AF21 Product, Purchase, Sales, Distribution, Marketing and Service Agreement

PRODUCT AF21/2705

This AF21 PRODUCT Agreement (the “Agreement”) made this 20th day of July, 2009 by and among Megola, Inc., a Nevada Corporation (“Supplier”) and EcoBlu Products, Inc., a Nevada Corporation (“BUYER”).  This Agreement replaces all prior Agreements related to the subject.

RECITALS

A.  WHEREAS, Supplier has the exclusive rights to manufacture Hartindo Fire Inhibiting AF21 product, which is more particularly described on Schedule A attached hereto, (“AF21” or the “Product”) within North America; and is fully authorized and willing to grant the Buyer the exclusive rights to purchase, use, market, sell and distribute the Product when combined with  Bluwood or EcoBlu proprietary product to create an enhanced fire inhibiting product (“Enhanced Product”) for use on and/or in any wood based material and which is more particularly described in Schedule A attached hereto; and

B. WHEREAS, Buyer has the rights to the proprietary product commonly known as BLUWOOD (“BLUWOOD”)and/or PERFECT BARRIERS, and other proprietary EcoBlu products which are more particularly described on Schedule A attached hereto; and

C.     WHEREAS, the Product may be combined with the BLUWOOD or EcoBlu proprietary product to create an enhanced fire inhibiting product for use on and in wood based materials (the “Enhanced Product”), and which is more particularly described on Schedule A attached hereto; and

D.    WHEREAS, Buyer desires to obtain (i) a supply of the product (ii) use of the technical data, intellectual property and other information relating to the Product application, handling and storage with respect to the Product and all modifications   1Application Technology in connection with the foregoing. During the term of this Agreement the use of and rights shall be for use on or within wood based products of the Product and Enhanced Product.

E.     The Buyer agrees that the Product is for either their own usage and applications and/or is permitted to resale AF21 finished, AF21 concentrate to their other coaters, sublicense for the use on or in any wood based materials but are prohibited from engaging in direct reselling of the AF21 products unless in the form of the enhanced product or as applied on or in their approved wood based materials required for use primarily in residential and commercial building construction.

F.      The Seller and Buyer both acknowledge that on October 5th, 2008, Megola entered into an agreement with Woodsmart Solutions Inc. to provide Woodsmart with exclusive rights for the use of and rights of the Product for application in the Enhanced Product or for use on or in any wood based material required for use in residential and commercial building construction in North America; The Parties also acknowledge that on May 20, 2009 Woodsmart Solutions Inc. forwarded a letter of advice to their licensees advising them that Woodsmart no longer held the rights to the BluWood proprietary formula – Schedule D. It is also understood by both parties that based on this situation, Woodsmart is in contravention of their agreement with Megola, Inc. 

G.    The Seller agrees to grant the exclusive use of and rights desired by Buyer on the terms and conditions set forth in this Agreement; and

H.    The Agreement shall be binding upon and inure to the benefit of the parties hereto, their successors and assigns; and