Exhibit 10.26
EXCLUSIVE TECHNOLOGY RIGHTS AGREEMENT
THIS AGREEMENT dated for reference the 21st
day of September 2005.
BETWEEN:
WILLIAM BAUMGARTNER AND RICHARD MCDIARMID, of
Suite 1880, 1066 West Hastings Street Vancouver,
British Columbia Canada, V6E 3X1
(Hereinafter referred to as "Inventors")
OF THE FIRST PART
AND:
ESSENTIAL INNOVATIONS TECHNOLOGY CORP.,
A company duly incorporated under the laws of the
State of Nevada, and having its principal offices at,
114 West Magnolia Street, Suite 400-142 Bellingham,
WA 98225 USA
(Hereinafter referred to as "Essential")
OF THE SECOND PART
WHEREAS:
A. Inventors have filed a Provisional
Patent Application with the United States
Patent and Trademark Office in regard to an
Electro-Acoustic Immersion Heater or
"Heating Technology" (herein the
"Technology"). The Inventors have developed
such patent-pending method of creating
steam, heat and/or power with application
directly relating not only to the Essential
Innovations line of proprietary
Geoexchange products and for other heating,
domestic hot water production and
cooling applications. The technology
specifically relates to a new method of
heating liquids using an electro-acoustic
immersion heater concept for rapid
heating of water and/or production of steam
using an energy movement within the
device that appears to be sonic or acoustic
in nature.
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AND WHEREAS:
B. Essential Innovations wishes to enter
into a sole exclusive manufacturing and
distribution and applications agreement
with the Inventors for the exclusive
rights to the use of their patent-pending
technology for use within the field of
Geothermal Heating and Cooling and any
other HVAC related application in the
Territory (as hereinafter defined).
AND FINALLY WHEREAS:
C. Inventors have agreed to sell the
exclusive rights for the utilization,
manufacturing, and distribution of the
Technology for use within the Geothermal
Heating and Cooling and any other HVAC
related application throughout the
Territory, on the terms and conditions
contained herein;
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of
the
mutual covenants, terms and conditions
contained herein, the parties covenant
and agree with each other as follows:
ARTICLE I - Definitions
1. In
this Agreement the following words, phrases and expressions
shall have the following meanings:
(a) "Heating Technology" means a process for, inter alia, an
immersion heating application and more specifically it relates
to a new method
of heating liquids using an electro-acoustic
immersion heater concept for a rapid and highly efficient
heating of water and/or the production of steam using an
energy movement within the device that appears to be sonic or
acoustic in nature, and for which a Provisional patent
Application has been filed in the United States Patent and
Trademark Office, a true copy of which application is attached
hereto as Schedule "A", and:
(i) any patent
or patents now or hereafter granted in
regard thereto, including any and all renewals,
divisions, continuations, continuations-in-part,
reissues, extensions or additions of or to the
aforesaid patent; and
(ii)
all designs, improvements, discoveries, concepts,
ideas,
knowledge and inventions, related to above
technology, whether or not capable of industrial or
intellectual property protection under any applicable
legislation, made or conceived or reduced to practice
by the Inventor, his employees, agents or independent
contractors or consultants retained by him;
b) "Trade-Mark" means the trademark or trademarks of all
products manufactured by Essential Innovations and its
affiliates.
c)"Territory" means "ALL COUNTRIES OF THE WORLD"
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e) "Parties," means Essential Innovations Technology Corp.,
its subsidiaries and/or affiliates, and William Baumgartner
and Richard McDiarmid, "the Inventors"
f) "Gross Sales Proceeds" means the actual gross proceeds
received by Essential from third parties in the manufacturing,
distribution, sale, licensing, franchising or exploitation of
the Technology less any administrative costs, direct costs or
marketing costs or deductions in regard thereto; and
g) "Know-how" means the technical information, knowledge and
expertise concerning the design, construction, operation and
use of the Technology, and all feasibility studies, design
engineering, construction drawings and operational knowledge
and conditions, plus all knowledge and information in regard
to the marketing of products derived from the Technology.
ARTICLE 2 -EXCLUSIVE TECHNOLOGY RIGHTS COMPENSATION SCHEDULE
(ROYALTIES, STOCK/OPTIONS AND CASH)
a) Inventors hereby grant exclusive manufacturing and distribution
and
applications agreement to Essential Innovations for the
exclusive
rights to the use of the Inventors patent-pending technology for
use
within Geothermal Heating and Cooling and any other HVAC
related
application throughout the Territory (as hereinafter defined)
b) The parties shall co-operate in the development and marketing of
the
Technology and in such regard shall inform each other of all
Know-how.
c) In consideration of the transfer of worldwide rights for the
specific application, the Inventors shall be entitled to receive,
and
Essential shall pay to them, a royalty of two and one half
percent
(2.5%) of Gross Sales Proceeds (the "Royalty") from every unit of
the
Technology ever produced or sold either individually or as part of
an
Essential piece of equipment for an indefinite period of time,
such
royalty based on the selling price of the technology itself
whether
sold individually or as part of another piece of equipment.
(i) Payment of
Royalty: The Royalty shall be calculated
on a calendar quarter basis and paid, without set-off
or counterclaim, for each quarter within 30 days of
the end of such quarter. Any amounts not paid within
30 days shall bear interest, calculated from the end
of the quarter for which such payment was due, at the
prime lending rate charged by the Royal Bank of
Canada to its most credit worthy customers plus two
percent (2%). To the extent that the revenue received
by
Essential for the manufacturing, distribution,
sale, licensing, franchising or exploitation of the
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Technology or other applications of the technology is
in a form other than the lawful currency of the
United States of America, the Royalty shall be paid
to Inventors in the lawful currency of the United
States of America based on published foreign exchange
rates (as constituted on the last day of the
applicable quarter) reasonably designated by
Inventors. Essential shall be responsible for
maintaining books and records which accurately
document its revenues and the Royalty.
d) Payment of Stock/Options: In relation specifically to the
Technology
application for Geothermal Heating and Cooling and any other
HVAC
related application Essential Innovations Technology Corp. will
grant
to the inventors on signing:
(i) 50,000
fully paid and non-assessable common shares of
"ESIV" (public trading symbol) of Essential
Innovations Technology Corp., and 50,000 options of
EITC @ $.75/share with a 5 Year exercise date
(ii)
Pursuant to continued R&D on the part of Essential
and it being proved that the Technology can be
applied within the field of Geothermal Heating and
Cooling and any other HVAC related application as
Essential believes, then Essential will grant to the
inventors an additional:
450,000 fully paid and non-assessable shares of
"ESIV", and an additional 450,000 options of ESIV
priced @ $0.75/share with a 5 Year exercise date
a) Essential agrees here to a period of a
maximum of 12 months from the date of
signing in order to complete their required
R & D; if the technology is unsuccessful,
then no further shares or options are
issuable.
e) Report of Technology Sales: Within 30 days following the close
of
the first calendar quarter in which there are any revenues
generated
from the Technology, Essential shall provide Inventors with a
written
report showing the sales in such quarter and the amount of
Royalty
payable with respect thereto, certified by the accountant for
Essential. Thereafter, within 30 days following the close of
each
calendar quarter, Essential shall provide Inventors with a
written
report showing the amount of sales in such quarter and the amount
of
Royalty payable with respect thereto.
f) Examination of Books and Records: Upon the written request
of
Inventors and, except as otherwise provided below, at
Inventors'
expense, Essential shall allow and make available on an annual
basis
its books and records to be examined and audited by a
registered
auditing firm for the purpose of determining compliance with
Royalty
obligations under this Agreement. If such audit discloses any
discrepancy in the amount of Royalty paid, the appropriate
adjustment
shall be made immediately thereafter. To the extent of an
overpayment,
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the amount due from Inventors shall be deducted from future
payments.
In the event that any such examination or audit shall determine
that
the Royalty actually
paid for any period was less than 95% of the
amount properly payable, or was greater than the amount that
should
have been paid, Essentia
