Exhibit 10.26
EXCLUSIVE TECHNOLOGY RIGHTS AGREEMENT
THIS AGREEMENT dated for reference the 21st day of September 2005.
BETWEEN: XXXXXXX XXXXXXXXXXX AND XXXXXXX XXXXXXXXX, of
Suite 1880, 0000 Xxxx Xxxxxxxx Xxxxxx Xxxxxxxxx,
Xxxxxxx Xxxxxxxx Xxxxxx, X0X 0X0
(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,
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000-000 Xxxxxxxxxx,
XX 00000 XXX
(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-Xxxx" 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 Xxxxxxx Xxxxxxxxxxx
and Xxxxxxx XxXxxxxxx, "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, Essential shall pay the reasonable expenses actually
incurred by Inventors in connection therewith, in addition to all
previously unpaid Royalties. Inventors and its representatives shall
not use or disclose such books and records, nor any of the specific
information contained therein, to any third parties except as
reasonably necessary if Essential is in breach of this Agreement.
ARTICLE 3 - FUTURE PATENT APPLICATIONS
Essential Innovations shall be entitled to apply for any patents related to the
utilization of the Technology for applications of its own deemed to be different
than those for which the inventors have filed their initial patent. Having said
that, Essential Innovations agrees to include each of the inventors individually
in any patent that Essential Innovations may file of it's own accord in the
future where the Technology has been used somewhere in the patent in whole or in
part.
ARTICLE 4 - PATENTS AND TRADEMARKS
4.01 Inventor warrants, represents and covenants with Essential that the
Inventor is the owner of the Heating Technology and technical information,
theory, knowledge, process and expertise concerning the design, construction and
use of the Heating Technology and that he has the right to sell, transfer,
assign and convey the rights to the Heating Technology to Essential.
4.02 Any modification, improvement or variance of the Heating Technology created
through the efforts of Inventor and which is patentable may be patented by
Inventor but such application and any subsequent patent therefore shall form
part of the Heating Technology.
4.03 Inventor agrees to use his best efforts to obtain a United States patent
for the Heating Technology and in such regard agrees to diligently proceed with
the prosecution of the patent application and to respond in a timely manner to
all "Office Actions" received from the United States Patent and Trademark
Office.
4.04 Inventor agrees to cooperate fully with Essential in the filing of all
necessary documents and applications to protect the Heating Technology in such
other jurisdictions as Essential may consider appropriate.
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ARTICLE 5 - INFRINGEMENT
a) If a patent is issued for the Technology and subsequent thereto any
person other than Inventors, Essential or an authorized licensee of
Essential, is utilizing technology which appears to infringe any
patents or trademarks issued with respect to the Technology both
parties shall share expense to take all reasonable steps to terminate
or enjoin the apparent infringement thereof further agreeing to
cooperate in such proceedings and perform all acts and execute all
documents, and participate in any suit to terminate or enjoin such
infringement as may be necessary or desirable, and in such event any
damage award or settlement shall enure to the joint benefit of both
parties.
ARTICLE 6 - NON COMPETITION
Inventors shall not market, sell or distribute or utilize the Technology,
whether as an individual, with a firm, association, syndicate, corporation,
partnership or other enterprise, whether as principal, agent, shareholder,
officer, director, employee, or in any manner whatsoever or permit its name to
be used or employed with any such business for the initial application of
Geothermal of HVAC heating, cooling, domestic hot water, or dehumidification.
ARTICLE 7 - WARRANTIES AND REPRESENTATIONS OF INVENTORS
Inventors warrant and represent to Essential as follows:
a) They have developed the Technology and own, possess and have title
to such and all documentation, designs, flowsheets and related
materials free and clear of all liens, charges and encumbrances;
b) They have not granted or agreed to grant any license or right or
entered into any other agreement whereby he is obliged to give any
other person, firm or corporation any rights to utilize or sell the
Technology; and
c) This Agreement has been duly and properly executed by them and is
binding upon them.
ARTICLE 8 - WARRANTIES AND REPRESENTATIONS OF ESSENTIAL
Essential warrants and represents to Inventors as follows:
a) Essential is a company duly incorporated under the laws of
Nevada in good standing in accordance with the laws of such
jurisdiction and shall remain so during the term of this
Agreement;
b) It shall use its best and reasonable efforts to utilize and
exploit the Technology in accordance with the terms and
conditions of this Agreement for the application in question;
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c) It shall comply with all applicable laws, orders and
regulations relating to the utilization of the Technology and,
where required by applicable laws, become registered in such
jurisdictions where it may exploit the Technology; and
d) All projects utilizing the Technology shall be done in a
professional manner that maintains the reputation and
integrity of Inventors and the Technology.
ARTICLE 9 - INDEMNIFICATION
(a) Indemnification by Inventors
Inventors shall indemnify and hold Essential Innovations free
and harmless from any and all claims, damages, charges,
expenses, suits or actions arising out of the negligence or
misrepresentation of Inventors.
(b) Indemnification by Essential Innovations
Essential Innovations shall indemnify and hold Inventors, free
and harmless from any and all claims, damages, charges,
expenses, suits or actions arising out of the negligence or
misrepresentation of Essential Innovations.
ARTICLE 10 - CONFIDENTIALITY
General
For purposes of this Agreement, the term Confidential Information
includes any information in any form or medium, including without
limitation written records, documents, computer-readable disks, tapes,
printouts, sound recordings, photographs, reproductions, sketches,
notes, or copies or excerpts of them, or other documents or materials,
that the parties consider confidential, whether or not marked as
confidential. Confidential Information includes inventions (as defined
below), software, source code, object code, algorithms, procedures,
databases, compilations, technical data, formulas, theories, methods,
equipment, samples, designs, data, specifications, drawings,
blueprints, prototypes, models, business plans, customer lists,
contacts and information, sales and marketing reports, proposals,
prices, costs, personnel and payroll records, mailing lists, accounting
records, and other trade secrets and information concerning the
businesses and other ventures which the parties now operates or may
operate in the future. For purposes of this Agreement, "Inventions"
shall include but not be limited to ideas, improvements, or other
Confidential Information, whether or not patentable and whether or not
reduced to practice, made or conceived by the parties which relate in
any manner to the actual or demonstrably anticipated business, work or
research and development of the parties or their subsidiaries.
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ARTICLE 11 - ARBITRATION
If there is any disagreement between the parties hereto with respect to
the terms of this Agreement or the interpretation thereof, the same
will be referred to a single arbitrator pursuant to the Commercial
Arbitration Act in the Country of Canada and in the Province of British
Columbia and any amendments thereto, and the determination of such
arbitrator will be final and binding upon the parties hereto.
ARTICLE 12 - GENERAL CONTRACT PROVISIONS
(a) Entire Agreement
This Agreement constitutes the entire agreement between the
Parties with respect to all matters herein contained, and its
execution has not been induced by, nor do any of the Parties
hereto rely upon or regard as material, any representations or
writings whatsoever not incorporated herein and made a part
hereof. This Agreement shall not be amended, altered or
qualified except by an instrument in writing, signed by the
Parties hereto and any amendments, alterations or
qualifications hereof shall not be binding upon or affect the
rights of any Party who has not given its consent in writing.
(b) Heading
The division of this Agreement into articles and sections is
for convenience of reference only and shall not affect the
interpretation or construction of this Agreement.
(c) Severability
In the event that any of the covenants herein contained shall
be held unenforceable or declared invalid for any reason
whatsoever, such unenforceability or invalidity shall not
affect the enforceability or validity of the remaining
provisions of this Agreement and such unenforceable or invalid
portion shall be severable from the remainder of this
Agreement.
(d) Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the Province of British Columbia
and any court of competent jurisdiction in the Province of
British Columbia shall have jurisdiction to adjudicate any
matter arising out of this Agreement.
(e) Interpretation
(i) Each provision of this Agreement is declared to
constitute a separate and distinct covenant and will
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be severable from all other such separate and
distinct covenants.
(ii) If any covenant or provision is determined to be void
or unenforceable, in whole or in part, it will not be
deemed to affect or impair the enforceability or
validity of any other covenant or provision of this
Agreement or any part thereof.
(iii) The headings in this Agreement form no part of the
agreement between the parties and will be deemed to
have been inserted for convenience only and will not
affect the construction hereof.
(f) Notices
All notices, requests, demands or communications made pursuant
to the terms hereof or required or permitted to be given by
one party to another shall be given by personal delivery or by
registered mail, addressed to such other party or delivered to
such party as follows:
o To Essential Innovations at:
ESSENTIAL INNOVATIONS TECHNOLOGY CORP.
Xx. Xxxxx XxXxxxxxx, President/CEO
000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000-000
Xxxxxxxxxx, XX 00000 XXX
o To the Inventors at:
XXXXXXX XXXXXXXXXXX AND XXXXXXX XXXXXXXXX
X/X Xxxxxxx Xxxxxx
Xxxxx 0000 - 0000 Xxxx Hastings
Vancouver, British Columbia
Canada, V6E 3X1
or at such other address as may be given by any of them to the
other from time to time and such notices, requests, demands or
other communications shall be deemed to have been received
when delivered, or, if mailed two (2) weeks following the date
of mailing thereof provided that if any such notices,
requests, demands or other communications shall have been
mailed regular mail service. Shall such mail service be
interrupted by strikes or other irregularities, such notices,
requests, demands or other communications shall be deemed to
have been received two (2) weeks after the day following the
resumption of normal mail service. In any case of
irregularities the party mailing such requests, demands or
communications should inform the other party of such
irregularities via telephone.
(g) Time
Time shall be of the essence.
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(h) Further Assurance
The Parties agree to sign such other instruments, cause such
meeting to be held, resolutions passed and by-laws enacted,
exercise their votes and influence, do and perform and cause
to be done and performed such further and other acts and
things as may be necessary or desirable in order to give full
effects to this Agreement.
(i) Successor and Assigns
This Agreement shall endure to the benefit of and be binding
upon the Parties hereto and their respective successors and
assigns.
(j) Non-Waiver
There shall be no waiver by either Party of any breach by the
other Party of any of its covenants, obligations or agreement,
nor shall any forbearance to seek a remedy for any breach, be
considered a waiver of any rights and remedies with respect to
such or any subsequent breach.
(k) Changes
(i) This Agreement shall remain binding and valid in the
event that either Party decides to relocate its head
office to any other country.
(ii) This Agreement supersedes all verbal and written
agreements prior to this date. This Agreement also
supersedes all other verbal and written agreements
that contradict with this Agreement.
(l) Contact Information
The Inventors and Essential Innovations contact information
are as follows:
o Essential Innovations Technology Corp. Contact
Information:
Address: 142 - 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000 XXX
Contact Name & Title: Xx. Xxxxx XxXxxxxxx,
President/CEO
Telephone: (000) 000 0000
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Facsimile: (000) 000 0000
E-mail: xxxxxxxxxx@xxxxxxxxxx.xxx
o The Inventors
Address: Suite 1880 - 0000 Xxxx Xxxxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx, X0X 0X0
Contact Name: Xxxxxxx Xxxxxx
Telephone: (000) 000 0000
Facsimile: (000) 000 0000
E-mail: xxxxxxx@xxxx.xx
(m) Counterparts
This Agreement may be executed in counterparts, each of which
will be deemed an original, but all of which together will
constitute one and the same instrument.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first written above.
SIGNED, SEALED AND DELIVERED by )
XXXXXXX XXXXXXXXXXX )
/s/ Xxxxxxx Xxxxxxxxxxx /s/ Xxxxxxx Xxxxxxxxxxx
------------------------------- ) -----------------------------
Signature ) XXXXXXX XXXXXXXXXXX
Xxxxxxx Xxxxxx Xxxxxxxxxxx )
-------------------------------- )
Name )
Inventor
-------------------------------- )
Occupation )
SIGNED, SEALED AND DELIVERED by )
XXXXXXX XXXXXXXXX )
/s/ X.X. XxXxxxxxx /s/ X.X. XxXxxxxxx
------------------------------- ) ----------------------------
Signature ) XXXXXXX XXXXXXXXX
Xxxxxxx X. XxXxxxxxx )
-------------------------------- )
Name )
Artist/Educator/Inventor
-------------------------------- )
Occupation )
On behalf of )
ESSENTIAL INNOVATIONS )
TECHNOLOGY CORP. was )
/s/ Xxxxx XxXxxxxxx
----------------------------- )
Authorized Signatory )
Xxxxx XxXxxxxxx ) /s/ Xxxxx XxXxxxxxx
----------------------------- ) ----------------------------
Name President/CEO
President/CEO )
----------------------------- )
Occupation
