Hartindo AF21 Product, Purchase, Sales, Distribution, Marketing and Service
Agreement
 
THIS HARTINDO AF21 PRODUCT AGREEMENT (THE “AGREEMENT”)
MADE THIS 5TH DAY OF OCTOBER 2008 BY AND AMONG
 
MEGOLA INC., a corporation incorporated under the laws of the State of Nevada
(hereinafter referred to as the “Supplier”)
jointly with;
MSE ENVIRO-TECH CORP., a corporation incorporated under the laws of the State of
Delaware
(hereinafter referred to as the “Distributor”)
 
-and-
 
WOODSMART SOLUTIONS, INC., a Florida Corporation and/or an entity to be formed
by
Charles A. Morando, a State of Florida resident, or his nominee 
(hereinafter referred to as the “Buyer”)
 
For the purpose of this Agreement, Supplier and Distributor may be jointly
referred to as the (“Seller”). This Agreement replaces all prior Agreements
related to the subject.
 
RECITALS
 

 
A.
WHEREAS, Seller has the exclusive rights to manufacture Hartindo AF21 Fire
Inhibitor product, which is more particularly described on Schedule A attached
hereto, (“AF21” or the “Product”) within Canada, The United States of America
and Mexico (“North America”); and

 
B.
WHEREAS, Seller possesses the exclusive rights to market, sell and distribute
the Product and is fully authorized and willing to grant the Buyer, when
combined with the BLUWOOD product to create an enhanced fire inhibiting product
(“Enhanced Product”), the exclusive rights to purchase, use, market, sell and
distribute the Enhanced Product for use on and in any wood based material and
which are more particularly described on Schedules A & C attached hereto; and

 
C.
WHEREAS, Buyer has the rights to the proprietary product commonly known as
BLUWOOD (“BLUWOOD”), and which is more particularly described on Schedule B
attached hereto; and

 
D.
WHEREAS, Buyer has the technical capability and may combine the Product with the
BLUWOOD 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 C attached hereto; and

 
E.
WHEREAS, Buyer desires to obtain (i) a supply of the product (ii) use of the
technical data, non-proprietary intellectual property and other information
relating to the Product’s application, handling and storage and all material,
non-proprietary modifications thereof as more fully set forth herein while this
Agreement is in effect (“Product Technology”) and (iii) to obtain the exclusive
use of and rights of the Product for use on or in any dimensional lumber,
Oriented Strand Board (“OSB”) and plywood (“Wood Based Products”) in North
America; and (iv) to obtain the exclusive use and rights for the Enhanced
Product for use on or in any wood based materials in North America; and

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F.
WHEREAS, Seller agrees and covenant’s to the Buyer that it will exclusively only
sell or supply the Hartindo AF-21 (“Product”) as more particularly described on
Schedule A attached hereto and including all improvements and modifications
thereto to the Buyer and not to any other person, company or entity that
manufacturers and/or supplies a product or performs an application service for
the protection and/or enhancement of any wood fiber based materials or
derivative product(s) that are utilized to build or renovate a residential
and/or commercial structure; and

 
Now, therefore, in consideration of the covenants contained herein and other
goods and valuable considerations, the Buyer and Seller (each a “Party” and
collectively the “Parties”) hereby agree to the following:
 
1. Intellectual Property
1.1 Ownership of the Product Technology. Buyer acknowledges, based on Seller’s
representation, that the Seller is the sole owner of the manufacturing, sales,
marketing and distribution rights for the Product for North America and Buyer
shall have no right, title, or interest therein or thereto other than the use
and rights to such Product in the manner and to the extent prescribed in this
Agreement or otherwise approved in writing by Seller.
1.2 No Implied Licenses. Each party shall exclusively own its own Intellectual
Property and neither Party will have any claim or right to the Intellectual
Property of the other by virtue of this Agreement except as otherwise provided
herein. Neither Party will take any action or make any claim to any intellectual
Property belonging to the other Party, whether during the term of this Agreement
or thereafter, which is consistent with this Section 1.1.
1.3 Rights to use Product Technology. (A) Grant. Subject to provisions of this
Section 1.3 Seller hereby grants to Buyer, for the term of this Agreement,
certain exclusive use of and rights exclusive of all Persons and Seller (as set
forth in 1.3 (F), the “Product and Enhanced Product”), including the exclusive
rights within North America, (i) to use, sell and have sold the Product and
Enhanced Product for use on or in Wood Based Products (ii) use, advertise,
promote, display, market, distribute, sell and have sold products that have been
protected with the Product or Enhanced Product (“Derivative Products”); and
(iii) use or have used the Product Technology and Application 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 for
any use of the Enhanced Product. (B) Initial Disclosure. Within ten (10) days of
execution of this Agreement, Seller will deliver and communicate the Product
Technology, Technical Data and Application Data to Buyer to enable Buyer to
exercise its rights under the Agreement set forth in Section 1.3 (A) hereof.
Seller will provide Buyer with sufficient technical support to ensure that Buyer
may commence use of the Product and Enhanced Product pursuant to this Agreement.
(C) Transfer of the Use of or Rights. Buyer may not sell, assign or transfer the
use or Rights granted buy Seller to the Buyer in this Agreement and any or all
other rights of the Buyer under this Agreement without Sellers advance written
approval and acceptance of all terms and conditions of any sale, assignment or
transfer by Buyer, which approval shall not be unreasonably withheld,
conditional or delayed; provided that no consent is needed if Buyer sells,
assigns or transfers the Agreement to an entity in which Charles A. Morando
and/or WoodSmart Solutions, Inc. individually or jointly own at least 50% of
such entity. (D) Notice of Unauthorized Use. In the event that either Party
becomes aware of any actual or threatened commercially material infringement for
the use of or rights of the Product or Enhanced Product, that Party shall
promptly notify the other Party and provide it with full details. Seller will
use commercially reasonable means to eliminate any unauthorized use of Product,
including pursuing legal action as appropriate. If Seller does not take
appropriate action to protect Buyer’s use of or rights under this Agreement,
including infringement, Buyer may pursue actions in its own right to eliminate
any such unauthorized use or infringement. (E) Buyer agrees and covenants that
at no time will the Buyer engage in or be a party to, or assist other persons in
any form of Product chemical analysis, reverse engineering or component
breakdown for the purpose of determining or evaluating Proprietary Information
(as defined below). (F) Exclusivity. Buyer shall have exclusive use of and
rights to the Product for use in Wood Based Products within North American and
exclusive use of and rights to the Enhanced Product for any use within North
America. Furthermore, Seller shall prohibit and take all reasonable steps to
prevent (including commencement of an action to enforce a temporary restraining
order, preliminary and permanent injunction or similar relief) any Person from
exercising or infringing upon the use of or rights granted under this Agreement
within North America.

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1.4 Use of Product. (A) Protection of Sellers Goodwill. In order to protect the
goodwill of the Seller and Buyer and to maintain uniform standards of operation
to promote broad recognition of Sellers product for the mutual benefit of Seller
and Buyer, Buyer shall adhere to reasonable rules, regulations, procedures,
programs, policies, processes, requirements and standards (“Quality Standards”)
relating to the application, promotion, advertising and marketing of the Sellers
Product as prescribed by Seller from time to time. (B) Seller Approval. Buyer
will utilize only such advertising and promotional materials which have been
reviewed by Seller, which shall be deemed acceptable if Seller does not respond
in writing within ten (10) days of Buyers submission of such material for
acceptance. (C) Quality Control. Seller shall provide Buyer with Sellers Quality
Standards for specifications, composition and quality in respect of the use of
the Product Technology and Product Application as are in force from time to
time. Seller shall institute appropriate procedures and policies and will abide
by in all material respects to such Quality Standards therefore provided by
Seller to Buyer, a copy is attached hereto as Schedule ________. Seller will
supply Buyer with quality control testing standards procedures and guidelines
(“Quality Standards”) so that the Buyer may determine that the application of
the Product or Enhanced Product performed by the Buyer or its customer(s) meets
such written standards of composition, specifications and quality as specified
by Seller. Seller shall have the right to require that treated materials that do
not meet such standards be retreated or not sold as material treated with
Product or Enhanced Product of the seller. Buyer is authorized to provide
independent third party quality control inspection to be able to determine
whether or not the Sellers written specifications and standards are met. The
Seller also has the option and Buyer encourages providing its own third party
testing program for the Buyer. (D) Buyers Rights to Change Marks and Trade Name.
Seller specifically agrees that the Buyer shall have the right to substitute,
alter and/or add identifying services, marks, trade names of the Enhanced
Product.

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1.5 Confidentiality. (A) Obligation of Nondisclosure. Except as otherwise
provided in this Agreement, each Party agrees that it will, with respect to the
Confidential and Privileged Information and Trade Secrets (collectively, the
"Proprietary Information") of the other Party: (i) protect the confidential and
proprietary nature of the Proprietary Information of the Disclosing Party from
disclosure to Persons who are not employees of the Receiving Party; and (ii) use
great care in the selection and assignment of personnel who receive the
Disclosing Party’s Proprietary Information and in that regard to restrict access
to the Disclosing Party’s Proprietary Information within the organization to a
limited number of persons who must necessarily have such information for the
purposes of giving effect to this Agreement and who have been advised of the
restrictions contained herein, including the limitations placed on the use of
Proprietary Information; and (iii) under no circumstances give any competitor of
the Disclosing Party, or other third Party, direct access to the Disclosing
Party’s Proprietary Information without the prior written consent of the
Disclosing Party; and (iv) use the Proprietary Information of the Disclosing
Party solely for the purpose of properly and lawfully performing and exercising
of the Receiving Party's obligations and rights under this Agreement; and (v)
not reproduce the Proprietary Information received from the Disclosing Party in
any form, except for internal use of the Receiving Party, or as otherwise
permitted by this Agreement, and to include in any such reproduction any
ownership or confidentiality legends that the Disclosing Party may have included
in or with the original disclosure. (B) Exceptions. The Receiving Party shall
not be obligated to maintain in confidentiality any: (i) Information which is
known to the Receiving Party before disclosure by the Disclosing Party, so long
as such knowledge is documented by written or other tangible evidence; and (ii)
Information which is available to the public independently of the Receiving
Party; and (iii) Information which is developed independently by employees of
the Receiving Party who did not have access to the Disclosing Party’s
Proprietary Information so long as such independent development is documented by
written or other tangible evidence; and (iv) Information which is disclosed to
the Receiving Party without obligation of nondisclosure by a third Party who is
legally entitled to disclose the information; and (v) Information which is
disclosed by the Disclosing Party to a third Party without requiring the third
Party to maintain the information in confidence; and (vi) Information which
becomes available to the public without breach of this agreement by the
Receiving Party, following its disclosure to the Receiving Party by the
Disclosing Party; and (vii) Information required to be disclosed by law,
provided that the Receiving Party shall first notify the Disclosing Party of
such requirement and cooperate with respect to any reasonable steps available
for the further protection of the Information; or (viii) Information that is
inherently disclosed in the unrestricted use, lease, sale, or other distribution
of any present or future product or service produced by, for or under
authorization of the Disclosing Party or in publicly available documentation for
any such product or service. (C) Return of Information. Upon termination of this
Agreement, the Receiving Party will and promptly upon the Disclosing Party’s
request either return, or destroy all copies of any advertising or promotional
materials supplied to the Receiving Party by the Disclosing Party and materials
containing Confidential and Privileged Information or Proprietary Information of
the Disclosing Party. (D) Investigation. The Receiving Party will at the request
of the Disclosing Party use reasonable efforts to assist in identifying any use,
copying, or disclosure of any portion of the Disclosing Party’s Proprietary
Information by any present or former employee of the Receiving Party in a manner
that is contrary to the provisions of this Agreement, so long as the Disclosing
Party shall have provided the Receiving Party with information reasonably
justifying the conclusion of the Disclosing Party that such contrary usage may
have occurred.
 
2. Quantities; Grant of Exclusive License; Minimum Quantities.
 

 
2.1. Quantities. During the term hereof, Seller shall manufacture, sell and
deliver to Buyer, and Buyer shall purchase, accept from and pay Seller for, one
hundred percent (100%) of Buyer's requirements for Product and for incorporation
as an integral part of the Enhanced Product which Buyer will resell to Buyer's
customers. Buyer further agrees and covenants that Buyer shall only use, sell,
market or distribute the Product or Enhanced Product for use on or within Wood
Based Materials and not for another purpose without the prior written approval
of Seller, which may be withheld solely at Sellers discretion.

 

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2.2 Minimum Quantities. Buyer is required to purchase the minimum quantities set
forth on Schedule D attached hereto. If Buyer fails to purchase said minimum
quantities, it shall lose all exclusivity as set forth in Section 1, this
Section 2 and elsewhere in this Agreement.

 
3. Price. Buyer shall purchase from Seller the Product, in the minimum
quantities set forth according to Section 2.2 above, at the prices set forth on
Schedule D attached hereto.
 
4. Estimates, Orders and Deliveries.
 

4.1.
Estimates. Thirty (30) days prior to the end of each calendar quarter, Buyer
shall provide to Seller an estimate of the quantity of Product which Buyer
expects to purchase in the next calendar quarter.   

 

 
4.2. Orders and Deliveries. Buyer shall give Seller a purchase order by the
tenth (10th) day of each month covering the amount of Product Buyer expects to
purchase in the following month. The purchase orders shall contain specific
"release dates", which are to be the dates on which the Product shall actually
be shipped by Seller to Buyer. Seller shall deliver all shipments of Product in
accordance with such release dates, F.0.B Seller's plant.

 
5. Warranty of Seller; Disclaimer of Other Warranties; Buyer’s Exclusive Remedy.
 
5.1. Specifications. Seller warrants that the Product at the time of delivery
thereof shall conform to the specifications established in writing by Seller for
such Product.
 
5.2. Disclaimer. THE WARRANTY SET FORTH HEREIN IS IN LIEU OF ANY AND ALL
WARRANTIES EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO THE WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE EXCEPT AS A FIRE ENHIBITOR
OF WOOD BASED MATERIALS. BUYER ACKNOWLEDGES THAT NO OTHER REPRESENTATIONS WERE
MADE TO IT OR RELIED ON BY BUYER WITH RESPECT TO THE QUALITY AND FUNCTION OF THE
PRODUCTS HEREIN SOLD.   
 
5.3. Buyer's Remedies. Buyer's sole and exclusive remedy for failure of the
Product sold hereunder to meet specifications, or for failure of any other
obligation of Seller relating to the quality of Product to be sold hereunder,
shall be expressly limited to Seller's issuing a credit to Buyer's account for
the quantity of Product that do not conform to the warranty set forth in this
Section 5. Buyer shall have the option to obtain replacement Product from Seller
in the event of a breach of Seller's warranty set forth in this Section 5 in
amounts not to exceed the amount of the order which is being replaced. If Buyer
obtains replacement Product from Seller, such replacement Product shall not be
subject to the estimate and order terms set forth in Section 4 hereof.
 
5.4. Exclusions to Warranty. The above warranty is made subject to Buyer's
proper use of any Product for the purpose for which such Product was intended.
The warranty does not cover any Product which (i) has been misused; (ii) has
been subject to unusual stress; (iii) has been altered by Buyer, except in
accord with such processes as have been established for the creation of the
Enhanced Product; or (iv) has not been stored in accordance with instructions
from Seller.
 

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5.5. Limitation of Liability. IN NO EVENT SHALL SELLER BE LIABLE FOR SPECIAL,
INDIRECT, CONSEQUENTIAL OR INCIDENTAL DAMAGES ARISING UNDER CONTRACT, WARRANTY,
TORT, NEGLIGENCE, STRICT LIABILITY OR ANY OTHER THEORY OF LIABILITY IN
CONJUNCTION WITH BUYER’S USE OF THE PRODUCT AND OR THE DEVELOPMENT, MANUFACTURE,
MARKETING, DISTRIBUTION OR USE OF THE ENHANCED PRODUCT. Such disclaimed damages
include but are not limited to loss of profits, loss of use of the Product,
damage to property, or claims of third parties. In any event, Seller's total
liability under this Agreement shall be limited to the unit purchase price paid
to Seller for Product within the immediately preceding one (1) month period.
 
5.6. Advertising and Promotional Materials. Any and all descriptions of the
Product or Enhanced Product to be used in Buyer’s marketing and promotional
literature, or in the marketing and promotional literature used by Buyer’s
distributors and authorized resellers of the Product or Enhanced Product, shall
be subject to the prior written approval of Seller.
 
6. Payment
 
6.1. Terms. Payment, including taxes, if applicable, for each invoice shall be
made by Buyer to Seller with 50% of payment due at the time of receipt of
Buyer’s purchase order (“PO”) and the balance of the payment under the Buyer’s
PO due prior to Product shipment. Without limiting any other remedies which
Seller may have, Seller may withhold future shipments to Buyer until any default
in the payments due Seller under the Agreement is cured.  
 
7. Labeling; Packaging. All of the Product sold to Buyer by Seller hereunder
shall be labeled and packaged by Buyer in such media as Buyer shall see fit, and
Buyer may repackage and inventory Product or Enhanced Product containing Product
per its customers' orders, provided that the form of any labeling or packaging
that refers to the Product shall be subject to the prior written approval of
Seller, which approval may not be unreasonably withheld by Seller.
 
8. Title; Risk of Loss. Title and risk of loss or damage to Product shall pass
to Buyer upon delivery by Seller to the carrier for shipment to Buyer.
    

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9. Force Majeure
 
9.1. Force Majeure. Seller shall not be liable to Buyer for any delay in any
performance or for failure to render any performance under this Agreement, and
any such delay or failure shall for all purposes be excused, when such delay or
failure is caused by governmental regulations (whether or not valid), fire,
strike, weather, differences with workmen, war, flood, accident, shortage of
material or railroad cars or other transportation, appropriation of plant or
Product (including but not limited to Products) in whole or in part, inability
to obtain raw materials or power, or any other cause or causes beyond the
reasonable control of Seller, which events or causes are collectively referred
to as "Force Majeure."
 
9.2. Notice. Seller shall notify Buyer in writing immediately upon the
occurrence of an event of Force Majeure, stating the nature of the event and its
expected duration.  
 
9.3. Product Allocation. If the event of Force Majeure results in an allocation
of the supply of Product, Seller shall allocate on a pro rata basis to all of
Seller's customers, including Buyer.  
 
9.4. Description of Performance. Upon the abatement, correction or removal of
any contingency provided for by subparagraph 9.1, Seller shall resume
performance under this Agreement.
 
10. Representations and Warranties.
 
10.1 By Seller. For the purpose of inducing Buyer to enter into this Agreement,
Seller hereby makes the following representations and warranties to Buyer (each
and all of which are true and correct as of the Effective Date and shall
continue to be true and correct at all times during the term of this Agreement)
(A) that: (i) Seller is the sole owner of the exclusive manufacturing, sales,
marketing and distributing rights of the Product, free from any lien, claim or
encumbrance within North America; and (ii) the Trade Secrets, the Product
Technology, Product use or any other rights do not unlawfully infringe on the
intellectual property rights of any Person or entity; and (iii) the execution,
delivery and performance of this Agreement does not and will not breach any law
or regulation, any judgment or order, or any agreement or arrangement binding on
or applicable to Seller; and (iv) the execution of this Agreement does not
conflict with and will not result in a default under or breach of: (a) Seller
Articles of Incorporation, by-laws or other organizational documents; (b) any
agreement, indenture, mortgage, contract or instrument to which Seller is bound
by or to which its assets are subject; (c) any order, writ, injunction, decree
or judgment of any Court or governmental agency to which Seller or any of its
assets are bound; or (d) any law or regulation applicable to the Product, the
operations of Seller or by which any of Sellers assets are bound; and (v) the
Product does not contain any carcinogens, heavy metals, aldehydes or solvents
and will meet all state and federal laws relating to VOC emissions; and (vi)
based upon collected field data, live testing and third party controlled test
data, all of which has been supplied to the Buyer, and Buyers own testing of
Product, Seller reasonably believes the Product to be effective by providing
improved fire resistance to wood based materials when properly treated with the
Product, in accordance with published data by Seller; and (vii) each shipment of
the Product to Buyer will conform to the current specifications for the Product
on the date of this Agreement; and (viii) Seller is a corporation duly
incorporated, validly existing and in good standing under the Laws of the State
of Nevada and Delaware.
 

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10.2 By Buyer. Buyer will comply with all applicable laws, ordinances and
regulations applicable to the transportation, storage and handling of the
Product and Enhanced Product and to the manufacture of the Enhanced Products.
Buyer (i) has the right and power to enter into, and perform its obligations
under this Agreement; and (ii) Buyer has the financial resources to meet it’s
financial obligations under this Agreement; and (iii) Buyer has taken all
requisite action to authorize the execution, delivery and performance of this
Agreement and each such other agreement delivered in connection herewith to
which it is a Party.
 
10.3 Mutual. Neither Buyer nor Seller shall conduct its business in a manner
that reflects unfavorably on the other. Neither Buyer nor Seller will at any
time intentionally engage in illegal, deceptive, misleading, or unethical
practices or advertising.
 
11. Term and Termination. 
 
11.1 Term. Unless terminated earlier by Seller or by Buyer under Section 11.2,
11.3 or 11.4., this Agreement shall have an initial term of one (1) year
commencing on the date of this Agreement and shall automatically renew annually
for additional terms, each one (1) year, without further action by Seller or
Buyer on the same terms and conditions set forth herein.
 
11.2 Termination by Seller. At Sellers option and without prejudice to any
remedies or rights it may otherwise have, Seller may terminate this Agreement by
written notice to Buyer in the event that Buyer fails in a material respect to
keep, observe or perform any term, condition or covenant contained herein
required to be kept, observed, or performed; provided that such notice shall not
terminate this Agreement if within thirty (30) days after its receipt, Buyer
undertakes to correct such default and diligently pursues the same to completion
within a reasonable time thereafter;
 
11.3 Effect of Termination. Upon termination of this Agreement by Buyer or
Seller in accordance with the terms hereof, the Buyer may continue to purchase
the Product and use the Product Technology to fulfill orders for Product or
Enhanced Product already received from all existing customers of Buyer as of the
date the Agreement is terminated. Buyer shall retain it’s exclusivity as
provided in this Agreement until all orders are fulfilled or until Buyer has
diminished all of its existing inventory of Product or Enhanced Product or
ninety (90) days, whichever occurs first. Thereafter, all of Buyers exclusive
rights under this Agreement shall terminate and Buyer shall discontinue all use
and advertisement of Product or Enhanced Product hereunder. Within ten (10) days
after the termination of this Agreement, Buyer shall remove (at Buyers expense),
and thereafter cease all use of any Product or Enhanced Product and cease all
use of any marketing materials or marks that reference the Product or Enhanced
Product under this Agreement. 
 
11.4 Termination Upon Bankruptcy. Either Party, upon written notice to the other
Party, may immediately terminate this Agreement, without penalty at any time in
the event the other Party applies for or consents to the appointment of or
taking of possession by a receiver, custodian, trustee, or liquidator of itself
or of all or a substantial part of its property; makes a general assignment for
the benefit of creditors; commences a voluntary case under the U.S. Bankruptcy
Code (as now or hereinafter in effect); or fails to contest in a timely or
appropriate manner or acquiesces in writing to any petition filed against it in
an involuntary case under the U.S. Bankruptcy Code or any application for the
appointment of a receiver, custodian, trustee or liquidation of itself or of all
or a substantial part of its property, or its liquidation, reorganization or
dissolution.

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12. Seller Production Requirements and Pricing. Seller represents that it has
the capacity to produce and sources of supply for the ingredients for sufficient
quantities of the Product and will deliver all orders of the Product to Buyer up
to the estimates as provided in Section 4 above in a timely manner in accordance
with terms and conditions set forth in Exhibit D. Seller will, on a best efforts
basis, manufacture and deliver product over and above the quantities estimated
by Buyer. Seller agrees to provide Buyer a minimum of sixty (60) days advance
written notice if it is necessary for Seller to increase its price after the
effective date of the Agreement for Product. Furthermore, Seller agrees not to
further increase the per gallon cost of undiluted or diluted Product to the
Seller in the future beyond the most favorable cost per gallon of Product
offered to any other business or person by Seller. Notwithstanding the
foregoing, however, Seller may at any time increase the price of the Product
charged to Buyer in order to recover commercially reasonable increases in the
cost of manufacturing the same due to improvements thereto, such as
reformulation for the inclusion of new additives. No price increase will be
effective for the Product necessary to satisfy Buyers obligations for existing
written annual supply contracts until the end of each annual contract period.
Buyer is required to supply Seller a copy of such annualized Licensee
contract(s) which shall be deemed Confidential & Privileged Information of the
Buyer. No price increase will be effective for any then existing purchase orders
of the Product.

13. Insurance. Buyer shall procure from financially responsible and reputable
carriers and maintain in full force and effect, during the term of this
Agreement, a policy or policies of comprehensive general liability insurance,
including product liability and broad form contractual or vendors endorsement
liability insurance, having standard products liability endorsements providing
aggregate liability limits in the minimum amount of Two Million Dollars
($2,000,000) and in an amount not less than one million dollars ($1,000,000) per
occurrence for bodily injury and one million dollars ($1,000,000) per occurrence
for property damage. The insurance companies issuing such policies must have
either: an A.M. Best’s rating of A-VIII or better; a Standard and Poor’s (“S&P”)
rating of AA or better, or a Moody’s rating of Aa2 or better. Promptly upon a
request from the Seller, Buyer shall furnish Certificates of Insurance showing
compliance with this section. Buyer is required to name the Seller as an
additional insured on their comprehensive general liability insurance policy,
the product liability insurance and the broad form contractual or vendors
endorsement liability insurance. Such certificates must provide that there shall
be no termination, non-renewal, or modification of such coverage without at
least thirty (30) calendar days’ prior written notice to Buyer. In the event
Buyer fails to obtain and/or maintain any of the coverage’s required by this
Section of the Agreement, Seller may, but shall not be obligated to, obtain or
maintain any such insurance on behalf of Buyer and recover the costs thereof
from Buyer.

14. Relationship Between Parties . Seller and Buyer are independent businesses,
are not joint ventures, partners, or agents of each other, and neither shall
have the power to obligate the other except as set forth in this Agreement.
 

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15. Buyers Indemnification. Buyer agrees to indemnify, defend and hold harmless
Seller, its subsidiaries, affiliates, successors, assigns, and designees and the
respective directors, officers, members, managers, employees, agents and
representatives, from and against any and all loss, liability, judgment,
settlement, cost and expense (including court costs and reasonable attorneys
fees), claims, demands, actions or damages which the Seller may suffer directly
related to the use of the BluWood product to create the Enhanced Product,
including without limitation to: (a) any alleged defect(s) in the Enhanced
Product or the materials in the Enhanced Product; (b) any negligent act,
misfeasance or nonfeasance of Buyer or any of its agents, servants or employees;
(c) Buyers breach of any of the representations, warranties or covenants made in
this Agreement; (d) claims that Buyer does not have the rights granted in this
Agreement or claims that the BluWood component of the Enhanced Product infringe
a third party's rights, other than Buyers application thereof; and (e) any and
all fees, costs and expenses including attorney’s fees incurred by or on behalf
of Seller in the investigation or defense against any and all of the foregoing
claims. However, upon notice to Seller that Buyer has assumed the defense of any
legal action or proceeding, Buyer shall not be liable to Seller for any legal or
other expenses subsequently incurred by Seller in connection with the defense
thereof. Seller agrees to provide prompt notice of receipt of any such claim and
Seller shall not settle any such claim without Buyers prior knowledge and
consent. This obligation of indemnity and defense shall survive any expiration
or termination of this Agreement.
Buyer agrees to indemnify and hold Seller harmless from and against loss,
liability, and expense (including court costs and reasonable attorney fees)
claims, demands, or actions that are actually proven to be directly, solely and
exclusively related to improper use, representation or application of the
Product or Enhanced Product by Buyer.

16. Sellers Indemnification. Seller agrees to indemnify, defend and hold
harmless Buyer, its subsidiaries, affiliates, successors, assigns, and designees
and the respective directors, officers, members, managers, employees, agents and
representatives, from and against any and all loss, liability, judgment,
settlement, cost and expense (including court costs and reasonable attorneys
fees), claims, demands, actions or damages which the Buyer may suffer directly
related to the Product, including without limitation to: (a) any alleged
defect(s) in the Product or the materials in the Product; (b) any negligent act,
misfeasance or nonfeasance of Seller or any of its agents, servants or
employees; (c) Sellers breach of any of the representations, warranties or
covenants made in this Agreement; (d) claims that Buyer does not have the rights
granted in this Agreement or claims that the Product Technology infringe a third
party's rights, other than Buyers application thereof; and (e) any and all fees,
costs and expenses including attorney’s fees incurred by or on behalf of Buyer
in the investigation or defense against any and all of the foregoing claims.
However, upon notice to Buyer that Seller has assumed the defense of any legal
action or proceeding, Seller shall not be liable to Buyer for any legal or other
expenses subsequently incurred by Buyer in connection with the defense thereof.
Buyer agrees to provide prompt notice of receipt of any such claim and Buyer
shall not settle any such claim without Seller prior knowledge and consent. This
obligation of indemnity and defense shall survive any expiration or termination
of this Agreement.
 
17. Equitable Remedies. Each Party recognizes that irreparable injury may result
to its business and property in the event of unauthorized disclosure of the
other Party's Confidential & Privileged Information and Proprietary Information.
Each Party acknowledges that monetary damages alone may be an insufficient
remedy for such injury and each Party therefore agrees that in that event the
other Party shall be entitled, in addition to any other remedies and damages
available; (i) to an injunction to restrain any such actual or threatened
disclosure, misuse, or violation and/or; (ii) to compel specific performance of
the terms and conditions thereof.

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Nothing herein contained shall be construed to prohibit each Party from pursuing
any other remedy available, for such breach, including the recovery of damages.
Each Party shall also be entitled to receive, in addition to any injunction,
specific performance, damages and any other relief for remedy it pursues or
obtains, reasonable expenses incurred in enforcing the unauthorized disclosure
of Confidential & Privileged and Proprietary Information terms of this
Agreement, including reasonable attorney's fees, whether or not legal action is
actually initiated. No action or proceedings for specific performance,
injunction, damages, monies due or otherwise shall be deemed a waiver of such
Party's rights of options under this Agreement.
 
18. No Waiver. No failure of Seller or Buyer to exercise or the partial exercise
of any right or power given to it hereunder or failure to demand strict
compliance with any term, condition, covenant or other obligation hereof, and no
practice of the parties at variance with the terms hereof shall constitute a
waiver of either party's rights to demand exact compliance with the terms hereof
or preclude either party from the exercise of any right or remedy granted to
this Agreement, or any other instrument or document, or at law or in equity.
Each other right shall be deemed cumulative any may be exercised from time to
time. Any waiver of a default hereunder shall be in writing and shall not
operate as a waiver of any default.
 
19. Invalid Provision. If any covenant or provision of this Agreement is
invalid, illegal or inapplicable of being enforced by reason of any rule of law,
administrative order, judicial decision or public policy, all other conditions
and provisions of this Agreement shall, nevertheless, except as hereinafter
expressly set forth, remain in full force and effect and no covenant or
provision shall be deemed dependent upon any other covenant or provision unless
so expressed herein. The Parties agree and consent that the court or other
governmental body making such determination shall reform such covenant, term,
condition or other provision of this Agreement so as to render the same
enforceable to the fullest extent permitted by law.
 
20. Notices. All notices shall be in writing and shall be deemed to have been
given three (3) business days after being deposited in the mail by registered
mail, postage paid, or deposited with a reputable overnight national courier
service, freight prepaid or when faxed or mailed electronically (if during
normal business hours of if after the close of business on any day, the next
business day) if to Seller, addressed to its chief executive office as set forth
on the first page of this Agreement or such other address as Seller shall
designate to Buyer in writing and, if to the Buyer, addressed to its chief
executive office as set forth on the first page of this Agreement or other such
addresses as Buyer shall designate to Seller in writing.
 
21. Entire Agreements; Amendments. This document constitutes the entire
agreement between the parties relating to the subject matter hereof, and no
prior or concurrent representation, understanding or agreement, whether written
or oral, shall bind either party hereto in respect of the manufacture and sale
by Seller of Product to Buyer after the date first above written. This Agreement
can only be amended, modified or changed by a written instrument properly signed
by an officer or other authorized official of Seller or Buyer parties of this
Agreement to be bound by such amendment. No document used in connection with
estimates, production or shipping orders, or acknowledgment thereof, shall
amend, modify, revoke or otherwise affect the provisions of this Agreement.

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22. Benefits. This Agreement shall inure solely to the benefit of and be binding
upon Seller and Buyer and their nominees, successors and assigns.
Notwithstanding the foregoing, Seller agrees that the benefits and rights under
this Agreement will be binding on its successor(s), assign(s) or designee(s) in
the event there is a purchase of assets, purchase of stock, purchase of the
Product, Trademarks or other intellectual property of the Product, or any other
transfer from Seller that may impact Buyers benefits and rights under this
Agreement. No other Person shall benefit from this Agreement.
 
23. Construction of Agreement. Masculine, feminine and neuter pronouns used in
this Agreement shall include all genders and the singular shall include the
plural and vice versa, where the context or facts so indicate.
 
24. Captions. Captions in this are inserted solely for the convenience and shall
not be construed as a limitation upon or expansion of the scope of any
particular provision.
 
25. Not a Security and no Representations. Buyer acknowledges that it has
entered into this Agreement after making an independent investigation as to
effectiveness of the Product and Enhanced Product on Wood Based Products along
with other sufficient testing to form a knowledgeable opinion as to the revenue
or profits which Buyer might be expected to realize. Buyer acknowledges that no
person has made any other representation that is not expressly set forth in
writing in order to induce Buyer to accept and execute this Agreement.
 
26. Limitations of Claims. Any and all claims arising out of or relating to his
Agreement or the relationship among the parties will be barred unless a judicial
proceeding is commence within one (1) year from the date upon which the party
asserting such claim knew or should have known the facts giving rise to such
claims.

27. Counterparts. This Agreement may be executed in any number of counterparts,
each of which when so executed and delivered shall be an original, but all of
which together constitute one and the same instrument.
 
28. Governing Law; Section Headings. This Agreement shall be governed by and
construed in accordance with the law of the State of Florida applicable to
agreements executed and to be performed therein. The section headings contained
in this Agreement are for reference purposes only, and shall not affect in any
way the meaning or interpretation of this Agreement. Any action, claim or
proceeding brought under this Agreement shall be commenced exclusively in the
courts of the State of Florida or in the federal courts of the United States of
America located in such State.
 

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IN WITNESS HEREOF, Seller and Buyer have caused this Agreement to be executed by
their duly authorized representatives.
 
SELLER
         
MEGOLA, INC.
         
By:
   
Date:
   
Joel Gardner, President & CEO
     
 
         
MSE ENVIRO-TECH CORP.
         
By:
   
Date:
   
Gilles Trahan, President & CEO 
           
BUYER
         
WOODSMART SOLUTIONS, INC.
         
By:
   
Date:
   
Charles A. Morando, President & CEO
     

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Schedule ‘A’
 
Description of Hartindo AF21 (“Product”)
 
Hartindo AF21 is water-based, environmentally friendly, multi-purpose, non-toxic
and non-corrosive fire inhibitor. As opposed to the numerous, and often times
toxic fire retardants on the market that simply delay the spread of fire, AF21
renders materials non-flammable, thereby preventing the spread of fire. It can
be applied to all natural fibers and many synthetics materials. A few of the
many applications include the treatment of furniture, carpet, clothing,
mattresses and building materials, onsite or during the manufacturing process,
to dramatically reduce the possibility of these materials catching fire.
 

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Schedule ‘B’
 
Description of BLUWOOD
 
BluWood® is the trademarked name of a family of products coated with a
proprietary two-part Infusion Film and DOT Wood Preservative technology,
developed by a team of highly respected scientists under the direction of
WoodSmart Solutions, Inc., headquartered in Boca Raton, Florida.
 
BluWood® wood framing components provide the building industry with a new level
of defense for protection of above ground, covered structure wood framing
components against the costly, damaging effects of mold fungus growth, rot fungi
and wood ingesting insects, as well as limiting moisture absorption, a key
necessary element for mold growth.
 
This industry-specific, factory-applied coating process is performed by a North
American network of WoodSmart Solutions, Inc., licensed application companies.
 

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Schedule ‘C’
 
Description of BLUWOOD “Enhanced Product”
 
The combination of Hartindo AF21 Fire Inhibitor and BluWood® , the “Enhanced
Product”, brings the ultimate in wood protection, preservative, and fire safety
to building components constructed of wood; from framing, joists, beams,
roofing, decks, sidings, trim board and paneling, to floors, walls and ceilings.
WoodSmart's BluWood® treated lumber and other wood components protect against
mold and mildew, wood rot, termites and other wood-ingesting insects, thereby
avoiding the potential nightmares that befall many home owners due to these
destructive elements. The addition of Hartindo AF21 Fire Inhibitor to the
BluWood® lumber treatment process adds the additional, much coveted element of
fire safety to all wooden components.
 
To date, the Enhanced Product has been produced through the mixing of AF21 and
BluWood at a 9:1 ratio. It is expected that a more concentrated solution of AF21
will be made available for use in the Enhanced Product such that a 5 parts AF21
to 1 part BluWood (5:1 ratio) will be further mixed with 4 parts clean water to
produce the Enhanced Product.
 

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Schedule ‘D’
 
Quantity
 
The Buyer shall be required to purchase from the Seller a minimum annual
quantity of Product upon the signing of this agreement. First year begins ninety
(90) days upon signing the agreement and/or ninety (90) days after initial
delivery of the initial order from the Buyer.
 
Minimum Purchase Requirements of Buyer
 
(d) Within the first 12 months immediately following the completion of the above
requirements; 400,000 annual total gallons of Product
(e) The next 13-24 months for an annual total of 550,000 gallons of Product
(f) The next 25-36 months for an annual total of 700,000gallons of Product OR at
the equivalent above annual gallons and price per gallon, if Product is supplied
by Seller to Buyer in a more concentrate form. To date, the ratio of Product
supplied by Seller to Buyer for testing is 9 to 1 (9 parts Product to 1 part
BLUWOOD).
 
The Buyer will retain the exclusive use of and rights to the Product as defined
in this Agreement beginning the 37th month and thereafter as long as the Buyer
purchases a minimum of 1,500,000 gallons of Product per each following 12 month
period.
 
The sole remedy of Seller if Buyer does not meet these minimum Product purchase
requirements is Buyer will lose its exclusivity and this Agreement will
terminate.
 
If for any reason the Seller or assignee, successor or new control person
discontinues the manufacturing of or cannot supply Product to the Buyer, Seller
agrees to sub-contract the manufacturing of the Product or arrange supply of the
Product sufficient to meet Buyers needs as long as Buyer has purchased
sufficient Product to meet the minimum Product purchases to retain Buyers
exclusivity as defined in this Agreement and the Agreement has not been
terminated.
 
The Seller further agrees and covenants that if the Agreement is terminated by
any of the Parties to the Agreement that the Buyer will retain the use and
non-exclusive rights for the Product so the Buyer can continue the supply of
sales, marketing and distribution of the “Enhanced Product” to the Buyer’s
Licensed Agreement holders. Seller agrees to continue to supply Buyer the
Product at the same unit pricing, terms and conditions then in effect at the
date of termination.
 

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