JOINT DEVELOPMENT AGREEMENT

JOINT DEVELOPMENT AGREEMENT

This Joint Development Agreement (“ Agreement ”) is entered into as of September 6, 2007 (the “ Effective Date ”), by and between Essential Innovations Technology Corp,. a corporation formed and existing under the laws of the State of Nevada, USA (“ ESIV ”), [Dragonfly Capital, a North Carolina Corporation (“ Dragonfly ”)], and Optimira Energy Canada, Ltd., a corporation formed and existing under the laws of the Province of Ontario, Canada (“ Optimira ”, and along with ESIV and Dragonfly being sometimes referred to individually as a “ Party ” and collectively as the “ Parties ”).

RECITALS

The Parties desire to form a new, special purpose entity for the purpose of constructing, financing, and leasing geothermal projects on the terms set forth herein.

ESIV and Optimira entered into a Summary of Terms and Conditions, dated June 8, 2007, which described, among other things, their expectations concerning the formation of the special purpose entity and their expected rights and obligations in Projects selected for joint development.

NOW, THEREFORE, in consideration of the mutual covenants and agreements in this Agreement and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the Parties agree as follows:

ARTICLE 1

GENERAL

1.1         Definitions . Capitalized terms used in this Agreement without other definition shall, unless expressly stated otherwise, have the meanings specified in this Section 1.1. The singular shall include the plural and the masculine shall include the feminine and neuter, and vice versa. “Includes” or “including” shall mean “including, without limitation.”

“ Affiliate ” means any Person that directly or indirectly controls, is controlled by, or is under common control with, such Person.

“ Agreement ” means this Agreement, as amended, modified or supplemented from time to time.

“ Confidential Information ” has the meaning set forth in Section 6.1.

“ Discloser ” has the meaning set forth in Section 6.1.

“ Indemnified Party ” has the meaning set forth in Section 4.1.

“ Indemnifying Party ” has the meaning set forth in Section 4.1.

“ Indemnity Claim ” has the meaning set forth in Section 4.3(a).

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“ Joint Venture ” has the meaning set forth in the Recitals.

“ [JD Entity] ” has the meaning set forth in Section 1.2.

“ Negotiating Period ” has the meaning set forth in Section 5.5(c).

“ Offered Interest ” has the meaning set forth in Section 5.5(a).

“ Party ” and “ Parties ” have the meaning set forth in the Preamble.

“ Percentage Interest ” has the meaning set forth in Section 2.1.

“ Person ” means any individual, corporation, partnership, firm, joint venture, association, limited liability company, joint stock company, trust, unincorporated organization, estate or governmental agency.

“ Project ” has the meaning given in Section 1.4(a).

“ Prospect ” has the meaning given in Section 1.6.

“ Purposes ” has the meaning given in Section 1.4.

“ Recipient ” has the meaning set forth in Section 6.1.

“ Representatives ” has the meaning given in Section 6.2.

“ Seller ” has the meaning set forth in Section 5.5(a).

“ Seller’s Notice ” has the meaning set forth in Section 5.5(a).

“ Shareholders’ Agreement ” has the meaning set forth in Section 1.2.

1.2         Contemplated Special Purpose Entity . The Parties shall, on or before September 17, 2007 (i) form a special purpose corporate entity (or such other form as the Parties may agree) in the Province of Ontario, Canada to be named _(To be determined)______, or such other name as the Parties shall agree (“ [JD Entity] ”), (ii) enter into a comprehensive shareholders’ agreement (the “ Shareholders’ Agreement ”) in connection therewith setting forth the respective rights and obligations of the Parties in greater detail; and (iii) enter into such other agreements as may be deemed necessary by the Parties to effectuate the purposes of [JD Entity]. [Note: Final form of the JD Entity to be determined, and upon such determination, the final form of the Shareholders’ Agreement can be determined.]

1.3         Principal Place of Business . [JD Entity’s] principal office and place of business shall be Ontario and may be changed from time to time, and other offices and places of business may be established from time to time by mutual agreement of the Parties.

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1.4 Purposes . The purposes of the [JD Entity] (“ Purposes ”) are:

(a)       to develop, arrange financing for, permit, and construct geothermal loop heat pumps systems for the projects set forth on Exhibit A hereto, as well as such other geothermal projects as may be identified by the Parties (the “ Projects ”); and

(b)       otherwise do all things reasonably necessary or advisable in connection with the above.

1.5         Filings; Licensing . The Parties shall cause to be executed, filed and published all such certificates, notices, statements or other instruments, and amendments thereto under the laws of the Province of Ontario and other applicable jurisdictions as the Parties deem necessary or advisable for the operation and licensing of the [JD Entity] in order to fulfill the Purposes.

1.6         Exclusivity . The Parties intend that [JD Entity] be the primary vehicle for the development of geothermal loop projects if the type listed on Exhibit A. Towards that end ESIV agrees that prior to the developing any potential geothermal loop heat pump projects potentially available to ESIV (a “ Prospect ”), it will provide a written description of such Prospect to Optimira and the Company offering such Prospect to the Company for potential development and financing as a Project. Optimira shall have an initial fourteen (14) day period in which to evaluate the Prospect, and advise ESIV in writing whether Optimira is interested in pursuing such Prospect. If Optimira advises ESIV that it is interested in pursuing the Prospect, Optimira shall have an additional period of sixty (60) days to complete a due diligence evaluation of the Prospect and to negotiate definitive agreements with respect to the development and financing of such Prospect. During the initial fourteen (14) day period and, if Optimira advises ESIV that it is interested in pursuing the Prospect, during the additional sixty (60) day due diligence period, ESIV will not, and will cause its Affiliates, officers, directors, employees, agents or representatives not to, directly or indirectly, solicit, initiate, or encourage the submission of, or participate in discussions or negotiations with respect to, or consummate, proposals or offers from, or enter into any agreement or understanding with any Person regarding arrangements or other contracts that could conflict with Optimira’s and the Company’s exclusive right to development and finance the Prospect with ESIV. If Optimira does not advise ESIV within the initial (14) day period that it is interested in pursuing the Prospect, or if during the additional sixty (60) day due diligence period Optimira advises ESIV that, as a result of such due diligence, it will not continue the development and finance of the Prospect, or the Parties do not enter into definitive agreements with respect to the development and financing of such Prospect within such additional (60) day period, then ESIV shall be free to develop and finance such Prospect without the Company or Optimira.

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ARTICLE 2

PARTICIPATION

(a)       The interests of the Parties in [JD Entity], and any profits and their respective shares of any losses and liabilities that may arise in respect thereof, and their interest in all property and equipment acquired and all money received by [JD Entity] (“ Percentage Interests ”), shall initially be as follows:

(b)       Upon the commencement of construction of each Project, which shall be defined as the earlier to occur of the issuance of a notice to proceed from the owner of the Project and the mobilization by [JD Entity] or ESIV, under a subcontract to [JD Entity], Optimira’s Percentage Interest shall be increased by seven percent (7.0%), and ESIV’s Percentage Interest shall be decreased by seven percent (7.0%), provided, that Optimira’s Percentage Interest shall not be increased above seventy-one percent (71%).

2.2         Expenses . Until such time as [JD Entity] has cash from operations or project financings available to pay expenses, each Party shall be responsible for the expenses incurred by such Party in fulfilling its obligations hereunder.

ARTICLE 3

DIVISION OF RESPONSIBILITY AND MANAGEMENT

(a)       Forming [JD Entity] and drafting corporate governance documentation for [JD Entity];

(b)       Providing to [JD Entity] the lead management for each Project undertaken by [JD Entity];

(d)       Subject to Section 3.4, developing, structuring, arranging for, and administering third party financing for the construction and operation of the Projects;

(f)        Providing asset management, including the preparation of appropriate legal documentation and adherence to regulatory or utility laws if and where necessary and the collection of payments by [JD Entity] from the end users for the geothermal loop-field for each completed Project.

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3.2 ESIV Responsibilities . ESIV shall be primarily responsible for:

(b)       Providing drilling, HDPE pipe, materials and labor, ground loop tie-in, flushing and purging and system charging, and contract and project management for the complete geo-field portion of each geothermal loop-field infrastructure required for each Project on a turnkey, fixed price and fixed schedule basis pursuant to an engineering, procurement and construction (EPC) contract mutually acceptable to ESIV and Optimira (acting for [JD Entity]); and

(c)       Provide preferential pricing to [JD Entity] on heat pumps for long term lease/financing by [JD Entity] of such equipment to end-users on such Projects as Optimira has determined that such installation lease/financing by [JD Entity] is in the best interest of lease/financing by [JD Entity].

3.3         Mutual Responsibilities . In order to achieve the purposes of this Agreement, each Party agrees to:

(a)       Use its reasonable efforts to identify and resolve Project problems; and

(b)       Keep the other Parties informed as to its activities regarding the Project, and, subject to Article 6, supply the other Parties with such information as they may reasonably request.

3.4         Conditions Precedent to Project Financings . Optimira’s obligation to develop, arrange, and close financing for any Project shall, with respect to such Project, be subject to the satisfaction or waiver by Optimira of the following conditions precedent:

(a)       The satisfactory completion, in Optimira’s sole discretion, of financial, technical and legal due diligence with respect to such Project, which due diligence may include, without limitation, (i) a satisfactory environmental audit of the Project site disclosing no material potential liabilities related to or arising out of the presence of hazardous materials in, or environmental contamination of, the Project site; (ii) reviews and analyses with respect to Project costs and schedule, labor and employment relations, including without limitation union and collective bargaining agreements, pensions and benefit matters, and compliance with federal and state laws; and (iii) reviews, inspections and analyses of such other contractual, physical and legal matters as Optimira, in its sole discretion, deems relevant;

(b)       [JD Entity] obtaining all governmental approvals, authorizations, licenses, consents and permits necessary or appropriate, in Optimira’s sole judgment, for the construction, ownership, operation and maintenance, as applicable, of the Project;

(c)       [JD Entity] obtaining consents necessary or appropriate, in Optimira’s sole judgment, for the construction, ownership, operation and maintenance, as applicable, of the Project;

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(d)       The receipt by Optimira of an opinion of counsel, satisfactory to Optimira, that the construction, ownership, operation and maintenance of the Project will not result in Optimira, or any Affiliate of Optimira, being regulated as a public utility or holding company; and

(e)       Such other Project specific conditions precedent as Optimira shall determine, in its reasonable discretion, are required for individual Projects.

3.5         Limitations on Authority . Except as approved in writing by Optimira and ESIV, no Party shall have any authority to bind [JD Entity] to any obligation or commitment (contingent or otherwise), and any agreement or undertaking entered into by any Party without the prior approval, or subsequent ratification by, Optimira and ESIV shall be the sole obligation of such Party. Each Party agrees that, without the prior written approval of Optimira and ESIV, it will not enter into any agreement or undertaking in the name of or on behalf of [JD Entity] or any other Party or hold itself out to any third party as having any authority to bind [JD Entity] or any other Party.

3.6         Management. No action will be taken on behalf of [JD Entity] without the prior written approval of Stephen Clevett and Jason McDiarmid.

3.7         Compensation and Reimbursement . Except as set forth in agreement between [JD Entity] and such Person, no Party or Affiliate of a Party shall be entitled to any fees or compensation from [JD Entity] for services rendered to [JD Entity] in connection with the activities of [JD Entity] or to reimbursement for costs or expenses incurred on behalf of [JD Entity] without the approval of Optimira and ESIV.

ARTICLE 4

INDEMNIFICATION; LIMITATION OF LIABILITY

4.1         General Indemnification. Each Party (each an “ Indemnifying Party ”), shall indemnify, defend and hold harmless the other Parties, each of their successors and permitted assigns, and each of their respective directors, officers, employees, agents and affiliates (each an “ Indemnified Party ”) against all losses, claims, damages, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), to the extent based upon, resulting from or arising out of (i) any inaccuracy or breach of such Indemnifying Party’s representations or warranties set forth in this Agreement, (ii) the breach by such Indemnifying Party of, or the failure by such Indemnifying Party to observe, any of its covenants or other agreements contained in this Agreement, or (iii) the negligence, recklessness or willful misconduct of the Indemnifying Party.

4.2         Environmental Indemnification .    Each Indemnifying Party shall indemnify, defend and hold harmless the Indemnified Parties against all losses, claims, damages, actions, suits, proceedings, demands, assessments, adjustments, costs and expenses (including specifically, but without limitation, reasonable attorneys’ fees and expenses of investigation), to the extent based upon, resulting from or arising out of the release by such Indemnifying Party of any hazardous materials in connection with a Project.

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4.3 Procedure for Indemnification with Respect to Third-Party Claims .

(a)        Notice of Claim . If any legal proceedings shall be instituted or any claim or demand shall be asserted by any third party in respect of which indemnification may be sought by any Indemnified Party under this Article 4, such Indemnified Party shall cause written notice of such legal proceedings or the assertion of such claim or demand (the “ Indemnity Claim ”) to be forwarded to the Indemnifying Party as promptly as practicable; provided, that the failure of an Indemnified Party to give timely notice shall not affect its rights to indemnification under this Article 4 except to the extent that the Indemnifying Party is materially prejudiced thereby.

(b)        Conduct of Claim . The Indemnified Party shall be entitled, at the sole expense and liability of the Indemnifying Party, to exercise full control of the defense, compromise or settlement of any such Indemnity Claim, action or proceeding unless the Indemnifying Party, within a reasonable time after the giving of such notice by the Indemnified Party, shall notify the Indemnified Party in writing of such Indemnifying Party’s intention to assume the defense, compromise or settlement of any such Indemnity Claim, action or proceeding in accordance herewith. After notice from the Indemnifying Party to such Indemnified Party of its election so to assume the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party for any legal or other expenses, except as provided below and except for the reasonable costs of investigation subsequently incurred by such Indemnified Party in connection with the defense thereof. The Indemnified Party shall have the right to employ its counsel in any such action, but the fees and expenses of such counsel shall be at the expense of the Indemnified Party unless the Indemnified Party shall have reasonably concluded that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party in the conduct of the defense of such action (in which case the Indemnifying Party shall not have the right to direct the defense of such Indemnity Claim, action or proceeding on behalf of the Indemnified Party) in which case the fees and expenses of such separate counsel (but not more than one separate firm for all Indemnified Parties as to any single action or proceeding in any one jurisdiction) shall be borne by the Indemnifying Party. The Indemnifying Party shall not settle or compromise any such Indemnity Claim, action or proceeding in which any relief other than the payment of money damages is sought against any Indemnified Party unless the Indemnified Party consents in writing to such compromise or settlement, which consent shall not be unreasonably withheld or delayed, and the Indemnifying Party shall not be obligated to indemnify an Indemnified Party hereunder for any settlement entered into or judgment consented to without the Indemnifying Party’s prior written consent, which consent shall not be unreasonably withheld or delayed.

(c)        Access to Information . If any claim is made by a third party against an Indemnified Party, the Indemnified Party shall use commercially reasonable efforts to make available to the Indemnifying Party those partners, members, officers and employees whose assistance, testimony or presence is necessary to assist the Indemnifying Party in evaluating and in defending such claims; provided, that any such access shall be conducted in such a manner as not to interfere unreasonably with the operations of the business of the Indemnified Party, and any out of pocket expenses incurred by any Indemnified Party in connection therewith shall be included in such Indemnified Party’s Losses.

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4.4         Limita