EXCLUSIVE TECHNOLOGY RIGHTS AGREEMENT
EXCLUSIVE TECHNOLOGY RIGHTS AGREEMENT
THIS AGREEMENT dated for reference the 15 day of January 2012.
BETWEEN:
VORTEX ENERGY RESEARCH INC., of CANADA
(Hereinafter referred to as "the Inventor")
OF THE FIRST PART
AND:
ESSENTIAL INNOVATIONS TECHNOLOGY
CORP.,
A company duly incorporated under the laws of the State of
Nevada,
(Hereinafter referred to as "Essential")
OF THE SECOND PART
WHEREAS:
A. Inventors intend to file Patent Application with the United States Patent and Trademark Office in regard to a certain unique “Heating Technologies” (herein the “Technology”). The Inventors have developed the following (among a number of other ideas accessible to Essential in future also):
I) A potential method of creating hot water or steam, or other heated mediums with application by Essential Innovations directly relating initially to the fields of HVAC and Hydronics. The technology specifically relates to a method of heating fluid mediums. The device(s) use a unique mechanical configuration to move fluids using boundary layer principles, induced pressure pulse, fluid shear, and controlled cavitational effects for rapid heating of the fluid medium within the device.
II) A method of creating steam, heat and/or power with, 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 WHEREAS:
B. Essential
Innovations wishes to enter into a sole exclusive manufacturing, distribution
and applications agreement with the Inventors for the exclusive rights to the
use of the Technology for use within the initial target field of HVAC and
Hydronics (the “Assigned Technology” as hereinafter defined), among any/all
other possible market applications, 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 Assigned Technology for use 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 process and technology as described above, the technology specifically relates to methods of heating fluid mediums. The device(s) use either a unique mechanical configuration to move fluids using boundary layer principles, induced pressure pulse, fluid shear, and controlled cavitational effects for rapid heating of the fluid medium within the device, or an immersion heating application; more specifically 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; each for which it is the intention of the Inventors to file a Patent Application in the United States Patent and Trademark Office: | ||
| (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”
d) “Parties,” means Essential Innovations Technology Corp., its subsidiaries and/or affiliates (“Essential”), and Vortex Energy Research Inc., the “Inventors”
e) “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.; and
f) “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.
g) “Assigned Technology” means the “Heating Technology”.
ARTICLE 2 –EXCLUSIVE TECHNOLOGY RIGHTS COMPENSATION SCHEDULE (ROYALTIES, STOCK/OPTIONS AND CASH)
a) Inventors hereby grant exclusive manufacturing and distribution and applications rights to Essential Innovations to the use of the Technology (The “Assigned Technology”) throughout the Territory (as hereinafter defined)
b) The parties shall co-operate in the further development 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 Assigned Technology, the Inventors shall receive, and Essential shall pay to them, the following:
I. A royalty of three percent (3.0%) of Gross Sales Proceeds (the “Royalty”) from every unit sold individually for an indefinite period of time, such royalty based on the selling price of the technology itself only, whether sold individually or as part of another piece of equipment.
| (i) |
Payment of Future 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 Assigned Technology is in a form other than the lawful currency of Canada, the Royalty shall be paid to Inventors in the lawful currency of Canada 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 rights, Essential Innovations Technology Corp. will grant to the inventors on signing
| (i) |
1,000,000 fully paid and non-assessable common shares of “ESIV” (public trading symbol) of Essential Innovations Technology Corp., and 500,000 options of EITC @ $.25/share with a 5 Year exercise date. |
e) R&D and Commercialization Funding Budget - Essential agrees here to provide the following funding to VER for the use of prototyping and commercialization of the Technology by VER, such funding to be released as follows: $100,000 CASH on or before January 1, 2013, to be used for further prototyping and completion of proof of concept testing along with patent search, analysis and patent filing costs; then another $400,000 CASH will be provided on or before June 1, 2013, but not earlier than April 30, 2013, in order to then complete their required R&D, and engage a full field-test program with no less than 3 separate sites in 3 different global geographic locations. Following this the Company will work with the inventors to bring it to a state ready for manufacturing and full-scale commercialization. Following this it would then be the target date that as at December 31st, 2013, Essential would then retain VER under a separate agreement as design and manufacturing consultants and would plan to complete a larger financing round solely for manufacturing, marketing, and distribution.
| f) |
Report of Technology Sales: Within 30 days following the close of the first calendar quarter in which there are any revenues generated from the Assigned 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, 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 any/all unique external applications it may uncover whether as previously defined or whether deemed to be different than those for which Essential and the Inventor have filed their initial patent. Having said that, Essential Innovations agrees to always include the inventor in any patent that Essential Innovations may file of it’s own accord in the future where the Assigned 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 Assigned 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 file a Patent Application and later on obtain a United States patent for the Heating Technology and in such regard agrees to diligently proceed with the prosecution of such patent applications 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.
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, Inventors shall have the option of participating and sharing the expense in taking steps to terminate or enjoin the apparent infringement thereof further agreeing to cooperate with Essential 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, by first reimbursing the pursuing party for expenses and then dividing proceeds evenly between Essential and Investors.
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 as more clearly described above under ARTICLE I – Definitions, “Assigned Technology”.
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 they are obliged to give any other person, firm or corporation any rights to utilize or sell the Technology within the field of Geothermal Heating and Cooling; 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;
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.
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 | ||
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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 Hong Kong and 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 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, in both cased with return receipt requested, addressed to such other party or delivered to such party as follows: | |||
| • | To Essential Innovations at: | |
| ESSENTIAL INNOVATIONS TECHNOLOGY CORP. | ||
| 3F Xxxx Xxxx, International Centre | ||
| 000 Xxxxxx Xxxx Xxxx, Xxxx Xxxx. SAR, China | ||
| • | To the Inventors at: | |
| VORTEX ENERGY RESEARCH | ||
| 0000 000X Xxxxxx | ||
| Xxxxxxx, XX, Xxxxxx |
|
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 | |
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Time shall be of the essence. | ||
| (h) |
Further Assurance | |
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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 | |
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This Agreement shall endure to the benefit of and be binding upon the Parties hereto and their respective successors and assigns. | ||
| (j) |
Non-Waiver | |
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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 or residence to any other country. | ||
| (ii) |
This Agreement supersedes all verbal and written agreements prior to this date. | ||
| (l) |
Counterparts | ||
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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. | |||
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first written above.
| SIGNED, SEALED AND DELIVERED | |
| /s/ Authorized Signatory | |
| VORTEX ENERGY RESEARCH | |
| (the “Inventor”) | |
| On behalf of | |
| ESSENTIAL INNOVATIONS TECHNOLOGY CORP. | |
| /s/ Xxxxx XxXxxxxxx | |
| Authorized Signatory |
