D E S I G N & D E V E L O P M E N T
A G R E E M E N T

THIS DESIGN and DEVELOPMENT AGREEMENT is entered into by and between CERVECERIA
MEXICANA, S. de R.L. de C.V., a corporation formed under the laws of the
Republic of Mexico (hereinafter referred to as "CERMEX"), and ENCORE BRANDS,
INC., a Nevada corporation (hereinafter referred to as “EBI”) this 10th day of
January, 2011.

RECITALS

A.           CERMEX is in the business of designing, developing Malt Beverage
Products.

B.           CERMEX has also developed a host of Branded Products, Private label
Products and proprietary beers.

C.           EBI is a newly formed, start up company with limited prior business
activities.

D.           CERMEX and EBI (referred to collectively as the Parties) desire to
form joint venture to design and develop a series of Branded beers.

E.           EBI intends to use CERMEX’s history of brewing and rely upon its
manufacturing, brewing and distribution expertise to develop brewed products
amongst other products as they may be appropriate for the benefit of EBI.

F.           CERMEX and EBI intend to separately engage in the business of
selling, marketing and otherwise conduct business with third parties that do not
directly interfere with this agreement.

NOW, THEREFORE, based upon the recitals, terms and conditions set forth in this
Design and Development Agreement (hereinafter referred to as the “Agreement”),
CERMEX and EBI agree as follows:

AGREEMENT

ARTICLE I

1.01                                CERMEX and EBI agree to:

 
(a)
CERMEX and EBI agree to, and shall upon execution of the Agreement will, provide
for a joint announcement that represents the nature of this Design and
Development agreement.

 
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(b)
CERMEX and EBI shall each maintain separate offices and will in no way promote
each other as it relates to ownership in each others companies to any third
parties.

 
 
 
(c)
CERMEX, or its designated representative, shall manage the project(s), including
but not limited to: product development; product design; scheduling; purchasing;
and material and products necessary to development Private Label beers.

 
(d)
EBI agrees to purchase from CERMEX all products produced under this agreement
exclusively from CERMEX for importation/wholesale or resale directly to
retailers as long as this agreement is in force.

 
(e)
EBI or its designated representative shall manage sales, marketing, promotional
activities, hiring and firing of employees, contracts with third parties and
independent contractors and any other activities normally and customarily the
responsibility of the Importer and/or Private label owner of a similar company.

 
(f)
EBI SHALL ISSUE TO CERMEX A TOTAL OF THREE MILLION (3,000,000) SHARES OF COMMON
STOCK (that are subject to Rule 144) TO CONSUMATE THIS AGREEMENT. The price per
share shall be equal to $0.45 per share. The shares to be transferred have gone
through registration as defined by the S.E.C., and shall be transferred no later
than five days after the execution of this agreement the shares shall be
transferred to CERMEX and/or it’s assignee(s) via “Original Common Share
Certificates” or electronically from the stock transfer agent representing EBI
to an account designated by CERMEX and/or their assignee(s). These shares will
bear a legend, and shall be considered “restricted” from the date of this
agreement. CERMEX agrees to accept the shares as payment for their development
of products for EBI.

 
(g)
Term of this agreement shall be three years.

 
(h)
Shares shall vest over the 3-year term, vesting annually in arrears, 33.33%.

 
(i)
The Intellectual Property as set forth in this development agreement shall
remain the property of EBI together with all Registered Trademarks associated
with the products developed by CERMEX for the benefit of EBI.

1.02                      The Agreement shall come into existence upon execution
of the Agreement by EBI and CERMEX and shall terminate upon the parties mutual
decision or in the event of EBI or CERMEX dissolution as a viable entity.

ARTICLE II
DESIGN AND DEVELOPMENT

2.01           CERMEX’s and EBI’s Duties.

 
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(a) CERMEX and EBI shall each commit their principal owner(s) and/or their
designee’s to devote sufficient time and energy to assist in the design and
development of at least two private label beers per year or more by mutual
agreement.

 
2.02
Time for Design and Development.

The Parties estimates that it will require a period not to exceed Six (6) months
from the date of the execution of this Agreement to develop a Registered
Trademarked product that includes bottle designs, label designs, packaging
configuration, invoicing payment schedules for product delivered, and points of
entry for each country where the product is to be sold (Hereafter referred to as
the “product”). Additionally, for each country an importer associated with that
country will be specified.

 
2.03
Design and Development Costs.

CERMEX shall contribute to EBI the necessary initial design and development
costs as determined by CERMEX on an “as needed basis” for a minimum of (2)
brands per year. The initial costs covered herein as well as any and all funds
contributed by CERMEX to provide for development and distribution of the
product, or any future venture, shall be paid by EBI through invoices provided
by CERMEX with full accounting.

2.04            Property Rights of EBI

(a)           Title, ownership and possession to all products and Intellectual
Property developed as a result of this agreement shall belong to and remain the
exclusive property of EBI.  EBI shall have the right to patent, copyright,
trademark, license, sell, assign or otherwise exploit to the fullest extent
provided by law all products, equipment and Intellectual Property designed
and/or developed pursuant to this Agreement.

ARTICLE III
ADDITIONAL CONSIDERATION

3.01  NONE

ARTICLE IV
TERMINATION

4.01           Termination.

A. If either party breaches a material provision of this Agreement (Hereafter
referred to as the “breach”) and fails to cure said breach within thirty (30)
days of receiving written notice from the other party, specifying the alleged
breach such that the breaching party can cure the breach this Agreement shall
terminate at the option of the non breaching party.

 
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B.        OBLIGATIONS ON TERMINATION.
Upon termination of this Agreement for any reason whatsoever, EBI shall
immediately pay all sums owed by them to CERMEX.  If the Agreement is terminated
as a result of CERMEX’s default, EBI shall retain unrestricted, worldwide,
exclusive rights to all patents, copyrights, trademarks, and licenses related to
the product developed under this Agreement.

ARTICLE V

MISCELLANEOUS

 
5.01
Notices.

Any notice required or permitted by this Agreement shall be in writing.  All
notices from EBI to CERMEX or CERMEX to EBI shall be sent by personal delivery,
facsimile transmission with confirmation capability, or by registered or
certified mail to the addresses specified on the signature page or at such
addresses as CERMEX and/or EBI shall substitute by subsequent notice.

 
5.02
Choice of Law.

The validity, construction and performance of the Agreement shall be
interpreted, construed and enforced according to the laws of the State of
California and all matters requiring Adjudication shall be in a suitable
California Court.

 
5.03
Entire Agreement.

 This Agreement represents the entire agreement and is intended by the Parties
to be an integrated agreement.  No evidence of prior, contemporaneous or
subsequent agreements, negotiations, statements, contracts or memorandum whether
oral or written shall be admissible to vary alter, amend, explain or contradict
the terms of this Agreement.

 
5.04
Binding Effect.

This Agreement binds and insures the benefit of the parties hereto, their
respective heirs, representatives, successors and/or assigns.

 
5.05
Paragraph Headings.

The paragraph headings in this Agreement are for convenience only, and they have
no substantive or interpretive effect.

 
5.06
Waiver.

Neither the modification of this Agreement nor any waiver of any term or
condition hereof shall be effective unless it is in writing and signed by the
parties hereto.  If either party fails to meet the requirements of any term of
this Agreement or waives any breach hereunder, that failure or waiver will
neither prevent a subsequent enforcement of such term nor be deemed a waiver of
any subsequent breach.

 
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5.07
Partial Invalidity.

In the event of the determination that any terms, covenant or condition of this
Agreement is of no force or effect, the remaining terms, conditions or covenants
contained herein shall not be affected thereby, and the obligations of the
parties hereto with respect to the performance of the remaining terms, covenants
and conditions shall continue in full force and effect.

 
5.08
Assignment.

This Agreement constitutes a personal contract and neither CERMEX nor EBI shall
transfer or assign it or any part thereof without written consent of the other
except to the extent set forth herein.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and
year first above written.

CERVECERIA MEXICANA, S. de R.L. de C.V.
 
ENCORE BRANDS, INC
A Mexican Corporation
 
A Nevada Corporation
Blvd. Morelos 750-B, Col. Industrial
 
502 EAST JOHN STREET,
Tecate, B.C., Mexico C.P. 21430
 
CARSON CITY, NV 89706
     
/s/ Leonard S. Moreno
 
/s/ Alex G. McKean
By: Leonard S. Moreno
 
By: Alex G. McKean
Its: Director General
 
Its: Chief Financial Officer
     
Date: 1/10/2011
 
Date: 1/10/2011

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

 
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