AGREEMENT BETWEEN OWNER AND DESIGN-BUILDER

Design Contract

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ESSENTIAL INNOVATIONS TECHNOLOGY CORP | WAKEFIELD BEACH DEVELOPMENTS LTD

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Title: AGREEMENT BETWEEN OWNER AND DESIGN-BUILDER
Date: 2/13/2007

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AGREEMENT BETWEEN OWNER AND DESIGN-BUILDER

For use when a stipulated price is the basis of payment.

This Agreement made as of the 17th day of January in the year 2006

by and between

WAKEFIELD BEACH DEVELOPMENTS LTD.

hereinafter called the “Owner”

and

ESSENTIAL INNOVATIONS CORPORATION

hereinafter called the “Design-Builder.”

The Owner and the Design-Builder agree as follows:

ARTICLE A-1 THE WORK

The Design-Builder shall:

1.1

perform the Work required by the Contract Documents for the Geoexchange Heating Ventilation and Air Conditioning System located at Wakefield Beach Homes for which the Agreement has been signed by the parties, and for which [to be determined] is acting as, and is hereinafter called, the “Consultant,”

1.2	do and fulfil everything indicated by the Contract Documents, and

1.3	commence the Work by the 18th day of January in the year 2006 and, subject to adjustment in Contract Time as provided for in the Contract Documents, attain Substantial Performance of the Work:

1st day of March in the year 2007; or

within __ weeks after receipt of all approvals from authorities having jurisdiction.

ARTICLE A-2 AGREEMENTS AND AMENDMENTS

2.1	The Contract as described in Article A-3 of the Agreement - CONTRACT DOCUMENTS supersedes all prior negotiations, representations, or agreements, either written or oral, relating in any manner to the Work.

2.2	The Contract may be amended only as provided in the Contract Documents.

ARTICLE A-3 CONTRACT DOCUMENTS

3.1	The following are the Contract Documents referred to in Article A-1 of the Agreement - THE WORK:

Agreement between Owner and Design-Builder

Definitions of the Design-Build Stipulated Price Contract

General Conditions of the Design-Build Stipulated Price Contract

Owner’s Statement of Requirements

Construction Documents, after they have been accepted by the Owner

Supplementary Conditions with Schedules A - E - Scope of Work and warranties

Geoexchange Operating Lease

ARTICLE A-4 CONTRACT PRICE

4.1	The Contract Price, which excludes Value Added Taxes, is: Four Hundred Seventy-Nine Thousand Nine Hundred Eighteen/100 dollars $479,918.00.

4.2	Value Added Taxes (of 7%) payable by the Owner to the Design-Builder are: Thirty Three Thousand Five Hundred Ninety Four 26/100 dollars $33,594.26.

4.3	Total amount payable by the Owner to the Design-Builder for the Work is: Five Hundred Thirteen Thousand Five Hundred Twelve 26/100 dollars $513,512.26.

4.4	All amounts are in Canadian funds.

4.5	These amounts shall be subject to adjustments as provided in the Contract Documents.

ARTICLE A-5 PAYMENT

5.1	Subject to the provisions of the Contract Documents, and in accordance with legislation and statutory regulations respecting holdback percentages and, where such legislation or regulations do not exist or apply, subject to a holdback of ten percent (10%), the Owner shall:

make progress payments to the Design-Builder on account of the Contract Price when due in the amount certified by the Consultant who is acting as, and is hereinafter called, the “Payment Certifier”, together with such Value Added Taxes as may be applicable to such payment, and

upon Substantial Performance of the Work pay to the Design-Builder the unpaid balance of the holdback amount when due together with such Value Added Taxes as may be applicable to such payment, and

upon the issuance of the final certificate for payment, pay to the Design-Builder the unpaid balance of the Contract Price when due together with such Value Added Taxes as may be applicable to such payment.

5.2	In the event of loss or damage occurring where payment becomes due under the property and boiler and machinery insurance policies, payments shall be made to the Design-Builder in accordance with the provisions of GC 11.1 - INSURANCE.

5.3

Interest

Should either party fail to make payments as they become due under the terms of the Contract or in an award by arbitration or court, interest at three percent (3 %) per annum above the prime rate on such unpaid amounts shall also become due and payable until payment. Such interest shall be compounded on a monthly basis. The prime rate shall be the lowest rate of interest quoted by the Royal Bank of Canada for prime business loans.

Interest shall apply at the rate and in the manner prescribed by paragraph 5.3.1 of this Article on the amount of any claim advanced and for which the Design-Builder is thereafter entitled to payment, either pursuant to Part S of the General Conditions -

DISPUTE RESOLUTION, or otherwise, from the date the amount would have been due and payable under the Contract, had it not been in dispute, until the date it is paid.

ARTICLE A-6 RECEIPT OF AND ADDRESSES FOR NOTICES

6.1

Notices in writing between the parties or between them and the Consultant shall be considered to have been received by the addressee on the date of delivery if delivered to the individual, or to a member of the firm, or to an officer of the corporation for whom they are intended by hand or by registered post; or if sent by regular post, to have been delivered within 5 Working Days of the date of mailing when addressed as follows:

The Owner at	6529 Sunshine Coast Highway, Sechelt
	British Columbia, VON 3A0

The Design-Builder at	#101 - 5219 192nd Street, Cloverdale
	British Columbia, V35 4P6

ARTICLE A-7 LANGUAGE OF THE CONTRACT

7.1	When the Contract Documents are prepared in both the English and French languages, it is agreed that in the event of any apparent discrepancy between the English and French versions, the English / French * language shall prevail.

7.2	This Agreement is drawn in English at the request of the parties hereto. La présente convention est redigée en anglais a la demande des parties.

ARTICLE A-8 SUCCESSION

8.1	The Contract shall enure to the benefit of and be binding upon the parties hereto, their respective heirs, legal representatives, successors, and permitted assigns.

In witness whereof the parties hereto have executed this Agreement and by the hands of their duly authorized representatives.

SIGNED AND DELIVERED
in the presence of:

Owner
WAKEFIELD BEACH DEVELOPMENTS LTD.
/s/ Kenneth R. Burgess	WITNESS
KENNETH R. BURGESS, Solicitor

Design-Builder
ESSENTIAL INNOVATIONS CORPORATION
/s/ S. Wuschke	WITNESS
STEVE WUSCHKE

DEFINITIONS OF THE DESIGN-BUILD STIPULATED PRICE CONTRACT

The following Definitions shall apply to all Contract Documents.

1.	Change Directive

A Change Directive is a written instruction signed by the Owner directing a change in the Work within the general scope of the Contract Documents.

2.	Change Order

A Change Order is a written amendment to the Contract signed by the Owner and the Design-Builder stating their agreement upon:

- a change in the Work;

- an amendment to the Owner’s Statement of Requirements, if any;

- the method of adjustment or the amount of the adjustment in the Contract Price, if any; and

- the extent of the adjustment in the Contract Time, if any.

3.	Construction

Construction means the total construction and related services required by the Contract Documents.

4.	Construction Documents

The Construction Documents consist of the drawings and specifications that are prepared based on the Contract Documents by or on behalf of the Design-Builder and that are accepted and signed by the Owner and the Design-Builder after execution of the Agreement, as meeting the general functional intent of the Contract Documents.

5.	Consultant

The Consultant is the person or entity identified as such in the Agreement. The term Consultant means the Architect, the Engineer, or entity licensed to practice in the province or territory of the Place of the Work and engaged by the Design-Builder to provide the Consultants Design Services and to coordinate the provision of the Design Services of all other consultants employed by the Design-Builder. The term Consultant means the Consultant or the Consultant’s authorized representative as designated by the Design-Builder to the Owner in writing.

6.	Contract

The Contract is the undertaking by the parties to perform their respective duties, responsibilities, and obligations as prescribed in the Contract Documents and represents the entire agreement between the parties.

7.	Contract Documents

The Contract Documents consist of those documents listed in Article A-3 of the Agreement - CONTRACT DOCUMENTS and amendments thereto agreed upon between the parties.

8.	Contract Price

The Contract Price is the amount stipulated in Article A-4 of the Agreement - CONTRACT PRICE.

9.	Contract Time

The Contract Time is the time stipulated in paragraph 1.3 of Article A-l of the Agreement - THE WORK from commencement of the Work to Substantial Performance of the Work.

10.

Design-Builder

The Design-Builder is the person or entity identified as such in the Agreement. The term Design-Builder means the Design-Builder or the Design-Builder’s authorized representative as designated by the Design-Builder to the Owner in writing.

11.

Design Services

Design Services means the professional services for the design and construction administration performed by the Consultant or other consultants under the Contract.

12.

Owner

The Owner is the person or entity identified as such in the Agreement. The term Owner means the Owner or the Owner’s authorized agent or representative as designated by the Owner to the Design-Builder in writing.

13	Owner’s Statement of Requirements

The Owner’s Statement of Requirements consists of the site information and program requirements provided by the Owner and as listed in Article A-3 of the Agreement - CONTRACT DOCUMENTS and amendments thereto agreed upon between the parties.

14.

Payment Certifier

The Payment Certifier is the person or entity identified as such in the Agreement responsible for the issuance of certificates for payment. The Payment Certifier may be the Consultant, Owner, or any knowledgeable third party, as designated by the Owner.

15.

Place of the Work

The Place of the Work is the designated site or location of the Construction identified in Article A-1 of the Agreement - THE WORK

16.

Product

Product or Products means material, machinery, equipment, and fixtures forming part of the Work, but does not include machinery and equipment used to prepare, fabricate, convey, or erect the Work; which are referred to as construction machinery and equipment.

17.

Project

The Project means the Owner’s enterprise of which the Work may be the whole or a part.

18.

Provide

Provide means to supply and install.

19.

Subcontractor

A Subcontractor is a person or entity, other than the Consultant or other consultants, having a direct contract with the Design-Builder to perform a part or parts of the Work, or to supply Products worked to a special design for the Work.

20.

Substantial Performance of the Work

Substantial Performance of the Work is as defined in the lien legislation applicable to the Place of the Work. If such legislation is not in force or does not contain such definition, or if the Work is governed by the Civil Code of Quebec, Substantial Performance of the Work shall have been reached when the Work is ready for use or is being used for the purpose intended and is so certified by the Consultant.

21.

Supplier

A Supplier is a person or entity having a direct contract with the Design-Builder to supply Products not worked to a special design for the Work.

22.

Value Added Taxes

Value Added Taxes means such sum as shall be levied upon the Contract Price by the Federal or any Provincial or Territorial Government and is computed as a percentage of the Contract Price and includes the Goods and Services Tax, the Quebec Sales Tax, Harmonized Sales Taxes, and any similar tax, the payment or collection of which, by the legislation imposing such tax, is an obligation of the Design-Builder.

23.

Work

The Work means the Design Services and Construction required by the Contract.

24.

Working Day

Working Day means a day other than a Saturday, Sunday, or a holiday which is observed by the construction industry in the area of the Place of the Work.

GENERAL CONDITIONS OF THE DESIGN-BUILD STIPULATED PRICE CONTRACT

PART 1 GENERAL PROVISIONS

GC 1.1 CONTRACT DOCUMENTS

1.1.1

The intent of the Contract Documents is to include the Design Services, Construction, and other services necessary for the performance of the Work in accordance with these documents. It is not intended, however, that the Design-Builder shall supply products or perform work not consistent with, not covered by, or not properly inferable from the Contract Documents.

1.1.2

Nothing contained in the Contract Documents shall create any contractual relationship between the Owner and the Consultant, an other consultant, a Subcontractor, a Supplier, or their agent, employee, or any other person performing any of the Work.

1.1.3

If the Payment Certifier is not the Consultant or the Owner, the Owner shall, if requested in writing by the Design- Builder, disclose the contractual relationship between the Owner and the Payment Certifier by provision of a copy of the contract with the Payment Certifier to the Design-Builder.

1.1.4

The Contract Documents are complementary, and what is required by any one shall be as binding as if required by all.

1.1.5

Words and abbreviations which have well known technical or trade meanings are used in the Contract Documents in accordance with such recognized meanings.

1.1.6

References in the Contract Documents to the singular shall be considered to include the plural as the context requires.

1.1.7

The specifications are that portion of the Contract Documents, wherever located and whenever issued, consisting of the written requirements and standards for Products, systems, workmanship, and the services necessary for the performance of the Construction.

1.1.8

The drawings are the graphic and pictorial portions of the Contract Documents, wherever located and whenever issued, showing the design, location, and dimensions of the Construction, generally including plans, elevations, sections, details, schedules, and diagrams.

1.1.9

Neither the organization of the specifications into divisions, sections, and parts, nor the arrangement of drawings shall control the Design-Builder in dividing the work among Subcontractors and Suppliers or in establishing the extent of the work to be performed by a trade.

1.1.10

If there is a conflict within the Contract Documents:

the order of priority of documents, from highest to lowest, shall be

- the Agreement between the Owner and the Design-Builder,

- the Definitions,

- Supplementary Conditions,

- the General Conditions,

- the Owner’s Statement of Requirements,

- the Construction Documents:

• Division 1 of the specifications,

• Divisions 2 through 16 of the specifications,

• material and finishing schedules,

• drawings.

drawings of larger scale shall govern over those of smaller scale of the same date.

dimensions shown on drawings shall govern over dimensions scaled from drawings.

later dated documents shall govern over earlier documents of the same type.