1.1

perform the Work required by the Contract Documents for the Geoexchange Heating Ventilation and Air Conditioning System located at Wakefield Beach Homes for which the Agreement has been signed by the parties, and for which [to be determined] is acting as, and is hereinafter called, the “Consultant,”

1.2

do and fulfil everything indicated by the Contract Documents, and

1.3

commence the Work by the 18th day of January in the year 2006 and, subject to adjustment in Contract Time as provided for in the Contract Documents, attain Substantial Performance of the Work:

.1

1st day of March in the year 2007; or

.2

within __ weeks after receipt of all approvals from authorities having jurisdiction.

2.1

The Contract as described in Article A-3 of the Agreement - CONTRACT DOCUMENTS supersedes all prior negotiations, representations, or agreements, either written or oral, relating in any manner to the Work.

2.2

The Contract may be amended only as provided in the Contract Documents.

3.1

The following are the Contract Documents referred to in Article A-1 of the Agreement - THE WORK:

-

Agreement between Owner and Design-Builder

-

Definitions of the Design-Build Stipulated Price Contract

-

General Conditions of the Design-Build Stipulated Price Contract

-

Owner’s Statement of Requirements

-

Construction Documents, after they have been accepted by the Owner

4.1

The Contract Price, which excludes Value Added Taxes, is: Four Hundred Seventy-Nine Thousand Nine Hundred Eighteen/100 dollars $479,918.00.

4.2

Value Added Taxes (of 7%) payable by the Owner to the Design-Builder are: Thirty Three Thousand Five Hundred Ninety Four 26/100 dollars $33,594.26.

4.3

Total amount payable by the Owner to the Design-Builder for the Work is: Five Hundred Thirteen Thousand Five Hundred Twelve 26/100 dollars $513,512.26.

4.4

All amounts are in Canadian funds.

4.5

These amounts shall be subject to adjustments as provided in the Contract Documents.

5.1

Subject to the provisions of the Contract Documents, and in accordance with legislation and statutory regulations respecting holdback percentages and, where such legislation or regulations do not exist or apply, subject to a holdback of ten percent (10%), the Owner shall:

.1

make progress payments to the Design-Builder on account of the Contract Price when due in the amount certified by the Consultant who is acting as, and is hereinafter called, the “Payment Certifier”, together with such Value Added Taxes as may be applicable to such payment, and

.2

upon Substantial Performance of the Work pay to the Design-Builder the unpaid balance of the holdback amount when due together with such Value Added Taxes as may be applicable to such payment, and

.3

upon the issuance of the final certificate for payment, pay to the Design-Builder the unpaid balance of the Contract Price when due together with such Value Added Taxes as may be applicable to such payment.

5.2

In the event of loss or damage occurring where payment becomes due under the property and boiler and machinery insurance policies, payments shall be made to the Design-Builder in accordance with the provisions of GC 11.1 - INSURANCE.

5.3

Interest

.1

Should either party fail to make payments as they become due under the terms of the Contract or in an award by arbitration or court, interest at three percent (3 %) per annum above the prime rate on such unpaid amounts shall also become due and payable until payment. Such interest shall be compounded on a monthly basis. The prime rate shall be the lowest rate of interest quoted by the Royal Bank of Canada for prime business loans.

.2

Interest shall apply at the rate and in the manner prescribed by paragraph 5.3.1 of this Article on the amount of any claim advanced and for which the Design-Builder is thereafter entitled to payment, either pursuant to Part S of the General Conditions -

6.1

Notices in writing between the parties or between them and the Consultant shall be considered to have been received by the addressee on the date of delivery if delivered to the individual, or to a member of the firm, or to an officer of the corporation for whom they are intended by hand or by registered post; or if sent by regular post, to have been delivered within 5 Working Days of the date of mailing when addressed as follows:

The Owner at

6529 Sunshine Coast Highway, Sechelt

British Columbia, VON 3A0

The Design-Builder at

#101 - 5219 192nd Street, Cloverdale

British Columbia, V35 4P6

7.1

When the Contract Documents are prepared in both the English and French languages, it is agreed that in the event of any apparent discrepancy between the English and French versions, the English / French * language shall prevail.

7.2

This Agreement is drawn in English at the request of the parties hereto. La présente convention est redigée en anglais a la demande des parties.

8.1

The Contract shall enure to the benefit of and be binding upon the parties hereto, their respective heirs, legal representatives, successors, and permitted assigns.

SIGNED AND DELIVERED

in the presence of:

Owner

WAKEFIELD BEACH DEVELOPMENTS LTD.

/s/ Kenneth R. Burgess

WITNESS

KENNETH R. BURGESS, Solicitor

Design-Builder

ESSENTIAL INNOVATIONS CORPORATION

/s/ S. Wuschke

WITNESS

STEVE WUSCHKE

1.

Change Directive

2.

Change Order

3.

Construction

4.

Construction Documents

5.

Consultant

6.

Contract

7.

Contract Documents

8.

Contract Price

9.

Contract Time

10.

Design-Builder

11.

Design Services

12.

Owner

13

Owner’s Statement of Requirements

14.

Payment Certifier

15.

Place of the Work

16.

Product

17.

Project

18.

Provide

19.

Subcontractor

20.

Substantial Performance of the Work

21.

Supplier

22.

Value Added Taxes

23.

Work

24.

Working Day

1.1.1

The intent of the Contract Documents is to include the Design Services, Construction, and other services necessary for the performance of the Work in accordance with these documents. It is not intended, however, that the Design-Builder shall supply products or perform work not consistent with, not covered by, or not properly inferable from the Contract Documents.

1.1.2

Nothing contained in the Contract Documents shall create any contractual relationship between the Owner and the Consultant, an other consultant, a Subcontractor, a Supplier, or their agent, employee, or any other person performing any of the Work.

1.1.3

If the Payment Certifier is not the Consultant or the Owner, the Owner shall, if requested in writing by the Design- Builder, disclose the contractual relationship between the Owner and the Payment Certifier by provision of a copy of the contract with the Payment Certifier to the Design-Builder.

1.1.4

The Contract Documents are complementary, and what is required by any one shall be as binding as if required by all.

1.1.5

Words and abbreviations which have well known technical or trade meanings are used in the Contract Documents in accordance with such recognized meanings.

1.1.6

References in the Contract Documents to the singular shall be considered to include the plural as the context requires.

1.1.7

The specifications are that portion of the Contract Documents, wherever located and whenever issued, consisting of the written requirements and standards for Products, systems, workmanship, and the services necessary for the performance of the Construction.

1.1.8

The drawings are the graphic and pictorial portions of the Contract Documents, wherever located and whenever issued, showing the design, location, and dimensions of the Construction, generally including plans, elevations, sections, details, schedules, and diagrams.

1.1.9

Neither the organization of the specifications into divisions, sections, and parts, nor the arrangement of drawings shall control the Design-Builder in dividing the work among Subcontractors and Suppliers or in establishing the extent of the work to be performed by a trade.

1.1.10

If there is a conflict within the Contract Documents:

.1

the order of priority of documents, from highest to lowest, shall be

• Division 1 of the specifications,

• Divisions 2 through 16 of the specifications,

• material and finishing schedules,

• drawings.

.2

drawings of larger scale shall govern over those of smaller scale of the same date.

.3

dimensions shown on drawings shall govern over dimensions scaled from drawings.

.4

later dated documents shall govern over earlier documents of the same type.

1.1.11

Copyright for the design and drawings prepared by or on behalf of the Design-Builder belongs to the Consultant or other consultants who prepared them.

1.1.12

Plans, sketches, drawings, graphic representations, and specifications, including computer generated designs, when prepared by the Consultant, or other consultants are instruments of their service and shall remain their property whether the Construction for which they are made is executed or not.

1.1.13

Submissions or distribution of the Consultant or other consultants plans, sketches, drawings, graphic representations, and specifications to meet official regulatory requirements or for other purposes in connection with the Work is not to be construed as publication in derogation of their reserved rights.

1.1.14

The Owner may retain copies, including reproducible copies, of plans, sketches, drawings, graphic representations, and specifications for information and reference in connection with the Owner’s design and construction and the Owner’s use and occupancy of the Work. As a condition precedent to the use of such documents, the Owner shall have paid in full for any Design Services rendered. The Design-Builder will, prior to any payment being issued under this Contract, deliver to the Owner a consent and acknowledgement signed by the Consultant confirming the Consultant’s agreement that the Owner may use any material produced by the Consultant and in which the Consultant retains any copyright in the manner set forth in paragraphs 1.1.13 to 1.1.16.

1.1.15

Except for reference purposes, the plans, sketches, drawings, graphic representations, and specifications shall not be used for additions or alterations to the Work or on any other project.

1.1.16

Models and architectural renderings furnished by the Design-Builder at the Owner’s expense are the property of the Owner.

1.2.1

Unless the Contract Documents specifically state otherwise, the Design-Builder, Consultant and other consultants may rely on the accuracy and completeness of all information provided by the Owner without regard for the source of such information.

1.2.2

Notwithstanding any other provision of the Contract, the Design-Builder is not responsible for any design errors or omissions in any designs or specifications provided by or on behalf of the Owner unless the Design-Builder has been specifically requested to review and has accepted in writing those designs and specifications under the Contract.

1.2.3

The Owner shall furnish the information and services required under the Contract promptly to avoid delay in the performance of the Contract.

1.2.4

The Owner’s Statement of Requirements may include:

.1

site information e.g. site description, topographical and boundary surveys, environmental, geotechnical and designated substance investigation reports, utility information, and covenants and restrictions on the property; and

.2

the Owner’s program requirements e.g. design objectives and parameters, performance requirements, constraints and criteria, spatial and functional requirements and relationships, flexibility and potential for expansion, special equipment and systems, and site requirements and budget.

1.2.5

The Design-Builder shall review the Owner’s Statement of Requirements and shall report promptly to the Owner any significant error, inconsistency, or omission the Design-Builder may discover.

1.2.6

The review by the Design-Builder under paragraph 1.2.5 shall be to the best of the Design-Builder’s knowledge, information, and belief and in making such review the Design-Builder does not assume any responsibility to the Owner for the accuracy of the review with respect to the Owner’s Statement of Requirements prepared by or on behalf of the Owner.

1.2.7

The Design-Builder shall not be liable for damage or costs resulting from such errors, inconsistencies, or omissions in the Owner’s Statement of Requirements prepared by or on behalf of the Owner which the Design-Builder did not discover.

1.2.8

If the Design-Builder does discover any significant error, inconsistency, or omission in the Owner’s Statement of Requirements prepared by or on behalf of the Owner, the Design-Builder shall not proceed with the work affected until the Design-Builder and the Owner have discussed how the information should be corrected or supplied.

1.3.1

The law of the Place of the Work shall govern the interpretation of the Contract.

1.4.1

Except as expressly provided in the Contract Documents, the duties and obligations imposed by the Contract Documents and the rights and remedies available thereunder shall be in addition to and not a limitation of any duties, obligations, rights, and remedies otherwise imposed or available by law.

1.4.2

Except as expressly provided in the Contract Documents, no action or failure to act by the Owner, Design-Builder, or the Consultant shall constitute a waiver of any right or duty afforded any of them under the Contract, nor shall any such action or failure to act constitute an approval of or acquiescence in any breach thereunder, except as may be specifically agreed to in writing.

1.5.1

Neither party to the Contract shall assign all or any part of the Contract without the written consent of the other, which consent shall not be unreasonably withheld.

1.6.1

The Owner and the Design-Builder shall keep confidential all matters respecting technical, commercial, and legal issues relating to or arising out of the Work or the performance of the Contract and shall not, without the prior written consent of the other party, disclose any such matters, except in strict confidence, to its professional advisors.

2.1.1

The Design-Builder shall engage the Consultant under a contract pursuant to which the Consultant’s services, duties and responsibilities will include:

.1

the review of the Owner’s Statement of Requirements;

.2

the review with the Owner of reasonable alternative approaches to the design;

.4

the coordination required to integrate all parts of the Design Services;

.5

the preparation of schematic design documents to illustrate the scale and character of the Work and how the parts of the Work functionally relate to each other;

.6

the preparation of design development documents, based on the schematic design documents accepted by the Owner, consisting of drawings and other documents appropriate to the size of the Work to describe the size and character of the entire Work including architectural, mechanical and electrical systems, materials, and such other elements as may be appropriate;

.7

the preparation of Construction Documents setting forth in detail the requirements for Construction based on the design development documents accepted by the Owner;

.8

the provision of assistance to the Owner and Design-Builder to obtain approvals, permits, and licenses for the Construction;

.9

the conducting of general review of the progress of the Construction, to the extent necessary, in order to determine to the Consultant’s satisfaction that the Construction is performed in general conformity with the requirements of:

(1)

the Contract Documents, and

(2)

the applicable statutes, regulations, codes, and bylaws of all authorities having jurisdiction over the Work;

.10

the assurances required by regulatory authorities respecting substantial conformance of the design with the applicable building regulations, other than construction safety issues;

.11

the preparation of Change Orders and Change Directives as set out in GC 6.2 - CHANGE ORDER and GC 6.3 - CHANGE DIRECTIVE;

.12

the determining of amounts owing to the Design-Builder based on the Consultant’s observations and evaluation of the Design-Builder’s applications for payment;

.13

the issuance of certificates for payment in the value proportionate to the amount of the Contract, for Work performed and Products delivered to the Place of the Work;

.14

the interpretation, in the first instance, of the requirements of the Construction Documents and the making of findings as to the performance thereunder by both the Owner and the Design-Builder without showing partiality to either the Owner or the Design-Builder, and in no event incurring liability for the result of such interpretations or findings rendered in good faith in such capacity;

.15

the interpretation and finding, in the first instance, of claims, disputes, and other matters in question relating to the performance of the Work or the interpretation of the Contract Documents, except for GC 5.1 - FINANCING INFORMATION REQUIRED OF THE OWNER.

.16

the rejecting of work which does not conform to the requirements of the Contract Documents;

.17

the requiring of special testing and inspection of the Construction at the sole discretion of the Consultant, whether or not such Construction has been fabricated, installed, or completed;

.18

he determining of the date of Substantial Performance of the Work and the issuing of a certificate attesting to same;

.19

the verification of the Design-Builder application for final payment and the issuing of a certificate for payment;

.20

the reviewing of any defects or deficiencies in the Work during the period described in (GC 12.3 - WARRANTY and the issuance of appropriate instructions for the correction of same; and

.21

such other work that may be required from time to time that is agreed to by the Owner and the Design-Builder in writing and is acceptable to the Consultant.

2.1.2

In performing the above duties, the Consultant will provide the necessary services as expeditiously as is required for the orderly progress of the Work.

2.1.3

All certificates issued by the Consultant shall be to the best of the Consultant’s knowledge, information, and belief by issuing any certificate, the Consultant does not guarantee the Work is correct or complete.

2.1.4

The Consultant shall perform the Design Services and fulfil the Consultant duties and responsibilities to the standard of diligence, skill, and care that consultants would customarily provide in similar circumstances and in the same relative geographic location, subject to the Consultant’s professional and legal obligations.

2.1.5

The Owner waives any right of action in negligence or otherwise against the Consultant or any other consultant employed by the Design-Builder in respect of performance of the Design Services except to the extent the Owner may be entitled to make a claim against the Design-Builder under the Contract.

2.1.6

If the Consultant’s engagement is terminated, the Design-Builder shall engage a new Consultant to provide the Consultant’s services. The Design-Builder shall notify the Owner in writing before appointing or reappointing a Consultant to provide the Design Services. The Design-Builder shall not appoint any Consultant to whom the Owner may reasonably object.

2.2.1

The Owner shall designate a representative authorized to act on the Owner’s behalf and shall specify in written notice to the Design -Builder any limits on the representative’s authority.

2.2.2

Subject to any notified limitations in authority, the Design-Builder may rely upon any written instructions or directions provided by the Owner’s representative.

2.2.3

The Owner representative shall take all reasonable steps to be accessible to the Design-Builder during performance of the Contract and shall render any necessary decisions or instructions promptly to avoid delay in the performance of the Contract.

2.2.4

The Owner and Owner’s representatives shall not communicate with any Subcontractors performing the Work except through the Design-Builder or a person designated by the Design-Builder.

2.3.1

The Design-Builder shall

.1

permit the Owner to review all material aspects of the design of the Work as the design proceeds, and

.2

provide a copy of all drawings, specifications, and diagrams to the Owner when required for review and acceptance.

2.3.2

From time to time, the Design-Builder may request and, on request, the Owner shall examine certain aspects of the design as set out on design development documents or Construction Documents to confirm that the design aspects are in general compliance with:

.1

the qualitative, functional layout, operational, and other Owner requirements for the Work; and

.2

the standards of finish, comfort, or aesthetics as required by the Contract Documents.

2.3.3

The Owner, the Consultant and the Payment Certifier shall have access to the Construction at all times. The Design- Builder shall provide sufficient, safe, and proper facilities at all times for their review of the Construction and the inspection of the Construction by authorized agencies. If parts of the Construction are in preparation at locations other than the Place of the Work, the Owner, the Consultant and the Payment Certifier shall be given access to such work whenever it is in progress.

2.3.4

If work is designated for tests, inspections, or approvals in the Contract Documents, or by the instructions of the Owner or the Consultant, or the laws or ordinances of the Place of the Work, the Design-Builder shall give the Owner reasonable notice of when the work will be ready for review and inspection. The Design-Builder shall arrange for and shall give the Owner reasonable notice of the date and time of inspections by other authorities.

2.3.5

The Design-Builder shall furnish promptly to the Consultant and to the Owner, on request, a copy of certificates and inspection reports relating to the Work.

2.3.6

If the Design-Builder covers, or permits to be covered, work that has been designated for special tests, inspections, or approvals before such special tests, inspections, or approvals are made, given or, completed, the Design-Builder shall, if so directed, uncover such work, have the inspections or tests satisfactorily completed, and make good the covering work at the Design-Builder’s expense.

2.3.7

The Owner may order any portion or portions of the Construction to be examined to confirm that such work is in accordance with the requirements of the Contract Documents. If the work is not in accordance with the requirements of the Contract Documents, the Design-Builder shall correct the work and pay the cost of examination and correction. If the work is in accordance with the

2.3.8

The Consultant shall provide any required assurances to regulatory authorities respecting substantial conformance of the Construction with the design approved by that authority for issuance of the building permit.

2.4.1

The Design-Builder shall promptly remove from the Place of the Work and replace or re-execute defective work that has been rejected by the Consultant as failing to conform to the Contract Documents whether or not the defective work has been incorporated in the Work and whether or not the defect is the result of poor workmanship, design, use of defective products, or damage through carelessness or other act or omission of the Design-Builder.

2.4.2

The Design-Builder shall make good promptly other contractors’ work destroyed or damaged by such removals or replacements at the Design-Builder’s expense.

2.4.3

If, in the opinion of the Owner, it is not expedient to correct defective work or work not performed as provided in the Contract Documents, the Owner may deduct from the amount otherwise due to the Design-Builder the difference in value between the work as performed and that called for by the Contract Documents. If the Design-Builder does not agree on the difference in value, the Design-Builder shall refer the dispute to Part 8 of the General Conditions - DISPUTE RESOLUTION.

3.1.1

The Design-Builder shall have total control of the Work and shall effectively direct and supervise the Work so as to ensure conformity with the Contract Documents.

3.1.2

The Design-Builder shall be solely responsible for construction means, methods, techniques, sequences, and procedures with respect to the Construction and for coordinating the various parts of the Construction under the Contract.

3.1.3

The Design-Builder shall keep the Owner informed of the progress of the Work.

3.1.4

The Design-Builder is solely responsible for the quality of the Work and shall undertake any quality control activities specified in the Contract Documents or, if none are specified, as may be reasonably required to ensure such quality.

3.2.1

During the progress of the Work, the Design-Builder shall furnish to the Owner the Construction Documents that describe details of the design required by the Contract Documents. At the time of submission the Design-Builder shall notify the Owner in writing of any significant deviations in the Construction Documents from the requirement of the Contract Documents.

3.2.2

The Design-Builder shall submit the Construction Documents to the Owner to review in orderly sequence and sufficiently in advance so as to cause no delay in the Work. Upon request of the

3.2.3

The Owner shall review the Construction Documents in accordance with the schedule agreed upon, or in the absence of an agreed schedule with reasonable promptness so as to cause no delay. The Owner’s review is for conformity to the intent of the Contract Documents. The Owner’s review shall not relieve the Design-Builder of responsibility for errors or omissions in the Construction Documents or for meeting all requirements of the Contract Documents unless the Owner expressly accepts a deviation from the Contract Documents.

3.2.4

No later than 7 days after completing the review, the Owner shall notify the Design-Builder in writing that the Owner has accepted and has signed the Construction Documents or shall notify the Design-Builder, giving reasons in writing, why the Owner rejects the Construction Documents. Upon request by the Owner, the Design-Builder shall revise and resubmit Construction Documents which the Owner has rejected. The Design-Builder shall notify the Owner in writing of any revisions to any resubmission other than those requested by the Owner.

3.2.5

When the Construction Documents are accepted and signed by the Owner and the Design Builder such Construction Documents shall become part of the Contract Documents.

3.2.6

When a change is required to the Construction Documents that have been accepted and signed by the Owner, it shall be made in accordance with GC 6.1 - CHANGES, GC 6.2 - CHANGE ORDER, or GC 6.3 - CHANGE DIRECTIVE.

3.3.1

The Owner reserves the right to award separate contracts in connection with other parts of the Project to other contractors and to perform work with own forces.

3.3.2

When separate contracts are awarded the other parts of the Project, or when work is performed by the Owner’s own forces, the Owner shall:

.1

provide for the co-ordination of the activities and work of other contractors and Owner’s own forces with the Work of the Contract;

.2

assume overall responsibility for compliance with the applicable health and construction safety legislation at the Place of the Work,

.3

enter into separate contracts with other contractors under conditions of contract which are compatible with the conditions of the Contract;

.4

ensure that insurance coverage is provided to the same requirements as are called for in GC 11.1 — INSURANCE and co-ordinate such insurance with the insurance coverage of the Design-Builder as it affects the Work; and

.5

take all reasonable precautions to avoid labour disputes or other disputes on the Project arising from the work of other contractors or the Owner’s own forces.

3.3.3

When separate contracts are awarded for other parts of the Project, or when work is performed by the Owner’s own forces, the Design-Builder shall:

.1

afford the Owner and other contractors reasonable opportunity to introduce and store their products and use their construction machinery and equipment to execute their work;

.2

co-ordinate and schedule the Work with the work of other contractors and Owner’s own forces and connect as specified or shown in the Contract Documents;

.3

participate with other contractors and the Owner in reviewing their schedules when directed by the Owner; and

.4

where part of the Work is affected by or depends upon for its proper execution the work of other contractors or Owner’s own forces, promptly report to the Owner in writing and prior to proceeding with that part of the Work, any apparent deficiencies in such work. Failure by the Design-Builder to so report shall invalidate any claims against the Owner by reason of the deficiencies in the work of other contractors or Owner’s own forces except those deficiencies not then reasonably discoverable.

3.3.4

Where a change in the Work is required as a result of the co-ordination and connection of the work of other contractors or Owner’s own forces with the Work, the changes shall be authorized and valued as provided in GC 6.1 - CHANGES, GC 6.2 - CHANGE ORDER, and GC 6.3 - CHANGE DIRECTIVE.

3.3.5

Claims, disputes, and other matters in question between the Design-Builder and other contractors shall be dealt with as provided in Part 8 of the General Conditions - DISPUTE RESOLUTION provided the other contractors have reciprocal obligations. The Design-Builder shall be deemed to have consented to arbitration of any dispute with any other contractor whose contract with the Owner contains a similar requirement to arbitrate such dispute.

3.4.1

The Design-Builder shall:

.1

prepare and submit to the Owner prior to the first application for payment, a schedule of the Work that indicates the timing of the major activities of the Work and provides sufficient detail of the critical events and their inter relationship to demonstrate the Work will be performed in conformity with the Contract Time;

.2

monitor the progress of