Sole Exclusive Rights And Distribution Agreement

SOLE EXCLUSIVE RIGHTS AND DISTRIBUTION AGREEMENT


This Agreement of (20) pages was signed on 19th day of July 2005.


BETWEEN:


ESSENTIAL INNOVATIONS CORPORATION: Incorporated under the Canada Business Corporations Act - -------------------------------------------------------------------------------- (Hereinafter referred to as "Essential Innovations" or "EIC")


AND:


Global Business Exchange CORPORATION: Incorporated in the Province of British Columbia - -------------------------------------------------------------------------------- (Hereinafter referred to as "GBX")


WHEREAS Essential Innovations Corporation has developed the EI Elemental line of innovative Geoexchange products. EIC is now focused on manufacturing and distribution strategies for it's proprietary EI Elemental Family of Products, which exclusively utilizes geoexchange technology, R410A refrigerant and specialized artificial intelligence controls. EIC is now actively seeking execution of product licensing and distribution agreements for its EI Elemental Heat Energy System throughout the World.


AND WHEREAS Essential Innovations is to be introduced to associates, affiliates, colleagues, branches, subsidiaries or other contacts of GBX in the Territory (as hereinafter defined).


AND WHEREAS GBX wishes to enter into a sole exclusive distribution and agency agreement with Essential Innovations whereby GBX would take on sole responsibility for the distribution, marketing and sale of the Product (as hereinafter defined) throughout the Territory (as hereinafter defined). GBX through its associates, affiliates, colleagues, branches, or subsidiaries wishes to undertake responsibilities for the evaluating, distribution, marketing and sale of the Product(s) (as hereinafter defined) on a sole exclusive basis throughout the Territory (as hereinafter defined) on the terms and conditions contained herein;


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NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants in this Agreement, the Parties agree as follows:


1. DEFINITIONS


Definitions


As used in this Agreement, the following words and phrases shall have
the following meanings:


"Term" means the term of this Agreement as provided in subsection 3(a)
including any renewal provided hereunder.


"Trade-Mark" means the trademark or trademarks of all products
manufactured by Essential Innovations and its affiliates.


1. "Territory" means MEXICO ONLY


"Future Territory" means Central Americas ONLY


"Product" means EI Elemental Geothermal Heat Pumps manufactured by
Essential Innovations Corporation


"Parties," means Essential Innovations Corporation and Global Business
Exchange Corporation


"Unit or Units," means any one individual EI Elemental Geothermal Heat
Pump (of any size)


2. APPOINTMENT AND TERRITORY


(a) Appointment


Essential Innovations hereby grants GBX sole exclusive rights to
market, distribute and sell the Product(s) within the Territory and
hereby appoints GBX as its sole distributor in the Territory for this
purpose subject to the terms and conditions herein.


(b) Territory


GBX shall be granted Sole Exclusive Rights to market, distribute and
sell the Product(s) exclusively in the "Territory".


(c) Sub-Distribution


GBX shall have the right to appoint sub-distributors, provided that, as
a condition of such appointment such sub-distributor shall be entitled
to distribute and promote the Product(s) only within the Territory and
subject to and in accordance with the terms of this Agreement,


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including the requirement that the sub-distributor must undergo and
take part in a training program to be provided in conjunction with
Essential Innovations and GBX at the sole cost of GBX.


(d) First Right of Refusal


It is hereby agreed under the terms of this Agreement that at such
future date when Exclusivity is to be granted for the "Future
Territory" as defined herewith, then GBX shall have the "First Right of
Refusal" to obtain such Exclusive Distribution should they wish to
exercise such right subject to similar terms and conditions as set
forth in this Agreement for the Exclusive Distribution Rights to the
Territory.


(e) Restriction on Sales of the Product


Subject to the terms of this Agreement, during the Term, Essential
Innovations shall not, directly or indirectly, sell, assign or grant to
any other person, entity, firm or organization, the right to, market,
sell or distribute the Product within the Territory unless with written
approval from GBX.


(f) Referrals


Essential Innovations agrees to refer to GBX all inquiries, orders or
requests for all Products originating from or intended for delivery
within the Territory.


3. TERMS AND RENEWAL


(a) Term


This Agreement shall become effective upon its execution by both EIC
and GBX hereto and shall remain in effect for a period of one (1) year
from the date of such execution (the "Initial Term") subject to the
terms and conditions herein.


(b) Renewal


After the Initial Term period, this Agreement will be automatically
extended to a further three (3) year consecutive period, under the same
conditions and terms within this Agreement, providing that GBX has
complied with all the terms of this Agreement up to and including the
time of renewal (except for applicable annual increases in the purchase
quotas and volume requirements).


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4. PURCHASE ORDER ACKNOWLEDGMENT


Essential will acknowledge orders in writing within ten (10) working
days after receipt of an accurate and complete order. Order is not
considered received until all information provided by GBX for the
product, billing, and shipping data is complete and accurate. Order
acknowledgments will be sent to the GBX "bill to" address, unless
otherwise requested by the GBX. The acknowledgment shall include
field/purchase order number, ship to address, items ordered, contract
pricing, and ship date. Essential shall send only one order
acknowledgment per order (unless subsequent changes need to be
acknowledged), which shall be a consistent form recognized by their
customers, and checked for accuracy prior to mailing. Essential may
refuse to accept telephone orders due to the possibility of errors,
however shall have capability to receive fax orders.


Alternate or additional terms and conditions accompanied with a
purchase order acknowledgment are unacceptable; the terms and
conditions incorporated herein prevail.


5. ORDER CANCELLATION & CHANGE ORDERS


GBX may cancel or change orders for standard contract items without
penalty within 15 working days from postmark date of order
acknowledgment. After this period, Essential may impose a 10% penalty
of the item(s) being cancelled and/or changed.


If a customer cancels an order for custom designed items, Essential may
impose up to a 100% penalty of the item(s) being cancelled.


6. PACKAGING


Specifications: Unless otherwise specified, goods are to be shipped in
new and undamaged condition and packaged in accordance with mutually
agreed upon standards between Essential and GBX. Goods shipped in other
than mutually agreed upon standards, as requested by the GBX, shall be
at an additional cost to the GBX.


7. PRICE


(a) Sale Price


(i) Essential Innovations shall, from time to time,
provide GBX with price-lists with respect to the
Product quoted FOB (Surrey, Canada), or quoted FOB
(Fort Wayne, Indiana).


(ii) Essential Innovations shall send a written notice to
GBX, 60 days in advance, of any changes in the price
list. Prices shall remain unchanged for at least 180
days after the effective date of the contract.
Adjustments in contract pricing will be allowed on a
pass-through basis only. Essential shall provide


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adequate documentation to justify said increases.
Approved price adjustments shall remain unchanged for
at least 180 days thereafter.


(iii) Once Essential Innovations has quoted GBX with a
price for the Product, the price shall be valid until
completion of the deal (order) and may not vary until
such time that the order is completed, provided the
order is completed within the quoted period and under
the quoted terms. This does not, however, relate to a
"new order" that may be placed during the same time
period and may be subject to different pricing should
the price list have been amended during the specific
ordering period.


(b) Payment


(i) Standard payment terms are Net 30 no interest from
the date of receipt of the purchase order from GBX to
EIC. With an industry standard interest charged for
payment within 60 and 90 days.


(iii) For special circumstances, should GBX initiate in
writing any direct sales between Essential
Innovations and buyers in the Territory, Essential
Innovations will invoice the buyer through GBX. In
that case a wire transfer or money order shall be
used to make payment directly to Essential
Innovations.


(c) Price List


GBX shall have the right to establish its own pricelist for
the Product(s) within the Territory.


(d) Sales and Marketing


The determination of sales and marketing strategies and
selling prices for the Product(s) within the Territory shall
be the sole responsibility of GBX.


(e) Registration of the Product


Should the Product(s) need to be registered, the official fees
for the registration (if any) of the Product within the
Territory shall be borne by EIC should it be necessary.


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8. TERMS AND CONDITIONS


The Parties agree that during the term of this Agreement Essential Innovations shall:


a) Provide GBX with all requested information presently
available in order to assist GBX in the preparation
of sales promotional material relating to the
Product(s) and in order to facilitate advertising and
sale of the Product(s);
b) Replace, at its own cost, any Product(s) delivered by
Essential Innovations to GBX / GBX's buyer in a
defective or un-merchantable state due to improper
shipping;
c) Properly maintain the registration of the Trade-Mark;
d) Essential Innovations shall not deal directly with
any person, entity, firm or organization in the
Territory and shall go through GBX unless with the
knowledge and a written consent from GBX.
e) Bear all liabilities for matters arising out of the
manufacture and quality of the Product(s) in
accordance with the standard manufacturer warranty
and/or the manufacturer extended warranty, if
applicable;
f) Permit GBX to hold itself out as an authorized sole
distributor of the Product(s) within the specified
Territory;
g) Package and label the Product in accordance with
applicable standards and in compliance with the law
of the jurisdiction of the ultimate sale. Such
standards shall be identified by GBX and communicated
to Essential Innovations in Writing


9. WARRANTIES AND REPRESENTATIONS


(a) Representations and Warranties of EIC. EIC represents and
warrants to GBX that the statements made in this Agreement are
true and correct in all material respects and do not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances
under which they were made, not misleading. EIC further agrees
that at the Start Date to this Agreement, the representations
and warranties of EIC set forth in this Agreement will be
deemed to have been remade as of the Start Date and shall
survive the End Date for the applicable period of limitations.


EIC warrants and represents to GBX as follows:


(i) EIC is a corporation duly incorporated, validly
existing and in good standing under the Federal laws
of the Country of Canada, and has all requisite
corporate power and authority to carry on its
business in all material respects.


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(ii) EIC has all requisite corporate power and authority
to enter into and deliver this Agreement and any
other agreement or document necessary to perform this
Agreement and to perform its obligations hereunder.
The execution of this Agreement and such other
agreements and instruments by EIC, and the
performance of their terms by EIC, have been duly and
validly authorized by appropriate members of the
Board of Directors of Essential Innovations
Technology Corp. ("EITC"), parent Company to EIC, and
no further corporate action or authorization on
behalf of EIC is required.


(iii) This Agreement is legal, valid and binding upon and
enforceable against EIC in accordance with its terms
(except as the enforceability thereof may be limited
by any applicable bankruptcy, reorganization,
insolvency or other laws affecting creditors' rights
generally or by general principles of equity,
regardless of whether such enforceability is
considered in equity or at law).


(iv) EIC has developed the EI Elemental Geothermal Heat
Pump Technolo ...