EXHIBIT 10.10
 
Exclusive Distribution Agreement
 
Between

ecoreal GmbH & Co. KG, represented by the managing director Oliver Kleinjohann,
Spinnmühlengasse 9, D-50676 Köln, Federal Republic of Germany

(Hereinafter referred to as "MANUFACTURER")

And

Snoke Distribution Canada and Snoke Distribution USA
425 Alness St. Toronto Canada M3J 2T8
(Hereinafter referred to as "DISTRIBUTOR”)
 
PREAMBLE
 
MANUFACTURER is a manufacturer of electronic cigarettes, liquids to refill these
electronic cigarettes and associated equipment, which enable the customer to
enjoy the feeling of smoking cigarettes. MANUFACTURER intends to distribute
these Products as defined hereinafter through DISTRIBUTOR in the Territory
defined hereinafter. DISTRIBUTOR possesses the resources and personnel, a
distribution network sufficient to penetrate the contract territory, the
necessary contacts und the best knowledge of the market to successfully sell the
Products of MANUFACTURER in the Territory. This agreed upon, the Parties enter
into the following Agreement:
 
1. DEFINITIONS
 
a)  
"Products" shall mean all products in MANUFACTURER’s product portfolio, as from
time to time amended.

 
 
Upon written request of MANUFACTURER to DISTRIBUTOR, MANUFACTURER shall be
entitled to demand from DISTRIBUTOR

 
1)  
That this Agreement shall apply to further products (in which case such products
shall also be deemed Products as defined herein), and/or

 
2)  
That individual product shall no longer be deemed to be Products as defined
herein from a certain point in time on, which will be determined by
MANUFACTURER.

 
b)  
"Territory" shall mean the national territory of Canada and the United States of
America as well as the first right of refusal for Mexico and the Caribbean.

 
c)  
"Customers" shall mean both actual as well as prospective buyers of the
Products.

 
 
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2. OBJECT OF AGREEMENT
 
a)  
Subject to the terms herein provided, MANUFACTURER hereby appoints DISTRIBUTOR
as exclusive DISTRIBUTOR of the Products in the Territory, and DISTRIBUTOR
hereby accepts such appointment upon the terms of this agreement. MANUFACTURER
shall refrain from appointing any other company or person in order to distribute
the Products in the Territory. DISTRIBUTOR is aware that imports into the
Territory by third parties may occur and MANUFACTURER shall use its best efforts
to stop. This shall not entitle DISTRIBUTOR to infer any rights on MANUFACTURER.
MANUFACTURER recruits any customers within the Territory which have not bought
the Products from DISTRIBUTOR, MANUFACTURER must offer those customers to
DISTRIBUTOR. As consideration, MANUFACTURER and DISTRIBUTOR shall mutually agree
on a commission to be paid to MANUFACTURER by DISTRIBUTOR for all sales of the
Products made to such customer.

 
b)  
DISTRIBUTOR shall buy and sell the Products on his own behalf and for his own
account.

 
c)  
DISTRIBUTOR shall not be authorised to act on behalf of or represent
MANUFACTURER in any legal relations.

 
d)  
DISTRIBUTOR shall solely procure Products from MANUFACTURER.

 
3. DELIVERIES, PRICES, INVOICING AND DEBT COLLECTION
 
a)  
Deliveries by MANUFACTURER to DISTRIBUTOR will be subject to the “Standard Terms
and Conditions” of MANUFACTURER as amended from time to time. The current
standard terms and conditions are attached hereto as

 
Schedule 1 (attached)
 
 
MANUFACTURER shall be entitled to change such terms and conditions at any time
but will notify DISTRIBUTOR 6 months before the changed terms and conditions
become effective.

 
 
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b)  
Deliveries will be made after MANUFACTURER has received an advance payment of 50
per cent of the purchase price. The remaining 50 per cent shall be paid by wire
transfer upon Distributor taking possession of the goods

 
c)  
If legally permissible, MANUFACTURER shall be entitled to recommend retail
prices in such form that meets legal requirements. DISTRIBUTOR shall discuss the
prices for the Products before selling them to its customers. .

 
d)  
DISTRIBUTOR will book binding orders at the latest three months prior to the
delivery date quoted on the order.

 
e)  
MANUFACTURER is not bound to supply the Products at the time of delivery quoted
by the DISTRIBUTOR if the order and time of delivery is accepted by the
Manufacturer.

 
f)  
If MANUFACTURER is in default of delivery for a period of more than 6 weeks,
DISTRIBUTOR shall be entitled to cancel in whole or in part the relevant order.

 
g)  
A delivery date shall be extended if and when MANUFACTURER is unable to observe
the delivery date due to untimely or incorrect delivery by its own suppliers.
This shall apply under the premise that MANUFACTURER had concluded a
corresponding deal with its supplier to cover its supply needs for the specific
delivery at the time of the respective Forecast becoming binding.

 
h)  
MANUFACTURER shall immediately notify DISTRIBUTOR in writing of the new delivery
date of the delayed Products and any later changes thereof.

 
i)  
All deliveries are made EXW (Incoterms 2010) Köln.

 
4.  LIABILITY FOR DEFECTS (“MÄNGELHAFTUNG”) AND WARRANTY PERIOD
 
a)  
For the assertion of claims based on defect (“Mängelansprüche”), DISTRIBUTOR
must have complied with its examination and notification obligations arising
from section 377 of the German Commercial Code (“HGB”). DISTRIBUTOR shall report
any apparent defect (“offensichtlicher Mangel”) in writing without undue delay
and in any case no later than two weeks after receipt of the Products, and shall
report any hidden defect in writing without undue delay after detection and in
any case no later than two weeks after detection.

 
 
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b)  
If the Products are defective, MANUFACTURER undertakes, at his own discretion,
to supply items free from defects (replacements) or to rectify the defects. In
the event of a rectification of defects, MANUFACTURER shall bear all costs
required to rectify the defect unless such costs are increased by the fact that
the item is delivered to another place than the place of performance. If
rectification of defects or replacement fails, DISTRIBUTOR may at its discretion
withdraw from the specific contract or reduce the purchase price. Generally
DISTRIBUTOR has to accept two replacement or rectification attempts. For the
avoidance of doubt, DISTRIBUTOR shall choose the most cost efficient way to send
the defective Products back to MANUFACTURER.

 
c)  
For a period of 1 year from the Delivery Date, in case the Products do not
comply with the requirements of this Agreement, DISTRIBUTOR may claim for
warranty against MANUFACTURER in accordance with the statutory provisions.

 
d)  
To the extent MANUFACTURER is liable for damages for any defect (on whatever
legal basis, including any damages claim for general breach of contract, breach
of any pre-contractual duty, or tortuous claims), such liability for damages
shall be limited as stipulated in Clause 5 hereof.

 
5. LIABILITY
 
a)  
MANUFACTURER shall be liable for the full extent of damage in the event of
intentional behaviour (“Vorsatz”) or gross negligence (“grobe Fahrlässigkeit”)
by MANUFACTURER or its vicarious agents. In addition, MANUFACTURER shall be
fully liable in the case of non-observance of guarantees (“Garantien”), when
taking a procurement risk (“Beschaffungsrisiko”) and in case of other definite
promises, in the case of culpable injury to life, body and health and under the
German Product Liability Act (“Produkthaftungsgesetz”). For the avoidance of
doubt, product specification shall not constitute a guarantee in the meaning
hereof.

 
b)  
In the case of culpable violation of essential contractual obligations, i.e.
principal obligations which enable the proper execution of the contract and upon
which DISTRIBUTOR therefore relies and may rely, MANUFACTURER undertakes
liability on the merits. MANUFACTURER’s liability shall in this case be limited
to damage which is typical for the contract and which can be reasonably
foreseen.

 
 
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c)  
In the cases covered in sub-paragraph b) hereof, MANUFACTURER’s liability shall
be limited to a maximum of three times the value of the relevant delivery or in
the case of pure financial loss to a maximum of twice the value of the relevant
delivery, but in any case to € 5,000 per event of damage and € 25,000 per
calendar year.

 
d)  
As for the rest, any claims on DISTRIBUTOR’s part for direct or indirect damages
including loss of profit, loss of business and loss of production (on whatever
legal basis including any damages claims for breach of any pre-contractual duty,
or tortuous claims) shall be excluded.

 
e)  
Damage claims of DISTRIBUTOR due to defects shall become time-barred in
accordance with Clause 4.c) hereof; this shall not apply to cases covered in
sub-paragraph 5.a) hereof, where the statutory provisions of the German Civil
Code shall apply. Other damage claims of DISTRIBUTOR shall become time-barred
two years after the date on which DISTRIBUTOR obtains, or without the presence
of gross negligence would have obtained, knowledge of the facts giving rise to
the claim and of the identity of the person or entity causing the damage or
loss, however no later than three years after the time of the event causing the
damage.

 
f)  
The above limitation of liability terms shall apply also to any damage claims on
DISTRIBUTOR’s part against MANUFACTURER’s statutory representatives, executives
(“leitende Angestellte”) and vicarious agents (“Erfüllungsgehilfen”).

 
g)  
MANUFACTURER shall put into place a $5,000,000 Product Liability Policy with a
recognised Insurance company Naming the DISTRIBUTOR on the policy

 
6. DISTRIBUTION DUTIES
 
a)  
DISTRIBUTOR shall inform MANUFACTURER about the needed extend of labelling of
products including packaging and warnings of customers and all other legal
requirements which MANUFACTURER will have to obtain in order to get his Products
distributed according to the applicable law within the Territory. DISTRIBUTOR
shall indemnify and hold harmless MANUFACTURER against any claims from third
parties including authorities brought against MANUFACTURER on the grounds that
the Products did not contain necessary labelling and warnings.

 
 
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b)  
DISTRIBUTOR shall be obligated to use his best efforts to diligently and
faithfully safeguard the interests of MANUFACTURER in the Territory and to
solicit best possible sales volumes with regard to the Products. DISTRIBUTOR
shall engage in no acts that jeopardise this objective. In particular, but not
limited to the following, DISTRIBUTOR shall

 
1)  
regularly call on Customers and maintain contact to Customers in every
appropriate and purposeful manner;

 
2)  
pursue all inquiries of Customers and other persons regarding the Products with
the aim to close business deals regarding the Products;

 
3)  
advertise and promote the Products in coordination with MANUFACTURER;

 
4)  
to the best of his efforts establish the Products and the name MANUFACTURER and
its trademarks in the Territory and promote them;

 
5)  
upon request of and in coordination with MANUFACTURER participate in trade fairs
and other sales events where presentation of the Products appears appropriate
and shall adequately present the Products at such trade fairs and events;

 
6)  
exclusively utilize qualified personnel optimally familiar with the market
forces as well as the Products for customer liaison and support;

 
7)  
grant his Customers the same guaranty and warranty terms as are granted to the
DISTRIBUTOR by MANUFACTURER; this does not apply where statutory
guarantees/warranties are different to the terms granted to DISTRIBUTOR by
MANUFACTURER;

 
8)  
without the written consent of MANUFACTURER refrain from making any promises
regarding the quality and functionality of the Products, in particular refrain
from any warranty promises or other statements exceeding the promises contained
within the sales material and literature provided by MANUFACTURER;

 
 
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9)  
distribute the Products solely unaltered and - also in regard to packaging if
legally permissible - in flawless condition and only with the equipment and
packaging prescribed by MANUFACTURER;

 
10)  
store and transport the Products in accordance with MANUFACTURER’s advice.

 
11)  
put into place a $5,000,000 Product Liability insurance policy as DISTRIBUTOR

 
7. PERSONNEL, BUSINESS EQUIPMENT, INVENTORY
 
DISTRIBUTOR shall be obligated to
 
a)  
employ an adequate number of sales and servicing staff in compliance with the
requirements set forth below in sub-paragraph b);

 
b)  
only utilize personnel with good commercial and technical qualifications in
accordance with the requirements of MANUFACTURER, and to train such personnel
with the frequency and in the manner required by MANUFACTURER;

 
8. MINIMUM QUANTITIES
 
The minimum quantities of the Products to be purchased by DISTRIBUTOR in the
years 2012 until the end of 2012 are set out in
 
Schedule 2 (attached)
 
to this Agreement.
 
The minimum quantities for subsequent years shall be stipulated no later than 1
October of each year and shall contain a minimum increase of 10 per cent.  each
year.
 
9. SUB-CONTRACTORS
 
a)  
DISTRIBUTOR shall be barred from transferring any duties under this agreement to
third parties without prior written approval of MANUFACTURER. This shall apply
in particular with regard to sub-contracting of distribution and servicing

 
b)  
To the extent DISTRIBUTOR does retain third parties with the approval of
MANUFACTURER, he shall be obligated to supervise them and ensure that their
premises and services are commensurate with the requirements set forth in this
Agreement with regard to the premises and services of DISTRIBUTOR.

 
 
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10. DUTY TO REPORT, CONTROL
 
DISTRIBUTOR shall be obligated to
 
a)  
promptly inform MANUFACTURER of any changes in statutory requirements and/or
standards that may impact the contractual relationship and/or the sale of
Products, including, but not limited to, import restrictions, governmental
requirements regarding the Products and customs duties;

 
b)  
promptly report to MANUFACTURER any observed infringements of MANUFACTURER's
trademarks, patents or other intellectual or industrial property rights as well
as any observed imitations of Products and complaints or negative criticism of
Products;

 
c)  
each calendar quarter report his observations for the preceding month regarding
quality, sales prices, turnover, successes and failures of competing products as
well as any other occurrences and insights that may impact the market or the
sale of Products, and report upon request from MANUFACTURER any and all other
information in connection with the sale of the Products and to supply such
information to MANUFACTURER to the extent possible. The calendar quarterly
reports shall deal with the different brands and different Products separately.
The calendar quarterly reports have to be sent to MANUFACTURER on the 15th of
the month following the relevant calendar quarter at the latest.

 
d)  
maintain and permanently update lists of all resellers and commercial customers,
with names, addresses, telephone and fax numbers and each calendar quarter and
on further demand pass on such lists to MANUFACTURER;

 
e)  
within 15 days after each calendar quarter report on all advertising
expenditures in the preceding calendar quarter including documentation hereto;
MANUFACTURER shall be entitled to have an auditor inspect the advertising
account during regular business hours;

 
f)  
furnish MANUFACTURER a marketing plan for the next business year by 1 October of
each year;

 
 
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g)  
obtain the prior written approval of MANUFACTURER, which approval shall only be
withheld for objectively justified cause, for any changes concerning the person
of the owner, the composition of its shareholders and the management personnel
responsible for MANUFACTURER. To the extent any change occurs without
cooperation of DISTRIBUTOR or its management, DISTRIBUTOR shall promptly notify
MANUFACTURER of such change and obtain retroactive approval.

 
11. GENERAL DUTIES OF DISTRIBUTOR
 
a)  
DISTRIBUTOR shall be barred from assigning any claims against MANUFACTURER
arising under or in connection with this Agreement.

 
b)  
DISTRIBUTOR shall not be entitled to set-offs against any claims of MANUFACTURER
that arise in connection with the supply of goods or under any other provisions
of this Agreement unless DISTRIBUTOR's claim has been established by final
judgment or it is undisputed by MANUFACTURER. DISTRIBUTOR shall also not be
entitled to any right of retention, unless DISTRIBUTOR's claim has been
established by final judgment or it is undisputed by MANUFACTURER.

 
c)  
DISTRIBUTOR shall be responsible for compliance with the provisions imposed upon
him with regard to the distributorship assigned hereunder. DISTRIBUTOR shall
obtain any permits and registrations required in the Territory for the
effectiveness or implementation of this Agreement, and lay all foundations
required for the sale, including but not limited to operating permits, import
licenses, and sales licenses. DISTRIBUTOR shall bear any costs arising in
connection therewith.

 
d)  
In the event that DISTRIBUTOR, during the term of this Agreement, should have
any suggestion for improvement with regard to the Products or the sale thereof,
DISTRIBUTOR shall communicate all relevant details to MANUFACTURER and allow the
latter to make use of such findings free of charge. This includes the right to
apply for registration of industrial or intellectual property rights with regard
to such improvement.

 
e)  
DISTRIBUTOR shall hold MANUFACTURER harmless from any damages and liabilities
including costs for defending against such damages and liabilities, to the
extent such damages or liabilities are based on a violation of this Agreement or
culpable conduct of DISTRIBUTOR, his employees, officers, sub- contractors,
agents, or other persons commissioned by him.

 
 
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f)  
DISTRIBUTOR agrees to comply with any direction of MANUFACTURER which
MANUFACTURER may issue in connection with the implementation of this Agreement,
provided such directions are not unreasonable.

 
12. SALES OUTSIDE OF TERRITORY
 
a)  
Subject to sub-paragraph b), it is not permitted to DISTRIBUTOR and constitutes
a serious violation of this agreement to perform any sales of contractual
products to customers outside the Territory. DISTRIBUTOR shall forward all
enquiries in respect of Products coming from outside the Territory to
MANUFACTURER. This applies accordingly, if Customers have their registered
office inside the Territory, but the delivery of the Products is intended for a
property located outside the Territory.
 
DISTRIBUTOR shall not actively solicit sales of Products to any territories
within the European Union and the European Economic Area, as MANUFACTURER will
exclusively start to distribute the Products itself to such territories or
assign such other territories to other exclusive distributors. Other countries
or an area (e.g. Asia) outside of territory has to be defined in a separate
contract. As soon as MANUFACTURER decides – either actively itself or through
another distributor – not to distribute the Products exclusively in other
territories, MANUFACTURER will inform DISTRIBUTOR accordingly, and DISTRIBUTOR
shall be entitled to sell the Products in such territory.

 
b)  
MANUFACTURER will inform DISTRIBUTOR regarding future countries for which
MANUFACTURER will reserve these rights for itself or will assign these rights to
another distributor.

 
c)  
All sales via the internet within the territory will be defined in a separate
contract. Until that Contract is in place we will continue as discussed
DISTRIBUTOR will pay regular prices for goods as listed in Schedule 1.
DISTRIBUTOR will add cost of pick and pack, delivery to customer, bank charges
for processing order. DISTRIBUTOR will reserve the amount of 15% of all their
Internet Sales to spend on advertising. The decision on the type of advertising
will be made together by the DISTRIBUTOR and MANUFACTURER. The balance of the
sale left will be split equally between the DISTRIBUTOR and MANUFACTERER

 
 
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13. PROHIBITION OF COMPETITION, LIABILITY FOR THIRD PARTIES
 
a)  
DISTRIBUTOR undertakes with regard to both himself and his personnel not to sell
or manufacture, directly or indirectly, any products that may compete with the
Products, or to assist in the distribution or manufacture of such products, and
DISTRIBUTOR shall neither directly nor indirectly hold an interest in companies
that distribute or manufacture such competing products. In the event of doubt as
to whether any activity or investment intended by DISTRIBUTOR is permissible
under this Clause, DISTRIBUTOR agrees to obtain the prior approval of
MANUFACTURER.

 
b)  
DISTRIBUTOR shall be responsible to MANUFACTURER for imposing the prohibition
set forth in sub-paragraph a) above upon all persons and companies retained by
him to fulfil his duties hereunder and for ensuring that such prohibition will
be observed by such persons and companies.

 
c)  
For each case of culpable breach of the non-competition clauses provided in
sub-paragraphs a) and b) above, DISTRIBUTOR shall owe MANUFACTURER liquidated
damages (Vertragsstrafe) in the amount of 5% of his annual sales computed on the
basis of his average sales in the three calendar years prior to such breach (in
the event of a contract period shorter than three years, such period shall be
applicable). MANUFACTURER shall be entitled to claim compensation for further
damages; the liquidated damages (Vertragsstrafe) will be set-off against such
further claims.

 
14. ADVERTISING / INDUSTRIAL PROPERTY RIGHTS
 
a)  
By 1 October of each calendar year, DISTRIBUTOR shall present a scheme
concerning the advertising and special merchandising measures planned by him for
the following calendar year, as well as the relevant cost estimate, and
coordinate such scheme with MANUFACTURER.

 
b)  
DISTRIBUTOR will procure suitable advertising material according to the
requirements agreed upon between the DISTRIBUTOR and MANUFACTURER. DISTRIBUTOR
and MANUFACTURER shall each invest at least 6% of the previous year’s sales
revenue in appropriate advertising campaigns. Such amount shall refer to the
costs of printing, distribution, placing and trade fairs only, and shall not
contain any costs for design or consultancy and creative production.

 
c)  
If DISTRIBUTOR adapts advertising material to the taste of the public in the
Territory in order to increase the effectiveness of advertising, DISTRIBUTOR
will send samples of the adapted advertising material to MANUFACTURER and will
only use such material after the prior written consent of MANUFACTURER.

 
 
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d)  
Any advertising material may only be passed on by DISTRIBUTOR to third parties
in the ordinary course of business. Empty packaging and tools labeled with
trademarks and/or provided with get-ups of MANUFACTURER may not be handed out by
DISTRIBUTOR to any third party (this also applies after termination of this
Agreement) unless with the prior written approval of MANUFACTURER

 
e)  
DISTRIBUTOR may not advertise Products by highlighting features or usability for
particular purposes, or give any warranty in that respect, if and to the extent
MANUFACTURER itself does not advertise or has not allowed such advertising, or
agreed to warrant in that respect. Further, DISTRIBUTOR shall not grant any
third party the right to advertise or warrant in that manner. Without prejudice
to any further rights of MANUFACTURER, DISTRIBUTOR shall hold MANUFACTURER free
and harmless from any risks that may result from any violation of the foregoing
undertakings.

 
f)  
DISTRIBUTOR acknowledges that all industrial property rights, in particular
patents, design patents, utility models, trademarks, and get-ups (inclusive of
product names), as well as copyrights that have been established by MANUFACTURER
in the Products or that are used in connection with the Products, their
packaging or advertisements, are held exclusively by MANUFACTURER and that he
has no rights whatsoever in that respects.

 
g)  
Any rights nonetheless being held by, or arising to DISTRIBUTOR, shall be
promptly assigned by DISTRIBUTOR to MANUFACTURER. DISTRIBUTOR shall refrain from
any act that may weaken or cancel the above-mentioned rights of MANUFACTURER. On
demand of MANUFACTURER, he shall enter into a license agreement (to be
registered, if required) with MANUFACTURER with regard to any industrial
property rights of MANUFACTURER.

 
h)  
For the term of this Agreement, DISTRIBUTOR shall be entitled to use
MANUFACTURER’s protected trademarks, other protected logos and corporate design
in order to advertise for the Products. DISTRIBUTOR shall use appropriate
features on his letterhead, printed forms and advertising material to make clear
that he is a distributor of the Products. DISTRIBUTOR shall be entitled to use
the protected trademarks or the brand name “SNOKE®” as part of his company name
subject to MANUFACTURERS prior written consent only. The same shall apply to the
registration and/or use of any internet domain and email-addresses that includes
the brand name “SNOKE®”.

 
 
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i)  
To the extent DISTRIBUTOR is allowed to make use of trademarks and get-ups, such
trademarks and get-ups may only be used without any change and only in the
manner determined by MANUFACTURER. DISTRIBUTOR undertakes to submit to
MANUFACTURER, for prior written approval, any self-produced advertising
material, business paper, signboards of his firm, as well as any other material
on which are shown trademarks or get-ups of MANUFACTURER, and not to use such
material without such written approval.

 
j)  
DISTRIBUTOR shall not, either during the term or after termination hereof,
challenge or contest the industrial property rights set forth in sub-paragraph
f) above.

 
k)  
DISTRIBUTOR shall observe MANUFACTURER's directions, and render reasonable
assistance to MANUFACTURER

 
1)  
if complaints about or negative criticism of Products or the packaging thereof
have to be warded off;

 
2)  
in the event that infringements of industrial property rights of MANUFACTURER by
third parties should have to be pursued; in particular, DISTRIBUTOR shall inform
MANUFACTURER without delay about infringements or potential infringements of
MANUFACTURER's trade marks including imitations of MANUFACTURER's packing,
get-up and shapes which could give rise to confusion. At the request of
MANUFACTURER DISTRIBUTOR shall assist MANUFACTURER in legal proceedings,
MANUFACTURER reserving the right to issue a Power of Attorney or any other Power
to represent MANUFACTURER's interest concerning matters of trade marks and
industrial property rights. The costs hereto are at the expense of MANUFACTURER.

 
3)  
if MANUFACTURER has to ward off allegations of third parties claiming that
MANUFACTURER, in the Territory, had violated any of their industrial property
rights or the principles of fair competition;

 
4)  
in the event that any third party, with regard to the sale of competing
products, should haveviolated the principles of fair competition which violation
would be pursued.

 
l)  
Any activities DISTRIBUTOR is not allowed to engage in under this Clause shall
also be disallowed by DISTRIBUTOR to any third party.

 
 
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15. DUTIES OF MANUFACTURER
 
a)  
MANUFACTURER will endeavour to supply DISTRIBUTOR with Products as scheduled and
in sufficient quantity, and to notify DISTRIBUTOR as soon as possible of any
foreseeable delivery problems and/or delays.

 
b)  
MANUFACTURER shall

 
1)  
continuously provide DISTRIBUTOR with any material relating to the Products, in
particular with leaflets, datasheets, catalogues, advertising material, and
standard forms, whereby such material shall remain the property of
MANUFACTURER';

 
2)  
provide DISTRIBUTOR with all market information including such lists of
customers that are available to MANUFACTURER from the time period prior to
commencement of the contractual relationship with DISTRIBUTOR as hereunder
established or that come to the attention of MANUFACTURER in the future
independent of the activities of DISTRIBUTOR;

 
c)  
MANUFACTURER shall promptly inform DISTRIBUTOR of any discontinuation of
Products as well as of new Products.

 
d)  
MANUFACTURER shall indemnify and hold DISTRIBUTOR harmless from any claims
arising from the sale of Products which infringes upon industrial property
rights of third parties. However, this shall only apply under the condition that
DISTRIBUTOR immediately informs MANUFACTURER of any such complaints of third
parties as soon as he becomes aware of them and that DISTRIBUTOR follows
MANUFACTURER’s instructions regarding the defence against such claims.

 
16. CONFIDENTIALITY
 
The Parties undertake to maintain confidentiality regarding any and all
information which they obtain from the other party, unless and in so far as
disclosure is appropriate and practicable to implement this Agreement or is
required by law.
 
 
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17. TERM
 
a)  
This Agreement shall commence on November 1, 2011 and end on October 31, 2016
Thereafter this Agreement shall automatically be extended for consecutive
periods of 5 years each unless it is terminated for cause with 6 months written
notice prior the end of the specific term.

 
b)  
This Agreement shall be interminable during its term. The right to a termination
for cause (Clause 18 herein) shall remain unaffected.

 
c)  
This Agreement shall terminate at the latest on October 31 2021. The parties
shall conduct negotiations for a new Agreement no later than six months prior to
the termination of this Agreement.

 
18. TERMINATION FOR CAUSE
 
a)  
Both parties are entitled – at their own option - to terminate this Agreement
prematurely for just cause with or without notice. Just cause shall be presumed
in particular in cases where one party

 
1)  
becomes insolvent or – voluntarily or involuntarily - applies for insolvency or
bankruptcy proceedings of any kind;

 
2)  
breaches this Agreement so substantially or with such a lasting effect that the
non-breaching party cannot be expected to adhere to this Agreement until the end
of the cancellation period;

 
3)  
repeats a breach of this Agreement or does not cease a continued breach within
two weeks despite written admonition.

 
b)  
Moreover, MANUFACTURER may terminate this Agreement prematurely – at its own
option - with or without notice in cases where

 
1)  
DISTRIBUTOR fails to meet the annual minimum quantities as set out in Clause 8
herein by more than 20%. MANUFACTURER shall have no right to terminate the
Agreement if DISTRIBUTOR proves that the failure to meet the minimum quantities
was occurred with no fault of his own;

 
 
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2)  
if DISTRIBUTOR is either (i) in default for more than 60 calendar days in
accepting any or all of the Products ordered and does not correct such default
after receipt of a warning letter pointing out such default and demanding
correction of such default within a reasonable period of time and stating
MANUFACTURER’s intention to terminate the Agreement otherwise or (ii) is
repeatedly (at least twice) in default for more than 60 calendar days in
accepting any or all of the Products ordered and has received above mentioned
warning letter after the previous default. DISTRIBUTOR shall also be in default
if the contract products have been ordered but cannot be delivered since their
payment is not assured. MANUFACTURER shall have no right to terminate the
Agreement if DISTRIBUTOR proves that the default was occurred with no fault of
his own;

 
3)  
the shareholders or the management of DISTRIBUTOR have changed without
MANUFACTURER’s prior written approval, even though this approval could have been
obtained, and where MANUFACTURER refuses retroactive approval for factually
justifiable cause.

 
4)  
MANUFACTURER shall exercise his right to terminate this Agreement prematurely at
the latest 3 months after having knowledge of such case.

 
19. RIGHTS AND OBLIGATIONS UPON TERMINATION
 
a)  
The termination of the Agreement shall not affect individual transactions
between DSITRIBUTOR and MANUFACTURER which have been concluded according to the
instant Agreement. In the case of a contractual notice of termination
MANUFACTURER shall continue to supply DISTRIBUTOR in such a way that DISTRIBUTOR
is able to fulfil his contractual obligations with third parties as usual until
the termination becomes effective.

 
b)  
MANUFACTURER may request DISTRIBUTOR to return, upon termination of this
Agreement, any and all or - at MANUFACTURER's sole option - part of any
remaining Products received from MANUFACTURER. MANUFACTURER shall reimburse
DISTRIBUTOR for any shipping costs and - to the extent such items are the
property of DISTRIBUTOR – for the purchase price.

 
 
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c)  
Inasmuch as MANUFACTURER is obligated to take back Products after termination of
this Agreement, this obligation shall only apply in so far as Products are
concerned which are still in MANUFACTURER’s product portfolio and which are
unused and still packed in the – largely undamaged – original packaging. There
shall be no obligation whatsoever to buy back any Products if and when
DISTRIBUTOR has unwarrantedly terminated this Agreement or if the termination is
based upon conduct of DISTRIBUTOR which would have entitled the supplier to
terminate the Agreement without notice.

 
d)  
Neither party shall be entitled to claim damages or compensation as a result of
the termination of this Agreement. In particular, DISTRIBUTOR shall not be
entitled to compensation according to sec. 89b) of the German Commercial Code
(HGB). Claims for damages resulting from breach of contract shall remain
unaffected hereof.

 
e)  
Upon termination of this Agreement, DISTRIBUTOR shall

 
1)  
return all samples as well as all written sales and advertising material;

 
2)  
refrain from utilizing any of MANUFACTURER’s industrial property rights, in
particular its trademarks, and for each case of culpable infringement pay
liquidated damages (Vertragsstrafe) of €25,000.00, and in cases of continuous
infringement liquidated damages (Vertragsstrafe) of €2,500.00 per day of such
infringement. MANUFACTURER shall be entitled to claim compensation for further
damages; the liquidated damages (Vertragsstrafe) will be set-off against such
further claims.

 
3)  
only use such trademarks and presentations for any new products which
DISTRIBUTOR may choose to distribute after the termination of this Agreement
which show noticeable dissimilarity from the Products to avoid confusion in the
market. This obligation does not result in any compensation claim of
DISTRIBUTOR.

 
20. WRITING, NOTICES
 
a)  
To the extent that this Agreement requires written form, this requirement shall
also be met through use of telegrams, faxes, telex or email.

 
b)  
Any notices sent by registered/certified mail or air mail shall be deemed
received by the recipient no later than one week after dispatch.

 
c)  
Any amendments to this Agreement must be in writing. This shall also apply to an
agreement to abolish the requirement of writing. Moreover, every decision, every
exercise of discretion and every approval of MANUFACTURER shall only be
effective if made in writing.

 
 
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d)  
Notices shall be sent to the following addresses:

 

  MANUFACTURER:  ecoreal GmbH & Co. KG     [name of contact person]    
Spinnmühlengasse 9     50676 Köln     Germany               DISTRIBUTOR:      
Snoke Distribution Canada/ Snoke Distribution USA     425 Alness, Toronto Canada
M2J 2T8

 
 
so long as the other party has not received a written change of address
notification.

 
21. RIGHT OF RETENTION
 
Either party may avert any right of retention of the other party by offering a
bank guaranty of adequate amount from a European bank which operates in Germany
for its own performance in direct exchange for the other party’s performance.
 
22. SEVERABILITY
 
In the event that part of this Agreement is or becomes invalid, the validity of
the remaining provisions shall not be affected. The parties will negotiate in
good faith to replace the invalid clause with a valid clause which most closely
reflects the economic intention of the invalid clause.
 
 
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23. GOVERNING LAW / Arbitration
 
a)  
This Agreement shall be governed by German law.

 
b)  
The applicability of the United Nations Convention on Contracts for the
International Sale of Goods (CISG) is hereby explicitly excluded for all
deliveries to DISTRIBUTOR.

 
c)  
All disputes arising in connection with this contract or its validity shall be
finally settled according to the Arbitration Rules of the German Institution of
Arbitration e.V. (DIS) without recourse to the ordinary courts of law. The place
of arbitration is Cologne in Germany. The arbitral tribunal consists of three
arbitrators. The language of the arbitral proceedings is the English language.

 

Köln    November 24, 2011  Toronto   November 13, 2011             By:    /s/
Dr. Jurgen Ruhlmann By:   /s/ Danny Yuranyi     Dr. Jurgen Ruhlmann   Danny
Yuranyi                         ecoreal GmbH & Co. KG  
Snoke Distribution Canada/
Snoke Distribution USA
 

 
 
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Schedule  1
 
For Sales in the USA, Mexico and Caribbean
 
Single Snoke --------------USD6.50 each
 
Package of 4 Caps-----USD10.36 each
 
Premium Sets--------------USD41.00 each
 
For Sales in Canada
 
Single Snoke---------------USD6.50 each
 
Package of 4 Caps------- USD14.80 each
 
Premium Sets--------------USD41.00 each
 
Pricing of Accessories to be added later
 
 
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Schedule 2
 
1,200,000 pieces of the Single Snoke
 
60,000 Premium Sets*
 
300,000 Packs of 4 Caps**
 
* As discussed the Distributor is not sure of the numbers of Premium Sets that
will be purchased and both parties understand that this number is a guide for
the Manufacturer and in year 1 the number may be more or less with no liability
to either Manufacturer or Distributor. In year 2 and moving forward there will
be added a formal commitment
 
** As discussed the Distributor is not sure of the numbers of Packs of 4 Caps
that will be purchased and both parties understand that this number is a guide
for the Manufacturer and in year 1 the number may be more or less with no
liability to either Manufacturer or Distributor. In year 2 and moving forward
there will be added a formal commitment
 
 
 
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