SHARE EXCHANGE AGREEMENT AMONG HOME SYSTEM GROUP HOLY (H.K) LIMITED OCEANIC WELL PROFIT INC AND THE SHARE HOLDERS OF HOLY (H.K) LIMITED LISTED ON SCHEDULE 1 DATED AS OF December 11, 2006
EXHIBIT
10.3
AMONG
HOME
SYSTEM GROUP
HOLY
(H.K) LIMITED
OCEANIC
WELL PROFIT INC
AND
THE
SHARE HOLDERS OF HOLY (H.K) LIMITED LISTED ON
SCHEDULE
1
DATED
AS OF
December
11, 2006
TABLE
OF CONTENTS
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PAGE
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INDEX
OF SCHEDULES AND EXHIBITS
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..IV
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ARTICLE
I. EXCHANGE OF SHARES
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.1
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1.1
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Agreement
to Sell
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...1
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1.2
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Purchase
Price
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..1
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1.3
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Mechanics
of Exchange
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...2
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1.4
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No
Fractional Shares
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2
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ARTICLE
II. REPRESENTATIONS AND WARRANTIES OF OCEANIC WELL PROFIT
INC
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.2
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2.1
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Organization
and Qualification
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..3
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2.2
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Subsidiaries
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3
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2.3
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Articles
of Incorporation and Bylaws
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3
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2.4
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Authorization
and Validity of this Agreement
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3
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2.5
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No
Violation
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4
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2.6
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Capitalization
and Related Matters
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..4
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2.7
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Compliance
with Laws and Other Instruments
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..5
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2.8
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Certain
Proceedings
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.6
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2.9
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No
Brokers or Finders
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...6
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2.10
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Title
to and Condition of Properties
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6
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2.11
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Absence
of Undisclosed Liabilities
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..7
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2.12
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Changes
|
.7
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2.13
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Material
Contracts
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..8
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2.14
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Tax
Returns and Audits
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..9
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2.15
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Material
Assets. 10
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2.16
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Insurance
Coverage
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.10
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2.17
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Litigation;
Orders
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.11
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2.18
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Licenses
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...11
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2.19
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Interested
Party Transactions
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..11
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2.20
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Governmental
Inquiries
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.12
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2.21
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Bank
Accounts and Safe Deposit Boxes
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...12
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2.22
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Intellectual
Property
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..12
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2.23
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Stock
Option Plans; Employee Benefits
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..12
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2.24
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Employee
Matters
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13
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2.25
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Environmental
and Safety Matters
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...13
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2.26
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Material
Customers
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.14
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2.27
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Inventories
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14
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2.28
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Money
Laundering Laws
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..14
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2.29
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Disclosure
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.15
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2.30
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Finders
and Brokers
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15
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i
PAGE
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ARTICLE
III. REPRESENTATIONS AND WARRANTIES OF HOME SYSTEM GROUP
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16
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3.1
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Organization;
Good Standing
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16
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3.2
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HOME
SYSTEM GROUP Common Stock
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16
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3.3
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Authority;
Binding Nature of Agreements
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16
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3.4
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Non-Contravention;
Consents
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17
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3.5
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Finders
and Brokers
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18
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3.6
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Reports
and Financial Statements; Absence of Certain Changes
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18
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3.7
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Compliance
with Applicable Law
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19
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3.8
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Complete
Copies of Requested Reports
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19
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3.9
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Full
Disclosure
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19
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ARTICLE
IV. COVENANTS OF HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC..
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19
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4.1
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Access
and Investigation
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19
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4.2
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Operation
of Business
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20
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4.3
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Filings
and Consents; Cooperation
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21
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4.4
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Notification;
Updates to Disclosure Schedules
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22
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4.5
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Commercially
Reasonable Efforts
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23
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4.6
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Confidentiality;
Publicity
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23
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ARTICLE
V. COVENANTS OF HOME SYSTEM GROUP
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23
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5.1
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Notification
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23
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5.2
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Filings
and Consents; Cooperation
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24
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5.3
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Commercially
Reasonable Efforts
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24
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5.4
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Disclosure
of Confidential Information
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24
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5.5
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Indemnification
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25
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ARTICLE
VI. CLOSING CONDITIONS OF HOME SYSTEM GROUP
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27
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6.1
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Accuracy
of Representations and Warranties
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27
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6.2
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Additional
Conditions to Closing
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27
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6.3
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Performance
of Agreements
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28
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6.4
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Consents
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28
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6.5
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No
Material Adverse Change
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28
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6.6
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HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC Closing
Certificates
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28
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6.7
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Transactional
Agreements
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28
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6.8
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Resignation
of Directors and Officers
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29
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6.9
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Delivery
of Stock Certificates, Minute Book and Corporate Seal
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29
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ARTICLE
VII. CLOSING CONDITIONS OF THE SHAREHOLDERS
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29
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7.1
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Accuracy
of Representations and Warranties
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29
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7.2
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Additional
Conditions to Closing
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29
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7.3
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HOME
SYSTEM GROUP Closing Certificates
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30
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7.4
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No
Material Adverse Change
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30
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ii
PAGE
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7.5
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Performance
of Agreements
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30
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7.6
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Consents
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30
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7.7
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HOME
SYSTEM GROUP Stock
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31
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ARTICLE
VIII. FURTHER ASSURANCES
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.31
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ARTICLE
IX. TERMINATION
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31
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9.1
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Termination
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31
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9.2
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Termination
Procedures
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.32
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9.3
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Effect
of Termination
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..32
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ARTICLE
X. MISCELLANEOUS
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33
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10.1
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Survival
of Representations and Warranties
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.33
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10.2
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Expenses
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33
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10.3
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Entire
Agreement
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33
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10.4
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Counterparts
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33
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10.5
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Descriptive
Headings
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33
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10.6
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Notices
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34
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10.7
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Choice
of Law
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.34
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10.8
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Binding
Effect; Benefits
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34
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10.9
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Assignability
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.35
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10.10
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Waiver
and Amendment
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35
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10.11
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Attorneys'
Fees
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35
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10.12
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Severability
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35
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10.13
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Construction
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35
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COUNTERPART
SIGNATURE PAGE SHARE EXCHANGE AGREEMENT AMONG HOME SYSTEM GROUP, HOLY (H.K)
LIMITED, OCEANIC WELL PROFIT INC AND THE SHAREHOLDERS NAMED THEREIN
1
iii
INDEX
OF SCHEDULES AND EXHIBITS
Exhibits:
A.
Certain Definitions
Schedules:
1.
Shareholders of Holy (H.K) Limited and OCEANIC WELL PROFIT INC
2.
Holy
(H.K) Limited and Oceanic Well Profit Inc Disclosure Schedule
SHARE
EXCHAGE AGREEMENT
THIS
SHARE EXCHANGE AGREEMENT (the "AGREEMENT") dated as of December
11, 2006,
is
entered into by and among HOME SYSTEM GROUP, a Nevada corporation ("HOME SYSTEM
GROUP"), Holy (H.K) Limited, a HONG KONG corporation, OCEANIC WELL PROFIT INC,
incorporated in People’s Republic of China ("OCEANIC WELL PROFIT INC"), and the
shareholders of Holy (H.K) Limited listed on schedule 1 listed to this
agreement, (Each, a “ Shareholder” and, collectively the ‘Shareholders”)
RECITALS
A.
The
Shareholders own the number of shares of capital stock in Holy (H.K) Limited
(the "SHARES") set forth opposite each Shareholder's name on
Schedule 1,
which
Shares collectively constitute all of the issued and outstanding
Shares
of
capital stock in Holy (H.K) Limited.
B.
Holy
(H.K) Limited is a holding company and the only sole shareholder of OCEANIC
WELL
PROFIT INC. Holy (H.K) limited’s sole asset is its sole shareholdings in OCEANIC
WELL PROFIT INC
C.
HOME
SYSTEM GROUP desires to purchase from the Shareholders, and the Shareholders
desire to sell to HOME SYSTEM GROUP, the shares in
exchange for Home System Group’s ’s Common Stock, all on the terms and subject
to the conditions set forth in this Agreement (the "Exchange").
D.
As a
result of the Exchange, Home System Group will become the new major shareholder
of Holy (H.K) Limited, and through Holy (H.K) Limited, will own all the issued
and outstanding stock of OCEANIC WELL PROFIT INC.
E.
Certain Capitalized Terms used in this agreement are defined on Exhibit
A.
AGREEMENT
In
consideration of the agreements, provisions and covenants set forth below,
Home
System Group, Holy (H.K) Limited, shareholders and OCEANIC WELL PROFIT INC,
hereby agree as follows:
ARTICLE
I.
EXCHANGE
OF SHARES
1.1
AGREEMENT TO SELL.
Upon
the
terms and subject to all of the conditions contained herein, each of the
Shareholders hereby agrees to sell, assign, transfer and deliver to HOME SYSTEM
GROUP, and HOME SYSTEM GROUP hereby agrees to purchase and accept from each
of
the Shareholders, on the Closing Date, the Shares.
1.2
PURCHASE PRICE.
As
full
consideration for the sale, assignment, transfer and delivery of the Shares
by
the Shareholders to HOME SYSTEM GROUP, and upon the terms and subject to all
of
the conditions contained herein, HOME SYSTEM GROUP shall issue to the
Shareholders 42,500,000 shares of RESTRICTED HOME SYSTEM GROUP COMMON STOCK
(the
"ACQUISITION SHARES") and pay cash consideration of $3,000,000 to the
Shareholders. The parties understand and acknowledge that such exchange is
based
upon an approximate valuation of HOME SYSTEM GROUP at US $7,919,180 and OCEANIC
WELL PROFIT INC at US$--------------------20.000.000
1.3
MECHANICS OF EXCHANGE.
(a)
At
the Closing, each Shareholder shall be entitled to surrender the certificate
or
certificates that immediately prior to the Closing represented the Holy (H.K)
Limited Common Stock (the "CERTIFICATES") to the exchange agent designated
by
HOME SYSTEM GROUP in exchange for the Acquisition Shares.
(b)
Promptly after the Closing, HOME SYSTEM GROUP or its designated exchange agent
shall make available to each Shareholder a letter of transmittal and
instructions for use in effecting the surrender of Certificates in exchange
for
the Acquisition Shares. Upon surrender of a Certificate to such exchange agent
together with the letter of transmittal, duly executed, the Shareholder shall
be
entitled to receive in exchange therefore such number of Acquisition Shares
as
such Shareholder has the right to receive in respect of the Certificate so
surrendered pursuant to the provisions of this Article I.
1.4
NO
FRACTIONAL SHARES.
No
fraction of a share of HOME SYSTEM GROUP Common Stock shall be issued in the
Exchange. In lieu of fractional shares, the Shareholders upon surrender of
their
Certificates as set forth in Section 1.3 shall be paid an amount in cash,
without interest, rounded to the nearest cent, determined by multiplying the
fractional interest to which such Shareholder would otherwise be entitled by
the
Average HOME SYSTEM GROUP Stock Price as of the date on which this Agreement
has
been signed by all parties.
1.5
CLOSING.
The
closing of the transactions contemplated by this Agreement (the "CLOSING")
shall
take place in Zhongshan China at 11:00 a.m., local time, on or before January
26, 2006 (the "CLOSING DATE"); provided, however, that if all of the other
conditions set forth in Articles VI and VII hereof are not satisfied or waived,
unless this agreement has been terminated under Section 9 hereof, or at such
date, the Closing Date shall be the business day following the day on which
all
such conditions have been satisfied or waived, or at such other date, time
and
place as HOME SYSTEM GROUP, Holy (H.K) Limited, and OCEANIC WELL PROFIT INC
and
the Shareholders shall agree.
ARTICLE
II.
REPRESENTATIONS
AND WARRANTIES OF HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
Except
as
set forth in the Disclosure Schedule attached hereto provided by Holy (H.K)
Limited and OCEANIC WELL PROFIT INC (the “Holy (H.K) Limited” and OCEANIC WELL
PROFIT INC DISCLOSURE SCHEDULE"), the parts of which are numbered to correspond
to the section numbers of this Agreement, each of Holy (H.K) Limited, OCEANIC
WELL PROFIT INC and the Shareholders represents and warrants jointly and
severally to HOME SYSTEM GROUP as follows:
2
2.1
ORGANIZATION AND QUALIFICATION.
Holy
(H.K) Limited is duly incorporated, validly and in good standing existing under
the laws of HONG KONG, OCEANIC WELL PROFIT INC is duly incorporated, validly
and
in good standing existing under the laws of People’s Republic of China. Both
have all requisite authority and power (corporate and other), governmental
licenses, authorizations, consents and approvals to carry on its business as
presently conducted and as contemplated to be conducted, to own, hold and
operate its properties and assets as now owned, held and operated by it, to
enter into this Agreement, to carry out the provisions hereof except where
the
failure to be in good standing or to have such governmental licenses,
authorizations, consents and approvals will not, in the aggregate, either (i)
have a Material Adverse Effect on the business, assets or financial condition
of
Holy (H.K) Limited and OCEANIC WELL PROFIT INC, or (ii) impair the ability
of
Holy (H.K) Limited or OCEANIC WELL PROFIT INC to perform its material
obligations under this Agreement. Holy (H.K) Limited and OCEANIC WELL PROFIT
INC
are duly qualified, licensed or domesticated as a foreign corporation in good
standing in each jurisdiction wherein the nature of its activities or its
properties owned or leased requires such qualification, licensing or
domestication, except where the failure to be so qualified, licensed or
domesticated will not have a Material Adverse Effect. Set forth on Part 2.1
of
Holy (H.K) Limited and OCEANIC WELL PROFIT INC Disclosure Schedule is a list
of
those jurisdictions in which each of Holy (H.K) Limited and OCEANIC WELL PROFIT
INC presently conduct its business, owns, holds and operates its properties
and
assets.
2.2
SUBSIDIARIES.
Holy
(H.K) Limited and OCEANIC WELL PROFIT INC do not own directly or indirectly,
any
equity or other ownership interest in any corporation, partnership, joint
venture or other entity or enterprise. Holy (H.K) Limited or OCEANIC WELL PROFIT
INC does not have any direct or indirect interests of stock ownership or
otherwise in any corporation, partnership, joint venture, firm, association
or
business enterprise, and is not party to any agreement to acquire such an
interest.
2.3
ARTICLES OF INCORPORATION AND BYLAWS.
The
copies of the Articles of Incorporation and bylaws of Holy (H.K) Limited and
OCEANIC WELL PROFIT INC (collectively, the "ORGANIZATIONAL DOCUMENTS") that
have
been delivered to HOME SYSTEM GROUP prior to the execution of this Agreement
are
true and complete and have not been amended or repealed. Holy (H.K) Limited
or
OCEANIC WELL PROFIT INC is not in violation or breach of any of the provisions
of the Organizational Documents, except for such violations or breaches which,
in the aggregate, will not have a Material Adverse Effect on Holy (H.K) Limited
or OCEANIC WELL PROFIT INC.
2.4
AUTHORIZATION AND VALIDITY OF THIS AGREEMENT.
This
Agreement and each of the Transaction Agreements constitute the legal, valid
and
binding obligation of each person or entity who is a party thereto (other than
HOME SYSTEM GROUP), enforceable against each such person or entity in accordance
with its terms, except as such enforcement is limited by general equitable
principles, or by bankruptcy, insolvency and other similar laws affecting the
enforcement of creditors rights generally. Each of the Shareholders, Holy (H.K)
Limited, OCEANIC WELL PROFIT INC has all requisite legal capacity to execute
and
deliver this Agreement and the Transaction Agreements to which he or she is
a
party, and to perform its, his or her obligations hereunder and thereunder.
The
execution and delivery by each of Holy (H.K) Limited, OCEANIC WELL PROFIT INC
and each Shareholders of this Agreement and the Transaction Agreements (to
the
extent either is a party thereto), and the consummation of the transactions
contemplated herein and therein (the "Transactions") have been authorized by
all
necessary corporate or other action on the part of Holy (H.K) Limited, OCEANIC
WELL PROFIT INC and each of the Shareholders. This Agreement and the Transaction
Agreements have been duly executed and delivered by the parties thereto (other
than HOME SYSTEM GROUP).
3
2.5
NO
VIOLATION.
Neither
the execution nor delivery of this Agreement or the Transaction Agreements,
nor
the consummation or performance of any of the Transactions by HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC or the Shareholders will directly or indirectly:
(i)
violate or conflict with any provision of the Organizational Documents of HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC; (B) result in (with or without notice
or lapse of time) a violation or breach of, or conflict with or constitute
a
default or result in the termination or in a right of termination or
cancellation of, or accelerate the performance required by, or require notice
under, any agreement, promissory note, lease, instrument or arrangement to
which
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or any of its assets are bound
or
result in the creation of any Liens upon HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC or any of its assets; (C) violate any order, writ, judgment,
injunction, ruling, award or decree of any Governmental Body; ("Governmental
Body"); (D) violate any statute, law or regulation of any jurisdiction as such
statute, law or regulation that relates to the Shareholders, HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC or any of the assets of HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC; or (E) result in cancellation, modification, revocation
or suspension of any permits, licenses, registrations, consents, approvals,
authorizations or certificates issued or granted by any Governmental Body which
are held by or granted to the Shareholders, or HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC or which are necessary for the conduct of HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC's business; or
(ii)
to
the knowledge of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or any of the
Shareholders, cause HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC to become
subject to, or to become liable for the payment of, any Tax (as hereinafter
defined) or cause any of the assets owned by HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC to be reassessed or revalued by any taxing authority or other
Governmental Body.
None
of
HOLY (H.K) LIMITED, OCEANIC WELL PROFIT INC or the Shareholders is or will
be
required to give any notice to or obtain any approval, consent, ratification,
waiver or other authorization (a "Consent") from any person or entity
(including, without limitation, any Governmental Body) in connection with (i)
the execution and delivery of this Agreement or any of the Transaction
Agreements, or (ii) the consummation or performance of any of the Transactions.
2.6
CAPITALIZATION AND RELATED MATTERS.
(a)
Capitalization. The registered capital stock of HOLY (H.K) LIMITED consists
of
HK Yuan 10,000
in
fully-paid shares. Except as set forth in the preceding sentence, no other
class
of capital stock or other security of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC is authorized, issued, reserved for issuance or outstanding. The
Shareholders, as of the Closing Date, are the lawful, record and beneficial
owners of the number of HOLY (H.K) LIMITED Common Stock set forth opposite
each
Seller's name on Schedule 1 attached hereto as of the Closing Date, is the
lawful, record and beneficial owner of 100% of the issued and outstanding shares
of OCEANIC WELL PROFIT INC Common Stock. The Shareholders have, as of the date
hereof and as of the Closing Date, valid and marketable title to their
respective Shares, free and clear of all Liens (including, without limitation,
any claims of spouses under applicable community property laws) and are the
lawful, record and beneficial owners of all of the Shares. Except as is issued
to and held by the Shareholders or other security of HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC, as applicable, is authorized, issued, reserved for
issuance or outstanding. At the Closing, HOME SYSTEM GROUP will be vested with
good and marketable title to the Shares, free and clear of all Liens (including,
without limitation, any claims of spouses under applicable community property
laws). No legend or other reference to any purported Lien appears upon any
certificate representing the Shares. Each of the Shares has been duly authorized
and validly issued and is fully paid and no assessable. None of the outstanding
capital or other securities of HOLY (H.K) LIMITED or OCEANIC WELL PROFIT INC
was
issued, redeemed or repurchased in violation of the Securities Act of 1933,
as
amended (the "Securities Act"), or any other securities or "blue sky" laws.
4
(b)
No
Redemption Requirements. There are no authorized or outstanding options,
warrants, equity securities, calls, rights, commitments or agreements of any
character by which HOLY (H.K) LIMITED or OCEANIC WELL PROFIT INC or any of
the
Shareholders is obligated to issue, deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock or other securities of HOLY
(H.K)
LIMITED or OCEANIC WELL PROFIT INC. There are no outstanding contractual
obligations (contingent or otherwise) of HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC to retire, repurchase, redeem or otherwise acquire any outstanding
shares of capital stock of, or other ownership interests in, HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC or to provide funds to or make any investment (in
the form of a loan, capital contribution or otherwise) in any other entity.
2.7
COMPLIANCE WITH LAWS AND OTHER INSTRUMENTS.
Except
as
would not have a Material Adverse Effect, the business and operations of HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC have been and are being conducted
in
accordance with all applicable foreign, federal, provincial and local laws,
rules and regulations and all applicable orders, injunctions, decrees, writs,
judgments, determinations and awards of all courts and governmental agencies
and
instrumentalities. There are no permits, bonuses, registrations, consents,
approvals, authorizations, certificates, or any waiver of the foregoing, which
are required to be issued or granted by a Governmental Body for the conduct
of
the Business as presently conducted or the ownership of the assets of HOLY
(H.K)
LIMITED AND OCEANIC WELL PROFIT INC. Except as would not have a Material Adverse
Effect, HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is not, and has not
received notice alleging that it is, in violation of, or (with or without notice
or lapse of time or both) in default under, or in breach of, any term or
provision of the Organizational Documents or of any indenture, loan or credit
agreement, note, deed of trust, mortgage, security agreement or other material
agreement, lease, license or other instrument, commitment, obligation or
arrangement to which HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is a party
or by which any of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC's properties,
assets or rights are bound or affected. To the knowledge of HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC, no other party to any material contract, agreement,
lease, license, commitment, instrument or other obligation to which HOLY (H.K)
LIMITED or OCEANIC WELL PROFIT INC is a party is (with or without notice or
lapse of time or both) in default thereunder or in breach of any term thereof.
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is not subject to any obligation
or restriction of any kind or character, nor is there, to the knowledge of
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC, any event or circumstance relating
to
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC that materially and adversely
affects in any way its business, properties, assets or prospects or that
prohibits HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC from entering into
this
Agreement and the Transaction Agreements or would prevent or make burdensome
its
performance of or compliance with all or any part of this Agreement, the
Transaction Agreements or the consummation of the Transactions contemplated
hereby or thereby.
5
2.8
CERTAIN PROCEEDINGS.
There
are
no outstanding or pending Proceeding that has been commenced against or
involving HOLY (H.K) LIMITED or OCEANIC WELL PROFIT INC or any of its assets
and, to the knowledge of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and
the
Shareholders, no matters of the foregoing nature are contemplated or threatened.
None of HOLY (H.K) LIMITED, OCEANIC WELL PROFIT INC or the Shareholders have
been charged with, and is not threatened with, or under any investigation with
respect to, any allegation concerning any violation of any provision of any
federal, provincial, local or foreign law, regulation, ordinance, order or
administrative ruling, and is not in default with respect to any order, writ,
injunction or decree of any Governmental Body.
2.9
NO
BROKERS OR FINDERS.
None
of
the HOLY (H.K) LIMITED, OCEANIC WELL PROFIT INC, the Shareholders, or any
officer, director, independent contractor, consultant, agent or employee of
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC has agreed to pay, or has taken any
action that will result in any person or entity becoming obligated to pay or
entitled to receive, any investment banking, brokerage, finder's or similar
fee
or commission in connection with this Agreement or the Transactions. HOLY (H.K)
LIMITED, OCEANIC WELL PROFIT INC and the Shareholders shall jointly and
severally indemnify and hold HOME SYSTEM GROUP harmless against any liability
or
expense arising out of, or in connection with, any such claim.
2.10
TITLE TO AND CONDITION OF PROPERTIES.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC have good, valid and marketable title
to all of its properties and assets (whether real, personal or mixed, and
whether tangible or intangible) reflected as owned in its books and records,
free and clear of all Liens. HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
owns
or holds under valid leases or other rights to use all real property, plants,
machinery, equipment and all assets necessary for the conduct of its business
as
presently conducted, except where the failure to own or hold such property,
plants, machinery, equipment and assets would not have a Material Adverse Effect
on HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC. No Person other than HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC owns or has any right to the use
or
possession of the assets used in HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC's business. The material buildings, plants, machinery and equipment
necessary for the conduct of the business of HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC as presently conducted are structurally sound, are in good operating
condition and repair and are adequate for the uses to which they are being
put
or would be put in the Ordinary Course of Business, in each case, taken as
a
whole, and none of such buildings, plants, machinery or equipment is in need
of
maintenance or repairs, except for ordinary, routine maintenance and repairs
that are not material in nature or cost.
6
2.11
ABSENCE OF UNDISCLOSED LIABILITIES.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC have no debt, obligation or liability
(whether accrued, absolute, contingent, liquidated or otherwise, whether
asserted or unasserted, whether due or to become due, whether or not known
to
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC) arising out of any transaction
entered into prior to the Closing Date or any act or omission prior to the
Closing Date which individually or taken together would constitute a Material
Adverse Effect on HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and have no
debt, obligation or liability to each other or any of the Shareholders or their
affiliates, except to the extent specifically set forth on or reserved against
on the Balance Sheet of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC.
The
financial statements are consistent with the books and records of HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC and fairly present in all material respects
the financial condition, assets and liabilities of HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC, as applicable, taken as a whole, as of the dates and
periods indicated, and were prepared in accordance with GAAP (except as
otherwise indicated therein or in the notes thereto).
2.12
CHANGES.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC has no Change, since 1 November,
2006:
(a)
Ordinary Course of Business. Conducted its business or entered into any
transaction other than in the Ordinary Course of Business, except for this
Agreement.
(b)
Adverse Changes. Suffered or experienced any change in, or affecting, its
condition (financial or otherwise), properties, assets, liabilities, business,
operations, results of operations or prospects which would have a Material
Adverse Effect;
(c)
Loans. Made any loans or advances to any Person other than travel advances
and
reimbursement of expenses made to employees, officers and directors in the
Ordinary Course of Business;
(d)
Compensation and Bonuses. Made any payments of any bonuses or compensation
other
than regular salary payments, or increase in the salaries, or payment on any
of
its debts in the Ordinary Course of Business, to any of its shareholders,
directors, officers, employees, independent contractors or consultants or entry
into by it of any employment, severance, or similar contract with any director,
officer, or employee, independent contractor or consultant; Adopted, or
increased in the payments to or benefits under, any profit sharing, bonus,
deferred compensation, savings, insurance, pension, retirement, or other
employee benefit plan for or with any of its employees;
(e)
Liens. Created or permitted to exist any Lien on any of its properties or assets
other than Permitted Liens;
(f)
Capital Stock. Issued, sold, disposed of or encumbered, or authorized the
issuance, sale, disposition or encumbrance of, or granted or issued any option
to acquire any shares of its capital stock or any other of its securities or
any
Equity Security, or altered the term of any of its outstanding securities or
made any change in its outstanding shares of capital stock or its
capitalization, whether by reason of reclassification, recapitalization, stock
split, combination, exchange or readjustment of shares, stock dividend or
otherwise; changed its authorized or issued capital stock; granted any stock
option or right to purchase shares of its capital stock; issued any security
convertible into any of its capital stock; granted any registration
rights
with respect to shares of its capital stock; purchased, redeemed, retired,
or
otherwise acquired any shares of its capital stock; declared or paid any
dividend or other distribution or payment in respect of shares of capital stock
of any other entity;
7
(g)
Dividends. Declared, set aside, made or paid any dividend or other distribution
to any of its shareholders;
(h)
Material Contracts. Terminated or modified any of its Material Contract except
for termination upon expiration in accordance with the terms of such agreements,
a description of which is included in the HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC's Disclosure Schedule;
(i)
Claims. Released, waived or cancelled any claims or rights relating to or
affecting HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC in excess of $10,000
in
the aggregate or instituted or settled any Proceeding involving in excess of
$10,000 in the aggregate;
(j)
Discharged Liabilities. Paid, discharged, cancelled, waived or satisfied any
claim, obligation or liability in excess of $10,000 in the aggregate, except
for
liabilities incurred prior to the date of this Agreement in the Ordinary Course
of Business;
(k)
Indebtedness. Created, incurred, assumed or otherwise become liable for any
Indebtedness or commit to any endeavor involving a commitment in excess of
$10,000 in the aggregate, other than contractual obligations incurred in the
Ordinary Course of Business;
(l)
Guarantees. Guaranteed or endorsed in a material amount any obligation or net
worth of any Person;
(m)
Acquisitions. Acquired the capital stock or other securities or any ownership
interest in, or substantially all of the assets of, any other Person;
(n)
Accounting. Changed its method of accounting or the accounting principles or
practices utilized in the preparation of its financial statements, other than
as
required by GAAP;
(o)
Agreements. Entered into any agreement, or otherwise obligated itself, to do
any
of the foregoing.
2.13
MATERIAL CONTRACTS.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC has delivered to HOME SYSTEM GROUP,
prior to the date of this Agreement, true, correct and complete copies of each
of its Material Contracts.
(a)
No
Defaults. The Material Contracts of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC are valid and binding agreements of HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC, as applicable, and are in full force and effect and are enforceable
in accordance with their terms. Except as would not have a Material Adverse
Effect, HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC are not in breach or
default of any of its Material Contracts to which it is a party and, to the
knowledge of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, no other party
to
any of its Material Contracts is in breach or default thereof. Except as would
not have a Material Adverse Effect, no event has occurred or circumstance has
existed that (with or without notice or lapse of time) would (a) contravene,
conflict with or result in a violation or breach of, or become a default or
event of default under, any provision of any of its Material Contracts or (b)
permit HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or any other Person the
right to declare a default or exercise any remedy under, or to accelerate the
maturity or performance of, or to cancel, terminate or modify any of its
Material Contracts. HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC has not
received any notice and have no knowledge of any pending or threatened
cancellation, revocation or termination of any of its Material Contracts to
which it is a party, and there are no renegotiations of, or attempts to
renegotiate.
8
2.14
TAX
RETURNS AND AUDITS.
(a)
Tax
Returns. (a) All material Tax Returns required to be filed by or on behalf
of
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC has been timely filed and all
such Tax Returns were (at the time they were filed) and are true, correct and
complete in all material respects; (b) all Taxes of HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC required to have been paid (whether or not reflected
on
any Tax Return) has been fully and timely paid, except those Taxes which are
presently being contested in good faith or for which an adequate reserve for
the
payment of such Taxes has been established on HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC Balance Sheet; (c) no waivers of statutes of limitation have
been given or requested with respect to HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC in connection with any Tax Returns covering HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC or with respect to any Taxes payable by it; (d) no
Governmental Body in a jurisdiction where HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC does not file Tax Returns has made a claim, assertion or threat
to
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC that HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC is or may be subject to taxation by such jurisdiction;
(e) HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC has duly and timely collected
or withheld, paid over and reported to the appropriate Governmental Body all
amounts required to be so collected or withheld for all periods under all
applicable laws; (f) there are no Liens with respect to Taxes on the property
or
assets of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC other than Permitted
Liens; (g) there are no Tax rulings, requests for rulings, or closing agreements
relating to HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC for any period (or
portion of a period) that would affect any period after the date hereof; and
(h)
any adjustment of Taxes of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC made
by a Governmental Body in any examination that HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC is required to report to the appropriate provincial, local
or
foreign taxing authorities has been reported, and any additional Taxes due
with
respect thereto have been paid. No state of fact exists or has existed which
would constitute ground for the assessment of any tax liability by any
Governmental Body. All Tax Returns filed by HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC are true, correct and complete.
(b)
No
Adjustments, Changes. Neither HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
nor
any other Person on behalf of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
(a)
has executed or entered into a closing agreement pursuant to Section 7121 of
the
Code or any predecessor provision thereof or any similar provision of
provincial, local or foreign law; or (b) has agreed to or is required to make
any adjustments pursuant to Section 481(a) of the Code or any similar provision
of provincial, local or foreign law.
(c)
No
Disputes. There is no pending audit, examination, investigation, dispute,
proceeding or claim with respect to any Taxes of or Tax Return filed or required
to be filed by HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, nor is any such
claim or dispute pending or contemplated. HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC has made available to HOME SYSTEM GROUP true, correct and complete
copies of all Tax Returns, examination reports and statements of deficiencies
assessed or asserted against or agreed to by HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC since January 1, 2001, and any and all correspondence with respect
to
the foregoing. HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC does not have
any
outstanding closing agreement, ruling request, request for consent to change
a
method of accounting, subpoena or request for information to or from a
Governmental Body in connection with any Tax matter.
9
(d)
No
Tax Allocation, Sharing. HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is
not a
party to any Tax allocation or sharing agreement. Other than with respect to
the
Tax Group of which HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is the common
parent, HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC (a) has not been a member
of a Tax Group filing a consolidated income Tax Return under
Section
1501 of the Code (or any similar provision of provincial, local or foreign
law),
and (b) do not have any liability for Taxes for any Person under Treasury
Regulations Section 1.1502-6 (or any similar provision of provincial, local
or
foreign law) as a transferee or successor, by contract or otherwise.
2.15
MATERIAL ASSETS.
The
financial statements of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC reflect
the material properties and assets (real and personal) owned or leased by them.
2.16
INSURANCE COVERAGE.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC has made available to HOME SYSTEM
GROUP, prior to the date of this Agreement, true, correct and complete copies
of
all insurance and general liability policies maintained by HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC on their properties and assets all claims made
under
any such current or prior insurance policies. All of such policies (a) taken
together, provide adequate insurance coverage for the properties, assets and
operations of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC for all risks
normally insured against by a Person carrying on the same business as HOLY
(H.K)
LIMITED AND OCEANIC WELL PROFIT INC, and (b) are sufficient for compliance
with
all applicable Laws and Material Contracts of HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC. All of such policies are valid, outstanding and in full force
and effect and, by their express terms, will continue in full force and effect
following the consummation of the transactions contemplated by this Agreement.
Except as set forth on Schedule 3.19, HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC has not received and has no knowledge of (a) any refusal of coverage or
any
written notice that a defense will be afforded with reservation of rights,
or
(b) any notice of cancellation or any other indication in writing or otherwise
that any insurance policy is no longer in full force or effect or will not
be
renewed or that the issuer of any policy is not willing or able to perform
its
obligations thereunder. All premiums due on such insurance policies on or prior
to the date hereof have been paid. There are no, HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC and the Shareholders have no knowledge of any circumstances
or
facts which, with or without notice of lapse of time or both would lead to
any:
(i) pending or threatened claims with respect to HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC or their properties or assets under any such insurance policies;
(ii) claims as to which the insurers have notified HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC that they intend to deny liability; and (iii) existing
defaults on the part of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC under
any
such insurance policies.
10
2.17
LITIGATION; ORDERS.
There
is
no Proceeding (whether federal, provincial, local or foreign) pending or, to
the
knowledge of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, threatened or
appealable against or affecting HOLY (H.K) LIMITED, OCEANIC WELL PROFIT INC
or
any of its properties, assets, business or employees. To the knowledge of HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC, there is no fact that might result
in
or form the basis for any such Proceeding. HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC is not subject to any Orders and have not received any written
opinion or memorandum or legal advice from their legal counsel to the effect
that HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is exposed, from a legal
standpoint, to any liability which would be material to its business. HOLY
(H.K)
LIMITED AND OCEANIC WELL PROFIT INC is not engaged in any legal action to
recover monies due it or for damages sustained by any of them.
2.18
LICENSES.
Except
as
would not have a Material Adverse Effect, each of HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC possesses from the appropriate Governmental Body all licenses,
permits, authorizations, approvals, franchises and rights that are necessary
for
it to engage in its business as currently conducted and to permit it to own
and
use its properties and assets in the manner in which it currently owns and
uses
such properties and assets (collectively, "PERMITS"). Except as would not have
a
Material Adverse Effect, HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC has
not
received any written notice from any Governmental Body or other Person that
there is lacking any license, permit, authorization, approval, franchise or
right necessary for HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC to engage
in
its business as currently conducted and to permit HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC to own and use its properties and assets in the manner in which
it currently owns and uses such properties and assets. Except as would not
have
a Material Adverse Effect, the Permits are valid and in full force and effect.
Except as would not have a Material Adverse Effect, no event has occurred or
circumstance exists that may (with or without notice or lapse of time): (a)
constitute or result, directly or indirectly, in a violation of or a failure
to
comply with any Permit; or (b) result, directly or indirectly, in the
revocation, withdrawal, suspension, cancellation or termination of, or any
modification to, any Permit. HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
has
not received any written notice from any Governmental Body or any other Person
regarding: (a) any actual, alleged, possible or potential contravention of
any
Permit; or (b) any actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination of, or modification to, any
Permit. All applications required to have been filed for the renewal of such
Permits have been duly filed on a timely basis with the appropriate Persons,
and
all other filings required to have been made with respect to such Permits have
been duly made on a timely basis with the appropriate Persons. All Permits
are
renewable by their terms or in the Ordinary Course of Business without the
need
to comply with any special qualification procedures or to pay any amounts other
than routine fees or similar charges, all of which have, to the extent due,
been
duly paid.
2.19
INTERESTED PARTY TRANSACTIONS.
No
officer, director or shareholder of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC or any Affiliate, Related Person or "associate" (as such term is defined
in
Rule 405 of the Commission under the Securities Act) of any such Person, either
directly or indirectly, (1) has an interest in any Person which (a) furnishes
or
sells services or products which are furnished or sold or are proposed to be
furnished or sold by HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, or (b)
purchases from or sells or furnishes to, or proposes to purchase from, sell
to
or furnish HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC any goods or services;
(2) has a beneficial interest in any contract or agreement to which HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC is a party or by which it may be bound
or
affected; or (3) is a party to any material agreements, contracts or commitments
in effect as of the date hereof with HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC. "Related Person" means: (i) with respect to a particular individual, the
individual's immediate family which shall include the individual's spouse,
parents, children, siblings, mothers and fathers-in-law, sons and
daughters-in-law, and brothers and sisters-in-law; and
(ii)
with
respect to a specified individual or entity, any entity or individual that,
directly or indirectly, controls, is controlled by, or is under common control
with such specified entity or individual.
11
2.20
GOVERNMENTAL INQUIRIES.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC has made available to HOME SYSTEM
GROUP a copy of each material written inspection report, questionnaire, inquiry,
demand or request for information received by HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC from (and the response of HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC thereto), and each material written statement, report or other
document filed by HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC with, any
Governmental Body since November 1, 2006.
2.21
BANK
ACCOUNTS AND SAFE DEPOSIT BOXES.
Part
2.22
of the HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC Disclosure Schedule
discloses the title and number of each bank or other deposit or financial
account, and each lock box and safety deposit box used by HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC, the financial institution at which that account or
box
is maintained and the names of the persons authorized to draw against the
account or otherwise have access to the account or box, as the case may be.
2.22
INTELLECTUAL PROPERTY.
Any
Intellectual Property HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC uses in
its
business as presently conducted is owned by HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC or properly licensed.
2.23
STOCK OPTION PLANS; EMPLOYEE BENEFITS.
(a)
Set
forth on Part 2.23 of the HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
Disclosure Schedule is a complete list of all stock option plans providing
for
the grant by HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC of stock options
to
directors, officers or employees. All such stock option plans are Approved
Plans.
(b)
Except as set forth on Part 2.23 of the HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC Disclosure Schedule, and HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC do not have any employee benefit plans or arrangements covering their
present and former employees or providing benefits to such persons in respect
of
services provided to HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC. and HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC have no commitment, whether formal
or
informal and whether legally binding or not, to create any additional plan,
arrangement or practice similar to the Approved Plans.
(c)
The
consummation of the transactions contemplated hereby will not result in (a)
any
payment (including, without limitation, severance, unemployment compensation
or
bonus payments) becoming due from HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC
or due to any Person, (b) any increase in the amount of compensation or benefits
payable to any Person or (c) any acceleration of the vesting or timing of
payment of any compensation, award or determination of options, warrants,
rights, severance payments or other contingent obligations of any nature
whatsoever of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC in favor of any
Person. No agreement, arrangement or other contract of HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC provides benefits or payments contingent upon, triggered
by, or increased as a result of a change in the ownership or effective control
of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC.
12
(d)
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC is not a party to or bound by any
written or oral agreement or understanding to employ, subsequent to the Closing,
any of its respective present or former directors, officers, independent
contractors, consultants, agents or employees.
2.24
EMPLOYEE MATTERS
(a)
No
former or current employee of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
is
a party to, or is otherwise bound by, any agreement or arrangement (including,
without limitation, any confidentiality, non-competition or proprietary rights
agreement) that in any way adversely affected, affects, or will affect (i)
the
performance of his, her or its duties to HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC, or (ii) the ability of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC to conduct its business.
(b)
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC has not employees, directors,
officers, consultants, independent contractors, representatives or agents whose
contract of employment or engagement cannot be terminated by three months'
notice. (c) HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is not required
or
obligated to pay, and since November 1, 2006, have not paid any moneys other
than in respect of remuneration, pension or other benefits pursuant to plans
described in Part 2.23 of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
Disclosure Schedule, to or for the benefit of, any director, officer, employee,
consultant, independent contractor, representative or agent of HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC. (d) HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC is in compliance with all applicable laws respecting employment
and
employment practices, terms and conditions or employment and wages and hours,
and are not engaged in any unfair labor practice. There is no labor strike,
dispute, shutdown or stoppage actually pending or, to the knowledge of HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC or the Shareholders, threatened
against or affecting HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC.
2.25
ENVIRONMENTAL AND SAFETY MATTERS.
Except
as would not have a Material Adverse Effect:
(a)
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC has at all time been and is in
compliance with all Environmental Laws and Orders applicable to HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC, as applicable.
(b)
There
are no Proceedings pending or, to the knowledge of HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC, threatened against HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC alleging the violation of any Environmental Law or Environmental
Permit applicable to HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or alleging
that HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is a potentially responsible
party for any environmental site contamination. None of HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC or the Shareholders are aware of, or has ever received
notice of, any past, present or future events, conditions, circumstances,
activities, practices, incidents, actions or plans which may interfere with
or
prevent continued compliance, or which may give rise to any common law or legal
liability, or otherwise form the basis of any claim, action, suit, proceeding,
hearing or investigation, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the
emission, discharge, release or threatened release into the environment, of
any
pollutant, contaminant, or hazardous or toxic material or waste.
13
(c)
Neither this Agreement nor the consummation of the transactions contemplated
by
this Agreement shall impose any obligations to notify or obtain the consent
of
any Governmental Body or third Persons under any Environmental Laws applicable
to the COMPANY.
2.26
MATERIAL CUSTOMERS.
Since
November 2006, none of the Material Customers (as hereinafter defined) of HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC has notified any of HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC or the Shareholders of their intent to terminate
their business with HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC business
because of any dissatisfaction on the part of any such person or entity. The
Transactions have not caused any of the Material Customers of HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC to terminate or provide notice of their intent
or
threaten to terminate their business with HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC or to notify HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or the
Shareholders of their intent not to continue to do such business with HOLY
(H.K)
LIMITED AND OCEANIC WELL PROFIT INC after the Closing. As used herein, "Material
Customers" means those customers from whom HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC derives annual revenues in excess of $500,000.
2.27
INVENTORIES.
All
inventories of COMPANY are of good, usable and merchantable quality in all
material respects, and, except as set forth in the HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC Disclosure Schedule, do not include a material amount
of
obsolete or discontinued items. Except as set forth in the HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC Disclosure Schedule, (a) all such inventories are
of
such quality as to meet in all material respects the quality control standards
of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, (b) all such inventories
are
recorded on the books at the lower of cost or market value determined in
accordance with GAAP, and (c) no write-down in inventory has been made or should
have been made pursuant to GAAP during the past two years.
2.28
MONEY LAUNDERING LAWS.
The
operations of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC are and have been
conducted at all times in compliance with applicable financial record-keeping
and reporting requirements of the money laundering statutes of all U.S. and
non-U.S. jurisdictions, the rules and regulations thereunder and any related
or
similar rules, regulations or guidelines, issued, administered or enforced
by
any Governmental Body (collectively, the "MONEY LAUNDERING LAWS") and no
Proceeding involving HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC with respect
to the Money Laundering Laws is pending or, to the knowledge of HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC, threatened.
14
2.29
DISCLOSURE..23 DISCLOSURE.
(a)
Any
information set forth in this Agreement, the HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC Disclosure Schedule, or the Transaction Agreements shall be true,
correct and complete in all material respects.
(b)
No
statement, representation or warranty of HOLY (H.K) LIMITED or OCEANIC WELL
PROFIT INC or the Shareholders in this Agreement (taken with the Schedules)
or
the Transaction Agreements or any exhibits or schedules thereto contain any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein, taken as a whole, in light of the
circumstances in which they were made, not misleading.
(c)
Except as set forth in the HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
Disclosure Schedule, the Shareholders, HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC have no knowledge of any fact that has specific application to HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC (other than general economic or
industry conditions) and that adversely affects the assets or the business,
prospects, financial condition, or results of operations of HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC.
(d)
In
the event of any inconsistency between the statements in the body of this
Agreement and those in the Schedules (other than an exception expressly set
forth as such in the Schedules with respect to a specifically identified
representation or warranty), the statements in the Schedules shall control.
(e)
The
books of account, minute books and stock record books of HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC, all of which have been made available to HOME SYSTEM
GROUP, are complete and accurate and have been maintained in accordance with
sound business practices. Without limiting the generality of the foregoing,
the
minute books of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC contain complete
and accurate records of all meetings held, and corporate action taken, by the
shareholders, the boards of directors, and committees of the boards of directors
of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, as applicable, and no meeting
of any such shareholders, board of directors, or committee has been held for
which minutes have not been prepared and are not contained in such minute books.
2.30
FINDERS AND BROKERS.
(a)
None
of HOLY (H.K) LIMITED, OCEANIC WELL PROFIT INC, the Shareholders or any Person
acting on behalf of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or the
Shareholders has engaged any finder, broker, intermediary or any similar Person
in connection with the Exchange.
(b)
None
of HOLY (H.K) LIMITED, OCEANIC WELL PROFIT INC, the Shareholders nor any Person
acting on behalf of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or the
Shareholders has entered into a contract or other agreement that provides that
a
fee shall be paid to any Person or Entity if the Exchange is consummated.
15
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF HOME SYSTEM GROUP
HOME
SYSTEM GROUP hereby represents and warrants to the Shareholders as of the date
hereof:
3.1
ORGANIZATION; GOOD STANDING.
HOME
SYSTEM GROUP is duly incorporated, validly and in good standing existing under
the laws of Nevada, has all requisite authority and power (corporate and other),
governmental licenses, authorizations, consents and approvals to carry on its
business as presently conducted and as contemplated to be conducted, to own,
hold and operate its properties and assets as now owned, held and operated
by
it, to enter into this Agreement, to carry out the provisions hereof except
where the failure to be in good standing or to have such governmental licenses,
authorizations, consents and approvals will not, in the aggregate, either (i)
have a Material Adverse Effect on the business, assets or financial condition
of
HOME SYSTEM GROUP, or (ii) impair the ability of HOME SYSTEM GROUP to perform
its material obligations under this Agreement. HOME SYSTEM GROUP is duly
qualified, licensed or domesticated as a foreign corporation in good standing
in
each jurisdiction wherein the nature of its activities or its properties owned
or leased requires such qualification, licensing or domestication, except where
the failure to be so qualified, licensed or domesticated will not have a
Material Adverse Effect.
3.2
HOME
SYSTEM GROUP COMMON STOCK.
As
of
December 11, 2006, there were 19,797,949
shares
of HOME SYSTEM GROUP's common stock issued and outstanding. The Acquisition
Shares, when issued in connection with this Agreement and the other
Transactional Agreements, will be duly authorized, validly issued, fully paid
and nonassessable.
3.3
AUTHORITY; BINDING NATURE OF AGREEMENTS.
(a)
The
execution, delivery and performance of this Agreement, the Transactional
Agreements, and all other agreements and instruments contemplated to be executed
and delivered by HOME SYSTEM GROUP in connection herewith have been duly
authorized by all necessary corporate action on the part of HOME SYSTEM GROUP
and its board of directors.
(b)
This
Agreement, the Transactional Agreements, and all other agreements and
instruments contemplated to be executed and delivered by HOME SYSTEM GROUP
constitute the legal, valid and binding obligation of HOME SYSTEM GROUP,
enforceable against HOME SYSTEM GROUP in accordance with their terms, except
to
the extent that enforceability may be limited by applicable bankruptcy,
Exchange, insolvency, moratorium or other laws affecting the enforcement of
creditors' rights generally and by general principles of equity regardless
of
whether such enforceability is considered in a proceeding in law or equity.
(c)
There
is no pending Proceeding, and, to HOME SYSTEM GROUP's knowledge, no Person
has
threatened to commence any Proceeding that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the Exchange or HOME SYSTEM GROUP's ability to comply with or perform its
obligations and covenants under the Transactional Agreements, and, to the
knowledge of HOME SYSTEM GROUP, no event has occurred, and no claim, dispute
or
other condition or circumstance exists, that might directly or indirectly give
rise to or serve as a basis for the commencement of any such Proceeding.
16
3.4
NON-CONTRAVENTION; CONSENTS.
The
execution and delivery of this Agreement and the other Transactional Agreements,
and the consummation of the Exchange, by HOME SYSTEM GROUP will not, directly
or
indirectly (with or without notice or lapse of time):
(a)
contravene, conflict with or result in a material violation of (i) HOME SYSTEM
GROUP's Certificate of Incorporation or Bylaws, or (ii) any resolution adopted
by HOME SYSTEM GROUP Board or any committee thereof or the stockholders of
HOME
SYSTEM GROUP;
(b)
to
the knowledge of HOME SYSTEM GROUP, contravene, conflict with or result in
a
material violation of, or give any Governmental Body the right to challenge
the
Exchange or to exercise any remedy or obtain any relief under, any legal
requirement or any Order to which HOME SYSTEM GROUP or any material assets
owned
or used by it are subject;
(c)
to
the knowledge of HOME SYSTEM GROUP, cause any material assets owned or used
by
HOME SYSTEM GROUP to be reassessed or revalued by any taxing authority or other
Governmental Body;
(d)
to
the knowledge of HOME SYSTEM GROUP, contravene, conflict with or result in
a
material violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend, cancel, terminate
or
modify, any Governmental Authorization that is held by HOME SYSTEM GROUP or
that
otherwise relates to HOME SYSTEM GROUP's business or to any of the material
assets owned or used by HOME SYSTEM GROUP, where such contraventions, conflict,
violation, revocation, withdrawal, suspension, cancellation, termination or
modification would have a Material Adverse Effect on HOME SYSTEM GROUP;
(e)
contravene, conflict with or result in a material violation or material breach
of, or material default under, any Contract to which HOME SYSTEM GROUP is a
party;
(f)
give
any Person the right to any payment by HOME SYSTEM GROUP or give rise to any
acceleration or change in the award, grant, vesting or determination of options,
warrants, rights, severance payments or other contingent obligations of any
nature whatsoever of HOME SYSTEM GROUP in favor of any Person, in any such
case
as a result of the Exchange; or
(g)
result in the imposition or creation of any material Lien upon or with respect
to any material asset owned or used by HOME SYSTEM GROUP.
Except
for Consents, filings or notices required under the state and federal securities
laws or any other laws or regulations or as otherwise contemplated in this
Agreement and the other Transactional Agreements, HOME SYSTEM GROUP will not
be
required to make any filing with or give any notice to, or obtain any Consent
from, any Person in connection with the execution and delivery of this Agreement
and the other Transactional Agreements or the consummation or performance of
the
Exchange.
17
3.5
FINDERS AND BROKERS.
(a)
Neither HOME SYSTEM GROUP nor any Person acting on behalf of HOME SYSTEM GROUP
has engaged any finder, broker, intermediary or any similar Person in connection
with the Exchange.
(b)
HOME
SYSTEM GROUP has not entered into a contract or other agreement that provides
that a fee shall be paid to any Person or Entity if the Exchange is consummated.
3.6
REPORTS AND FINANCIAL STATEMENTS; ABSENCE OF CERTAIN CHANGES.
(a)
HOME
SYSTEM GROUP has filed all reports required to be filed with the SEC pursuant
to
the Exchange Act since DECEMBER 31, 2005 (all such reports, including those
to
be filed prior to the Closing Date and all registration
statements
and prospectuses filed by HOME SYSTEM GROUP with the SEC, are collectively
referred to as the "HOME SYSTEM GROUP SEC REPORTS). All of the HOME SYSTEM
GROUP
SEC Reports, as of their respective dates of filing (or if amended or superseded
by a filing prior to the date of this Agreement, then on the date of such
filing): (i) complied in all material respects as to form with the applicable
requirements of the Securities Act or Exchange Act and the rules and regulations
thereunder, as the case may be, and
(ii)
did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The audited financial statements of Home System Groupluded in the
HOME SYSTEM GROUP SEC Reports comply in all material respects with the published
rules and regulations of the SEC with respect thereto, and such audited
financial statements (i) were prepared from the books and records of HOME SYSTEM
GROUP, (ii) were prepared in accordance with GAAP applied on a consistent basis
(except as may be indicated therein or in the notes or schedules thereto) and
(iii) present fairly the financial position of HOME SYSTEM GROUP as of the
dates
thereof and the results of operations and cash flows for the periods then ended.
The unaudited financial statements included in the HOME SYSTEM GROUP SEC Reports
comply in all material respects with the published rules and regulations of
the
SEC with respect thereto; and such unaudited financial statements (i) were
prepared from the books and records of HOME SYSTEM GROUP, (ii) were prepared
in
accordance with GAAP, except as otherwise permitted under the Exchange Act
and
the rules and regulations thereunder, on a consistent basis (except as may
be
indicated therein or in the notes or schedules thereto) and (iii) present fairly
the financial position of HOME SYSTEM GROUP as of the dates thereof and the
results of operations and cash flows (or changes in financial condition) for
the
periods then ended, subject to normal year-end adjustments and any other
adjustments described therein or in the notes or schedules thereto.
(b)
Except as specifically contemplated by this Agreement or reflected in the HOME
SYSTEM GROUP SEC Reports, since November 1, 2006, there has not been (i) any
material adverse change in HOME SYSTEM GROUP's business, assets, liabilities,
operations, and, to the knowledge of HOME SYSTEM GROUP, no event has occurred
that is likely to have a material adverse effect on HOME SYSTEM GROUP's
business, assets, liabilities or operations, (ii) any declarations setting
aside
or payment of any dividend or distribution with respect to the HOME SYSTEM
GROUP
Common Stock other than consistent with past practices,
(iii)
any
material change in HOME SYSTEM GROUP's accounting principles, procedures or
methods, (iv) cancellation in writing of any material customer contract or
(v)
the loss of any customer relationship which would have a material adverse effect
on HOME SYSTEM GROUP's business, assets, liabilities or operations.
18
3.7
COMPLIANCE WITH APPLICABLE LAW.
Except
as
disclosed in the HOME SYSTEM GROUP SEC Reports filed prior to the date of this
Agreement and except to the extent that the failure or violation would not
in
the aggregate have a Material Adverse Effect on the business, results of
operations or financial condition of HOME SYSTEM GROUP, to HOME SYSTEM GROUP's
knowledge HOME SYSTEM GROUP holds all Governmental Authorizations necessary
for
the lawful conduct of its business under and pursuant to, and the business
of
HOME SYSTEM GROUP is not being conducted in violation of, any Governmental
Authorization applicable to HOME SYSTEM GROUP.
3.8
COMPLETE COPIES OF REQUESTED REPORTS.
HOME
SYSTEM GROUP has delivered or made available true and complete copies of each
document that has been reasonably requested by HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC or the Shareholders.
3.9
FULL
DISCLOSURE.
(a)
Neither this Agreement (including all Schedules and Exhibits hereto) nor any
of
the Transactional Agreements contemplated to be executed and delivered by HOME
SYSTEM GROUP in connection with this Agreement contains any untrue statement
of
material fact; and none of such documents omits to state any material fact
necessary to make any of the representations, warranties or other statements
or
information contained therein not misleading.
(b)
All
of the information set forth in the prospectus and all other information
regarding HOME SYSTEM GROUP and the business, condition, assets, liabilities,
operations, financial performance, net income and prospects of either that
has
been furnished to HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or the
Shareholders by or on behalf of HOME SYSTEM GROUP or any of the HOME SYSTEM
GROUP's Representatives, is accurate and complete in all material respects.
ARTICLE
IV.
COVENANTS
OF HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
4.1
ACCESS AND INVESTIGATION.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC shall ensure that, at all times during
the Pre-Closing Period:
(a)
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC and their Representatives provide
HOME
SYSTEM GROUP and its Representatives access, at reasonable times and with
twenty-four (24) hours notice from HOME SYSTEM GROUP to HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC, to all of the premises and assets of HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC, to all existing books, records, Tax Returns, work
papers and other documents and information relating to HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC, and to responsible officers and employees of HOLY
(H.K)
LIMITED AND OCEANIC WELL PROFIT INC, and HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC and its Representatives provide HOME SYSTEM GROUP and its
Representatives with copies of such existing books, records, Tax Returns, work
papers and other documents and information relating to HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC as HOME SYSTEM GROUP may request in good faith;
19
(b)
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC and their Representatives confer
regularly with HOME SYSTEM GROUP upon its request, concerning operational
matters and otherwise report regularly (not less than semi-monthly and as HOME
SYSTEM GROUP may otherwise request) to HOME SYSTEM GROUP and discuss with HOME
SYSTEM GROUP and its Representatives concerning the status of the business,
condition, assets, liabilities, operations, and financial performance of HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC, and promptly notify HOME SYSTEM
GROUP
of any material change in the business, condition, assets, liabilities,
operations, and financial performance of HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC, or any event reasonably likely to lead to any such change.
4.2
OPERATION OF BUSINESS.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC shall ensure that, during the
Pre-Closing Period:
(a)
It
conducts its operations in the Ordinary Course of Business and in the same
manner as such operations have been conducted prior to the date of this
Agreement;
(b)
It
uses its commercially reasonable efforts to preserve intact its current business
organization, keep available and not terminate the services of its current
officers and employees and maintain its relations and goodwill with all
suppliers, customers, landlords, creditors, licensors, licensees, employees
and
other Persons having business relationships with HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC;
(c)
It
does not declare, accrue, set aside or pay any dividend or make any other
distribution in respect of any shares of its capital stock, and does not
repurchase, redeem or otherwise reacquire any shares of its capital stock or
other securities, except with respect to the repurchase of shares of HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC Common Stock upon termination of employees
at the original purchase price pursuant to agreements existing at the date
hereof;
(d)
It
does not sell or otherwise issue (or grant any warrants, options or other rights
to purchase) any shares of capital stock or any other securities, except the
issuance of shares of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC Common
Stock pursuant to option grants to employees made under the Option Plan in
the
Ordinary Course of Business;
(e)
It
does not amend its Articles of Incorporation, Bylaws or other Organizational
Documents, and does not effect or become a party to any recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f)
It
does not form any subsidiary or acquire any equity interest or other interest
in
any other Entity;
(g)
It
does not establish or adopt any Employee Benefit Plan, and does not pay any
bonus or make any profit sharing or similar payment to, or increase the amount
of the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees;
20
(h)
It
does not change any of its methods of accounting or accounting practices in
any
respect;
(i)
It
does not make any Tax election;
(j)
It
does not commence or take any action or fail to take any action which would
result in the commencement of any Proceeding;
(k)
It
does not (i) acquire, dispose of, transfer, lease, license, mortgage, pledge
or
encumber any fixed or other assets, other than in the Ordinary Course of
Business; (ii) incur, assume or prepay any indebtedness, Indebtedness or
obligation or any other liabilities or issue any debt securities, other than
in
the Ordinary Course of Business; (iii) assume, guarantee, endorse for the
obligations of any other person, other than in the Ordinary Course of Business;
(iv) make any loans, advances or capital contributions to, or investments in,
any other Person, other than in the Ordinary Course of Business; or (v) fail
to
maintain insurance consistent with past practices for its business and property;
(l)
It
pays all debts and Taxes, files all of its Tax Returns (as provided herein)
and
pays or performs all other obligations, when due;
(m)
It
does not enter into or amend any agreements pursuant to which any other Person
is granted distribution, marketing or other rights of any type or scope with
respect to any of its services, products or technology;
(n)
It
does not hire any new officer-level employee;
(o)
It
does not revalue any of its assets, including, without limitation, writing
down
the value of inventory or writing off notes or accounts receivable, except
as
required under GAAP and in the Ordinary Course of Business;
(p)
Except as otherwise contemplated hereunder, it does not enter into any
transaction or take any other action outside the Ordinary Course of Business;
and
(q)
It
does not enter into any transaction or take any other action that likely would
cause or constitute a Breach of any representation or warranty made by it in
this Agreement.
4.3
FILINGS AND CONSENTS; COOPERATION.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC shall ensure that:
(a)
Each
filing or notice required to be made or given (pursuant to any applicable Law,
Order or contract, or otherwise) by HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC or the Shareholders in connection with the execution and delivery of any
of
the Transactional Agreements, or in connection with the consummation or
performance of the Exchange, is made or given as soon as possible after the
date
of this Agreement;
21
(b)
Each
Consent required to be obtained (pursuant to any applicable Law, Order or
contract, or otherwise) by HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or
the
Shareholders in connection with the execution and delivery of any of the
Transactional Agreements, or in connection with the consummation or performance
of the Exchange, is obtained as soon as possible after the date of this
Agreement and remains in full force and effect through the Closing Date;
(c)
It
promptly delivers to HOME SYSTEM GROUP a copy of each filing made, each notice
given and each Consent obtained by HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC during the Pre-Closing Period; and
(d)
During the Pre-Closing Period, it and its Representatives cooperate with HOME
SYSTEM GROUP and HOME SYSTEM GROUP's Representatives, and prepare and make
available such documents and take such other actions as HOME SYSTEM GROUP may
request in good faith, in connection with any filing, notice or Consent that
HOME SYSTEM GROUP is required or elects to make, give or obtain.
4.4
NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULES.
(a)
During the Pre-Closing Period, each of HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC shall promptly notify HOME SYSTEM GROUP in writing of:
(i)
the
discovery by it of any event, condition, fact or circumstance that occurred
or
existed on or prior to the date of this Agreement which is contrary to any
representation or warranty made by it in this Agreement or in any of the other
Transactional Agreements, or that would upon the giving of notice or lapse
of
time, result in any of its representations and warranties set forth in this
agreement to become untrue or otherwise cause any of the conditions of Closing
set forth in Article VI or Article VII not to be satisfied;
(ii)
any
event, condition, fact or circumstance that occurs, arises or exists after
the
date of this Agreement (except as a result of actions taken pursuant to the
express written consent of HOME SYSTEM GROUP) and that is contrary to any
representation or warranty made by it in this Agreement, or that would upon
the
giving of notice or lapse of time, result in any of its representations and
warranties set forth in this agreement to become untrue or otherwise cause
any
of the conditions of Closing set forth in Article VI or Article VII not to
be
satisfied;
(b)
If
any event, condition, fact or circumstances that is required to be disclosed
pursuant to Section 4.4(a) requires any material change in the HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC Disclosure Schedule, or if any such event,
condition, fact or circumstance would require such a change assuming the HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC Disclosure Schedule were dated as
of
the date of the occurrence, existence or discovery of such event, condition,
fact or circumstances, then HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC,
as
applicable, shall promptly deliver to HOME SYSTEM GROUP an update to the HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC Disclosure Schedule specifying such
change (a "DISCLOSURE SCHEDULE UPDATE").
(c)
It
will promptly update any relevant and material information provided to HOME
SYSTEM GROUP after the date hereof pursuant to the terms of this Agreement.
22
4.5
COMMERCIALLY REASONABLE EFFORTS.
During
the Pre-Closing Period, each of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC
shall use its commercially reasonable efforts to cause the conditions set forth
in Article VI and Article VII to be satisfied on a timely basis and so that
the
Closing can take place on or before January 30, 2007 in accordance with Section
1.5, and shall not take any action or omit to take any action, the taking or
omission of which would or could reasonably be expected to result in any of
the
representations and warranties of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC
set forth in this Agreement becoming untrue, or in any of the conditions of
Closing set forth in Article VI or Article VII not being satisfied.
4.6
CONFIDENTIALITY; PUBLICITY.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC shall ensure that:
(a)
It
and its Representatives keep strictly confidential the existence and terms
of
this Agreement prior to the issuance or dissemination of any mutually agreed
upon press release or other disclosure of the Exchange; and
(b)
neither it nor any of its Representatives issues or disseminates any press
release or other publicity or otherwise makes any disclosure of any nature
(to
any of its suppliers, customers, landlords, creditors or employees or to any
other Person) regarding any of the Exchange;
except
in
each case to the extent that it is required by law to make any such disclosure
regarding such transactions or as separately agreed by the parties; provided,
however, that if it is required by law to make any such disclosure, HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC advises HOME SYSTEM GROUP, at least five
business days before making such disclosure, of the nature and content of the
intended disclosure.
ARTICLE
V.
COVENANTS
OF HOME SYSTEM GROUP
5.1
NOTIFICATION.
During
the Pre-Closing Period, HOME SYSTEM GROUP shall promptly notify HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC in writing of:
(a)
the
discovery by HOME SYSTEM GROUP of any event, condition, fact or circumstance
that occurred or existed on or prior to the date of this Agreement which is
contrary to any representation or warranty made by HOME SYSTEM GROUP in this
Agreement; and,
(b)
any
event, condition, fact or circumstance that occurs, arises or exists after
the
date of this Agreement (except as a result of actions taken pursuant to the
written consent of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC) and that
is
contrary to any representation or warranty made by HOME SYSTEM GROUP in this
Agreement;
23
5.2
FILINGS AND CONSENTS; COOPERATION.
HOME
SYSTEM GROUP shall ensure that:
(a)
Each
filing or notice required to be made or given (pursuant to any applicable Law,
Order or contract, or otherwise) by HOME SYSTEM GROUP in connection with the
execution and delivery of any of the Transactional Agreements, or in connection
with the consummation or performance of the Exchange, is made or given as soon
as possible after the date of this Agreement;
(b)
Each
Consent required to be obtained (pursuant to any applicable Law, Order or
contract, or otherwise) by HOME SYSTEM GROUP in connection with the execution
and delivery of any of the Transactional Agreements, or in connection with
the
consummation or performance of the Exchange, is obtained as soon as possible
after the date of this Agreement and remains in full force and effect through
the Closing Date;
(c)
HOME
SYSTEM GROUP promptly delivers to HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC
a copy of each filing made, each notice given and each Consent obtained by
HOME
SYSTEM GROUP during the Pre-Closing Period; and
(d)
During the Pre-Closing Period, HOME SYSTEM GROUP and its Representatives
cooperate with HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and their
Representatives, and prepare and make available such documents and take such
other actions as HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC may request
in
good faith, in connection with any filing, notice or Consent that HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC is required or elects to make, give or
obtain.
5.3
COMMERCIALLY REASONABLE EFFORTS.
During
the Pre-Closing Period, HOME SYSTEM GROUP shall use its commercially reasonable
efforts to cause the conditions set forth in Article VI and Article VII to
be
satisfied on a timely basis and so that the Closing can take place on or before
January 31, 2007 or as soon thereafter as is reasonably practical, in accordance
with Section 1.5, and shall not take any action or omit to take any action,
the
taking or omission of which would or could reasonably be expected to result
in
any of the representations and warranties or HOME SYSTEM GROUP set forth in
this
Agreement becoming untrue or in any of the conditions of closing set forth
in
Article VI or Article VII not being satisfied.
5.4
DISCLOSURE OF CONFIDENTIAL INFORMATION.
(a)
Each
of HOME SYSTEM GROUP, HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and the
Shareholders acknowledges and agrees that it may receive Confidential
Information in connection with this Transaction including without limitation,
the HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC Disclosure Schedule and
any
information disclosed during the due diligence process, the public disclosure
of
which will harm the disclosing party's business. The Receiving Party may use
Confidential Information only in connection with the Transaction. The results
of
the due diligence review may not be used for any other purpose other than in
connection with the Transaction. Except as expressly provided in this Agreement,
the Receiving Party shall not disclose Confidential Information to anyone
without the Disclosing Party's prior written consent. The Receiving Party shall
take all reasonable measures to avoid disclosure, dissemination or unauthorized
use of Confidential Information, including, at a minimum, those measures it
takes to protect its own confidential information of a similar nature. The
Receiving Party shall not export any Confidential Information in any manner
contrary to the export regulations of the governmental jurisdiction to which
it
is subject.
24
(b)
The
Receiving Party may disclose Confidential Information as required to comply
with
binding orders of governmental entities that have jurisdiction over it, provided
that the Receiving Party (i) gives the Disclosing Party reasonable notice (to
the extent permitted by law) to allow the Disclosing Party to seek a protective
order or other appropriate remedy, (ii) discloses only such information as
is
required by the governmental entity, and (iii) uses commercially reasonable
efforts to obtain confidential treatment for any Confidential Information so
disclosed.
(c)
All
Confidential Information shall remain the exclusive property of the Disclosing
Party. The Disclosing Party's disclosure of Confidential Information shall
not
constitute an express or implied grant to the Receiving Party of any rights
to
or under the Disclosing Party's patents, copyrights, trade secrets, trademarks
or other intellectual property rights.
(d)
The
Receiving Party shall notify the Disclosing Party immediately upon discovery
of
any unauthorized use or disclosure of Confidential Information or any other
breach of this Agreement by the Receiving Party. The Receiving Party shall
cooperate with the Disclosing Party in every reasonable way to help the
Disclosing Party regain possession of such Confidential Information and prevent
its further unauthorized use.
(e)
The
Receiving Party shall return or destroy all tangible materials embodying
Confidential Information (in any form and including, without limitation, all
summaries, copies and excerpts of Confidential Information) promptly following
the Disclosing Party's written request; provided, however, that, subject to
the
provisions of this Agreement, the Receiving Party may retain one copy of such
materials in the confidential, restricted access files of its legal department
for use only in the event a dispute arises between the parties related to the
Transaction and only in connection with that dispute. At the Disclosing Party's
option, the Receiving Party shall provide written certification of its
compliance with this Section.
5.5
INDEMNIFICATION.
(a)
Each
of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and the Shareholders, jointly
and severally, each shall defend, indemnify and hold harmless HOME SYSTEM GROUP,
and its respective employees, officers, directors, stockholders, controlling
persons, affiliates, agents, successors and assigns (collectively, the "HOME
SYSTEM GROUP Indemnified Persons"), and shall reimburse the HOME SYSTEM GROUP
Indemnified Person, for, from and against any loss, liability, claim, damage,
expense (including costs of investigation and defense and reasonable attorneys'
fees) or diminution of value, whether or not involving a third-party claim
(collectively, "Damages"), directly or indirectly, relating to, resulting from
or arising out of:
(i)
any
untrue representations, misrepresentations or breach of warranty by or of HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC or the Shareholders contained in
or
pursuant to this Agreement, and the HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC Disclosure Schedule;
25
(ii)
any
breach or nonfulfillment of any covenant, agreement or other obligation by
or of
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or the Shareholders (only to
the
extent made or occurring prior to or at the Closing) contained in or pursuant
to
this Agreement, the Transaction Agreements executed by HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC or any of the Shareholders in their individual capacity,
the HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC Disclosure Schedule, or
any
of the other agreements, documents, schedules or exhibits to be entered into
by
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or any of the Shareholders in
their individual capacity pursuant to or in connection with this Agreement;
(iii)
all
of Pre-Closing liabilities of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
or
the Shareholders; and
(iv)
any
liability, claim, action or proceeding of any kind whatsoever, whether
instituted or commenced prior to or after the Closing Date, which directly
or
indirectly relates to, arises or results from, or occurs in connection with
facts or circumstances relating to the conduct of business of HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC, or the assets of HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC, or events or circumstances existing on or prior to the Closing
Date.
(b)
HOME
SYSTEM GROUP shall defend, indemnify and hold harmless HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC and its respective affiliates, agents, successors and
assigns (collectively, the "HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
Indemnified Persons"), and shall reimburse the HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC Indemnified Persons, for, from and against any Damages, directly
or indirectly, relating to, resulting from or arising out of:
(i)
any
untrue representation, misrepresentation or breach of warranty by or of HOME
SYSTEM GROUP contained in or pursuant to this Agreement;
(ii)
any
breach or nonfulfillment of any covenant, agreement or other obligations by
or
of HOME SYSTEM GROUP contained in or pursuant to this Agreement, the Transaction
Agreements or any other agreements, documents, schedules or exhibits to be
entered into or delivered to pursuant to or in connection with this Agreement.
(c)
Promptly after receipt by an indemnified Party under Section 5.6 of this
Agreement of notice of a claim against it ("Claim"), such indemnified Party
shall, if a claim is to be made against an indemnifying Party under such
Section, give notice to the indemnifying Party of such Claim, but the failure
to
so notify the indemnifying Party will not relieve the indemnifying Party of
any
liability that it may have to any indemnified Party, except to the extent that
the indemnifying Party demonstrates that the defense of such action is
prejudiced by the indemnified Party's failure to give such notice.
(c)
A
claim for indemnification for any matter not involving a third-party claim
may
be asserted by notice to the Party from whom indemnification is sought.
26
ARTICLE
VI.
CLOSING
CONDITIONS OF HOME SYSTEM GROUP
HOME
SYSTEM GROUP's obligations to effect the Closing and consummate the Exchange
are
subject to the satisfaction of each of the following conditions:
6.1
ACCURACY OF REPRESENTATIONS AND WARRANTIES.
The
representations and warranties of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC
and the Shareholders in this Agreement shall have been true and correct as
of
the date of this Agreement and shall be true and correct on and as of the
Closing. HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and the Shareholders
shall have performed all obligations in this Agreement required to be performed
or observed by them on or prior to the Closing.
6.2
ADDITIONAL CONDITIONS TO CLOSING.
(a)
All
necessary approvals under federal and state securities laws and other
authorizations relating to the issuance of the Acquisition Shares and the
transfer of the Shares shall have been received.
(b)
HOME
SYSTEM GROUP shall have obtained an opinion stating that the terms of the
Exchange are fair, just and equitable to HOME SYSTEM GROUP and its shareholders.
(c)
No
preliminary or permanent injunction or other order by any federal, state or
foreign court of competent jurisdiction which prohibits the consummation of
the
Exchange shall have been issued and remain in effect. No statute, rule,
regulation, executive order, stay, decree, or judgment shall have been enacted,
entered, issued, promulgated or enforced by any court or governmental authority
which prohibits or restricts the consummation of the Exchange. All
authorizations, consents, orders or approvals of, or declarations or filings
with, and all expirations of waiting periods imposed by, any Governmental Body
which are necessary for the consummation of the Exchange, other than those
the
failure to obtain which would not materially adversely affect the consummation
of the Exchange or in the aggregate have a material adverse effect on HOME
SYSTEM GROUP and its subsidiaries, taken as a whole, shall have been filed,
occurred or been obtained (all such permits, approvals, filings and consents
and
the lapse of all such waiting periods being referred to as the "REQUISITE
REGULATORY APPROVALS") and all such Requisite Regulatory Approvals shall be
in
full force and effect.
(d)
There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Exchange, by any
Governmental Body which, in connection with the grant of a Requisite Regulatory
Approval, imposes any material condition or material restriction upon HOME
SYSTEM GROUP or its subsidiaries or HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC, including, without limitation, requirements relating to the disposition
of
assets, which in any such case would so materially adversely impact the economic
or business benefits of the Exchange as to render inadvisable the consummation
of the Exchange.
27
6.3
PERFORMANCE OF AGREEMENTS.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC or the Shareholders, as the case
may
be, shall have executed and delivered each of the agreements, instruments and
documents required to be executed and delivered, and performed all actions
required to be performed by HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
or
any of the Shareholders, as the case may be, pursuant to this Agreement, except
as HOME SYSTEM GROUP has otherwise consented in writing.
6.4
CONSENTS.
Each
of
the Consents identified or required to have been identified in the HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC Disclosure Schedule shall have been obtained
and shall be in full force and effect, other than those Consents, which have
been expressly waived by HOME SYSTEM GROUP.
6.5
NO
MATERIAL ADVERSE CHANGE AND SATISFACTORY DUE DILIGENCE.
There
shall not have been any material adverse change in the business, condition,
assets, liabilities, operations or financial performance of HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC since the date of this Agreement as determined
by
HOME SYSTEM GROUP in its discretion. HOME SYSTEM GROUP shall be satisfied in
all
respects with the results of its due diligence review of HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC.
6.6
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC CLOSING CERTIFICATES.
In
addition to the documents required to be received under this Agreement, HOME
SYSTEM GROUP shall also have received the following documents:
(a)
copies of resolutions of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC,
certified by a Secretary, Assistant Secretary or other appropriate officer
of
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, authorizing the execution,
delivery and performance of this Agreement and other Transactional Agreements;
(b)
good
standing certificate from China of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC; and
(c)
such
other documents as HOME SYSTEM GROUP may request in good faith for the purpose
of (i) evidencing the accuracy of any representation or warranty made by HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC, (ii) evidencing the compliance by
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, or the performance by HOLY
(H.K)
LIMITED AND OCEANIC WELL PROFIT INC of, any covenant or obligation set forth
in
this Agreement or any of the other Transactional Agreements, (iii) evidencing
the satisfaction of any condition set forth in Article VII or this Article
VI,
or (iv) otherwise facilitating the consummation or performance of the Exchange.
6.7
TRANSACTIONAL AGREEMENTS.
Each
Person (other than HOME SYSTEM GROUP) shall have executed and delivered prior
to
or on the Closing Date all Transactional Agreements to which it is to be a
party.
28
6.8
RESIGNATION OF DIRECTORS AND OFFICERS.
HOME
SYSTEM GROUP shall have received a written resignation from each of the
directors and officers of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC
effective as of the Closing.
6.9
DELIVERY OF STOCK CERTIFICATES, MINUTE BOOK AND CORPORATE SEAL.
The
Shareholders shall have delivered to HOME SYSTEM GROUP the stock books, stock
ledgers, minute books and corporate seals of HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC.
ARTICLE
VII.
CLOSING
CONDITIONS OF THE SHAREHOLDERS
The
Shareholders' obligations to effect the Closing and consummate the Exchange
are
subject to the satisfaction of each of the following conditions:
7.1
ACCURACY OF REPRESENTATIONS AND WARRANTIES.
The
representations and warranties of HOME SYSTEM GROUP in this Agreement shall
have
been true and correct as of the date of this Agreement and shall be true and
correct on and as of the Closing and HOME SYSTEM GROUP shall have performed
all
obligations in this Agreement required to be performed or observed by them
on or
prior to the Closing.
7.2
ADDITIONAL CONDITIONS TO CLOSING.
(a)
All
necessary approvals under federal and state securities laws and other
authorizations relating to the issuance and transfer of the Acquisition Shares
by HOME SYSTEM GROUP and the transfer of the Shares by HOLY (H.K) LIMITED AND
OCEANIC WELL PROFIT INC shall have been received.
(b)
No
preliminary or permanent injunction or other order by any federal, state or
foreign court of competent jurisdiction which prohibits the consummation of
the
Exchange shall have been issued and remain in effect. No statute, rule,
regulation, executive order, stay, decree, or judgment shall have been enacted,
entered, issued, promulgated or enforced by any court or governmental authority
which prohibits or restricts the consummation of the Exchange. All Requisite
Regulatory Approvals shall have been filed, occurred or been obtained and all
such Requisite Regulatory Approvals shall be in full force and effect.
(c)
There
shall not be any action taken, or any statute, rule, regulation or order
enacted, entered, enforced or deemed applicable to the Exchange, by any federal
or state Governmental Body which, in connection with the grant of a Requisite
Regulatory Approval, imposes any condition or restriction upon the Surviving
Corporation or its subsidiaries (or, in the case of any disposition of assets
required in connection with such Requisite Regulatory Approval, upon HOME SYSTEM
GROUP, its subsidiaries or HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC,
or
any of their subsidiaries), including, without limitation, requirements relating
to the disposition of assets, which in any such case would so materially
adversely impact the economic or business benefits of the Exchange as to render
inadvisable the consummation of the Exchange.
29
7.3
HOME
SYSTEM GROUP CLOSING CERTIFICATES.
The
Shareholders shall have received the following documents:
(a)
copies of resolutions of HOME SYSTEM GROUP, certified by a Secretary, Assistant
Secretary or other appropriate officer of HOME SYSTEM GROUP, authorizing the
execution, delivery and performance of the Transactional Agreements and the
Exchange;
(b)
good
standing certificates for the State of Nevada; and
(c)
such
other documents as HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC may request
in
good faith for the purpose of (i) evidencing the accuracy of any representation
or warranty made by HOME SYSTEM GROUP, (ii) evidencing the compliance by HOME
SYSTEM GROUP with, or the performance by HOME SYSTEM GROUP of, any covenant
or
obligation set forth in this Agreement or any of the other Transactional
Agreements, (iii) evidencing the satisfaction of any condition set forth in
Article VI or this Article VII, or (iv) otherwise facilitating the consummation
or performance of the Exchange.
7.4
NO
MATERIAL ADVERSE CHANGE.
There
shall not have been any material adverse change in HOME SYSTEM GROUP's business,
condition, assets, liabilities, operations or financial performance since the
date of this Agreement.
7.5
PERFORMANCE OF AGREEMENTS.
HOME
SYSTEM GROUP shall have executed and delivered each of the agreements,
instruments and documents required to be executed and delivered, and performed
all actions required by HOME SYSTEM GROUP pursuant to this Agreement, except
as
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and the Shareholders have
otherwise consented in writing.
7.6
CONSENTS.
Each
of
the Consents identified or required to have been identified in
Section
3.4 shall have been obtained and shall be in full force and effect, other than
those Consents the absence of which shall not have a material adverse effect
on
HOME SYSTEM GROUP.
30
7.7
HOME
SYSTEM GROUP STOCK.
On
the
Closing Date, shares of HOME SYSTEM GROUP Common Stock shall not be eligible
for
quotation on the NASDQA market. .
ARTICLE
VIII.
FURTHER
ASSURANCES
Each
of
the parties hereto agrees that it will, from time to time after the date of
the
Agreement, execute and deliver such other certificates, documents and
instruments and take such other action as may be reasonably requested by the
other party to carry out the actions and transactions contemplated by this
Agreement, including the closing conditions described in Articles VI and VII.
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and the Shareholders shall
reasonably cooperate with HOME SYSTEM GROUP in its of the books and records
of
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, or in preparing any solicitation
materials to be sent to the shareholders of HOME SYSTEM GROUP in connection
with
the approval of the Exchange and the transactions contemplated by the
Transactional Agreements.
ARTICLE
IX.
TERMINATION
9.1
TERMINATION.
This
Agreement may be terminated and the Exchange abandoned at any time prior to
the
Closing Date:
(a)
by
mutual written consent of HOME SYSTEM GROUP, HOLY (H.K) LIMITED, OCEANIC WELL
PROFIT INC and the Shareholders;
(b)
by
HOME SYSTEM GROUP if the Financial Statements of HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC for the prior three fiscal years do not disclose minimum
revenues of RMB 1 million or if it is not satisfied with the results of its
due
diligence of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC for any reason;
(c)
by
HOME SYSTEM GROUP if (i) there is a material Breach of any covenant or
obligation of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or the
Shareholders; provided however, that if such Breach or Breaches are capable
of
being cured prior to the Closing Date, such Breach or Breaches shall not have
been cured within 10 days of delivery of the written notice of such Breach,
or
(ii) HOME SYSTEM GROUP reasonably determines that the timely satisfaction of
any
condition set forth in Article VI has become impossible or impractical (other
than as a result of any failure on the part of HOME SYSTEM GROUP to comply
with
or perform its covenants and obligations under this Agreement or any of the
other Transactional Agreements);
(d)
by
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC if (i) there is a material Breach
of any covenant or obligation of HOME SYSTEM GROUP; provided however, that
if
such Breach or Breaches are capable of being cured prior to the Closing Date,
such Breach or Breaches shall not have been cured within 10 days of delivery
of
the written notice of such Breach, or (ii) HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC reasonably determines that the timely satisfaction of any condition
set forth in Article VII has become impossible or impractical (other than as
a
result of any failure on the part of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC or any Shareholder to comply with or perform any covenant or obligation
set
forth in this Agreement or any of the other Transactional Agreements);
31
(e)
by
HOME SYSTEM GROUP if the Closing has not taken place on or before January 31,
2006 (except if as a result of any failure on the part of HOME SYSTEM GROUP
to
comply with or perform its covenants and obligations under this Agreement or
in
any other Transactional Agreement);
(f)
by
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC if the Closing has not taken
place on or before January 30, 2007 (except if as a result of the failure on
the
part of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC or the Shareholders
to
comply with or perform any covenant or obligation set forth in this Agreement
or
in any other Transactional Agreement);
(g)
by
any of HOME SYSTEM GROUP, on the one hand or HOLY (H.K) LIMITED AND OCEANIC
WELL
PROFIT INC, on the other hand, if any court of competent jurisdiction in the
United States or other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Exchange and such order, decree, ruling or any other
action shall have become final and non-appealable; provided, however, that
the
party seeking to terminate this Agreement pursuant to this clause (f) shall
have
used all commercially reasonable efforts to remove such order, decree or ruling;
or
(h)
The
parties hereby agree and acknowledge that a breach of the provisions of Sections
y4.1, y4.2, y4.3, y4.4 and y4.6 are, without limitation, material Breaches
of
this Agreement.
9.2
TERMINATION PROCEDURES.
If
HOME
SYSTEM GROUP wishes to terminate this Agreement pursuant to Section 9.1, HOME
SYSTEM GROUP shall deliver to the Shareholders, HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC a written notice stating that HOME SYSTEM GROUP is terminating
this Agreement and setting forth a brief description of the basis on which
HOME
SYSTEM GROUP is terminating this Agreement. If HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC wishes to terminate this Agreement pursuant to Section 9.1,
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC, as applicable, shall deliver to
HOME
SYSTEM GROUP a written notice stating that HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC is terminating this Agreement and setting forth a brief description
of the basis on which HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC is
terminating this Agreement.
9.3
EFFECT OF TERMINATION.
In
the
event of termination of this Agreement as provided above, this Agreement shall
forthwith have no further effect. Except for a termination resulting from a
Breach by a party to this Agreement, there shall be no liability or obligation
on the part of any party hereto. In the event of a breach, the remedies of
the
non-breaching party shall be to seek damages from the breaching party or to
obtain an order for specific performance, in addition to or in lieu of other
remedies provided herein. Upon request after termination, each party will
redeliver or, at the option of the party receiving such request, destroy all
reports, work papers and other material of any other party relating to the
Exchange, whether obtained before or after the execution hereof, to the party
furnishing same; provided, however, that HOLY (H.K) LIMITED AND OCEANIC WELL
PROFIT INC and the Shareholders shall, in all events, remain bound by and
continue to be subject to
Section
4.6 and all parties shall in all events remain bound by and continue to be
subject to Section 5.4 and 5.5. .
32
Notwithstanding
the above, both HOME SYSTEM GROUP, on the one hand, and HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC and the Shareholders, on the other hand, shall be
entitled to announce the termination of this Agreement by means of a mutually
acceptable press release.
ARTICLE
X.
MISCELLANEOUS
10.1
SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
All
representations and warranties of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC
and the Shareholders in this Agreement and the HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC Disclosure Schedule shall survive shall survive indefinitely.
The right to indemnification, reimbursement or other remedy based on such
representations and warranties will not be affected by any investigation
conducted by the parties.
10.2
EXPENSES.
Except
as
otherwise set forth herein, each of the parties to the Exchange shall bear
its
own expenses incurred in connection with the negotiation and consummation of
the
transactions contemplated by this Agreement.
10.3
ENTIRE AGREEMENT.
This
Agreement and the other Transactional Agreements contain the entire agreement
of
the parties hereto, and supersede any prior written or oral agreements between
them concerning the subject matter contained herein, or therein. There are
no
representations, agreements, arrangements or understandings, oral or written,
between the parties to this Agreement, relating to the subject matter contained
in this Agreement and the other Transaction Agreements, which are not fully
expressed herein or therein. The schedules and each exhibit attached to this
Agreement or delivered pursuant to this Agreement are incorporated herein by
this reference and constitute a part of this Agreement.
10.4
COUNTERPARTS
This
Agreement may be executed in any number of counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same
instrument.
10.5
DESCRIPTIVE HEADINGS.
The
Article and Section headings in this Agreement are for convenience only and
shall not affect the meanings or construction of any provision of this
Agreement.
33
Any
notices required or permitted to be given under this Agreement shall be in
writing and shall be deemed sufficiently given on the earlier to occur of the
date of personal delivery, the date of receipt or three (3) days after posting
by overnight courier or registered or certified mail, postage prepaid, addressed
as follows:
If
to
HOME SYSTEM GROUP:
HOME
SYSTEM GROUP
Los
Angeles U.S
If
to
HOLY (H.K) LIMITED or
OCEANIC
WELL PROFIT INC:
Zhongshan
China
If
to the
Shareholders:
To
such
address or addresses as a party shall have
previously
designated by notice to the sender
given
in
accordance with this section.
10.7
CHOICE OF LAW
This
Agreement shall be construed in accordance with and governed by the laws of
the
State of New York without regard to choice of law principles. The parties hereto
each consent to the jurisdiction of the courts of the state of New York, county
of Los Angeles and to the federal courts located in the county of New York,
State of New York
10.8
BINDING EFFECT; BENEFITS
This
Agreement shall inure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns. Nothing in this Agreement,
express or implied, is intended to confer on any Person other than the parties
or their respective successors and permitted assigns, the Shareholders and
other
Persons expressly referred to herein, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
34
10.9
ASSIGNABILITY
Neither
this Agreement nor any of the parties' rights hereunder shall be assignable
by
any party without the prior written consent of the other parties and any
attempted assignment without such consent shall be void.
10.10
WAIVER AND AMENDMENT
Any
term
or provision of this Agreement may be waived at any time by the party, which
is
entitled to the benefits thereof. The waiver by any party of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of
any
subsequent breach. The parties may, by mutual agreement in writing, amend this
Agreement in any respect. HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and
the
Shareholders hereby acknowledge their intent that this Agreement includes as
a
party any holder of capital stock in HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT
INC at the time of Closing. HOME SYSTEM GROUP, HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC and the Shareholders therefore agree that this Agreement may
be
amended, without the further consent of any party to this Agreement, (i) to
add
as a new Shareholder any existing shareholder of HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC and
(ii)
to
modify Schedule 1 to reflect the addition of such shareholder.
10.11
ATTORNEYS' FEES.
In
the
event of any action or proceeding to enforce the terms and conditions of this
Agreement, the prevailing party shall be entitled to an award of reasonable
attorneys' and experts' fees and costs, in addition to such other relief as
may
be granted.
10.12
SEVERABILITY.
If
any
provision of this Agreement is held invalid or unenforceable by any court of
competent jurisdiction, the other provisions of this Agreement will remain
in
full force and effect. Any provision of this Agreement held invalid or
unenforceable only in part or degree will remain in full force and effect to
the
extent not held invalid or unenforceable.
10.13
CONSTRUCTION.
In
executing this Agreement, the parties severally acknowledge and represent that
each: (a) has fully and carefully read and considered this Agreement; (b) has
or
has had the opportunity to consult independent legal counsel regarding the
legal
effect and meaning of this document and all terms and conditions hereof; (c)
has
been afforded the opportunity to negotiate as to any and all terms hereof;
and
(d) is executing this Agreement voluntarily, free from any influence, coercion
or duress of any kind. The language used in this Agreement will be deemed to
be
the language chosen by the parties to express their mutual intent, and no rule
of strict construction will be applied against any party.
35
IN
WITNESS WHEREOF, this Agreement has been executed by the parties hereto as
of
the day and year first above written.
HOME
SYSTEM GROUP
By:
Name:
Xxx Xxx Li
Title:
CEO and Chairman
Holy
(H.K) Limited
By:
Name:
Title:
OCEANIC
WELL PROFIT INC
By:
Name:
Title:
SHAREHOLDERS:
See
attached Shareholder signature pages
36
EXHIBIT
A
CERTAIN
DEFINITIONS
For
purposes of the Agreement (including this Exhibit A):
AGREEMENT.
"Agreement" shall mean the Share Exchange Agreement to which this Exhibit A
is
attached (including all Disclosure Schedules and all Exhibits), as it may be
amended from time to time.
APPROVED
PLANS. "Approved Plans" shall mean a stock option or similar plan for the
benefit of employees or others, which has been approved by the shareholders
of
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC.
AVERAGE
HOME SYSTEM GROUP STOCK PRICE. "Average HOME SYSTEM GROUP Stock Price" shall
refer to the average of the closing price of the Common Stock of HOME SYSTEM
GROUP on the OTC Bulletin Board equaling to US$0.40
per
share based upon a valuation of HOME SYSTEM GROUP of $7,919,180 as determined
by
the parties.
BREACH.
There shall be deemed to be a "Breach" of a representation, warranty, covenant,
obligation or other provision if there is or has been any inaccuracy in or
breach of, or any failure to comply with or perform, such representation,
warranty, covenant, obligation or other provision.
CERTIFICATES.
"Certificates" shall have the meaning specified in Section 1.3 of the Agreement.
HOME
SYSTEM GROUP. "HOME SYSTEM GROUP" shall have the meaning specified in the first
paragraph of the Agreement.
HOME
SYSTEM GROUP COMMON STOCK. "HOME SYSTEM GROUP Common Stock" shall mean the
shares of common stock of HOME SYSTEM GROUP.
CLOSING.
"Closing" shall have the meaning specified in Section 1.5 of the Agreement.
CLOSING
DATE. "Closing Date" shall have the meaning specified in Section 1.5 of the
Agreement.
CODE.
"Code" shall have the meaning specified in the Recitals of this Agreement.
37
CONFIDENTIAL
INFORMATION. "Confidential Information" shall mean all nonpublic information
disclosed by one party or its agents (the "Disclosing Party") to the other
party
or its agents (the "Receiving Party") that is designated as confidential or
that, given the nature of the information or the circumstances surrounding
its
disclosure, reasonably should be considered as confidential. Confidential
Information includes, without limitation (i) nonpublic information relating
to
the Disclosing Party's technology, customers, vendors, suppliers, business
plans, intellectual property, promotional and marketing activities, finances,
agreements, transactions, financial information and other business affairs,
and
(ii) third-party information that the Disclosing Party is obligated to keep
confidential.
Confidential
Information does not include any information that (i) is or becomes publicly
available without breach of this Agreement, (ii) can be shown by documentation
to have been known to the Receiving Party at the time of its receipt from the
Disclosing Party, (iii) is received from a third party who, to the knowledge
of
the Receiving Party, did not acquire or disclose such information by a wrongful
or tortious act, or (iv) can be shown by documentation to have been
independently developed by the Receiving Party without reference to any
Confidential Information.
CONSENT.
"Consent" shall mean any approval, consent, ratification, permission, waiver
or
authorization (including any Governmental Authorization).
DISCLOSURE
SCHEDULE UPDATE. "Disclosure Schedule Update" shall have the meaning specified
in Section 4.4 of the Agreement.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC BALANCE SHEET. "HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC Balance Sheet" shall mean HOLY (H.K) LIMITED AND OCEANIC
WELL PROFIT INC's unaudited balance sheet at December 31, 2005.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC COMMON STOCK. "HOLY (H.K) LIMITED
AND
OCEANIC WELL PROFIT INC Common Stock" shall mean the shares of common stock
of
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC.
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC DISCLOSURE SCHEDULE. "HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC Disclosure Schedule" shall have the meaning
specified in introduction to Article II of the Agreement.
ENTITY.
"Entity" shall mean any corporation (including any non profit corporation),
general partnership, limited partnership, limited liability partnership, joint
venture, estate, trust, cooperative, foundation, society, political party,
union, company (including any limited liability company or joint stock company),
firm or other enterprise, association, organization or entity.
ENVIRONMENTAL
LAWS. "Environmental Laws" shall mean any Law or other requirement relating
to
the protection of the environment, health, or safety from the release or
disposal of hazardous materials.
ENVIRONMENTAL
PERMIT. "Environmental Permit" means all licenses, permits, authorizations,
approvals, franchises and rights required under any applicable Environmental
Law
or Order.
38
EQUITY
SECURITIES. "Equity Security" shall mean any stock or similar security,
including, without limitation, securities containing equity features and
securities containing profit participation features, or any security convertible
into or exchangeable for, with or without consideration, any stock or similar
security, or any security carrying any warrant, right or option to subscribe
to
or purchase any shares of capital stock, or any such warrant or right.
EXCHANGE
ACT. "Exchange Act" means the Securities Exchange Act of 1934, as amended.
GAAP.
"GAAP" shall mean Generally Accepted Accounting Principles, applied on a
consistent basis.
GOVERNMENTAL
AUTHORIZATION. "Governmental Authorization" shall mean any:
(a)
permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
that is issued, granted, given or otherwise made available by or under the
authority of any Governmental Body or pursuant to any Law; or
(b)
right
under any contract with any Governmental Body.
GOVERNMENTAL
BODY. "Governmental Body" shall mean any:
(a)
nation, principality, state, commonwealth, province, territory, county,
municipality, district or other jurisdiction of any nature;
(b)
federal, state, local, municipal, foreign or other government;
(c)
governmental or quasi-governmental authority of any nature (including any
governmental division, subdivision, department, agency, bureau, branch, office,
commission, council, board, instrumentality, officer, official, representative,
organization, unit, body or Entity and any court or other tribunal); or
(d)
individual, Entity or body exercising, or entitled to exercise, any executive,
legislative, judicial, administrative, regulatory, police, military or taxing
authority or power of any nature, including any court, arbitrator,
administrative agency or commissioner, or other governmental authority or
instrumentality.
INDEBTEDNESS.
"Indebtedness" shall mean any obligation, contingent or otherwise. Any
obligation secured by a Lien on, or payable out of the proceeds of, or
production from, property of the relevant party will be deemed to be
Indebtedness.
INTELLECTUAL
PROPERTY. "Intellectual Property" means all industrial and intellectual
property, including, without limitation, all U.S. and non-U.S. patents, patent
applications, patent rights, trademarks, trademark applications, common law
trademarks, Internet domain names, trade names, service marks, service xxxx
applications, common law service marks, and the goodwill associated therewith,
copyrights, in both published and unpublished works, whether registered or
unregistered, copyright applications, franchises, licenses, know-how, trade
secrets, technical data, designs, customer lists, confidential and proprietary
information, processes and formulae, all computer software programs or
applications, layouts, inventions, development tools and all documentation
and
media constituting, describing or relating to the above, including manuals,
memoranda, and records, whether such intellectual property has been created,
applied for or obtained anywhere throughout the world.
39
KNOWLEDGE.
A corporation shall be deemed to have "knowledge" of a particular fact or matter
only if a director or officer of such corporation has, had or should have had
knowledge of such fact or matter.
LAWS.
"Laws" means, with respect to any Person, any U.S. or non-U.S. federal,
national, state, provincial, local, municipal, international, multinational
or
other law (including common law), constitution, statute, code, ordinance, rule,
regulation or treaty applicable to such Person.
LIEN.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien
or
charge, right of first refusal, encumbrance or other adverse claim or interest
of any kind, including, without limitation, any conditional sale or other title
retention agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform Commercial Code
of
any jurisdiction and including any lien or charge arising by Law.
MATERIAL
ADVERSE EFFECT. "Material Adverse Effect" means any change, effect or
circumstance which, individually or in the aggregate, would reasonably be
expected to (a) have a material adverse effect on the business, assets,
financial condition or results of operations of the affected party, in each
case
taken as a whole or (b) materially impair the ability of the affected party
to
perform its obligations under this Agreement and the Transaction Agreements,
excluding any change, effect or circumstance resulting from (i) the
announcement, pendency or consummation of the transactions contemplated by
this
Agreement, (ii) changes in the United States securities markets generally,
or
(iii)
changes in general economic, currency exchange rate, political or regulatory
conditions in industries in which the affected party operates.
MATERIAL
CONTRACT. "Material Contract" means any and all agreements, contracts,
arrangements, understandings, leases, commitments or otherwise, providing for
potential payments by or to the company in excess of $10,000, and the
amendments, supplements and modifications thereto.
ORDER.
"Order" shall mean any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any Governmental
Body.
ORDINARY
COURSE OF BUSINESS. "Ordinary Course of Business" shall mean an action taken
by
HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC if (i) such action is taken
in
normal operation, consistent with past practices, (ii) such action is not
required to be authorized by the Shareholders, Board of Directors or any
committee of the Board of the Directors or other governing body of HOLY (H.K)
LIMITED AND OCEANIC WELL PROFIT INC and (iii) does not require any separate
or
special authorization or consent of any nature by any Governmental Body or
third
party.
40
PERMITTED
LIENS. "Permitted Liens" shall mean (a) Liens for Taxes not yet payable or
in
respect of which the validity thereof is being contested in good faith by
appropriate proceedings and for the payment of which the relevant party has
made
adequate reserves; (b) Liens in respect of pledges or deposits under workmen's
compensation laws or similar legislation, carriers, warehousemen, mechanics,
laborers and material men and similar Liens, if the obligations secured by
such
Liens are not then delinquent or are being contested in good faith by
appropriate proceedings conducted and for the payment of which the relevant
party has made adequate reserves; and (c) statutory Liens incidental to the
conduct of the business of the relevant party which were not incurred in
connection with the borrowing of money or the obtaining of advances or credits
and that do not in the aggregate materially detract from the value of its
property or materially impair the use thereof in the operation of its business.
PERSON.
"Person" shall mean any individual, Entity or Governmental Body.
PRE-CLOSING
PERIOD. "Pre-Closing Period" shall mean the period commencing as of the date
of
the Agreement and ending on the Closing Date.
PROCEEDING.
"Proceeding" shall mean any action, suit, litigation, arbitration, proceeding
(including any civil, criminal, administrative, investigative or appellate
proceeding and any informal proceeding), prosecution, contest, hearing, inquiry,
inquest, audit, examination or investigation, commenced, brought, conducted
or
heard by or before, or otherwise has involved, any Governmental Body or any
arbitrator or arbitration panel.
REPRESENTATIVES.
"Representatives" of a specified party shall mean officers, directors,
employees, attorneys, accountants, advisors and representatives of such party,
including, without limitation, all subsidiaries of such specified party, and
all
such Persons with respect to such subsidiaries. The Related Persons of HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC shall be deemed to be
"Representatives" of HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC, as
applicable.
SEC.
"SEC" shall mean the Securities and Exchange Commission.
SECURITIES
ACT. "Securities Act" shall mean the Securities Act of 1933, as amended.
TAXES.
"Taxes" shall mean all foreign, federal, state or local taxes, charges, fees,
levies, imposts, duties and other assessments, as applicable, including, but
not
limited to, any income, alternative minimum or add-on, estimated, gross income,
gross receipts, sales, use, transfer, transactions, intangibles, ad valorem,
value-added, franchise, registration, title, license, capital, paid-up capital,
profits, withholding, payroll, employment, unemployment, excise, severance,
stamp, occupation, premium, real property, recording, personal property, federal
highway use, commercial rent, environmental (including, but not limited to,
taxes under Section 59A of the Code) or windfall profit tax, custom, duty or
other tax, governmental fee or other like assessment or charge of any kind
whatsoever, together with any interest, penalties or additions to tax with
respect to any of the foregoing; and "Tax" means any of the foregoing Taxes.
41
TAX
GROUP. "Tax Group" shall mean any federal, state, local or foreign consolidated,
affiliated, combined, unitary or other similar group of which HOLY (H.K) LIMITED
AND OCEANIC WELL PROFIT INC is now or was formerly a member.
TAX
RETURN. "Tax Return" shall mean any return, declaration, report, claim for
refund or credit, information return, statement or other similar document filed
with any Governmental Body with respect to Taxes, including any schedule or
attachment thereto, and including any amendment thereof. TRANSACTIONAL
AGREEMENTS. "Transactional Agreements" shall mean:
(a)
this
Agreement; and
42
43
Holy
(H.K) Limited Shareholders
Name
and Address
|
Number
of Shares
|
|
Yu
Kaming
|
10,000
|
OCEANIC
WELL PROFIT INC
|
Name
and Address
|
Number
of Shares
|
Holy
(H.K) Limited
|
44
SCHEDULE
2
HOLY
(H.K) LIMITED AND OCEANIC WELL PROFIT INC DISCLOSURE SCHEDULE
COUNTERPART
SIGNATURE PAGE
AMONG
HOME
SYSTEM GROUP,
Holy
(H.K) LIMITED,
OCEANIC
WELL PROFIT INC
AND
THE SHAREHOLDERS NAMED THEREIN
A.
The
undersigned shareholder of Holy (H.K) Limited desires to enter into the Share
Exchange Agreement dated December
11, 2006
(the
"AGREEMENT"), among HOME SYSTEM GROUP, Holy (H.K) Limited, OCEANIC WELL PROFIT
INC and the shareholders of Holy (H.K) Limited. therein, a copy of which has
been delivered to the undersigned.
B.
The
undersigned hereby adopts, accepts and agrees to all of the terms and provisions
of the Agreement.
C.
This
Counterpart Signature Page has been executed by the under signed Shareholder.
The parties to the Agreement are hereby authorized to attach this Counterpart
Signature Page to a copy of the Agreement, together with executed Counterpart
Signature Pages of the other Shareholders. The undersigned agrees that when
this
Counterpart Signature Page has been appended to the Agreement, the Agreement
shall thereupon become a binding agreement between the undersigned, HOME SYSTEM
GROUP, HOLY (H.K) LIMITED AND OCEANIC WELL PROFIT INC and other Shareholders
who
have executed similar Counterpart Signature Pages, enforceable against the
undersigned in accordance with its terms, without further action by the
undersigned.
IN
WITNESS WHEREOF, the undersigned has executed and delivered this Counterpart
Signature Page as of the 11th
day
of
2006.
SHAREHOLDER:
By:
Name: