Document:

Exhibit 10.7

 

EXECUTION
VERSION

 

INDEMNIFICATION
SUBORDINATION AGREEMENT

 

This INDEMNIFICATION
SUBORDINATION AGREEMENT (this “Agreement”), dated as of February 4,
2009, is entered into by and between Accuride Corporation, a Delaware
corporation (together with any current or future successors or direct or
indirect parents or subsidiaries, the “Company”), on the one hand, and
Sun Capital Master Securities Fund III, L.P., a Caymans Islands exempted
limited partnership, Sun Capital Securities Fund III, LP, a Delaware limited
partnership, Sun Capital Securities Advisors III, L.P., a Cayman Islands
exempted limited partnership, Sun Capital Securities III, Ltd., a Cayman
Islands exempted company, Sun Capital Securities Management III, LP, a Delaware
limited partnership, Sun Capital Securities Management Services III, LLC, a
Delaware limited liability company (“SCSM III”), and Sun Capital
Securities III, LLC, a Delaware limited liability company (collectively, “Sun”),
on the other hand.  Capitalized terms
used but not otherwise defined herein shall have the meanings set forth in Section 3.

 

W I T N E S S E T H:

 

WHEREAS, the Company is a
party to that certain Last Out Debt Agreement, dated as of the date hereof, by
and between the Company and a Sun Affiliate (the “Last Out Debt Agreement”),
and that certain Consulting Agreement, dated as of the date hereof, by and
between the Company and a Sun Affiliate (the “Consulting Agreement”);

 

WHEREAS, the Company has
certain indemnification obligations to certain Sun Affiliates and their
respective officers, directors, members, partners, employees  and agents under certain Organizational
Documents, the Last Out Debt Agreement and the Consulting Agreement, and such
parties also have certain rights to indemnification provided by Sun and/or Sun
Affiliates;

 

WHEREAS, this Agreement
is intended to clarify certain rights of (a) Sun, (b) any Sun
Affiliate, (c) any persons or entities providing management, advisory,
consulting or other services at the direction or request of Sun or any Sun
Affiliate to or for the benefit of the Company, (c) any persons designated
by Sun or any Sun Affiliate to serve as a director, officer, board observer,
partner, trustee, fiduciary, manager, employee, consultant or advisor, or
functional or foreign equivalent of the foregoing, to the Company, and (d) any
direct or indirect partners (including general partners), shareholders, members
(including managing members), controlling persons, subsidiaries, directors,
officers, fiduciaries, managers, employees and agents of each of the foregoing
(those persons and entities identified in (a), (b), (c) and (d) above,
the “Indemnified Parties”), whether such rights exist pursuant to any
Organizational Document, Advisory Agreement, Transaction Agreement or any other
agreement or document;

 

WHEREAS, it is the intent
of the parties that (a) the Company is and shall be the indemnitor of the
first resort with respect to any matters for which advancement or
indemnification is provided by the Company to or on behalf of the Indemnified
Parties, whether for claims and liabilities prior to or after the date of this
Agreement, (b) the Company shall provide advancement or indemnification to
each Indemnified Party on a primary basis and (c) any Indemnified Party
may be expected to seek advancement and/or indemnification from any other
potential source of advancement or indemnification (including, without
limitation, from any other Indemnified Party) only if, and to the extent, that
the Company is legally and/or

 

1

 

financially unable to
make advancement and/or indemnification, as the case may be, to or on behalf of
such Indemnified Party; and

 

WHEREAS, the Company’s
acknowledgement and agreement to the foregoing is a material condition to the
willingness of certain Sun Affiliates to serve as officers and/or directors of
the Company, to enter into the Last Out Debt Agreement and Consulting Agreement
and to consummate the transactions contemplated thereby.

 

NOW, THEREFORE, in
consideration of the premises, and of the representations, warranties,
covenants and agreements set forth herein, the parties agree as follows:

 

1.               Primary Indemnitor; Subrogation. 
The Company hereby acknowledges that the Indemnified Parties have
certain rights to advancement and/or indemnification by Sun and certain Sun
Affiliates (collectively, the “Fund Indemnitors”).  The Company hereby agrees that the Company is
the indemnitor of first resort (i.e., its obligations to the Indemnified
Parties are primary and those of the Fund Indemnitors are secondary), that the
Company shall be liable for the full amount of payments of indemnification
required by any Organizational Document, Advisory Agreement or Transaction
Agreement and that the Company irrevocably and unconditionally waives any
claims against the Fund Indemnitors for contribution, subrogation, exoneration,
reimbursement or any other recovery of any kind for which the Company is liable
pursuant to any Organizational Document, Advisory Agreement, Transaction
Agreement or this Agreement.  The Company
further agrees that no payment for indemnification by the Fund Indemnitors on
behalf of any Indemnified Party with respect to any claim for which an
Indemnified Party has sought payment from the Company shall affect the foregoing,
and the Fund Indemnitors, to the extent of such payment, shall be subrogated to
all of the rights of recovery of such Indemnified Party against the Company.

 

2.               Modification of Indemnification Rights. 
An Indemnified Party’s rights under this Agreement and an Indemnified
Party’s rights to advancement or indemnification from the Company pursuant to
any agreement or document (including, without limitation, any Organizational
Document, Advisory Agreement or Transaction Agreement) governing an Indemnified
Party’s rights to advancement and/or indemnification from the Company may not
be waived, eliminated or otherwise diminished or modified without the specific
written consent of SCSM III, on behalf of Sun. 
Sun may, within Sun’s sole discretion, compromise, waive or relinquish
any Indemnified Party’s rights to advancement or indemnification under any
agreement or document (whether pursuant to any Organizational Document,
Advisory Agreement, Transaction Agreement or otherwise) governing such
Indemnified Party’s rights to advancement and/or indemnification from the
Company.

 

3.               Certain Definitions. 
The following terms have the meanings set forth below:

 

“Advisory Agreement”
shall mean any advisory agreement, consulting, monitoring or other similar or
equivalent agreement, including the Consulting Agreement.

 

“Organizational
Document” shall mean an entity’s charter, bylaws, partnership agreement,
limited liability company agreement, operating agreement, indemnification
agreement or other similar agreement or document, including any document
amendatory or supplemental thereto.

 

2

 

“Person” shall
mean any individual, sole
proprietorship, partnership, joint venture, trust, unincorporated association,
corporation, limited liability company or entity.

 

“Sun Affiliate”
shall mean any other Person controlling, controlled by or under common control
with Sun; provided, that under no circumstances shall the Company or any
“portfolio company” acquired, either directly or indirectly through one or more
subsidiaries, by Sun be deemed a Sun Affiliate hereunder.  For purposes of this definition, “control”
(including the terms “controlling,” “controlled by” and “under
common control with”) means the possession, direct or indirect, of the
power to direct or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities, by contract or
otherwise.  For the avoidance of doubt,
any investment fund formed or managed by Sun or any Sun Affiliate or for which
Sun or any Sun Affiliate serves as an investment adviser, and each of their
respective employees, officers, directors,  direct
or indirect general partner, managing member and/or controlling persons are “Sun
Affiliates” for all purposes hereof.

 

“Transaction Agreement”
shall mean any investment agreement, securities purchase agreement, note
purchase agreement, asset purchase agreement, merger agreement or other similar
or equivalent agreement, including the Last Out Debt Agreement.

 

4.               No Obligation to Provide Services. 
Nothing in this Agreement shall be construed to require SCSM III to
provide, or to continue to provide, management, advisory consulting or other
services, and nothing in this agreement shall be construed to require any Indemnified
Party to serve, or continue to serve, as a director, officer, board observer,
fiduciary, partner or manager (or in any other capacity) of the Company.  Subject to the second sentence of Section 2, no Indemnified Party’s rights
hereunder shall be limited or impaired in any way in the event that such
Indemnified Party ceases, for any reason, to serve or provide services to the
Company.

 

5.               Third-Party Beneficiaries. 
Each Fund Indemnitor and, subject to the second sentence of Section 2, each Indemnified Party shall,
to the extent not a party hereunder, be considered an express third-party
beneficiary hereunder and shall enjoy all rights that a party hereunder enjoys
and shall enjoy such rights to the same extent as a party hereunder.

 

6.               Joint and Several Liability. 
Each subsidiary of the Company party hereto hereby agrees, and any
successor to each such subsidiary that is a subsidiary of the Company (whether
by merger, consolidation or transfer of all or substantially all of such
subsidiary’s assets) shall agree, that it shall be jointly and severally liable
to the Fund Indemnitors for any amounts owed by the Company to any Fund
Indemnitor pursuant to this Agreement.

 

7.               Additional Subsidiaries. 
The Company shall cause each subsidiary of the Company not a party
hereto to execute a joinder to this Agreement within two (2) weeks of the
date hereof; provided, that any subsidiary formed in a jurisdiction
outside the United States shall not be bound by the provisions of Section 6 hereof.  The Company shall not form or acquire any
subsidiaries in the future unless each such subsidiary executes a joinder to
this Agreement, including, with respect to domestic subsidiaries, Section 6 hereof, it being agreed and
understood that whether or not such subsidiary actually executes such a
joinder, such subsidiary shall, to the fullest extent permitted by law, be
bound by this Agreement, including, with respect to domestic subsidiaries, Section 6 hereof.

 

3

 

8.               No Further Changes.  Except as,
and only to the extent, specifically provided herein, any and all rights to
advancement and/or indemnification to which each Indemnified Party has ever
been, is or may in the future be entitled from the Company shall remain
unchanged by this Agreement.

 

9.               Conflicting Provisions.  To the extent
that any provision of this Agreement conflicts with any provision of any other
agreement to which the Company or an Indemnified Party is a party (whether
pursuant to an Organizational Document, Advisory Agreement, Transaction
Document or any other agreement or document) with respect to the subject matter
of this Agreement, the provisions of this Agreement shall control.

 

10.         Amendment.  No amendment
of any provision of this Agreement will be effective unless made in writing and
signed by the Company and SCSM III, on behalf of Sun.

 

11.         Waiver.  No waiver
will be effective unless it is in a writing signed by a duly authorized officer
of the waiving party that makes express reference to the provision or
provisions subject to such waiver.

 

12.         Remedies.  No right or
remedy conferred herein is intended to be exclusive of any other right or
remedy, and every other right or remedy shall be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at
law or in equity or otherwise, so long as such right or remedy does not
conflict with any right or remedy provided herein.

 

13.         Change in Law.  To the extent
that a change in the laws of the State of Delaware (or other applicable law),
whether by statute or judicial decision, permits greater indemnification rights
or remedies than would currently be afforded under (a) the Company’s
Organizational Documents, (b) this Agreement or (c) any other
document providing advancement and/or indemnification to an Indemnified Party,
it is the intent of the parties that the Indemnified Parties shall enjoy, by
and as a result of this Agreement, the greater benefits so afforded by such
change.

 

14.   Counterparts and Facsimile.  For the convenience of the parties hereto,
this Agreement may be executed in any number of separate counterparts, each
such counterpart being deemed to be an original instrument, and all such
counterparts will together constitute the same agreement.  Executed signature pages to this Agreement
may be delivered by electronic facsimile (including via electronic mail) and
such facsimiles will be deemed as sufficient as if actual signature pages had
been delivered.

 

15.   Governing Law.  This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware,
without giving effect to principles of conflicts of law or choice of law that
would compel the application of the substantive laws of any other jurisdiction.

 

16.         WAIVER OF JURY TRIAL. 
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY LITIGATION, ACTION, PROCEEDING, CROSS-CLAIM, OR COUNTERCLAIM IN ANY
COURT (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING
TO OR IN CONNECTION WITH (I) THIS AGREEMENT OR THE VALIDITY, PERFORMANCE,

 

4

 

INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF OR (II) THE
ACTIONS OF THE PARTIES IN THE NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY,
ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

 

17.         Notices.  All notices,
demands and other communications to be given or delivered under or by reason of
the provisions of this Agreement shall be in writing and shall be deemed to
have been given (i) when personally delivered, sent by telecopy (with hard
copy to follow); (ii) one day after sent by reputable overnight express
courier (charges prepaid); or (iii) five (5) days following
mailing by certified or registered mail, postage prepaid and return receipt
requested.  Unless another address is
specified in writing, notices, demands and communications to the Company and
Sun shall be sent to the addresses indicated below.

 

(a)          If to Sun:

 

Sun Capital Securities Management Services III, LLC

5200 Town Center Circle, Suite 600

Boca Raton, Florida 33486

Attention: Jason H. Neimark, Brian Urbanek and C. Deryl Couch

Facsimile: (561) 394-0540 

Email: jneimark@suncappart.com, burbanek@suncappart.com and
dcouch@suncappart.com

 

and

 

Sun Capital Securities
Management Services III, LLC

11111 Santa Monica Blvd., Suite 1050

Los Angeles, California 90025

Attention: Michael J. Satzberg

Facsimile: (310) 473-1119 

Email: msatzberg@suncappart.com

 

with a copy to:

 

Kirkland & Ellis
LLP

200 E. Randolph Drive

Chicago, Illinois 60601

Attention: Douglas C. Gessner, P.C., Gerald T. Nowak and Jeremy S. Liss

Facsimile: (312) 861-2200 

Email: dgessner@kirkland.com, gnowak@kirkland.com and jliss@kirkland.com

 

5

 

(b)         If to the Company:

 

Accuride Corporation

7140 Officer Circle

Evansville, Indiana 47715

Attention: David K. Armstrong

Facsimile: (812) 962-5246

Email: dkarmstr@accuridecorp.com

 

with a copy to:

 

Latham & Watkins
LLP

Sears Tower, Suite 5800

233 South Wacker Drive

Chicago, Illinois 60606

Attention: Christopher D. Lueking

Facsimile: (312) 993-9767

Email: christopher.lueking@lw.com

 

18.         Entire Agreement. 
This Agreement sets forth the entire agreement of the parties hereto
with regard to the subject matter hereof and supersedes and replaces all prior
agreements, understandings and representations, oral or written, with regard to
such matters.

 

19.         Assignment; Successors and Assigns. 
This Agreement and the rights, duties and obligations of the Company
hereunder may not be assigned or delegated by the Company without the prior
written consent of Sun.  All covenants,
promises and agreements by or on behalf of the parties contained in this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors and
assigns.  The Company acknowledges and
agrees this Agreement is intended to bind all future direct and indirect
parents and subsidiaries of the Company.

 

20.         Severability. 
If any provision of this Agreement, or the application thereof to any
person or circumstance, is determined by a court of competent jurisdiction to
be invalid, void or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as
to which it has been held invalid or unenforceable, will remain in full force
and effect and shall in no way be affected, impaired or invalidated thereby, so
long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to any party.  Upon such determination, the parties shall
negotiate in good faith in an effort to agree upon a suitable and equitable
substitute provision to effect the original intent of the parties.

 

21.         Further Assurances. Each party hereto agrees to use all
reasonable efforts to obtain all consents and approvals, and to do all other
things, necessary for the transactions contemplated by this Agreement.  The parties agree to take such further action
and to deliver or cause to be delivered any additional agreements or
instruments as any of them may reasonably request for the purpose of carrying
out this Agreement and the agreements and transactions contemplated hereby.

 

6

 

22.         Attorneys’ Fees. 
In the event that any action is instituted by Sun under this Agreement
to enforce or interpret any of the terms hereof, Sun shall be entitled to be
paid all court costs and expenses, including the reasonable and documented fees
of one counsel, incurred by Sun with respect to such action, unless as a part
of such action, the court of competent jurisdiction determines that each of the
material assertions made by Sun as a basis for such action were not made in
good faith or were frivolous.  In the
event of an action instituted by the Company under this Agreement or to enforce
or interpret any of the terms of this Agreement, Sun shall be entitled to be
paid all court costs and expenses, including the reasonable and documented fees
of one counsel, incurred by Sun in defense of such action (including with
respect to Sun’s counterclaims and cross-claims made in such action), unless as
apart of such action the court determines that each of Sun’s material defenses
to such action were made in bad faith or were frivolous.

 

23.         Interpretation. 
The headings contained in this Agreement are for reference purposes only
and are not part of this Agreement. 
Whenever the words “include,” “includes” or “including” are used in this
Agreement, they shall be deemed followed by the words “without limitation.”  No rule of construction against the
draftsperson shall be applied in connection with the interpretation or
enforcement of this Agreement, as this Agreement is the product of negotiation
between sophisticated parties advised by counsel.

 

[REMAINDER OF PAGE
INTENTIONALLY LEFT BLANK]

 

7

 

IN WITNESS WHEREOF, the
parties have executed this Indemnification Subordination Agreement as of the
date first written above.

 

 

	
   

  	
  ACCURIDE
  CORPORATION  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David K. Armstrong

  
	
   

  	
  Name: David K.
  Armstrong 

  
	
   

  	
  Title: Senior Vice
  President/Chief Financial 

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AKW
  GENERAL PARTNER, L.L.C.

  
	
   

  	
   

  
	
   

  	
  By: Accuride
  Corporation, as Member

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David K. Armstrong

  
	
   

  	
  Name: David K.
  Armstrong

  
	
   

  	
  Title: Senior Vice
  President/Chief Financial 

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AOT,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David K. Armstrong

  
	
   

  	
  Name: David K.
  Armstrong 

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  TRANSPORTATION
  TECHNOLOGIES, 

  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David K. Armstrong

  
	
   

  	
  Name: David K.
  Armstrong 

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCURIDE
  CUYAHOGA FALLS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David K. Armstrong

  
	
   

  	
  Name: David K.
  Armstrong 

  
	
   

  	
  Title: Vice President

  

 

Signature
Page to Indemnification Subordination Agreement

 

 

	
   

  	
  ACCURIDE
  ERIE, L.P.

  
	
   

  	
   

  
	
   

  	
  By: AKW General Partner
  LLC, as General 

  Partner

  
	
   

  	
   

  
	
   

  	
  By: Accuride
  Corporation, as Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David K. Armstrong

  
	
   

  	
  Name: David K.
  Armstrong

  
	
   

  	
  Title: Senior Vice
  President/Chief Financial 

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCURIDE
  HENDERSON LIMITED LIABILITY COMPANY

  
	
   

  	
   

  
	
   

  	
  By: Accuride
  Corporation, as Member

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David K. Armstrong

  
	
   

  	
  Name: David K.
  Armstrong

  
	
   

  	
  Title: Senior Vice
  President/Chief Financial 

  Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ACCURIDE
  EMI, LLC  

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ William M. Lasky

  
	
   

  	
  Name: William M. Lasky 

  
	
   

  	
  Title: Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David K. Armstrong

  
	
   

  	
  Name: David K.
  Armstrong 

  
	
   

  	
  Title: Manager

  

 

Signature
Page to Indemnification Subordination Agreement

 

 

	
   

  	
  SUN
  CAPITAL MASTER SECURITIES 

  FUND III, L.P.

  
	
   

  	
   

  
	
   

  	
  By: Sun Capital Securities
  Management III, 

  LP

  
	
   

  	
  Title: Investment Manager

  
	
   

  	
   

  
	
   

  	
  By: Sun Capital Securities
  III, LLC

  
	
   

  	
  Title: General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. McConvery

  
	
   

  	
  Name: Michael J. McConvery

  
	
   

  	
  Title: Vice President and Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUN
  CAPITAL SECURITIES FUND III, 

  LP

  
	
   

  	
   

  
	
   

  	
  By: Sun Capital Securities
  Management III,

  LP

  
	
   

  	
  Title: Investment Manager

  
	
   

  	
   

  
	
   

  	
  By: Sun Capital Securities
  III, LLC

  
	
   

  	
  Title: General Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. McConvery

  
	
   

  	
  Name: Michael J. McConvery

  
	
   

  	
  Title: Vice President and Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUN
  CAPITAL SECURITIES 

  ADVISORS III, L.P.

  
	
   

  	
   

  
	
   

  	
  By: Sun Capital Securities
  III, Ltd.

  
	
   

  	
  Title: General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. McConvery

  
	
   

  	
  Name: Michael J. McConvery

  
	
   

  	
  Title: Vice President and Assistant Secretary

  

 

Signature
Page to Indemnification Subordination Agreement

 

 

	
   

  	
  SUN
  CAPITAL SECURITIES III, LTD.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. McConvery

  
	
   

  	
  Name: Michael J. McConvery

  
	
   

  	
  Title: Vice President and Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUN
  CAPITAL SECURITIES 

  MANAGEMENT III, LP

  
	
   

  	
   

  
	
   

  	
  By: Sun Capital Securities
  III, LLC

  
	
   

  	
  Title: General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. McConvery

  
	
   

  	
  Name: Michael J. McConvery

  
	
   

  	
  Title: Vice President and Assistant Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SUN CAPITAL SECURITIES III, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael J. McConvery

  
	
   

  	
  Name: Michael J. McConvery

  
	
   

  	
  Title: Vice President and Assistant Secretary

  

 

Signature
Page to Indemnification Subordination Agreement

 

 

	
   

  	
  SUN
  CAPITAL SECURITIES 

  MANAGEMENT SERVICES III, LLC

  
	
   

  	
   

  
	
   

  	
  By: Sun Capital Securities
  Management III, 

  LP

  
	
   

  	
  Title: Managing
  Member

  
	
   

  	
   

  
	
   

  	
  By: Sun Capital Securities
  III, LLC

  
	
   

  	
  Title: General
  Partner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mark Hajduch

  
	
   

  	
  Name: Mark Hajduch

  
	
   

  	
  Title: Vice
  President and Assistant Secretary

  

 

Signature
Page to Indemnification Subordination AgreementUnassociated Document

     

    
      Exhibit
10.1

      
UNOFFICIAL
ENGLISH TRANSLATION

       

    

    AGREEMENT
ON CAPITAL INCREASE AND EQUITY
SUBSCRIPTION

     

    THIS CAPITAL INCREASE AND EQUITY
SUBSCRIPTION  (this “Agreement”) is made
and entered into as of January 29,
2009, by and among Guangzhou
AWA Wine Co. Ltd.  (the “Company”), a wholly
owned Chinese domiciled enterprise duly organized and existing under the laws of
the People’s Republic of China (hereinafter referred to as “PRC” or “China”), with its
legal address at Suite
510 Block C No 88 Wenchan South Rd Liwan District, Guangzhou Guangdong, China,
and Mr. Nei Weifeng, Mr.
Liang Huanxian, Mr. Xian Wenbin (each a “Chinese Equity Interest
Holder” and in the aggregate the “Chinese Equity Interest
Holders”), Regal Life
Concepts, Inc. (the “Investor”), a
corporation duly organized and existing under the laws of Nevada, with its legal
address at 3723 E. Maffeo Road, Phoenix, Arizona, 85050, United States of
America.

     

    
      The
Investor, the Company, the Chinese Equity Interest Holders are
hereinafter sometimes individually referred to as a “Party” and sometimes collectively
referred to as the “Parties.” The Company and the Chinese Equity Interest Holders are
referred to as “Chinese Parties”.

    

     

    Recitals

     

    On a
fully diluted basis, Investor agrees to acquire 26% of the Company’s equity
interest by capital increase and equity subscription. The Company shall convert
to a Sino-foreign cooperative joint venture (“CJV”) after the capital
increase.  The Investor may further acquire 25% equity interest in the
Company and have a 51% equity interest pursuant to the development of the
JV.

     

    Agreement

     

    NOW, THEREFORE, in
consideration of the premises and of the mutual covenants contained herein, the
Parties agree as follows:

     

    ARTICLE I. –
CAPITAL INCREASE

     

    1.1           Capital
Increase.

     

    (a)           Upon
the terms and subject to the conditions of this Agreement, at the Closing
referred to in Section 3.1 hereof, the Investor shall contribute to the Capital
Increase of the Company and shall acquire the Equity, free and clear of any and
all liens, mortgages, adverse claims, charges, security interests, encumbrances,
other restrictions or limitations, or rights of any third persons whatsoever
other than liens arising from acts of the Investor (collectively, “Liens”).

     

    (b)           To
effect the Transaction contemplated by Section 1.1(a), at the Closing, the JV
Company shall deliver or cause to be delivered to the Investor, against payment
therefor in accordance with Section 2.2 hereof, one or more certificates
representing the Equity, accompanied by evidence acceptable to the Investor
demonstrating Investor’s ownership of the Equity on the books of the JV
Company.

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    ARTICLE II.
SUBSCRIPTION PRICE

     

    2.1           Investment Amount.
The investment amount for the equity is USD 500,000, equal to RMB
3,400,000. The investment amount shall be invested in two installments in
USD.  The first installment of USD 200,000 shall be made as a loan
(which shall be substantially treated as capital increase and equity
subscription) (the “First Installment Investment’), the second installment of
USD 300,000 shall be paid as direct investment (the “Second Installment
Investment”).

     

    2.2           Method of
Payment.  Within 7 days upon execution of this Agreement, the
JV Contract and the Loan Agreement, the Investor shall remit the First
Installment Investment of USD 200,000 to a bank account designated by the
Company’s Board of Directors in Hong Kong. Upon obtaining the proper
government approval for the capital increase and equity subscription, the
Investor shall remit the Second Installment Investment of USD 300,000 into the
capital verification account.

     

    2.3           Taxes.  The
payment of any taxes imposed by any Governmental Authority with respect to the
execution or delivery of this Agreement or consummation of the transactions
contemplated hereby shall be the responsibility of the Chinese
Parties.

     

    ARTICLE
III. CLOSING

     

    3.1           Closing.  The
consummation of the acquisition of the Equity, payment of the second installment
of the Capital Increase, the issuance of the certificates, and the other
transactions contemplated by this Agreement (the “Closing”) will take
place at 11:00 a.m. August 1, 2009 (local time) on a date to be specified by the
Investor (the "Closing
Date"), at the Guangzhou office of King & Wood, located at 54/F CITIC
Plaza, 233 Tianhe Road, North Tianhe District, Guangzhou, 510613 China, unless
another date, time, or place is agreed to in writing by the parties
hereto.  In no event, however, shall the Closing Date occur after
August 15, 2009.

     

    3.2           Deliveries by the
Company.  At or prior to the Closing, the Company, as
applicable, shall deliver to the Investor:

     

    (i)           certificates
representing all of the Equity accompanied by evidence acceptable to the
demonstrating Investor’s ownership of the Equity on the books of the JV Company
in accordance with all Legal Requirements of the applicable Governmental
Authorities;

     

    (ii)           A
Capital Investment Certificate issued by the JV Company’s Chairman of the Board
of Directors evidencing the Investor’s ownership of the Equity;

     

    (iii)           a
counterpart of the JV Agreement signed by the Chinese Equity Interest Holders
and the Investor in a form of which is appended hereto as Exhibit
3.2(iii);

     

    
      
         

      

      
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    (iv)           the Loan Agreement signed by the Company and the
First Installment Investment shall be ready to be remitted to the
CJV’s capital verification account ;

     

    (v)           any
other deliverables referenced in Section 7.1 and one or more certificate(s)
executed by the Company and the Chinese Equity Interest
Holders to the effect that the conditions set forth in Section 7.2(e) and
Section 7.2(j) have been satisfied;

     

    (vi)           written
approval of the Investor’s nominee to the Board of Directors; and

     

    (vii)          such
other agreements, certificates, and writings that the Investor may reasonably
request.

     

    3.3           Deliveries by the
Investor.  At or prior to the Closing, the Investor shall
deliver to the Company:

     

    (i)         
  the Second Installment Investment required to be paid at Closing to
the Company pursuant to Section 2.2 hereof;

     

    (ii)           a
counterpart of the JV Agreement signed by the Investor;

     

    (iii)           the
name of Investor’s nominee to the Board of Directors;

     

    (iv)           Loan
Agreement signed the by Company Equity Interest Holders;

     

    (v)           one
or more certificates executed by an authorized officer of the Investor, on
behalf of the Investor, to the effect that the conditions set forth in Section
7.1(a) and Section 7.1(e) have been satisfied; and

     

    (vi)           such
other agreements, certificates, and writings that the Company may reasonably
request.

     

    3.4           Termination in Absence of
Closing.

     

    (a)           If
the Closing has not occurred by the close of business on August 15, 2009 nor the
another Closing Date is agreed in writing pursuant to section 3.1, then any
Party hereto may thereafter terminate this Agreement by written notice to such
effect, to the other Parties hereto, without liability of or to any Party to
this Agreement or any stockholder, director, officer, employee, or
representative of such Party unless the reason for Closing having not occurred
is (i) such Party’s willful breach of the provisions of this Agreement, or (ii)
if all of the conditions to such Party’s obligations set forth in Article VII
have been satisfied or waived in writing by the date scheduled for the Closing
pursuant to Section 3.1, the failure of such Party to perform its obligations
under this Article III on such date; provided, however, that the
applicable provisions of Article X shall survive any such termination; and,
provided further, however, that any
termination pursuant to this Section 3.4 shall not relieve any Party hereto who
was responsible for Closing having not occurred as described in clauses (i) or
(ii) above of any liability for (x) such Party’s willful breach of the
provisions of this Agreement, or (y) if all of the conditions to such Party’s
obligations set forth in Article VII have been satisfied or waived in writing by
the date scheduled for the Closing pursuant to Section 3.1, the failure of such
Party to perform its obligations under this Article III on such
date.

    
      
         

      

      
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    ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF

    THE
COMPANY AND THE CHINESE EQUITY INTEREST
HOLDERS

     

    The
Chinese Parties do hereby jointly and severally represent and warrant to the
Investor that:

     

    4.1           Corporate Existence and
Qualification.  The Company is a wholly owned Chinese domiciled
enterprise duly organized, validly existing, and in good standing under the laws
of the China. The Company has the corporate power to own, manage, lease, and
hold its Properties and to carry on its business as and where such Properties
are presently located and such business is presently conducted; and the Company
is qualified to do business as a foreign corporation, or such equivalent concept
under Chinese law, and in good standing in each jurisdiction in which the
failure to be so qualified would have a Material Adverse Effect on the
Company.

     

    4.2           Authority, Approval, and
Enforceability.  Each of this Agreement and all of the Exhibits
has been duly executed and delivered by the Chinese Parties and each of the
Chinese Parties have all requisite power and legal capacity to execute and
deliver this Agreement and all Exhibits executed and delivered or to be executed
and delivered in connection with the Transaction provided for hereby, to
consummate the Transaction contemplated hereby and by the Exhibits, and to
perform its obligations hereunder and under the Exhibits.  This
Agreement and each Exhibit to which the Chinese Party is a Party constitutes, or
upon execution and delivery will constitute, the legal, valid, and binding
obligation of such Party, enforceable in accordance with its terms.

     

    4.3           Capitalization and Corporate
Records.

     

    (a)           The
Company’s current authorized capital consists solely of RMB 500,000
(approximately equivalent to USD
73,529).  An aggregate of only USD 73,529 or RMB 500,000 are issued
and outstanding as set forth on Exhibit A for the
time being, and the Equity being acquired by the Investor pursuant to this
Agreement represents 26% of the total equity in the JV Company on a fully
diluted basis after the completion of the capital increase contemplated
hereunder.  Except for the previously stated Registered Capital, there
is no other Registered Capital or securities of the Company authorized, issued,
or outstanding.  All of issued and outstanding equity interests of the
current Registered Capital are owned of record by the Chinese Equity Interest
Holders as set forth on Exhibit A, free and
clear of any and all Liens, and no equity interests of the current Registered
Capital or other securities are held by the Company.  The Equity
subject to this Agreement is duly authorized, validly issued, fully paid, and
non-assessable and was not issued in violation of any: (i) preemptive or other
rights of any Person to acquire Registered Capital or other securities of the
Company, or (ii) any Legal Requirements of any Governmental
Authority.  There are no outstanding subscriptions, options,
convertible securities, rights (preemptive or otherwise), warrants, calls, or
agreements relating to any Registered Capital or other securities of the
Company.  Upon delivery to the Investor at the Closing of certificates
representing the Equity, accompanied by evidence acceptable to the Investor
demonstrating Investor’s ownership of the Equity on the books of the JV Company,
good and valid title to the Equity will pass to the Investor, free and clear of
all Liens.

    
      
         

      

      
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    (b)           The
Company has provided the Investor with true, correct, and complete copies of the
Company’s Articles of Association and all other governing documents and
agreements, including, without limitation, any agreement among the Chinese
Equity Interest Holders, which reflect all amendments made through the date of
this Agreement.  Books evidencing the Company’s current Registered
Capital and minute books made available to the Investor for review were true,
correct, and complete in all material respects as of the date of such review, no
further entries have been made through the date of this Agreement, and such
books contain a materially accurate record of all Chinese Equity Interest
Holders and corporate actions of the Chinese Equity Interest Holders and
directors (and any committees thereof) of the Company taken by written consent
or at a meeting since the organization of the Company.  All corporate
actions taken by the Company have been duly authorized or
ratified.  All accounts, books, ledgers, and official and other
records of the Company fairly and accurately reflect in all material respects
the Company’s transactions, properties, assets, and liabilities.

     

    (c)           Except
as otherwise set forth on Schedule 4.3(c)
attached hereto, the Company does not own, directly or indirectly, any
outstanding registered capital of, securities of or other interests in any other
Person. The Company has no Subsidiaries.

     

    4.4           No Defaults or
Consents.  The execution and delivery of this Agreement and the
Exhibits by each of the Chinese Parties and the performance by each of the
Chinese Parties of its, his, or their obligations hereunder and thereunder will
not violate any provision of Legal Requirement or any judgment, award, or decree
or any indenture, agreement, or other instrument to which the Company and/or
such Chinese
Shareholder is a party, or by which the properties or assets of any of
the Chinese Parties is bound or affected, or conflict with, result in a breach
of, or constitute (with due notice or lapse of time or both) a default under,
any such indenture, agreement, or other instrument.

     

    4.5           No Company
Defaults.  Except as otherwise set forth on Schedule 4.5 attached
hereto, neither the execution and delivery of this Agreement or any Exhibit nor
the carrying out of any of the Transaction contemplated hereby
will:

     

    (i)           violate
or conflict with any of the terms, conditions, or provisions of the Articles of
Association and all other governing documents and agreements, including, without
limitation, any agreement among the Company’s Chinese Equity Interest
Holders;

     

    (ii)           violate
any Legal Requirements applicable to the Company or each Chinese
Shareholder;

     

    (iii)           violate,
conflict with, result in a breach of, constitute a default under (whether with
or without notice or the lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or give any other party the right
to terminate, any Contract or Permit binding upon or applicable to the Company
or the Chinese Equity
Interest Holders;

     

    
      
         

      

      
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    (iv)           result
in the creation of any Lien on any Properties of the Company; or

     

    (v)           require
either the Company or the Chinese Equity Interest
Holders to obtain or make any waiver, consent, action, approval, or
authorization of, or registration, declaration, notice or filing with, any
private non-governmental third party or any Governmental Authority.

     

    (b)           No
Proceedings.  No suit, action, or other proceeding is pending
or, to the Knowledge of the Company, threatened before any Governmental
Authority seeking to restrain the Company or the Chinese Equity Interest
Holders or prohibit their entry into this Agreement or prohibit the
Closing, or seeking Damages against the Company or its Properties as a result of
the consummation of this Agreement.

     

    4.6           Financial
Statements.

     

    (a)           (i)
The Company has delivered to the Investor true, correct, and complete copies of
the audited Financial Statements with respect to the Company and its business as
of and for the year ended December 31, 2007 and (ii) unaudited interim Financial
Statements with respect to the Company and its business as of and for the 9
months ended September 30, 2008.  The said Financial Statements are
attached hereto as Schedule
4.6(a).  All of such Financial Statements fairly present, and
the Company’s books and records accurately reflect, as applicable, the financial
condition, results of operations of the Company, and all the transactions that
the Company has entered into, as applicable, for the dates or periods indicated
thereon.  All of such Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
indicated, except that the interim Financial Statements do not contain footnote
disclosures and is subject to year end audit adjustments that will not,
individually or in the aggregate, be material.

     

    (b)           Except
for (i) the liabilities to be reflected on the Company’s December 31, 2007
balance sheet included in the Financial Statements attached as Schedule 4.6(a), (ii)
trade payables and accrued expenses incurred since December 31, 2007 (the “Balance Sheet Date”)
in the ordinary course of business, none of which are material, (iii) executory
contract obligations set forth on Schedule 4.6(b)
attached hereto, and (iv) the liabilities set forth on Schedule 4.6(b)
attached hereto, the Company does not have any liabilities or obligations,
including, without limitation, for capital commitments or deferred tax liability
(whether accrued, absolute, contingent, known, unknown, or otherwise, and
whether or not of a nature required to be reflected or reserved against in a
balance sheet in accordance with GAAP).

    
      
         

      

      
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    (c)           Except
as otherwise set forth on Schedule 4.6(c)
attached hereto, the accounts receivable to be reflected on the December 31,
2007 balance sheet included in the Financial Statements referenced in Section 4.6(a) and
all of the Company’s accounts receivable arising since the Balance Sheet Date
arose from bona fide transactions in the ordinary course of business, and the
goods and services involved have been sold, delivered, and performed to the
account obligors, and no further filings (with Governmental Authorities,
insurers or others) are required to be made, no further goods are required to be
provided and no further services are required to be rendered in order to
complete the sales and fully render the services and to entitle the Company to
collect the accounts receivable in full.  Except as otherwise set
forth on Schedule
4.6(c) attached hereto, no such account has been assigned or pledged to
any other Person, and, except only to the extent fully reserved against as set
forth in the December 31, 2007 balance sheet included in such Financial
Statements, no defense or set-off to any such account has been asserted by the
account obligor or, to Knowledge of the Company or to the knowledge of the Chinese Equity Interest
Holders or any of them, exists.

     

    (d)           Except
as otherwise set forth on Schedule 4.6(d)
attached hereto, the Company has not entered into any transactions with any
Affiliate.

     

    (e)           Except
as provided under the provisions of the agreements described in Schedule 4.6(e)
attached hereto, the Company has and will have as of the Closing Date legal and
beneficial ownership of its Properties, free and clear of any and all
Liens.

     

    4.7           Absence of Certain
Changes.

     

    (a)           Except
as otherwise set forth on Schedule 4.7(a)
attached hereto, since the Balance Sheet Date, there has not been:

     

    (i)           any
event, circumstance, or change that had or can reasonably be expected to have a
Material Adverse Effect;

     

    (ii)           any
damage, destruction, or loss (whether or not covered by insurance) that had or
might have a Material Adverse Effect; or

     

    (iii)           any
material adverse change in the Company’s sales patterns, pricing policies,
accounts receivable, or accounts payable.

     

    (b)           Except
as otherwise set forth on Schedule 4.7(b)
attached hereto, since the Balance Sheet Date, the Company has not done any of
the following:

     

    (i)           merged
into or with or consolidated with, any other corporation or acquired the
business or assets of any Person;

     

    (ii)           purchased
any securities of any Person;

     

    (iii)           created,
incurred, assumed, guaranteed, or otherwise become liable or obligated with
respect to any indebtedness, or made any loan or advance to, or any investment
in, any Person, except in each case in the ordinary course of
business;

     

    (iv)           made
any change in any existing election, or made any new election, with respect to
any tax law in any jurisdiction which election could have an effect on the tax
treatment of the Company or the Company’s business operations;

     

    
      
        
           

        

        
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    (v)           entered
into, amended, or terminated any material Contract;

     

    (vi)           sold,
transferred, leased, mortgaged, encumbered, or otherwise disposed of, or agreed
to sell, transfer, lease, mortgage, encumber, or otherwise dispose of, any
Properties except in the ordinary course of business;

     

    (vii)           settled
any claim or litigation, or filed any motions, orders, briefs, or settlement
agreements in any proceeding before any Governmental Authority or any
arbitrator;

     

    (viii)          incurred
or approved, or entered into any agreement or commitment to make, any
expenditures in excess of RMB 250,000 (other than those arising in the ordinary
course of business);

     

    (ix)           maintained
its books of account other than in the usual, regular, and ordinary manner in
accordance with GAAP and on a basis consistent with prior periods or made any
change in any of its accounting methods or practices that would be required to
be disclosed under GAAP;

     

    (x)           adopted
any benefit program or agreement, or granted any increase in the compensation
payable or to become payable to directors, officers, or employees (including,
without limitation, any such increase pursuant to any bonus, profit-sharing, or
other plan or commitment), other than merit increases to non-officer employees
in the ordinary course of business and consistent with past
practice;

     

    (xi)           suffered
any extraordinary losses or waived any rights of material value;

     

    (xii)           made
any payment to any Affiliate or forgiven any Indebtedness due or owing from any
Affiliate to the Company;

     

    (xiii)          changed
in any material respect the Company’s practices in connection with the payment
of payables and/or the collection of receivables;

     

    (xiv)          engaged
in any one or more activities or transactions with an Affiliate or outside the
ordinary course of business;

     

    (xv)           declared,
set aside, or paid any dividends, or made any distributions or other payments in
respect of its Registered Capital or other securities, or repurchased, redeemed,
or otherwise acquired any such Registered Capital or other
securities;

     

    (xvi)          amended
its Articles of Association or other governing documents and
agreements;

     

    (xvii)         issued
any Registered Capital or other securities, or granted, or entered into any
agreement to grant, any options, convertible rights, other rights, warrants,
calls, or agreements relating to its Registered Capital or other securities;
or

     

    
      
         

      

      
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    (xviii)           committed
to do any of the foregoing.

     

    4.8           Compliance with
Laws.  Except as otherwise set forth on Schedule 4.8 attached
hereto, the Company is and has been in compliance in all respects with any and
all Legal Requirements applicable to the Company, other than failures to so
comply that would not have a Material Adverse Effect.  Except as
otherwise set forth on Schedule 4.8 attached
hereto, the Company (x) has not received or entered into any citations,
complaints, consent orders, compliance schedules, or other similar enforcement
orders or received any written notice from any Governmental Authority or any
other written notice that would indicate that there is not currently compliance
with all such Legal Requirements, except for failures to so comply that would
not have a Material Adverse Effect, and (y) is not in default under, and, to the
Knowledge of the Chinese Parties, no condition exists (whether covered by
insurance or not) that with or without notice or lapse of time or both would
constitute a default under, or breach or violation of, any Legal Requirement or
Permit applicable to the Company.

     

    4.9           Litigation.  To the knowledge of the
Company, there are no pending or threatened claims, actions, suits,
investigations, or proceedings against the Company.

     

    4.10         Commitments.  All
of the Company’s Contracts are valid, binding, and in full force and effect, and
the Company has not been notified or advised by any party thereto of such
party’s intention or desire to terminate or modify any such Contract in any
respect.  Neither the Company nor, to the Knowledge of the Company,
any other party is in breach of any of the terms or covenants of any
Contract.  Following the Closing, the Company will continue to be
entitled to all of the benefits currently held by the Company under each
Contract with respect to which it is a party.

     

    4.11         Arm’s-Length
Negotiation.  The Company is not a party to or bound by any Contract
the terms of which were arrived at by or otherwise reflect
less-than-arm’s-length negotiations or bargaining.

     

    4.12         Permits;
Assets.

     

    (a)           The Company has all Permits necessary for the
Company to own, operate, use, and/or maintain its Properties and to conduct its
business and operations as presently conducted and as expected to be conducted
in the future.  All such Permits are in effect, no proceeding is
pending or, to the Knowledge of the Company, threatened to modify, suspend or
revoke, withdraw, terminate, or otherwise limit any such Permits, and no
administrative or governmental actions have been taken or, to the Knowledge of
the Company, threatened in connection with the expiration or renewal of such
Permits which could reasonably be expected to adversely affect the ability of
the Company to own, operate, use, or maintain any of its Properties or to
conduct its business and operations as presently conducted and as expected to be
conducted in the future.

    
      
         

      

      
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    (b)          The
Company has all assets necessary for the Company to own, operate, use, and/or
maintain its Properties and to conduct its business and operations as presently
conducted and as expected to be conducted in the future.

     

    4.13         Suppliers and
Customers. The Company maintains good relations with all its
suppliers and customers as well as with governments, partners, financing
sources, and other parties with whom the failure to maintain good relations
could have a Material Adverse Effect and no such party has canceled, terminated,
or made any threat to the Company to cancel or otherwise terminate its
relationship with the Company or to materially decrease its services or supplies
to the Company or its direct or indirect purchase or usage of the products or
services of the Company.

     

    4.14         Absence of Certain Business
Practices.  To the Knowledge of the Company, neither the
Chinese Parties nor any other Affiliate or agent of the Company, or any other
person acting on behalf of or associated with the Company, acting alone or
together, has (a) received, directly or indirectly, any rebates, payments,
commissions, promotional allowances or any other economic benefits, regardless
of their nature or type, from any customer, supplier, employee, or agent of any
customer or supplier; or (b) directly or indirectly given or agreed to give any
money, gift, or similar benefit to any customer, supplier, employee or agent of
any customer or supplier, any official or employee of any Governmental Authority
(domestic or foreign), or any political party or candidate for office (domestic
or foreign), or other person who was, is, or may be in a position to help or
hinder the business of the Company (or assist the Company in connection with any
actual or proposed transaction), in each case which (i) may subject the Company
to any damage or penalty in any civil, criminal or governmental litigation or
proceeding, (ii) if not given in the past, would have had an adverse effect on
the assets, business, operations, or prospects of the Company, or (iii) if not
continued in the future, may reasonably be expected to adversely affect the
assets, business, operations, or prospects of the Company.

     

    4.15         Products;
Services.  There are no claims existing or, to the Knowledge of
the Company, threatened under or pursuant to any warranty, whether express or
implied, on Products or services sold by the Company other than warranty claims
arising in the ordinary course of business, the effect of which is not
reasonably likely to have a Material Adverse Effect.  There are no
claims existing and, to the Knowledge of the Company, there is no basis for any
claim against the Company for injury or damage to persons or property as a
result of the sale, distribution or manufacture of any Product or performance of
any service by the Company, including, but not limited to, claims arising out of
the defective or unsafe nature of its Products or services.  The
Company maintains insurance coverage for products liability claims against it in
the amounts it deems adequate for its needs.

     

    
      
         

      

      
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    4.16         Transactions With
Affiliates.  Except for normal advances to employees consistent
with past practices, payment of compensation for employment to employees
consistent with past practices, and participation in scheduled benefit programs
and agreements by employees, the Company has not purchased, acquired, or leased
any property or services from, or sold, transferred, or leased any Property or
services to, or loaned or advanced any money to, or borrowed any money from, or
entered into or been subject to any management, consulting, or similar agreement
with, or engaged in any other significant transaction with any officer,
director, or Chinese Equity Interest Holders of the Company or any of their
respective Affiliates.  Neither any officer, director, or Chinese Equity
Interest Holders of the Company nor any of their respective Affiliates is
indebted to the Company for money borrowed or other loans or advances, and the
Company is not indebted to any such Affiliate

     

    4.17         Use of
Proceeds.  The proceeds from the Subscription Price shall be
allotted to Registered Capital and shall be used for general working
capital.

     

    4.18         Other
Information.  The information furnished by each of the Chinese
Parties, to the Investor pursuant to this Agreement (including, without
limitation, information contained in the Exhibits hereto, the Schedules
identified herein, the instruments referred to in such Exhibits or Schedules, as
applicable, and the certificates and other documents to be executed or delivered
pursuant hereto by any of the Chinese Parties at or prior to the Closing) is
not, nor at the Closing will be, false or misleading in any material respect, or
contains, or at the Closing will contain, any misstatement of material fact, or
omits, or at the Closing will omit, to state any material fact required to be
stated in order to make the statements therein not misleading. No investigation
by or information provided to the Investor will vitiate the Investor’s reliance
on any representation, warranty, or covenant of any of the Chinese
Parties.

     

    ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE INVESTOR

     

    The
Investor hereby represents and warrants to the Company and the Company
that:

     

    5.1           Corporate Existence and
Qualification.  The Investor is a corporation duly organized,
validly existing, and in good standing under the laws of Nevada.  The
Investor has the power to own, manage, lease, and hold its properties and to
carry on its business as and where such properties are presently located and
such business is presently conducted.

     

    5.2           Authority, Approval, and
Enforceability.  This Agreement has been duly executed and
delivered by the Investor and the Investor has all requisite power and legal
capacity to execute and deliver this Agreement and all Exhibits executed and
delivered or to be executed and delivered by the Investor in connection with the
Transactions provided for hereby, to consummate the Transaction contemplated
hereby and by the Exhibits, and to perform its obligations hereunder and under
the Exhibits.  

     

    
      
         

      

      
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    5.3           No Default or
Consents.  Neither the execution and delivery of this Agreement
nor the carrying out of the transactions contemplated hereby will:

     

    (i)           violate
or conflict with any of the terms, conditions, or provisions of the Investor’s
Certificate of Incorporation or Bylaws;

     

    (ii)           violate
any Legal Requirements applicable to the Investor;

     

    (iii)           violate,
conflict with, result in a breach of, constitute a default under (whether with
or without notice or the lapse of time or both), or accelerate or permit the
acceleration of the performance required by, or give any other party the right
to terminate, any Contract or Permit applicable to the Investor;

     

    (iv)           result
in the creation of any lien, charge, or other encumbrance on any property of the
Investor; or

     

    (v)           requires
the Investor to obtain or make any waiver, consent, action, approval or
authorization of, or registration, declaration, notice or filing with, any
private non-governmental third party or any Governmental Authority.

     

    5.4           No
Proceedings.  No suit, action or other proceeding is pending
or, to the Investor’s knowledge, threatened before any Governmental Authority
seeking to restrain the Investor or prohibit its entry into this Agreement or
prohibit the Closing, or seeking Damages against the Investor or its properties
as a result of the consummation of this Agreement.

     

    ARTICLE VI.
COVENANTS AND AGREEMENTS OF THE PARTIES

     

    The
Parties hereto do hereby covenant and agree, as follows:

     

    6.1           The Investor’s Access to
Information and Properties.  The Company shall permit the
Investor and its authorized employees, agents, accountants, legal counsel, and
other representatives to have access to the books, records, employees, counsel,
accountants, engineers, and other representatives of the Company during normal
working hours and without unreasonable interruption to the Company’s operations
for the purpose of conducting an investigation of the Company’s financial
condition, corporate status, operations, prospects, business, and
Properties.  The Company shall make available to the Investor for
examination and reproduction all documents and data of every kind and character
relating to the Company in possession or control of, or subject to reasonable
access by, any of the Chinese Equity Interest Holders, including, without
limitation, all files, records, data, and information relating to the Properties
(whether stored in paper, magnetic or other storage media) and all agreements,
instruments, contracts, assignments, certificates, orders, and amendments
thereto.  Also, the Company shall allow the Investor access to, and
the right to inspect, the Properties, except to the extent that such Properties
are operated by a third-party operator, in which case the Company shall use its
best efforts to cause the operator of such Properties to allow the Investor
access to, and the right to inspect, such Properties.

     

    
      
         

      

      
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    6.2           Company’s Conduct of
Business and Operations.  The Company shall keep the Investor
advised as to all material operations and proposed material operations relating
to the Company.  The Company shall (a) conduct its business in the
ordinary course, (b) keep available the services of present employees, (c)
maintain and operate its Properties in a good and workmanlike manner, (d) pay or
cause to be paid all costs and expenses (including but not limited to insurance
premiums) incurred in connection therewith in a timely manner, (e) use
reasonable efforts to keep all Contracts in full force and effect, (f) comply
with all of the covenants contained in all such material Contracts, (g) maintain
in force until the Closing Date insurance policies equivalent to those in effect
on the date hereof, and (h) comply in all material respects with all applicable
Legal Requirements.  Except as otherwise contemplated in this
Agreement, the Company will use commercially reasonable efforts to preserve the
present relationships of the Company with persons having significant business
relations therewith.

     

    6.3           General
Restrictions.  Except as otherwise expressly permitted in this
Agreement, between the date of this Agreement and the Closing Date, without the
prior written consent of the Investor, which consent shall not be unreasonably
withheld, the Company shall not:

     

    (i)           declare,
set aside, or pay any dividends, or make any distributions or other payments in
respect of its Registered Capital or other securities, or repurchase, redeem, or
otherwise acquire any such Registered Capital or other securities;

     

    (ii)           merge
into or with or consolidate with, any other corporation or acquire the business
or assets of any Person;

     

    (iii)           purchase
any securities of any Person;

     

    (iv)           amend
its Articles of Association or other governing documents and
agreements;

     

    (v)           issue
any Registered Capital or other securities, or grant, or enter into any
agreement to grant, any options, convertibility rights, other rights, warrants,
calls, or agreements relating to its Registered Capital or other
securities;

     

    (vi)           create,
incur, assume, guarantee, or otherwise become liable or obligated with respect
to any indebtedness, or make any loan or advance to, or any investment in, any
Person, except in each case in the ordinary course of business;

     

    (vii)           make
any change in any existing election, or make any new election, with respect to
any tax law in any jurisdiction which election could have an effect on the tax
treatment of the Company or the Company’s business operations;

     

    
      
         

      

      
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    (viii)         enter
into, amend, or terminate any material Contract;

     

    (ix)           sell,
transfer, lease, mortgage, encumber, or otherwise dispose of, or agree to sell,
transfer, lease, mortgage, encumber, or otherwise dispose of, any Properties
except in the ordinary course of business;

     

    (x)           settle
any material claim or litigation, or file any material motions, orders, briefs,
or settlement agreements in any proceeding before any Governmental Authority or
any arbitrator;

     

    (xi)           other
than in the ordinary course of business consistent with past practices, incur or
approve, or enter into any agreement or commitment to make, any expenditures in
excess of RMB 250,000;

     

    (xii)           maintain
its books of account other than in the usual, regular, and ordinary manner in
accordance with GAAP and on a basis consistent with prior periods or make any
change in any of its accounting methods or practices;

     

    (xiii)          make
any change, whether written or oral, to any Contract with any of the suppliers
or customers;

     

    (xiv)          accelerate
or delay collection of any notes or accounts receivable in advance of or beyond
their regular due dates or the dates when they would have been collected in the
ordinary course of business consistent with past practices;

     

    (xv)           delay
or accelerate payment of any accrued expense, trade payable, or other liability
beyond or in advance of its due date or the date when such liability would have
been paid in the ordinary course of business consistent with past
practices;

     

    (xvi)          adopt
any benefit program or agreement or increase the compensation payable to any
employee (including, without limitation, any increase pursuant to any bonus,
profit-sharing, or other incentive plan or commitment);

     

    (xvii)         engage
in any one or more activities or transactions outside the ordinary course of
business;

     

    (xviii)        enter
into any transaction or make any commitment which could result in any of the
representations, warranties, or covenants of any of the Chinese Parties
contained in this Agreement not being true and correct after the occurrence of
such transaction or event; or

     

    (xix)           commit
to do any of the foregoing.

     

    6.4           Notice Regarding
Changes.  The Company and the Chinese Equity Interest
Holders shall promptly inform the Investor in writing of any change in
facts and circumstances that could render any of the representations and
warranties made herein by any of the Chinese Parties inaccurate or misleading if
such representations and warranties had been made upon the occurrence of the
fact or circumstance in question.  The Investor shall promptly inform
the Company in writing of any change in facts and circumstances that could
render any of the representations and warranties made herein by it inaccurate or
misleading if such representations and warranties had been made upon the
occurrence of the fact or circumstance in question.

     

    
      
         

      

      
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    6.5           Ensure Conditions
Met.  Subject to the terms and conditions of this Agreement,
each of the Parties hereto shall use all reasonable commercial efforts to take
or cause to be taken all actions and do or cause to be done all things required
under applicable Legal Requirements in order to consummate the transactions
contemplated hereby, including, without limitation, (a) obtaining all Permits,
authorizations, consents and approvals of any Governmental Authority or other
person which are required for or in connection with the consummation of the
transactions contemplated hereby and by the Exhibits, (b) taking any and all
reasonable actions necessary to satisfy all of the conditions to each party’s
obligations hereunder as set forth in Article VII, and (c) executing and
delivering all agreements and documents required by the terms hereof to be
executed and delivered by such party on or prior to the Closing.

     

    6.6           Payment of Transaction
Expenses and Bonuses.  The Chinese Parties hereby agree that:
(a) all legal, accounting, and other transaction expenses incurred by the
Chinese Parties in connection with the Transaction contemplated by this
Agreement (collectively, “Transaction
Expenses”); and (b) all bonuses, incentive payments, and other
remuneration (in excess of current salaries) payable to any member of the
management of the Company (the “Bonus Compensation”),
paid or payable by the Company shall be borne solely by the Company and, if and
to the extent previously paid by the Investor, shall be deducted from the
Subscription Price.

     

    ARTICLE VII.
CONDITIONS TO PARTIES’ OBLIGATIONS

     

    7.1           Conditions to Obligations of
the Chinese Parties.  The obligations of the Chinese Parties to
carry out the Transaction contemplated by this Agreement are subject, at the
option of the Chinese Parties, to the satisfaction or waiver of the following
conditions:

     

    (a)           The
Investor shall have furnished the Company with a certified copy of all necessary
corporate and other action on its behalf approving its execution, delivery, and
performance of this Agreement.

     

    (b)           The
Company’s receipt of the Approval Certificate issued by MOC of Guangdong
Province approving the Transaction.

     

    (c)           The
Company’s receipt of Evidence that the SAIC has registered the Investor as the
Equity holder of the Company and the Registered Capital of the Company is
revised to be RMB 3,900,000.

     

    (d)           The
Company’s receipt of MOC and all other relevant government approval for the
transaction contemplated in this Agreement;

     

    
      
         

      

      
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    (e)           The
Company or its General Manager shall have delivered to the Investor a set of
corporate milestones and business plan to cover the management of the Company’s
business for a period of two years from the Closing, which business plan and
corporate milestones shall be in form and substance satisfactory to the Investor
and attached hereto as Schedule
7.1(e).

     

    (f)           The
Parties shall have agreed on a schedule for the use of the Subscription Price,
which shall be attached hereto as Schedule
7.1(f).

     

    (g)           All
representations and warranties of the Investor contained in this Agreement shall
be true and correct in all material respects at and as of the Closing, and the
Investor shall have performed and satisfied in all material respects all
covenants and agreements required by this Agreement to be performed and
satisfied by the Investor at or prior to the Closing.

     

    (h)           As
of the Closing Date, no suit, action, or other proceeding (excluding any such
matter initiated by or on behalf of the Chinese Parties) shall be pending or
threatened before any Governmental Authority seeking to restrain the Company or
prohibit the Closing or seeking Damages against the Company, its Properties or
the Chinese Equity Interest Holders as a result of the consummation of this
Agreement.

     

    (i)           The
Investor shall have made the deliveries set forth in Section 3.3
above.

     

    7.2           Conditions to Obligations of
the Investor.  The obligations of the Investor to carry out the
transactions contemplated by this Agreement are subject, at the option of the
Investor, to the satisfaction, or waiver by the Investor, of the following
conditions:

     

    (a)           All
representations and warranties of the Chinese Parties contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing, and the Chinese Parties, as applicable, shall have performed and
satisfied in all material respects all agreements and covenants required by this
Agreement to be performed and satisfied by them at or prior to the
Closing.

     

    (b)           The
Investor’s receipt of the Approval Certificate issued by the MOC of Guangdong
Province approving the Transaction.

     

    (c)           The
Investor’s receipt of evidence that the SAIC has registered the Investor as the
Equity holder of the Company and the Registered Capital of the Company is
revised to be RMB 3,900,000.

     

    (d)           Investor’s
receipt of approvals from MOC and other relevant government authorities with
regard to execution and implementation of this Agreement and the
Transaction.

     

    (e)           As
of the Closing Date, no suit, action, or other proceeding (excluding any such
matter initiated by or on behalf of the Investor) shall be pending or threatened
before any court or Governmental Authority seeking to restrain the Investor or
prohibit the Closing or seeking Damages against the Investor as a result of the
consummation of this Agreement.

     

    
      
         

      

      
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    (f)              Written
consents from Mr. Liang Huangxian, Mr. Xian Wenbin and Mr. Nei
Weifeng  to not to exercise their rights of first refusal to acquire
the Equity.

     

    (g)           A
Capital Investment Certificate issued by the JV Company’s Chairman of the Board
evidencing Investor’s ownership of the Equity.

     

    (h)           The
Investor shall have received a JV Agreement in such form as the Investor shall
approve.

     

    (i)           Since
the Balance Sheet Date and up to and including the Closing, there shall not have
been any event, circumstance, change, or effect that, individually or in the
aggregate, had or could reasonably be expected to have a Material Adverse
Effect.

     

    (j)           Each
of the Chinese Parties, as necessary, shall have furnished the Investor with a
certified copy of all necessary corporate actions, or other action on its
behalf, approving in accordance with the Company’s Articles of Association,
approving the acquisition of the Equity; the amendment of the Articles of
Association; the increase of the Registered Capital of the Company to
RMB3,900,000; and the execution and delivery of the JV Agreement among the
Chinese Equity Interest Holders and the Investor, the Company’s execution,
delivery, and performance of this Agreement .

     

    (k)           The
Investor shall have completed its due diligence investigation, and the results
thereof shall not have revealed that any of the representations or warranties of
the Chinese Parties set forth herein are untrue or incorrect in any material
respect.

     

    (l)           All
proceedings to be taken by the Company in connection with the transactions
contemplated hereby and all documents incident thereto shall be satisfactory in
form and substance to the Investor and its counsel, and the Investor and said
counsel shall have received all such counterpart originals or certified or other
copies of such documents as it or they may request.

     

    (m)           No
proceeding in which the Company, or the Chinese Equity Interest Holders shall be
a debtor, defendant, or party seeking an order for its own relief or
reorganization shall have been brought or be pending by or against such person
under any Legal Requirement.

     

    (n)           Each
of the Chinese Parties shall have made the deliveries contemplated by Section
3.2 of this Agreement.

     

    (o)           The
execution and delivery of, and the consummation of the transactions contemplated
under that certain Loan Agreement of even date by and between the Investor and
the JV Company

     

    ARTICLE VIII.
  POST-CLOSING OBLIGATIONS

     

    8.1           Further
Assurances.  Following the Closing, the Chinese Equity Interest
Holders, each Chinese Equity Interest Holders of the Company, and the Investor
shall execute and deliver such documents, and take such other action, as shall
be reasonably requested by any other Party hereto to carry out the Transaction
contemplated by this Agreement.

     

    
      
         

      

      
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    8.2           Publicity.  None
of the Parties hereto shall issue, or make, or cause to have issued or made, any
public release or announcement concerning this Agreement or the Transaction
contemplated hereby, without the advance approval in writing of the form and
substance thereof by each of the other Parties, except as required by law (in
which case, so far as possible, there shall be consultation among the Parties
prior to such announcement), and the Parties shall endeavor jointly to agree on
the text of any announcement or circular so approved or required.

     

    8.3           Post-Closing
Indemnity.  From and after the Closing, each of the Chinese
Parties shall, and hereby does, jointly and severally indemnify and hold
harmless the Investor, and its Affiliates, directors, officers, and employees
from and against any and all Damages arising out of, resulting from, or in any
way related to (a) a material breach of, or the failure to perform or satisfy in
any material respect any of, the representations, warranties, covenants, and
agreements made by the Chinese Parties in this Agreement or in any document or
certificate delivered by the Chinese Parties at the Closing pursuant hereto, (b)
the occurrence of any event on or prior to the date of Closing that is (or would
be, but for any deductible thereunder) covered by individual policies of
insurance, blanket insurance policies or self insurance programs maintained by
the Company.  Any payment made to the Investor pursuant to the
indemnification obligations under this Section 8.3 shall constitute a reduction
in the Subscription Price hereunder

     

    It is
recognized and hereby acknowledged by the Parties hereto that a breach or
violation by the Company, any Guarantor, and/or the Chinese Equity Interest
Holders of any or all of the covenants and agreements contained in this Section
8.3 may cause irreparable harm and Damage to the Investor in a monetary amount
which may be virtually impossible to ascertain.  As a result, each of
the Chinese Parties recognizes and hereby acknowledges that the Investor shall
be entitled to an injunction from any court of competent jurisdiction enjoining
and restraining any breach or violation of any or all of the covenants and
agreements contained in this Section 8.3 by the Company, the Chinese Equity
Interest Holders, the Chinese Equity Interest Holders, and/or their associates,
Affiliates, partners, or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other rights
or remedies the Investor may possess hereunder, at law or in
equity.  Nothing contained in this Section 8.3 shall be construed to
prevent Investor from seeking and recovering from the Company and/or the Chinese
Equity Interest Holders Damages sustained by it as a result of any breach or
violation by the Company, the Chinese Equity Interest Holders, or Chinese Equity
Interest Holders of any of the covenants or agreements contained
herein.

     

    8.4           Option. Equity
Interest Holders

     

    (a)           The
Investor shall have an option to subscribe for, on a fully diluted basis, 25% of
the Registered Capital of the CJV  subject to the following terms and
conditions set forth in this Section. The Investor would own 51% of the JV
Company’s Registered Capital, after giving effect to the Transaction
contemplated by this Agreement and the exercise of the Option contained in this
Section. . The Investor shall exercise such option within 90 days upon the
accomplishment of the milestones mentioned in Schedule 7.1 (e)

     

    
      
         

      

      
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    (b)           The
terms and conditions of the Option are as follows:

     

    (i) CJV
shall deliver the following within 180 days of establishment of capitalization
of the capital investment by Regal Life:

    - opening
of a second AWA club location in Guangzhou (TianHe)

    - opening
of the Nanjing and Shanghai club location

    

    (ii) AWA
to receive a formal wine import license

    

    (iii) a
logistics and product distribution JV with the Shangdong Provincial and Nanjing
Municipal branches of China Post.

    

    (iv) AWA
will have greater than RMB10 million in sales turnover for the 6 month period
and to have an auditable base of greater than 30,000 active members directly
purchasing products from AWA, the parent company

    (v)  the
completed development membership backend administration system for the AWA
network of in-house owned and franchised store outlets.

    

    (c)           Each
of the Chinese Equity Interest Holders shall use their respective commercially
reasonable efforts to cause the JV Company to accomplish the Investor’s business
objectives for the JV Company in order to facilitate the Investor’s exercise of
its Option set forth in this Section.

     

    ARTICLE
IX. TAX
MATTERS

     

    9.1           Representations and
Obligations Regarding Taxes.  Each of the Company and each
Guarantor represents and warrants to and agrees with the Investor as
follows:

     

    (a)           The
Company has filed all Tax Returns that it was required to file.  All
such Tax Returns were true, correct, and complete in all material
respects.  All Taxes owed by the Company (whether or not shown on any
Tax Return and whether or not any Tax Return was required) have been paid. The
Company is not currently the beneficiary of any extension of time within which
to file any Tax Return.  No claim has ever been made by any
Governmental Authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that
jurisdiction.  There are no Liens on any of the assets of the Company
that arose in connection with any failure (or alleged failure) to pay any Tax,
except for Liens for Taxes not yet due.

     

    (b)           The
Company has withheld and paid all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, Chinese Equity Interest Holders, or other third
party.

     

    
      
         

      

      
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    (c)           No
director or officer (or employee responsible for Tax matters) of the Company
expects any Governmental Authority to assess any additional Taxes for any period
for which Tax Returns have been filed.  There is no dispute or claim
concerning any Tax liability of the Company either (i) claimed or raised by any
Governmental Authority in writing or (ii) as to which any of the directors or
officers (or employees responsible for Tax matters) of the Company has actual
knowledge (after reasonable investigation) based upon personal contact with any
agent of such Governmental Authority. The Company has delivered to the Investor
true, correct, and complete copies of all income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to by the
Company since January 1, 2003.

     

    (d)           The
Company has not waived any statute of limitations in respect of Taxes or agreed
to any extension of time with respect to a Tax assessment or
deficiency.

     

    (e)           Schedule 9.1(f) sets
forth the following information with respect to the Company as of the most
recent practicable date (as well as on an estimated pro forma basis as of the
Closing giving effect to the consummation of the Transaction contemplated
hereby):  (i) the basis of the Company in its assets; and (ii) the
amount of any net operating loss, net operating loss carryover, net capital
loss, net capital loss carryover, Tax credit, Tax credit carryover, or excess
charitable contribution and similar credits or deductions of the
Company.

     

    (f)           The
unpaid Taxes of the Company (i) did not, as of the most recent fiscal month end,
exceed the reserve for Tax liability (rather than any reserve for deferred Taxes
established to reflect timing differences between book and Tax income) set forth
on the face of the most recent balance sheet (rather than in any notes thereto)
and (ii) do not exceed that reserve as adjusted for the passage of time through
the Closing Date in accordance with the past custom and practice of the Company
in filing its Tax Returns.

     

    (g)           All
material elections with respect to Taxes affecting the Company are disclosed or
attached to a Tax Return of the Company.

     

    (h)           The
Company shall grant to the Investor or its designees access at all reasonable
times to all of the Company’s books and records (including tax workpapers and
returns and correspondence with tax authorities), including the right to take
extracts therefrom and make copies thereof, to the extent such books and records
relate to taxable periods ending on or prior to or that include the Closing
Date.  Investor shall (i) grant to the Company access at all
reasonable times to all of the Company’s books and records (including tax
workpapers and returns and correspondence with tax authorities), including the
right to take extracts therefrom and make copies thereof, to the extent that
such books and records relate to the operations of the Company during taxable
periods ending on or prior to or that include the Closing Date, and (ii)
otherwise cooperate with the Company in connection with any audit of Taxes that
relate to the business of the Company prior to Closing.

     

    
      
         

      

      
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    (i)           The
subscription for the Capital Increase by the Investor pursuant to the terms of
this Agreement will not result in any Tax liability to the Company or the
Investor.

     

    (j)           The
Company shall be responsible for preparing and filing, or causing the Company to
prepare and file, all Tax Returns of the Company required to be filed after the
Closing Date.

     

    (k)           As
used in this Agreement, “Affiliated Group”
means any affiliated group within the meaning of under any provision of
national, provincial, local, or foreign law; the “Company” means the
Company and/or any corporation that at any time has been a subsidiary of the
Company; “Tax”
means any national, provincial, state, local or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental, customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not, and “Taxes” means any or
all of the foregoing collectively; and “Tax Return” means any
return, declaration, report, claim for refund or information return or statement
relating to Taxes, including any schedule or attachment thereto and including
any amendment thereof.

     

    ARTICLE X.
  MISCELLANEOUS

     

    10.1         Survival of Representations,
etc..

     

    (a)           The
representations, warranties, agreements, and indemnities of the Chinese Equity
Interest Holders set forth in this Agreement or in connection with the
transactions contemplated hereby shall survive the Closing.

     

    (b)           Each
of the Company and each Guarantor shall be jointly and severally obligated to
indemnify as and to the extent set forth in Section 8.3 of this
Agreement.

     

    (c)           For
purposes of this Section 10.1(c), a party making a claim for indemnity under
Section 8.3 is
hereinafter referred to as an “Indemnified Party”
and the party against whom such claim is asserted is hereinafter referred to as
the “Indemnifying
Party.”  All claims by any Indemnified Party shall be asserted
and resolved in accordance with the following provisions.  If any
claim or demand for which an Indemnifying Party would be liable to an
Indemnified Party is asserted against or sought to be collected from such
Indemnified Party by such third party, said Indemnified Party shall with
reasonable promptness notify in writing the Indemnifying Party of such claim or
demand stating with reasonable specificity the circumstances of the Indemnified
Party’s claim for indemnification; provided, however, that any
failure to give such notice will not waive any rights of the Indemnified Party
except to the extent the rights of the Indemnifying Party are actually
prejudiced.  After receipt by the Indemnifying Party of such notice,
then upon reasonable notice from the Indemnifying Party to the Indemnified
Party, or upon the request of the Indemnified Party, the Indemnifying Party
shall defend, manage, and conduct any proceedings, negotiations, or
communications involving any claimant whose claim is the subject of the
Indemnified Party’s notice to the Indemnifying Party as set forth above, and
shall take all actions necessary, including but not limited to, the posting of
such bond or other security as may be required by any Governmental Authority, so
as to enable the claim to be defended against or resolved without expense or
other action by the Indemnified Party.  Upon request of the
Indemnifying Party, the Indemnified Party shall, to the extent it may legally do
so and to the extent that it is compensated in advance by the Indemnifying Party
for any costs and expenses thereby incurred,

     

    
      
         

      

      
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    (i)           take
such action as the Indemnifying Party may reasonably request in connection with
such action,

     

    (ii)           allow
the Indemnifying Party to dispute such action in the name of the Indemnified
Party and to conduct a defense to such action on behalf of the Indemnified
Party, and

     

    (iii)           render
to the Indemnifying Party all such assistance as the Indemnifying Party may
reasonably request in connection with such dispute and defense.

     

    10.2         Resolution of
Disputes.

     

    (a)           In
the event of any dispute with respect to or pursuant to this Agreement,
including but not limited to any dispute or claim in respect of any indemnities
or third party claims or otherwise for which the Investor shall seek
indemnification under this Agreement, the Exhibits, and Schedules hereto, the
Parties shall in good faith seek to settle or compromise such dispute or
claim.  In the event that any such dispute or claim cannot be settled
or compromised, as aforesaid, within thirty (30) days of the other Party’s
receipt of written notice of the subject claim, any Party may submit the dispute
to final and binding arbitration to the Hong Kong International Arbitration
Center in Hong Kong, which proceeding shall be conducted in accordance with the
International Chamber of Commerce International Arbitration Rules in effect at
the time of applying for arbitration. The arbitration tribunal shall consist of
three arbitrators. The arbitration shall be conducted in Chinese. The Parties
shall use their collective best efforts to promptly schedule and conduct the
hearings before such arbitrators, with a view toward concluding such arbitration
proceedings not later than ninety (90) days from the first submission of the
dispute to arbitration.  Any decision and award by the arbitrators
shall be in writing and shall be supported by reasonably detailed findings of
fact and conclusions of law.  The arbitrators shall have no authority
to amend or modify this Agreement or any Exhibit hereto.

     

    (b)           In
connection with any Arbitration pursuant to this Section 10.2, the arbitrators
shall, as part of their award, allocate the fee of the Arbitration, including
all fees of the arbitrators, the cost of any transcripts, and the parties'
reasonable attorneys' fees, based upon and taking into account the arbitrators'
determination of the merits and good faith of the parties' claims and defenses
in the subject proceeding.

     

    (c)           The
decision and award of the arbitrators shall be final and binding upon the
Parties hereto and shall be enforceable in any court of competent
jurisdiction.  Any process or other papers hereunder may be served by
internationally recognized overnight courier or by personal service, provided
that a reasonable time for appearance or response is allowed.

     

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    10.3         Confidentiality.

     

    (a)           Prior
to the Closing, the Investor shall, and shall cause its Affiliates and its and
their employees, agents, accountants, legal counsel, and other representatives
and advisers to, hold in strict confidence all, and not divulge or disclose any,
information of any kind concerning the Company and its business; provided, however, that the
foregoing obligation of confidence shall not apply to (i) information that is or
becomes generally available to the public other than as a result of a disclosure
by the Investor or its Affiliates or any of its or their employees, agents,
accountants, legal counsel, or other representatives or advisers, (ii)
information that is or becomes available to the Investor or its Affiliates or
any of its or their employees, agents, accountants, legal counsel, or other
representatives or advisers on a non-confidential basis prior to its disclosure
by the Investor or its Affiliates or any of its or their employees, agents,
accountants, legal counsel, or other representatives or advisers, and (iii)
information that is required to be disclosed by the Investor or its Affiliates
or any of its or their employees, agents, accountants, legal counsel, or other
representatives or advisers as a result of any applicable law, rule, or
regulation of any Governmental Authority; and, provided further, that the
Investor promptly shall notify the Company of any disclosure pursuant to clause
(iii) of this Section 10.3(a) and shall cooperate with the Company in seeking a
protective order for such information; and, provided further, that the
foregoing obligation of confidence shall not apply to the furnishing of
information by the Investor in bona fide discussions or negotiations with
prospective lenders.

     

    (b)           The
Chinese Parties shall, and shall cause its or his Affiliates and their
respective employees, agents, accountants, legal counsel, and other
representatives and advisers to, hold in strict confidence all, and not divulge
or disclose any, information of any kind concerning the Transaction contemplated
by this Agreement or the Investor or the Investor’s businesses; provided, however, that the
foregoing obligation of confidence shall not apply to (i) information that is or
becomes generally available to the public other than as a result of a disclosure
by the Company, the Chinese Equity Interest Holders, or its Affiliates or any of
their respective employees, agents, accountants, legal counsel, or other
representatives or advisers, (ii) information that is or becomes available to
the Company, the Chinese Equity Interest Holders, or its Affiliates or any of
their respective employees, agents, accountants, legal counsel, or other
representatives or advisers on a non-confidential basis prior to its disclosure
by the Company, the Chinese Equity Interest Holders, or its Affiliates or any of
their respective employees, agents, accountants, legal counsel, or other
representatives or advisers, and (iii) information that is required to be
disclosed by the Company, the Chinese Equity Interest Holders, or its or his
Affiliates or any of their respective employees, agents, accountants, legal
counsel, or other representatives or advisers as a result of any Legal
Requirement of any Governmental Authority; and, provided further, that the
Chinese Parties shall promptly shall notify the Investor of any disclosure
pursuant to clause (iii) of this Section 10.3(b).

     

    10.4         Brokers.  Regardless
of whether the Closing shall occur, (i) each of the Chinese Parties shall, and
hereby does, jointly and severally indemnify and hold harmless the Investor
Investor from and against any and all liability for any brokers’ or finders’
fees arising with respect to brokers or finders retained or engaged by the
Chinese Parties of the Company in respect of the Transaction contemplated by
this Agreement, and (ii) the Investor shall, and hereby does, indemnify and hold
harmless the Company from and against any and all liability for any brokers’ or
finders’ fees arising with respect to brokers or finders retained or engaged by
the Investor in respect of the Transaction contemplated by this
Agreement.

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    10.5         Costs and
Expenses.  Each of the Parties to this Agreement shall bear his
or its own expenses incurred in connection with the negotiation, preparation,
execution and closing of this Agreement and the Transaction contemplated hereby
(the “Transaction
Expenses”); provided, however, that the
Company shall be responsible for and shall discharge all Transaction Expenses
incurred by or on behalf of the Company and/or the Chinese Equity Interest
Holders (it being the Parties’ agreement that the Investor shall not bear or
otherwise be liable for any such expenses) out of the sale
proceeds.

     

    10.6         Notices.  Any
notice, request, instruction, correspondence, or other document to be given
hereunder by any Party hereto to another (herein collectively called “Notice”) shall be in
writing and delivered personally or mailed by internationally recognized
overnight courier, postage prepaid and receipt acknowledged, or by facsimile, as
follows:

     

    
      
        
          	
                  IF
      TO THE INVESTOR:

                	
                  Regal
      Life Concepts, Inc.

                
	 
      	
                  3723
      E. Maffeo Road

                
	 
      	
                  Phoenix
      AZ 85050

                
	 
      	
                  Attn:  Eric
      Wildstein

                
	 
      	
                  Fax
      No.  516-659-6677

                
	 
      	 
      
	 
      	
                  With a copy
      to:

                
	 
      	 
      
	 
      	
                  Gersten
      Savage LLP

                
	 
      	
                  600
      Lexington Avenue, 10th
      Floor

                
	 
      	
                  New
      York, New York  10022

                
	 
      	
                  Attention:  David
      Danovitch, Esq.

                
	 
      	
                  Fax
      No. 212-980-5192

                

        

      

    

    

    
      
        	
                IF
      TO THE COMPANY

              	
                Guangzhou
      AWA Wine Co. Ltd.

              
	
                AND/OR
      THE CHINESE EQUITY INTEREST HOLDERS:

              	
                Suite

                510
      Block C No 88 Wenchan South Rd
Liwan District, Guangzhou Guangdong,
      
China

              
	 
      	
                Attn:  Mr.
      Nie Weifeng

              
	 
      	
                Fax
      No. 86 20 8104 6996

              

      

    

    

    10.7         Governing
Law.  The provisions of this Agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the China (excluding any conflict of law rule or principle that
would refer to the laws of another jurisdiction).

     

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    10.8         Entire Agreement; Amendments
and Waivers.  This Agreement, together with all Exhibits and
Schedules attached hereto, constitutes the entire agreement between and among
the Parties hereto pertaining to the subject matter hereof and supersedes all
prior agreements, understandings, negotiations, and discussions, whether oral or
written, of the Parties, and there are no warranties, representations, or other
agreements between and among the Parties in connection with the subject matter
hereof except as set forth specifically herein or contemplated
hereby.  No supplement, modification, or waiver of this Agreement
shall be binding unless executed in writing by the Party to be bound
thereby.  No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (regardless
of whether similar), nor shall any such waiver constitute a continuing waiver
unless otherwise expressly provided.

     

    10.9         Binding Effect and
Assignment.  This Agreement shall be binding upon and inure to
the benefit of the Parties hereto and their respective permitted successors and
assigns; but neither this Agreement nor any of the rights, benefits, or
obligations hereunder shall be assigned, by operation of law or otherwise, by
any party hereto without the prior written consent of the other party, provided, however, that nothing
herein shall prohibit the assignment of the Investor’s rights and obligations to
any direct or indirect subsidiary or prohibit the assignment of the Investor’s
rights (but not obligations) to any lender.  .

     

    10.10       Remedies.  The
rights and remedies provided by this Agreement are cumulative, and the use of
any one right or remedy by any Party hereto shall not preclude or constitute a
waiver of its right to use any or all other remedies.  Such rights and
remedies are given in addition to any other rights and remedies a Party may have
by law, statute, or otherwise.

     

    10.11       Exhibits and
Schedules.  The Exhibits and Schedules referred to herein are
attached hereto and incorporated herein by this reference.

     

    10.12       Duplicates. This
Agreement shall be executed in duplicates which constitute the entire
agreement.

     

    10.13       References and
Construction.

     

    (a)           Whenever
required by the context, and is used in this Agreement, the singular number
shall include the plural and pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, neuter, singular, or plural, as the
identification the person may require.  References to monetary
amounts, specific named statutes and generally accepted accounting principles
are intended to be and shall be construed as references to RMB or Yuan, as
applicable, statutes of the China, and China generally accepted accounting
principles, respectively, unless the context otherwise requires.

     

    (b)           The
provisions of this Agreement shall be construed according to their fair meaning
and neither for nor against any Party hereto irrespective of which Party caused
such provisions to be drafted.  Each of the Parties acknowledges that
it has been represented by an attorney in connection with the preparation and
execution of this Agreement.

     

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

     

    10.14       Survival.  Any
provision of this Agreement which contemplates performance or the existence of
obligations after the Closing Date, and any and all representations and
warranties set forth in this Agreement, shall not be deemed to be merged into or
waived by the execution and delivery of the instruments executed at the Closing,
but shall expressly survive Closing and shall be binding upon the Party or
Parties obligated thereby in accordance with the terms of this Agreement,
subject to any limitations expressly set forth in this Agreement.

     

    10.15       Attorneys’
Fees.  In the event any suit or other legal proceeding is
brought for the enforcement or interpretation of any of the provisions of this
Agreement, the Parties hereto agree that the prevailing Party or Parties shall
be entitled to recover from the other Party or Parties upon final judgment on
the merits reasonable attorneys’ fees, including attorneys’ fees for any appeal,
and costs incurred in bringing such suit or proceeding and the costs of
enforcing any order or judgment.

     

    10.16       Risk of
Loss.  Prior to the Closing, the risk of loss of damage to, or
destruction of, any and all of the Company’s assets, including, without
limitation, the Properties, shall remain with the Company.

     

    10.17       Severability.  The
invalidity of any one or more of the words, phrases, sentences, clauses or
sections contained in this Agreement shall not affect the enforceability of the
remaining portions of this Agreement or any part thereof, all of which are
inserted conditionally on their being valid in law, and, in the event that any
one or more of the words, phrases, sentences, clause or sections contained in
this Agreement shall be declared invalid, this Agreement shall be construed as
if such invalid word or words, phrase or phrases, sentence or sentences, clause
or clauses, or section or sections had not been inserted.  If such
invalidity is caused by length of time or size of area, or both, the otherwise
invalid provision will be considered to be reduced to a period or area which
would cure such invalidity.

     

    ARTICLE
XI. DEFINITIONS

     

    Capitalized
terms used in this Agreement are used as defined in this Article XI or elsewhere
in this Agreement.

     

    11.1         Affiliate.  The
term “Affiliate” shall mean, with respect to any person, any other person
controlling, controlled by or under common control with such
person.  The term “Control” as used in the preceding sentence means,
with respect to a corporation, the right to exercise, directly or indirectly,
more than 50% of the voting rights attributable to the shares of the controlled
corporation and, with respect to any person other than a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person.

     

    11.2         Board of Directors.
The term “Board of Directors shall mean the board of directors of the
Company

     

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    11.3         Business Day. The
term “Business Day” shall mean a day that banks are open for business in the
People’s Bank of China and a day the Central bank of Nevada is open for
business.

     

    11.4        
China.  The
term “China” shall mean the People’s Republic of China, and for the purpose of
this Agreement only, not including Hong Kong SAR, Macau SAR and Province of
Taiwan.

     

    11.5         Closing.  The
term “Closing” shall mean the consummation of the transactions contemplated in
connection with the purchase of the Equity in accordance with Section
3.1.

     

    11.6         Confidential
Information.  The term “Confidential Information” shall mean
confidential data and confidential information relating to the business of the
Company (which does not rise to the status of a Trade Secret under applicable
law) and which has value to the Company and is not generally known to the
competitors of the Company.  Confidential Information shall not
include any data or information that (i) has been voluntarily disclosed to the
general public by the Company or its Affiliates, (ii) has been independently
developed and disclosed to the general public by others, or (iii) otherwise
enters the public domain through lawful means.

     

    11.7         Contracts.  The
term “Contracts,” when described as being those of or applicable to any person,
shall mean any and all contracts, agreements, franchises, understandings,
arrangements, leases, licenses, registrations, authorizations, easements,
servitudes, rights of way, mortgages, bonds, notes, guaranties, liens,
indebtedness, approvals, or other instruments or undertakings to which such
person is a party or to which or by which such person or the property of such
person is subject or bound, excluding any Permits.

     

    11.8         Damages.  The
term “Damages” shall mean any and all damages, liabilities, obligations,
penalties, fines, judgments, claims, deficiencies, losses, costs, expenses and
assessments (including without limitation income and other taxes, interest,
penalties and reasonable attorneys’ and accountants’ fees and
disbursements).

     

    11.9         Equity.  The
term “Equity” shall mean the 26% equity interest in the JV Company’s Registered
Capital, on a fully diluted basis, which is the subject of the transaction as
contemplated by this Agreement.

     

    11.10       Equity Interest
Holders.  The term ” Equity Interest Holders” shall refer to
any owner of the Company’s Registered Capital.

     

    11.11       Exhibits.  The
term “Exhibits” shall mean any or all of the exhibits to this Agreement and any
and all other agreements, instruments, or documents required or expressly
provided under this Agreement to be executed and delivered in connection with
the transactions contemplated by this Agreement.

     

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    11.12       Financial
Statements.  The term “Financial Statements” shall mean any or
all of the financial statements, including balance sheets and related statements
of income and statements of changes in financial position and the accompanying
notes thereto, of the Company’s business prepared in accordance with GAAP
consistently applied, except as may be otherwise provided herein.

     

    11.13       Indebtedness.  “Indebtedness”
shall mean the aggregate amount (including the current portions thereof) of all
(i) indebtedness for money borrowed from others, capital lease obligations,
dividends payable to any of Chinese Equity Interest Holders, bonus payables to
employees, and purchase money indebtedness of the Company, (ii) indebtedness of
the type described in clause (i) above guaranteed, directly or indirectly, in
any manner by the Company, or in effect guaranteed, directly or indirectly, in
any manner by the Company, through an agreement, contingent or otherwise, to
supply funds to, or in any other manner invest in, the debtor, or to purchase
indebtedness, or to purchase and pay for property if not delivered or to pay for
services if not performed, primarily for the purpose of enabling the debtor to
make payment of the indebtedness or to assure the owners of the indebtedness
against loss, but excluding endorsements of checks and other instruments in the
ordinary course, (iii) indebtedness of the type described in clause (i) above
secured by any lien upon property owned by the Company, even though the Company
has not in any manner become liable for the payment of such indebtedness and
(iv) interest expense accrued but unpaid, and all prepayment premiums, on or
relating to any of such indebtedness.

     

    11.14       GAAP.  “GAAP”
means generally accepted accounting principles of China.

     

    11.15       Governmental
Authorities.  The term “Governmental Authorities” shall mean
any nation or country (including but not limited to, China and Nevada) and any
commonwealth, territory, province, or possession thereof and any political
subdivision of any of the foregoing, including but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries, or other
instrumentalities.

     

    11.16       Knowledge of the
Company.  The term “Knowledge of the Company” shall mean the
actual knowledge of the directors, officers, managerial personnel, or key
employees of the Company with respect to the matter in question, and such
knowledge as the other directors, officers, managerial personnel, or key
employees of the Company reasonably should have obtained upon diligent
investigation and inquiry into the matter in question.

     

    11.17       Legal
Requirements.  The term “Legal Requirements,” when described as
being applicable to any Person, shall mean any and all laws (statutory,
judicial, or otherwise), ordinances, regulations, judgments, orders, directives,
injunctions, writs, decrees, or awards of, and any Contracts with, any
Governmental Authority, in each case as and to the extent applicable to such
person or such person’s business, operations, or properties

     

    11.18       Material Adverse
Effect.  The term “Material Adverse Effect” shall mean any
event, circumstance, or change (other than resulting from general economic
conditions or the financial or securities markets generally) that had or can
reasonably be expected to have a material adverse effect on the business,
operations, prospects, Properties, financial condition, or working capital of
the Company.

     

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    11.19       Legal
Requirements.  The term “Legal Requirements,” when described as
being applicable to any Person, shall mean any and all laws (statutory,
judicial, or otherwise), ordinances, regulations, judgments, orders, directives,
injunctions, writs, decrees, or awards of, and any Contracts with, any
Governmental Authority, in each case as and to the extent applicable to such
person or such person’s business, operations, or properties

     

    11.20       Material Adverse
Effect.  The term “Material Adverse Effect” shall mean any
event, circumstance, or change (other than resulting from general economic
conditions or the financial or securities markets generally) that had or can
reasonably be expected to have a material adverse effect on the business,
operations, prospects, Properties, financial condition, or working capital of
the Company.

     

    11.21       MOC.  The
term “MOC” shall mean the Ministry of Commerce of the PRC and its provincial and
local counterparts.

     

    11.22       Permits. The term
“Permits” shall mean any and all permits, rights, approvals, licenses,
authorizations, legal status, orders, or Contracts under any Legal Requirement
or otherwise granted by any Governmental Authority.

     

    11.23       Person.  The
term “Person” shall mean any individual, partnership, joint venture, firm,
corporation, association, limited liability company, trust, or other enterprise
or any governmental or political subdivision or any agency, department, or
instrumentality thereof.

     

    11.24       Product.  The
term “Product” shall mean each product, repair process, or service under
development, developed, manufactured, licensed, distributed, or sold by the
Company and any other products in which the Company has any proprietary rights
or beneficial interest.

     

    11.25       Properties.  The
term “Properties” shall mean any and all properties and assets (real, personal
or mixed, tangible or intangible) owned or Used by the Company.

    

    11.26       Real
Property.  The term “Real Property” shall mean the real
property Used by the Company in the conduct of its business.

     

    11.27       Registered
Capital.  The term “Registered Capital” shall mean the
registered capital stated on the Company’s business license or the resulting
registered capital after the consummation of the Transaction contemplated by
this Agreement.

     

    11.28       SAIC.  The
term “SAIC” shall mean the State Administration of Industry and Commerce and its
provincial and local counterparts.

     

    11.29       Schedules.  The
term “Schedules” shall mean any or all of the schedules to this Agreement and
any and all other disclosure items, financial statements, or such other
documents to be delivered in connection with the transactions contemplated by
this Agreement.

     

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    11.30       Subsidiary.  The
term “Subsidiary” shall mean any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by the Company.

     

    11.31       Trade
Secrets.  The term “Trade Secrets” shall mean information of
the Company including, but not limited to, technical or nontechnical data,
formulas, patterns, compilations, programs, financial data, financial plans,
product or service plans or lists of actual or potential customers or suppliers,
which (i) derives economic value, actual or potential, from not being generally
known to, and not being readily ascertainable by proper means by, other persons
who can obtain economic value from its disclosure or use, and (ii) is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy.

     

    11.32       Used.  The
term “Used” shall mean, with respect to the Properties, Contracts, or Permits of
the Company, those owned, leased, licensed, or otherwise held by the Company
which were acquired for use or held for use by the Company in connection with
the Company’s business and operations, whether or not reflected on the Company’s
books of account.

     

     [the
balance of this page intentionally left blank]

     

    
      
         

      

      
        30

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the
Parties hereto have executed this Agreement on Subscription for Capital Increase
as of the date first written above.

     

    
      
        
          
            
              
                
                  
                    
                      
                        	
                                INVESTOR:

                              
	 
      
	
                                REGAL
      LIFE CONCEPTS, INC..

                              
	 
      
	
                                By: 

                              	
                                /s/ Eric Wilstein

                              
	 
      	
                                Name:

                              	
                                Eric
      Wildstein

                              
	 
      	
                                Title:

                              	
                                President

                              
	 
      
	
                                COMPANY:

                              
	 
      
	
                                GUANGZHOU
      AWA WINE CO. LTD.

                              
	 
      
	
                                By:

                              	
                                /s/ Nie Weifeng

                              
	 
      	
                                Name:

                              	
                                Nie
      Weifeng

                              
	 
      	
                                Title:

                              	
                                  Legal
      Representative

                              
	 
      	 
      	 
      
	
                                CHINESE
      EQUITY INTEREST HOLDERS:

                              
	 
      
	
                                /s/ Nei Weifeng

                              
	
                                MR.
      NEI WEIFENG

                              
	 
      
	
                                /s/ Liang Huanxian

                              
	
                                MRS.
      LIANG HUANXIAN

                              
	 
      
	
                                /s/ Xian Wenbin

                              
	
                                MR.
      XIAN
WENBIN

                              

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        31

        
          

        

      

      
         

      

    

    AGREEMENT
ON CAPITAL INCREASE AND EQUITY SUBSCRIPTION

     

    
      
        

      

    

     

    Among

     

    
      
        
          
            
              	
                      REGAL
      LIFE CONCEPTS, INC.,

                       

                    
	
                       GUANGZHOU
      AWA WINE CO. LTD.,

                    
	 
      
	
                       and

                    
	 
      
	
                       MR.
      NEI WEIFENG

                    
	 
      
	
                       MRS.
      LIANG HUANXIAN

                    
	 
      
	
                       MR.
      XIAN WENBIN

                    
	 
      
	 
      
	
                       January
      29,
2009

                    

            

          

        

      

    

    
      
         

      

      
        32

        
          

        

      

      
         

      

    

    LIST
OF EXHIBITS AND SCHEDULES

     

    
      
        	
                Exhibit
      A

              	
                -

              	
                List
      of Chinese Equity Interest Holders

              	
                A-1

              
	 
      	 
      	 
      	 
      
	
                Exhibit
      B

              	
                -

              	
                The
      Joint Venture Agreement

              	
                B-1

              
	 
      	 
      	 
      	 
      
	
                Schedules

              	
                -

              	 
      	
                C-1

              

      

    

    
      
         

      

      
        - iv
-

        
          

        

      

      
         

      

    

    
      Exhibit
A

    

    
      List of Chinese Equity
Interest Holders

    

     

    The
Registered Capital of the Company as of the date of this Agreement is RMB
500,000 and held by the following individuals (“Chinese Equity Interest
Holders”). Pursuant to PRC Company Law, Chinese Equity Interest Holders own the
following percentages of the equity interest of the Company
respectively.

     

    
      
        
          
            
              
                
                  	
                          Name

                        	   	
                          Address

                        	    	
                          Percentage of Equity

                          ownership

                        	 
	 
      	 	 
      	 	 	 
	
                          Mr.
      Nie Weifeng

                        	 	 
      	 	 	40	%
	 
      	 	 
      	 	 	 	 
	
                          Mr.
      Liang Huanxian

                        	 	 
      	 	 	50	%
	 
      	 	 
      	 	 	 	 
	
                          Mr.
      Xian Wenbin

                        	 	 
      	 	 	10	%

                

              

            

          

        

      

    

    
      
         

      

      
        A -
1

        
          

        

      

      
         

      

    

    Exhibit
B

    Form of Joint Venture
Agreement

    
      
         

      

      
        B -
1

        
          

        

      

      
         

      

    

    Schedules

    

    To
be provided by the Company

    

    Schedule
7.1(e)

    

    Company
Milestones

    

    a)           CJV
shall deliver the following within 180 days of establishment of capitalization
of the capital investment by Regal Life:

    - opening
of a second AWA club location in Guangzhou (TianHe)

    - opening
of the Nanjing and Shanghai club location

    

    b) AWA to
receive a formal wine import license

    

    c) AWA
will have greater than RMB10 million in sales turnover for the 6 month period
and to have an auditable base of greater than 30,000 active members directly
purchasing products from AWA, the parent company

    

    d) a
logistics and product distribution JV with the Shangdong Provincial and Nanjing
Municipal branches of China Post.

    

    e) the
completed development membership backend administration system for the AWA
network of in-house owned and franchised store outlets.

    
      
         

      

      
        C -
1

        
          

        

      

      
         

      

    

    Schedule
7.1(f).

    Timetable
on Use of Subscription Price

    

    Use of
US$500,000 (commencing January 2009)

    
      
        
          
             

            
              
                
                  
                    
                      
                        
                          
                            	
                                    EXPENDITURE 
ITEM

                                  	 
      	
                                    PROJECTED

                                    PERIOD

                                  	 
      	
                                    AMOUNT

                                  	 
      	
                                    REMARKS

                                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                    Guangzhou
      Head Office

                                  	 
      	
                                    January

                                  	 
      	
                                    RMB

                                  	
                                    300,000

                                  	 
      	
                                    Provide
      an upscale image to recruit new alliance stores.

                                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                    Guangzhou
      Flagship Store

                                  	 
      	
                                    January

                                  	 
      	
                                    RMB

                                  	
                                    300,000

                                  	 
      	
                                    To
      promote image and provide protocol to attract new alliance
      stores

                                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                    Eastern
      China Flagship Store

                                  	 
      	
                                    February

                                  	 
      	
                                    RMB

                                  	
                                    300,000

                                  	 
      	
                                    To
      set up regional base to recruit alliance stores

                                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                    Central China
      Flagship Store

                                  	 
      	
                                    April

                                  	 
      	
                                    RMB

                                  	
                                    300,000

                                  	 
      	
                                    To
      set up regional base to recruit alliance stores

                                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                    Internet
      Software Development

                                  	 
      	
                                    March

                                  	 
      	
                                    RMB

                                  	
                                    500,000

                                  	 
      	
                                    Unify
      sales management system to integrate all alliance
stores

                                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                    Flowing
      Capital

                                  	 
      	
                                    January
      – March

                                  	 
      	
                                    RMB

                                  	
                                    180,000

                                  	 
      	
                                    Daily
      expenditures for wine ordering

                                  
	 
      	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                                    Total

                                  	 
      	 
      	 
      	
                                    RMB

                                  	
                                    3.5
      million

                                  	 
      	 
      

                          

                        

                      

                    

                  

                  
                    
                       

                    

                    
                      C -
2

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00152-of-00352.parquet"}]]