Mr. Li Wei Qui, CEO and Chairman of Home System Group. "We believe that his experience in both the retail industry and the U.S. public markets will be an invaluable asset to Home System Group as we continue to execute our business plan as a publicly traded U. S. company."

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 the ability of Home System Group to expand its market share or otherwise achieve its commercial objectives, and regarding the business strategy, plans and objectives of the Company and its subsidiaries. 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]