Natural Glacial Distribution Agreement

BETWEEN



NATURAL GLACIAL WATERS INC.



AND



AQUABLUE SPRING WATER INTERNATIONAL INC.

LES EAUX DE SOURCE AQUABLUE INTERNATIONAL INC.



SUPPLY AND DISTRIBUTION AGREEMENT



THIS AGREEMENT IS DATED THE 22 DAY OF AUGUST, 2008 FOR REFERENCE BETWEEN:

NATURAL GLACIAL WATERS INC.



8430 Berray Road, Fanny Bay, BC V0R 1W0

(the "Manufacturer")



AND:

AQUABLUE SPRING WATER INTERNATIONAL, INCL./LES EAUX DE SOURCE

AQUABLUE INTERNATIONAL INC.



507, Places d'Armes, Bureau 1529, Montreal, Quebec, H2Y 2W8

(the "Distributor")

(The manufacturer and the Distributor shall collectively be referred to as the Parties in this Agreement.)



RECITALS:



WHEREAS:



A. The Manufacturer is a corporation duly incorporated pursuant to the British Columbia Business Corporations Act, and is represented by Alan Lai, its Chief Executive Officer, who is duly authorized for the purposes of this Agreement.


B. The Distributor is a corporation duly incorporated pursuant to the Canada Business Corporations Act, and is represented by Anna Szostak, its President, who is duly authorized for the purposes of this Agreement.










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C. The Manufacturer is in the business of bottling, selling and supplying premium natural glacial spring water to third party distributors of natural spring water.


D. The Manufacturer is also in the business of selling, and distributing premium natural glacial spring water in Asia (including and not limited to Taiwan, the People's Republic of China, Korea, and Japan), Canada (including and not limited to Vancouver Island, British Columbia, the City of Vancouver, British Columbia, the Lower Mainland of British Columbia, and Edmonton, Alberta), and the United States (including and not limited to State of California) under its own brand of Nc9Vc9 and CANADA ICEFIELD.


E. The Distributor is an independent intermediary specializing in the distribution of premium natural spring water.


F. The Distributor wishes to exclusively distribute and market bottled natural glacial spring water under the Distributors brand name of "AQUABLUE" (the "Brand").


G. The Manufacturer wishes to supply the Distributor with bottled natural glacial spring water (the "Product") under the Distributor's brand name of "AQUABLUE" and to grant the Distributor the exclusive right to distribute the Brand in any territory the Distributor may develop.


H. The Parties agree that this Agreement shall in no way whatsoever restrict of limit the Manufacturer's business of bottling, selling, and distributing natural glacial spring water under its own brand of Nc9Vc9 and CANADA ICEFIELD in any current or future territory developed by the Manufacturer, shall in no way whatsoever restrict or limit the Manufacturer from developing and marketing future brands, and shall in no way whatsoever restrict or limit the Manufacturer ?s business of bottling, selling and supplying natural spring water to other third party distributor(s), other than distributor's current, in any current or future territory developed by the Manufacturer.


I. It is the intention of the Parties to establish a complimentary commercial relationship between them and they wish, to that effect, to establish between them an atmosphere of cooperation and constant consultation so as to enable the development of policies for the production, the marketing and the distribution in order to ensure maximum penetration of the "AQUABLUE" Products.


J. The Manufacturer agrees no to directly contact distributor's customer. A written consent from the distributor is needed prior the manufacturer enter into a formal business relationship with the distributors customer ?s. A customer list, however needs to be supplied to the manufacturer on monthly basis. Manufacturer's current customer is exempt from this restriction.


NOW THEREFORE the Manufacturer and the Distributor agree that:



SUPPLY OF WATER



1. The Manufacturer shall supply the Distributor with natural glacial spring water from its sources (the "natural spring water"). All natural spring water supplied by the Manufacturer shall at all times meet or exceed the standards and regulations established by NSF International (the "NSF") and the International Bottled Water Association.



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SUPPLY AND DISTRIBUTION



2. The manufacturer hereby agrees to grant the distributor the right to purchase from the Manufacturer natural spring water for the purpose of distributing and marketing the Product under that distributor's Brand for the term of this Agreement.


3. The Distributor shall have the exclusive right to distribute and to sell the Products under the brand AQUABLUE on the Territory for the term of this Agreement, or any renewal thereof.


PRODUCT PACKING SPECIFICATIONS



4. The Parties agree that all raw material specifications, packing specifications, prices and volume discounts agreed upon by the Parties are detailed in Schedule B to this Agreement.


5. in the event that the Distributor wishes the Manufacturer to supply Product to the Distributor in bottle and formats other than those agreed upon and detailed in Schedule B to this Agreement, the Manufacturer and Distributor will provide the Distributor with new raw material specifications, packing specifications and prices, and the raw material specifications, packaging specifications, prices and volume discounts stated in Schedule to this Agreement shall not be applicable.


LABEL AND COSTS FOR LABELS



6. The Distributor shall supply the artwork to be printed on the labels applied to the Product.


7. The Distributor shall supply the artwork to be printed on the cardboard cases that will be used to package the Product.


8. There will be a one time set-up cost for creating a printing plate and cutting die for the labels to be applied to the Product. The cost for creating a printing plate and cutting die for the labels shall be paid by the Distributor. Payment for the printing plate and cutting die shall be paid by the Distributor to the Manufacturer at the time of the Distributor's first order.


9. There will be a one time set-up cost for creating a printing plate and cutting die for the artwork to be printed on the cardboard cases. The cost for creating a printing plate and cutting die for the cardboard cases shall be paid by the Distributor. Payment for the printing plate and cutting die shall be paid by the Distributor to the Manufacturer at the time of the Distributor's first order.


RAW MATERIAL AND MATERIAL SPECIFICATIONS



10. The Manufacturer shall purchase all the raw material(s) required to bottle and package the Product.


11. The Manufacturer shall supply the raw materials for each plastic bottle as described in Schedule B to this Agreement.


12. The Manufacturer shall give the Distributor 45 days written notice prior to implementing any change in the raw material(s) supplied under this Agreement. In the event that the Manufacturer makes a change to the raw material(s) supplied under this Agreement, the raw material(s) that is substituted in place of the original shall meet or exceed the quality of the original raw material(s) supplied.



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BOTTLE DESIGN



13. The Parties agree that the Manufacturer's "Traditional" bottle design as shown on Schedule "A" to this Agreement shall be used to bottle the Product.


CHANGE IN BOTTLE DESIGN



14. In the event that the Distributor wishes the Manufacturer to utilize a bottle of a design other than the manufacturer's "Traditional" bottle design, the Distributor shall pay for all cost and expense necessarily required to retool the production line (the "retooling cost"). Payment for retooling the production line shall be delivered by the Distributor to the Manufacturer prior to the commencement of any work required for the retooling.


15. The Manufacturer agrees to reimburse the retooling cost to the Distributor if and when the Distributor's purchase of Product in the new bottle design exceeds 1,000,000 cases.


Packaging and Shipping Specifications



16. The Manufacturer shall package the Product in cardboard cases, the whole as described in Schedule B to this Agreement.


17. The Manufacturer shall ship Product to the Distributor only when there is sufficient quantity of Product to completely fill a 40 foot shipping container.


Price and Volume Discounts



18. The unit price and volume discounts for each format of the Product are described in Schedule B to this Agreement.


19. All monetary amounts in this Agreement are stated in and shall be paid in Canadian currency. In addition, unless otherwise indicated, the amounts of money stated in this Agreement shall not be interpreted to include the amounts stipulated in the Goods and Services Tax, the Quebec Sales Tax, and any other tax on such payment during the term hereof.



Price Change by the Manufacturer



20. The Manufacturer shall be permitted to change the price stated in Schedule B of this Agreement upon giving the Distributor 60 days written notice of any change to the price. (the "price change").


21. In the event of a price change, the Manufacturer shall apply the price in effect prior to the price change to any order placed by the Distributor before the price change takes effect. The Manufacturer shall not withhold any order placed by the Distributor before the price change, and the Manufacturer shall supply the Distributor with all orders placed prior to the coming into force of the price change.


22. The Parties agree that the price and the volume discounts stated in Schedule B of this Agreement shall be reviewed on each anniversary date of the signing of this Agreement.



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23. The Parties agree that a price change made on the anniversary review of this Agreement, if any, shall come into effect sixty (60) days following the anniversary date.


PRODUCTION SCHEDULE



24. For the first six months, the distributor should provide a monthly sale forecast to the manufacturer. After this time period, the Distributor shall provide the Manufacturer with its sales forecast 120 days before the date the Distributor intends to place an order (the "preset sales forecast").


25. The Parties shall each use its best efforts to cooperate to establish a production schedule for each quarter of the year based upon the Distributor's present sales forecast.


26. The Manufacturer will try its best to work with Distributor's present sales forecast. The Manufacturer will inform the Distributor if preset sale forecast is over its current production capacity and will not be liable for any order amount that exceeds manufacturer' capacity.


TERMS OF PAYMENT



27. Payment terms for all Product purchased by the Distributor from the Manufacturer shall consist of a 30% down payment paid at the time of order, and with the remainder 70% of the purchase price to be paid by an irrevocable letter of credit opened by the Distributor in favour of the Manufacturer at the time of the order. The irrevocable letter of credit shall be in a format specified by the Manufacturer, and the same format shall be used for each order.


SHIPMENT



28. Unless otherwise agreed in writing, the Manufacturer sh ...