**TRADEMARK AND DESIGN LICENSE AGREEMENT**

     This Agreement made and entered into effective  the1st day of January, 2003, by and between TANNING RESEARCH LABORATORIES, INC.  ("TANNING"), a Florida corporation having offices at 1190 U.S. Highway  1, North, Ormond Beach, Florida, 32174, and AMERICAN WATER STAR, INC. ("AWS"),  a Nevada corporation having offices at 4560 South Decatur #204, Las Vegas, Nevada:

**W I T N E S S E T H:**

     WHEREAS, TANNING has adopted, has used, and is  using the term HAWAIIAN TROPIC as a trademark to identify sun-tanning oils and  lotions, sun and wind screens, skin moisturizers and moisteners for tan preservation,  sunburn ointments, shampoos, hair conditioners, hand and body lotions, lip balms,  t-shirts, swimwear, and sportswear all sold by it which trademark has been registered  or is being registered by TANNING in the United Patent and Trademark Office;  and

     WHEREAS, AWS is desirous of' creating, producing,  marketing, advertising, and selling Flavored Water as described on Exhibit A  bearing the HAWAIIAN TROPIC trademark (the "LICENSED GOODS"); and

     WHEREAS, AWS seeks authorization to use the name,  HAWAIIAN TROPIC, all such use subject to the terms of this Agreement; and

     WHEREAS, TANNING may desire to use for promotional  purposes items from. AWS's unsold inventory of the LICENSED GOODS, to be purchased  at a price of AWS's net wholesale price less 20%. Promotional purpose items  shall be defined as item s purchased by TANNING not for ultimate resale to.  a consumer through a retailer (sale of items to company employees shall be considered  promotional sales). TANNING shall retain the absolute right to purchase promotional  purpose items of like kind to the LICENSED GOODS from sources other than AWS,  if TANNING wishes; and

     WHEREAS, it is the desire and intention of the  parties that AWS be permitted to create, produce, market, advertise and sell  the LICENSED GOODS in the LICENSED TERRITORY described in Exhibit B (hereinafter  "'LICENSED TERRITORY"), except as restricted later herein;

     NOW, THEREFORE, in consideration of the following  mutual covenants the parties hereto agree as follows:

 

**TRADMARK LICENSE**

1. TANNING hereby 1icenses AWS to produce, market and sell on  an exclusive basis in the LICENSED TERRITORY, subject, to the terms of this  Agreement, items bearing the HAWAIIAN TROPIC trademark in (all of which items  are defined. as the "LICENSED GOODS"), provided the quality of the  LICENSED GOODS are produced, marketed, and sold in accordance with all applicable  local, state and federal. rules, regulations, and laws; and the style and placement  of the HAWAIIAN TROPIC trademarks and designs on them meet with TANNING's approval.

**NON-DIVISIBLE**

2. AWS acknowledges that the trademark and designs are nondivisible and shall  not be transferred, assigned, or sublicensed, in whole or in part. by AWS.

**LICENSED ROYALTY AND GUARANTY**

3. AWS agrees to pay TANNING a royalty of four percent(4%) of invoice sales  (net of shipping and sales taxes) of the LICENSED GOODS, said royalty to accrue  from the first date of sale by AWS and to be paid TANNING within thirty (30)  days from. the end of the quarter in which the LICENSED GOODS are shipped or,  at the termination or revocation of this Agreement, whichever occurs first.  AWS shall pay upon the signing of this Agreement a nonrefundable advance royalty  payment in the amount of $25,000.00 which shall be credited against the first  royalty amounts owed Tanning by AWS.

AWS and its principal signing below hereby jointly and severally guarantee  the minimum royalty payments to TANNING established in Exhibit "C"  during each year or any part thereof that this Agreement is in effect, including  any renewal period.

**TERM OF LICENSE**

4. The license shall remain in effect for a period of three (3) years from  Januaary 1, 2003, only if each of the guaranteed royalties of Exhibit "C'  per year is paid TANNING. Otherwise this Agreement shall automatically terminate  effective at the end of any calendar year in which AWS fails to satisfy the  guaranteed royalties as required. Notwithstanding the foregoing, this Agreement  may also be terminated upon ten (10) days' written notice by either party to  the other upon the occurrencc of the following:

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(a) AWS or TANNING shall go into receivership or bankruptcy in which event    the license shall terminate immediately; or    (b) AWS or TANNING breaches one of the provisions of this Agreement in which    event either party shall have the option of revoking the license after ten.    (10) days' written notice to the other, which option shall remain in effect    so long as the breach continues. Repair of the breach. more than ten (10)    days after written notice of revocation has already been sent to the other    party shall not serve to avoid revocation.    (c) AWS fails to have all samples of the tradernark and logo use presented    to TANNING for pre-market approval.    (d) AWS fails to make payment of any royalty amounts due by thethirtieth (30th)    day of the quarter following the month in which shipment occurred of that    product on which royalty payments accrue.

The parties agree that AWS will have the option to renew this  License Agreement for a three year period of this Agreernent exceed $10,000,000.  The minimurn sales required per year during the three year renewall, if applicable,  are S5,000,000.

**PREMARKET APPROVAL OF GOODS AND DES1GNS**

5. At least thirty (30) days prior to the date of availability  of any new merchandise or new designs for sale by AWS, it shall provide.TANNING  with mockup samples of each item., displaying the Hawaiian Topic trademark and/or  logo it wishes to market. TANNING shall advise AWS in writing if such mockup  sample of use is not suitable and shall so state in such advisement the specific  reasons why such samples are not suitable. If TANNING does not adviseAWS of  the unsuitability of the samples by no later than than the fifteenth (15th)  day following the receipt by TANNING of such samples, then such samples shall  be deemed to be suitable. Upon receipt by AWS of any such stated reasons of  unsuittabilty, AMS shall not proceed to, sell such products until performing  the correction necessary to make samples suitable. to TANNING. Upon written  approval by TANNING of any later corrected samples, AWS may immediately proceed  to manufacture and otherwise process all orders given it for the purchase of  approved items AWS agrees to provide information and samples and artwork of  each design use. AWS represents that, except for creative and intellectual property  rights related to the Hawaiian Tropic trademark and/or Hawaiian Tropic logo,  it owns all creative rights to any axtwork presented to TANNING for approval.  The pre-market approval rights required in this Paragraph 5 shall also apply  to all AWS advertising, promotion. and point-of-purchase material displaying  the HAWAIIAN TROPIC trademark and/or designs.

**SUPPLY AND OWNERSHIP MATERIALS**

6. The parties agree that TANNING shall be the sole owner of all  master copies of the HAWAIIAN TROPIC trademark and each design approved by TANNING  (which copies are intended to include positives, negatives, and screens) that  shall be used to imprint Exhibit A items With the HAWAIIAN TROPIC trademarks  and designs, regardless of which party incurred the expense of preparing those  copies.  In the event of termination or revocation of this license, AWS agrees to immediately  turn over to TANNING all master copies of the HAWIIAN TROPIC trademark and copyrighted  designs that AWS has in its possession or under its control.

**ACKNOWLEDGEMENTS OF TRADEMARK VALIDITY**

TANNING represents and AWS acknowledges and stipulates that the  term HAWAIIAN TROPIC is a valid and, enforceable trademark owned exclusively  by TANNING and that, pursuant to such ownership, TANNING has the exclusive right  to use the terms HAWAIIAN TROPIC in whatever style and accompanied by whatever  design or artwork, as decoration, ornamentation, adornment or indication of  sorts, origins, sponsorship, affiliation or endorsement on or for any goods  or services. AWS agrees never to contend otherwise in legal proceedings or in  any other circumstances, nor to use the term HAWAIIAN TROPIC, or any other TANNING  trademark or copyrighted designs, in, any of the ways, including those just  enumerated, except under the authorization of this or some other written license  agreement with TANNING or its successor-in-interest to HAWAIIAN TROPIC trademark  and design.  AWS also acknowledges and stipulates that the HAWIIAN TROPIC, trademark registration  :is valid and enforceable, and it agrees never to contest the validity or enforceability  of that registration in any legal proceedings or otherwise. AWS acknowledges  that its use of the favor any right, HAWIIAN TROPIC trademark shall not create  in AMW'S favor any right, titlc or interest to the trademarks and/ or copyriqhts.,  and AWS agrees that it will not represent, in any manner, that it has any ownership  interest in said trademarks and designs.  AWS acknowledges that it is aware that Tanning has not yet registered or commenced  using the HAWIIAN TROPIC tradernark for any flavored water products, but it  agrees that the trademark is so well known that such use of the name HAWIIAN  TROPIC, if not controlled by Tanning,would be likely to cause confusion among  consumers and/or dilution:of the value of the trademark.  AWS agrees that itwill note on all its use of the Hawaiian Tropic Trademark  that it is owned by Tanning and being used under a License Agreement as an independent  Licensee.

**NOTIFICATION OF INFRINGING USES**

8. AWS agrees to promptly notify TANNING of any unlicensed use  by third parties of HAWAIIAN TROPIC trademark and designs or marks confusingly  similar thereto, of which AWS should happen to learn, and AWS agrees to take  no action, of any kind with respect to such unlicensed use except with the express  written authorization of TANNING. TANNING may prosecute action against infringers  if it determines in its sole and absolute discretion.

**REPORTING REQUIREMNTS**

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(a) AWS shall keep complete, accurate, current and itemized records and books    of account, including, but not limited to, complete, accurate current and    itemized records of all (i) sales transactions invoiced by AWS, including    the identity, of the purchaser and the date, quantity and total sales price    for each transaction, (ii) an inventory of all LICENSED GOODS manufactured    by AWS.    Such records and books of account shall be maintained in whatever form TANNING    may reasonably specify. All books records, correspondence, and other data    maintained pursuant to this paragraph or which are otherwise related to thc    LICENSED GOODS or to AWS's efforts or obligations hereunder. shall be available    for inspection and copying by TANNING at any time during normal business hours    and for a period of two (2) years following the termination of this Agreement,    from whatsoever cause arising.    (b) AWS shall furnish to TANNING, quarterly, a complete report of shipments    in dollars. Such reports and schedule shall be submitted. on such form or    forms as may be designated by TANNING. Monthly reports and schedules hereunder    shall be sent to the Company within thirty (30) days after the last day of    the month for which such reports and schedules are made. TANNING may, in its    discretion, require AWS to include with such reports a complete statement    by sales transactions containing the information specified in Subparagraphs    (a)(i) and (a)(ii) of this Paragraph.    (c) TANNING shall have the right at. any reasonable time to inspect AWS's    office, facilities, equipment, materials and inventory pertaining to the manufacture,    promotion and sale of the LICENSED GOODS covered under th Agreement.    (d) AWS agrees to accompany each royalty payment with a report as to how it    was calculated, including a breakdown of sales according to purchaser, type    of goods and selling price. AWS also agrees to provide quarterly reports of    accrued and/or paid royalty payments as aforedescribed.

Upon request by TANNING, AWS will provide TANNING names and addresses of its  printers and sub-contractors, and hereby grants TANNING the right to receive  all information from its suppliers and printers relevant to purchases by AWS  for production of all LICENSED GOODS.

**INSPECTION OF BOOKS**

10. AWS agrees to allow TANNING, or accountants or auditors hired by TANNING,  to inspect AWS's books and records related to sales under this Agreement to  determine whether AWS's reports are complete and accurate, provided that the  inspection is conducted during normal business hours and TANNING gives reasonable  advance notice to AWS of the time for the inspection. Unless required in litigation  or preparation thereof, TANNING shall not disclose AWS's financial information  to any third party unless such information is known or later becomes known within  the public domain or is revealed to TANNING from a third party not in breach  of a Confidentiality Agreement.

11. The partics intend that each party shall not be deemed to be an agent,  partner, orjoint venturer, servant, or employee, of the other party as a result  of, or in any transaction relating to, this Agreement, and each party agrees;  not to represent or contend otherwiise; this is intended to mean among the other  things that each party shall not in. anyway purport to pledge the other party's  credit. or incur any obligations or liability on behalf of the other.

**INDEMNIFICATION**

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(a) AWS shall indemnify, defend, and hold harmless TANNING, its officers,    employees, and agents from and against any and all claims, expenses (including    reasonable outside attorneys' fees) asserted against imposed upon, or suffered    by TANNING; arising out of, or resulting from any errors, ornissions, or commissions    on AWS's part or by AWS's employees; agents,sub-contractors in connection    with the performance under this Agreement, or the uses ;permitted hereunder,    including, but not limited to, any claims for bodily injury, death or property    damage, product liability, arising out of or resulting from any errors, omissions,    or commissions. AWS agrees to provide evidence to TANNING of contractual and/or    public liability insurance, with. broad form vendor's endorsement specifically    naming TANNING as an additional insured with the minimum limits of liability    in the amount of $5,000,000.00/$5,000,000 bodily injury coverage and $1,000,000.00    property damage coverage. TANNING agrees to notify AWS, in. writing, within    twenty (20) days of receiving notice of such claims.

(b) TANNING shall indemnify, defend, and hold harmless AWS, its officers,    employees, and agents from and against any and all claims, expenses (including    reasonable outside. attorneys' fees) asserted. against, imposed upon, or suffered    by AWS; arising out of, or resulting from a violation of this Agreement by    Tanning, and additonally from any errors, omissions, or, commissions, on TANNING's    part or by TANNING's employees, agents, or sub-contractors connection with    the performance under this Agreement, or the uses permitted including, but    not Himited to, any cla'r. L.s for bodily injury, death, or property damage,    product liability, arising out of or resulting from TANNING's or its employees'    errors, omissions, or comissions.

**NO CHILD LABOR**

13. AWS covenants and agrees that it shall utilize no child labor in the manufacture  of the LICENSED GOODS subject to this Agreement, nor will it purchase items  to be licensed under the Hawiian Tropic Tradernark from any sources which: utilize  child labor in the manufacturer or production of' said LICENSED GOODS. The parties  hereto intend that this commitment shall respect the International Self Regulatory  Guidelines for Child Labor recognized by the Council of Better Business Bureaus  and the American Association of Manufacturers. If any of the LICENSED GOODS  are found to be produced in part or in whole by child labor, this License shall  be immediately revocable at the discretion of TANNING.

**ADDRESSEE**

14. Payments made under this Agreement, as well as written notices or demands  given to the parties under this Agreement, shall be deemed adequately sent if  mailed by overnight mail with first class postage to the below-listed addresses,  unless and until the sending party is notificd by the other of a change in address:

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 (a) if to TANNING:    TANNING RESEARCH LABORATORIES, INC.    1190 U.S. Highway #1, North    Ormond Beach, Florida 32174    Attention: Larry L. Adams, Cour.sel    (for all notices under this Agreement)    Attention: Bill Jennings, Vice President/ Finance    (for all financial reporting aiid payments)    Telephone: (386) 677-9559    Facsimile: (386) 615-8426

 (b) If to AWS:    American Water Star, inc.    4560 South Decatur #204    Las Vegas, Nevada 89103    Attention: Roger Mohlman    Te1ephone: (800) 864-7827    Facsimile: (702) 740-7037

**SEVERABILITY**

15. If any of the terms of this Agreement are in conflict with any governing  rule of law or any statutory provisions, then, such terms shall be deemed inoperative  and null and void insofar as, there may be such a conflict, and this Agreement  shall be deemed modified to confirm to such rule of law. The parties intend  that so much of this Agreement as does not conflict: with any governing rule  of law or statutory provision will continue to be valid and binding between  them.

**INTEGRATION, MODIFICATION AND RELEASE**

16. This instrument reflccts the entire understanding and agreement between  the parties and supersedes any and all prior negotiations, understandings, and  agreements between them. As to future modification, any waiver of any, of the  provisions of this Agreement, in order to be binding upon either of the parties,  must, be in writing signed by both of thern.

**CONFIDENTIALITY AND NON-DISCLOSURE**

17. 

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(a) All books, records, correspondence, data, reports, schedules and other    infornation relating to the business conducted by AWS ("Information")    which AWS furnishes to TANNING for review, inspection or copying pursuant    to this Agreement shall be held strictly confidential by TANNING, its officers,    directors, employees and agents during the term of this Agreement. and for    a period of two (2) years after the termination of this Agreement. TANNING    acknowledges and agrees that the nature of such Information is considered    confidential by AWS and that disclosure of such. Information to third partits,    or use of it by TANNING for other than the purpose set forth herein, may severtly    injurc AWS's business. TANNNING shall limit access to all Information provided    to it under this Agreement to its directors, officers, employees, accountants    and other representatives who reasonably require access to the Information    for the purpose of evaluation in connection with this Agreement and who are    informed by TANNING of the confidential nature of the Information. Any of    the persons who are given acccss to such Information shall be informed of    this Agreement in advance and TANNING shall. use all reasonable efforts to    cause such pcrsons to comply with this Agreement.

(b) All Information so disclosed to TANNING shall remain the property of    AWS and all documents and Information, including any comes of such Information,    shall be returned to AWS within three (3) business days after a written request    therefor.

(c) TANNING understands and agrees that, because of the unique. nature of    the information, AWS, will suffer irreparable: harm in the event that TANNING    fails to comply with any of its obligations under this Section 11 and monetary    damages will be inadcquate to compensate AWS for such breach. Accordingly,    TANNING agrees that AWS shall, in addition to any other remedy available to    it at law or in equity, be entitled to injunctive relief to enforce the terms    of this Section 11.

(d) In the event that TANNING, or anyone. to whom it transmits the Information    pursuant to this Agreement, becomes legally required to disclose any such    Information, TANNING shall provide AWS with prompt notice so that AWS may    seek a protective order or other appropriate remedy and/ or waive compliance    with the provisions of this Section 11. In the event that such. protective    order or other remedy is not obtained, or AWS waives compliance the provisions    of this Agreement, TANNING shall furnish only that portion of the Information    which it is legally required, to disclose.

**APPLICABLE LAW**

18. This Agreement shall be construed according to, and governed by, the laws  of the State of Florida, U.S.A.

**HEADINGS**

19. The paragraph headings contained in this Agreement are for reference purposes  on and shall not affect in any way the meaning or inzerpretation of this Agreement.

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

|   | TANNING RESEARCH LABATORIES,INC      By:/s/ Jack Surrette       Title: EVP - Marketing and Sales |
|--------|--------------------------------------------------------------------------------------------------|
|   |                                                                                             |
|   | AMERICAN WATER STAR, INC.      By:/s/ Roger Mohlman      Title: President/CEO                    |
|   |                                                                                             |
|   |                                                                                             |
|   |                                                                                             |
|   |                                                                                             |

The undersigned does personally guarantee the minimum royalty payments described  in the Paragraph 3 above:

By:/s/  Roger Mohlman

 

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EXHIBIT A

LICENSED GOODS

Bottled Flavor Water****

 

 

 

 

 

 

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**EXHIBIT B**

TERRITORY

United States

Canada

  

 

 

 

 

 

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**EXHIBIT C**

 

GUARANTEED ROYALTY

  $ 40,000 Minimum/Year 1ST Year

$120,000 Minimun/Year 2nd Year

$200,000 Minimun/Year 3rd Year

If renewal for 3 additional years, the minimum  Royalty shall be $200,000 per year

 

 

 

 

 

 

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