Purchase, Distribution & Services Agreement

Purchase, Distribution & Services Agreement

This Agreement (" Agreement ") is made as of the 24 ^th day of August, 2009 (the " Effective Date "), by and between: BluwoodUSA, INC. , a Delaware Corporation organized under the laws of Delaware and with its chief executive offices located at 4357 Cowing Rd., Lakewood, N.Y. 14750 (" BluwoodUSA ") and ECOBLU PRODUCTS, Inc., a Nevada corporation with its chief executive offices located at 909 West Vista Way, Vista California 92083 (" EcoBlu "). This agreement replaces all prior agreements related to the subject matter herein.

A. Bluwood USA is the assigned owner of valuable technical data and intellectual property for a protective coating (the " Product," as defined with greater particularity below) to be used primarily as a factory applied Covered Structure wood component products protective coating utilized within a covered structure when constructing residential or commercial buildings, and designed primarily for protecting covered structure wood component products from: (a) excessive moisture; (b) mold fungus growth; and (c) rot fungi decay; and (d) structural damage caused by common wood ingesting insects including termites.

B. Bluwood USA manufactures the Product and has use of (owner of trademarks and registered trademarks) related to the Product. Bluwood USA desires to enter into an agreement for sales, marketing and distribution rights for the Product to EcoBlu.

C . EcoBlu desires to obtain exclusively: (a) a supply of the Product, (b) use of the technical data, intellectual property and other information relating to the Product, and (c) use of the Marks, together with certain distribution, marketing and sales rights with respect to the Product and all modifications thereof as more fully set forth herein while this agreement is in effect. E . Bluwood USA is willing to grant the rights desired by EcoBlu on the terms and conditions set forth in this Agreement.

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

Now, therefore , in consideration of the covenants contained herein and other good and valuable consideration, Bluwood USA and EcoBlu (each a " Party " and together the " Parties ") hereby agree to the following:

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1.1. " Information " means knowledge and data of any kind, whether or not in tangible form. " Confidential & Privileged Information " means Information other than Trade Secrets disclosed by one Party (the " Disclosing Party ") to the other Party (the " Receiving Party "), which the Disclosing Party does not wish to be made public and which is not required by law to be publicized, provided that the Disclosing Party exercises reasonable efforts to designate the Information as Confidential & Privileged Information, including by marking any such Information disclosed in tangible form to the Receiving Party marked with the legend, “Confidential & Privileged” Information of [Name of Disclosing Party]” or words of substantially similar import, and the specific written designation of any such information disclosed orally as “Confidential & Privileged” in a writing delivered to the Receiving Party at the time of disclosure or within ten (10) days thereafter. For purposes hereof, the existence and terms of this Agreement are Confidential & Privileged Information.

1.2. "Intellectual Property" means any and all now known or hereafter known tangible and intangible: (a) rights associated with works of authorship throughout the universe, including but not limited to copyrights, moral rights, and mask works; (b) trademark and trade name rights and similar rights; (c) Trade Secret rights; (d) patents, designs, algorithms and other industrial property rights; (e) all other intellectual and industrial property rights (of every kind and nature throughout the universe and however designated) (including logos, "rental" rights and rights to remuneration), whether arising by operation of law, contract, license, or otherwise; and, (f) all registrations, initial applications, renewals, extensions, continuations, divisions or reissues hereof now or hereafter in force (including any rights in any of the foregoing).

1.3. "Technology" means all available Information and Intellectual Property (other than Marks) relating to the Product for protecting wood framing, roof and floor truss, roof and floor decking and wall sheathing and all other above-ground contact Covered Structure wood framing component products from reasonable moisture, mold fungus growth, rot fungi decay and structural damage by common wood ingesting insects including termites, together with all additions improvements or extensions thereof.

1.4. "Product" means the product or products more specifically identified on Exhibit A annexed hereto and any improvements or modifications thereof now or hereafter developed, manufactured or sold by Bluwood USA in commercial quantities for the protection of Covered Structure wood component products while this Agreement is in effect.

1.5. "Trade Marks" means all trade names, trademarks, service marks, logos and other designations relating to the Product, as listed on Exhibit B annexed hereto and any other such trade names trademarks, service marks, logos or other designations used by Bluwood USA during the term of this Agreement.

1.6. “Protected Manufacturing Territory/Locations” means:

Territories in the United States and Mexico are as follows:

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California, Oregon, Washington State, Idaho, Utah, Montana, Wyoming, Nevada, Arizona, Texas, New Mexico and Hawaii. The entire country of Mexico

Territories of British Columbia and Alberta Canada will be exclusive to EcoBlu as follows: If EcoBlu is successful with the execution and setup of a company owned, affiliate, subsidiary or customer owned coating facility in either territory within 120 days of the date of execution of this agreement, EcoBlu will be granted the exclusive manufacturing (application) rights for that territory not including OEM accounts. For the purposes of this Agreement the successful setup of a coating facility is defined by having application equipment in place, operational and coating activities underway. If EcoBlu is not successful in securing a coating facility within the specified period then the territories of British Columbia and Alberta Canada will be limited to the below group of identifiable customers only: Jager, Nascor, Weyerhaeuser, Ainsworth, Luxor, AcuJoist/Acutruss, Igloo building products, All Span, Zytek, All-Fab building Components, Tolko.

The following group of customers may be added after 9 months at the sole discretion of BluwoodUSA if the above exclusivity requirements have not been satisfied: Canfor, West Fraser LVL, Taiga.

Non-exclusive OEM accounts throughout Canada: EcoBlu is given the non-exclusive right to pursue OEM accounts throughout all provinces in Canada provided they are not being actively pursued by BluwoodUSA or any other party that BluwoodUSA has authorized or has knowledge of. Information regarding clients who are regarded as actively pursued will be provided upon request.

1.7. "Trade Secrets" means technical and non-technical Information disclosed to the EcoBlu by or on behalf of Bluwood USA during the term of this Agreement or prior thereto that derives economic value, actual or potential, from not being generally known to other persons who could obtain economic value from the disclosure or use thereof, and that is the subject of efforts that are reasonable under the circumstances to maintain its secrecy 1.8. " Person" means any individual, partnership, joint venture, corporation, limited liability company or other corporate entity, association, syndicate, pool, union, trust estate, or government or agency or subdivision thereof, but it shall not include either Party to this Agreement.

1.9. "Product Warranty" means Bluwood USA Perfect Barrier System, Residential and Commercial "CoveredStructure" Warranty attached as Exhibit F to this Agreement. 1.10. "Equipment Application Technology" means all available Information and Intellectual Property (other than Marks) relating to and necessary to the application of the Product through application equipment and apparatus, approved for use and which has been specifically developed by EcoBlu.

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1.11. “Covered Structure” means any wood, roof and floor truss, roof/floor/wall sheathing products, and other structural wood framing component products utilized when building a residential or commercial structure that are protected from exterior weather conditions.

1.1 2 . “Derivative Products” means any wood, roof and floor truss, roof/floor/wall sheathing products and all other structural wood framing component products in which the Products has been applied.

1.13. “CSO” means Coating Service Only for application of the Product to covered structure wood component products.

is the sole owner of the sales, marketing and distribution rights for the Technology and the Marks and that EcoBlu shall have no right, title, or interest therein or thereto other than the rights to such Technology and Marks in the manner and to the extent prescribed in this Agreement or otherwise approved by Bluwood USA .

2.2. 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 inconsistent with this Section 2. No right or license shall be implied by estoppel or otherwise, other than the rights and licenses expressly granted in this Section 2.

(a) Grant . Subject to the provisions of this Section 2.3, Bluwood USA hereby grants to EcoBlu, for the term of this Agreement, certain rights within the Manufacturing Territory/Locations, to (i) to make, use, and sell a treatment service only for the application of the Product to Covered Structure wood component products; (ii) to make, use, sell and have sold Covered Structure wood components that have been protected with Product (iii) use the Marks in connection with the foregoing and (iv) to ship treated product in accordance with (i), (ii) and (iii) above into another territory which is not within the Manufacturing Territory/Locations of EcoBlu. During the term of this Agreement, the foregoing rights shall be for factory applied application of Product to wood, roof and floor trusses, roof/floor/wall sheathing products and all other structural wood framing component products utilized within a Covered Structure used in building residential and commercial buildings to protect wood component products against moisture, mold fungus growth, rot fungi decay and common wood destroying insects including termites while the Agreement is in effect.

(b) Initial Disclosure . Bluwood USA will deliver and communicate the Technology to EcoBlu as necessary to enable EcoBlu to exercise its rights under the Agreement set forth in Section 2.3(a) hereof. Bluwood USA will provide EcoBlu with sufficient technical support to

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ensure that EcoBlu may promptly commence use of the Product and Technology pursuant to the Agreement.

(c) Transfer of Rights . EcoBlu may not sell, assign, encu mber or transfer the rights granted in this Agreement and any or all other rights of the EcoBlu under this agreement, without Bluwood USA advanced written approval and acceptance of all terms and conditions of any sale, assignment or transfer by EcoBlu and acceptance of all terms and conditions of this Agreement by new EcoBlu. Notwithstanding the foregoing, EcoBlu may transfer rights under this Agreement to an affiliate of EcoBlu without prior written approval of Bluwood USA . Affiliate for this purpose shall be defined as a corporation or other entity controlled by EcoBlu or which entity is more than fifty percent (50%) under common control with EcoBlu.

(a) Protection of Bluwood USA Goodwill . In order to protect the goodwill of Bluwood USA and EcoBlu and to maintain uniform standards of operation to establish and promote broad recognition of Bluwood USA products and trademarks for the mutual benefit of Bluwood USA and EcoBlu. EcoBlu shall adhere to uniform and reasonable rules, regulations, methods, procedures, programs, policies, processes, requirements, and standards ("Quality Standards"), relating to the application, promotion, advertising and marketing of the Product as prescribed by Bluwood USA from time to time.

(b) Bluwood USA’s Approval . EcoBlu shall include the Marks and state Bluwood USA as trademark owner in all promotional and advertising materials relating to the Product.

(c) Quality Control . Bluwood USA shall provide EcoBlu with Bluwood USA Quality Standards for specifications, composition, and quality in respect of the use of the Technology as are in force from time to time. EcoBlu shall institute appropriate procedures and policies and will abide by in all the material respects to such Quality Standards therefore provided by Bluwood USA to EcoBlu, a copy of which is attached hereto as Exhibit E . EcoBlu shall permit inspections of its application process and materials to which Product are applied by a Bluwood USA and/or Bluwood USA ’s appointed third party inspection service without prior notice to EcoBlu, during normal business hours, at EcoBlu’s treatment facility(s) so that Bluwood USA may determine that the application of the Product performed by the EcoBlu meets such written standards of composition, specifications, and quality as specified by Bluwood USA . Bluwood USA is authorized by EcoBlu to secure a third-party inspection services from a party approved by Bluwood USA , the frequency of which shall be determined by Bluwood USA on a reasonable basis. EcoBlu shall pay up to $500.00 per month for such third party testing for each manufacturing location.

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(d) Bluwood USA ’s Rights to Change Marks and Trade Name . EcoBlu specifically agrees that if Bluwood USA is required by law to change the Marks (in whole or in part), Bluwood USA shall have the right to substitute or alter such mark or other identifying device as is legally necessary and such substituted or altered mark(s) be deemed Marks for purposes of the Agreement; (e) Notice of Infringement . EcoBlu will notify Bluwood USA promptly of any unauthorized use of any Marks by any entity or person which is not licensed or unauthorized by Bluwood USA which comes to the attention of EcoBlu. Bluwood USA will register and maintain the Marks and use commercially reasonable means to eliminate unauthorized use of or infringement of the Marks, including pursuing legal action as appropriate.

(f) It is hereby agreed that EcoBlu owns the trademarks EcoBlu, EcoBlu Products, BluJoist, BluBeam, BluTrim, BluLVL, BluRimBoard, BluPanel and will have the right to market the Products under these trademarks with the stipulation that reference “using Bluwood technology” is incorporated into all the sales literature, website, sales displays, and labeling for all products marketed by EcoBlu that are blue, or any shade of blue, in color.

(a) Obligation of Nondisclosure . Except as otherwise provided in this Agreement, EcoBlu agrees that it will with respect to the Confidential & Privileged Information and Trade Secrets (collectively, the " Proprietary Information ") of Bluwood USA : (i) protect the Confidential and proprietary nature of the Proprietary Information of Bluwood USA from disclosure to persons who are not employees of the EcoBlu; (ii) use great care in the selection and assignment of personnel who receive Bluwood USA ’s Proprietary Information and in that regard to restrict access to the Bluwood USA ’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 information; (iii) under no circumstances give any competitor of Bluwood USA , or other third party, direct access to Bluwood USA Proprietary Information without the prior written consent of Bluwood USA ; (iv) use the Proprietary Information of Bluwood USA solely for the purpose of properly and lawfully performing and exercising of the EcoBlu’s obligations and rights under this Agreement; and (v) not reproduce the Proprietary Information received from Bluwood USA 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 Bluwood USA may have included in or with the original disclosure.

(b) Exceptions . The EcoBlu shall not be obligated to maintain confidentiality in any: (i) Information which is known to EcoBlu before disclosure by Bluwood USA , so long as such knowledge is documented by written or other tangible evidence; (ii) Information which is available to the public independently of EcoBlu; (iii) Information which is developed independently by employees of EcoBlu who did not have access to the Bluwood US