Exhibit 10.11
        Separation Agreement between Skye and Mike Stebbins










This
      Separation Agreement (“Agreement”) is entered into this 20 th  day of
      May 2005, by and between Tankless Systems Worldwide, Inc., a Nevada corporation
      (the “Company”), and Michael D. Stebbins (“Employee”).





**WHEREAS** ,
      the
      Employee has provided (i) valuable business and operational services to the
      Company and its affiliated entities for a substantial period of time and (ii)
      advice to the Company and its affiliated entities in connection with its
      business, namely water heating appliances for homes (the “Business”);
      and





**WHEREAS** ,
      Employee’s advice and assistance has been instrumental and valuable in designing
      and developing a new line of products for the Company; and





**WHEREAS** ,
      the
      efforts, services and contributions of Employee have enhanced the Company’s
      ability to sell product, provide warranty services to its customers, increase
      the value of its stock and to generally improve the conduct its business;
      and





**WHEREAS** ,
      Employee has acted diligently, efficiently and in good faith in the performance
      of the services to the Company and has observed a duty of loyalty to the Company
      and its affiliates in relation to communications with employees, customers,
      clients and other business contacts and business relations of the Company and
      all services, work and work product have been professional in quality and
      responsive to the mandate of the needs of the Company; and





**WHEREAS** ,
      the
      Company, as an inducement to Employee to assist the Company in its Business,
      agreed to further compensate Employee at such time as the Company had applied
      for patents with respect to new technologies and had commenced plans to produce
      new products based on such proprietary technologies, which conditions precedent
      have now been satisfied; and





**WHEREAS** ,
      the
      parties desire to terminate their relationship such that Employee will no longer
      be performing any services for the Company; and





**WHEREAS** ,
      the
      parties desire to resolve any and all claims or disputes that may exist between
      one another and release one another from any future claims;





**NOW,
      THEREFORE** ,
      for
      valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, and the covenants contained herein, the parties hereto agree
      as
      follows:








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1.  Issuance
      of Stock for Services .
      In
      consideration of services heretofore rendered by Employee to the Company which
      have not otherwise been compensated in any manner, the Company hereby agrees
      to
      issue to Employee Two Hundred Fifty Thousand (250,000) shares of the Company’s
      Common Stock, $0.001 par value, which shares shall be restricted pursuant to
      the
      provisions of Rule 144 of the Securities Act of 1933 (“Shares”). The Shares
      shall be issued upon the execution of this Agreement and, when issued, shall
      be
      deemed validly issued, fully paid and non-assessable. The Shares shall be in
      full and complete payment of all services rendered to the Company and all
      expenses incurred by Employee in any manner relating to the Company, or any
      of
      its affiliates, prior to the date of this Agreement. Such compensation shall
      be
      deemed fully earned when paid and no portion shall be subject to refund or
      return to the Company.





2.  Agreed
      Value of Shares .
      All
      Shares issued in satisfaction of this Agreement shall be deemed to have a stated
      fair market value of $0.05 per share (which price was not arbitrarily
      determined, and takes into consideration the current price of the Company’s free
      trading shares and the restrictions placed on the Shares issued, the financial
      condition of the Company and its operations at the time of execution of this
      Agreement, and the fact that the public market for such stock has been
      substantially illiquid for some time and subject to dramatic changes based
      on
      volume).





3.  Release
      and Indemnity .
      Except
      for the performance of obligations contained in this Agreement, Employee, for
      himself and on behalf of any other party claiming by, through or under him,
      hereby releases, remises, discharges, waives and forgives the Company and each
      of its affiliated entities, and their respective past, present and future
      officers, directors, shareholders, owners, employees, agents, representatives,
      attorneys, accountants, Employees, contractors, affiliates, predecessors,
      successors and assigns (collectively, the “Released Parties”), from and against
      all rights and claims Employee may have against any of the Released Parties
      arising out of, or by reason of, any cause, matter, or thing whatsoever existing
      as of the date of this Agreement, whether known to the parties at the time
      of
      the execution of this Agreement or not. Employee hereby agrees to indemnify
      and
      save harmless the Released Parties from any actions, causes of action, claims,
      demands, damages, costs and expenses, including reasonable attorneys’ fees,
      incurred by or demanded from the Released Parties directly or indirectly arising
      out of or resulting from any act or omission made by Employee or Employee’s
      employees, agents or subcontractors.





4.  Disclosure
      of Inventions, etc .
      Employee shall promptly disclose to the Company, in writing and form
      satisfactory to the Board of Directors thereof, all discoveries, developments,
      improvements and innovations, whether or not patentable, (hereinafter referred
      to as “Inventions”) conceived, developed, created, made or reduced to practice
      by the Employee prior to or following the date hereof so long as Employee shall
      be affiliated with the Company or any of its affiliates, which are in any way
      related to the business of the Company and whether conceived or made during
      regular working hours or any other time. The Employee shall likewise disclose
      to
      the Company any such Inventions conceived or made by others which may be of
      benefit to the Company, the knowledge of which the Employee obtained during
      the
      term hereof.


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5.  Assignment
      of Inventions, etc .
      Employee hereby assigns, transfers and conveys all of his rights, title and
      interest to or in any and all such Inventions to the Company. Employee further
      agrees to execute such documents and to perform such other actions and
      activities, at the expense of the Company, as may be necessary or desirable
      as
      determined by the Company’s Board of Directors thereof: (i) for the filing of
      patent applications and issuance of patents (both domestic and foreign) for
      such
      Inventions; and (ii) to complete exclusive ownership by the Company of such
      Inventions and patent applications and patents. It is mutually understood and
      agreed that the term “Inventions” as used herein shall be construed to include
      all forms of intellectual property and the term “patent” as used herein shall be
      interpreted to include all forms of intellectual property protection, including,
      without limitation, patents, copyrights, international copyrights and literary
      property.





6.  Confidentiality
      and Non-Disclosure .
      Employee understands and acknowledges that the Company and its affiliates have
      developed and rely on contacts, confidential information and trade secrets
      relating to the business and affairs of the Company and its affiliates and
      that
      such information is the sole and exclusive property of the Company
      (“Confidential Information”). The Confidential Information includes matters
      known to the Company and its Affiliates prior to the date of this Agreement
      as
      well as matters newly acquired by the Company and its affiliates during the
      term
      of this Agreement. Employee agrees to hold all Inventions and Confidential
      Information as trade secrets and proprietary information of the Company and
      further warrants never to use any such Inventions or Confidential Information
      to
      compete with or against the Company either during the term of this Agreement
      or
      at any time thereafter. Employee shall hold in confidence, not use, except
      for
      the benefit of the Company, and not disclose to anyone without prior written
      authorization by the Company, any and all Confidential Information, written,
      oral or otherwise, relating to the Inventions or the business or operations
      of
      the Company, or its clients or customers, including, without limitation,
      scientific or technical information, market or marketing information, personal
      contacts, designs, processes, procedures, formulas or improvements which
      Employee may obtain prior to, during or subsequent to the term of this
      Agreement. Employee further agrees to hold and use articles representing or
      disclosing said Inventions and Confidential Information only in such manner
      as
      would benefit and protect the Company including holding such information in
      confidence until the release thereof is authorized by the Company’s Board of
      Directors. Employee shall deliver or return to the Company, upon its request,
      all information in tangible form which Employee received from the Company
      including all copies thereof. Employee further warrants that during the term
      hereof he will maintain full fidelity to the stockholders of the Company and
      guard and protect the interests thereof with the same prudence and diligence
      as
      he would his own. Title in any information or data received from the Company,
      including all copies thereof, shall be in and remain with the Company at all
      times. Except as otherwise expressly provided herein, the provisions of this
      paragraph shall be effective and remain in full force and effect for a period
      of
      five (5) years from the date hereof.




7.  Non-Competition
        Restriction . Employee
        recognizes and understands that his position with the Company and his access
        to
        protected information will enable Employee to compete with the Company on
        an
        unfair basis, thereby damaging the Company and the Company’s goodwill. Because
        the Company’s goodwill is a valuable and unique asset and because of the highly
        technical and proprietary nature of the Company’s business, it is necessary to
        afford the Company fair protection for that asset and its business. Accordingly,
        and as a material inducement for the Company to hire Employee and pay Employee
        the salary and other benefits associated with Employee’s employment, Employee
        covenants and agrees that commencing on the date of this Agreement and
        continuing for a period of one (1) year from the date hereof, Employee will
        not
        directly, or indirectly, either as a consultant, owner, independent contractor,
        officer, director, principal, agent, trustee or through the agency of any
        individual or entity, engage in the water heater or water heating systems
        business within the United States or within any territory where the Company
        has
        water heater contracts. Although the Company anticipates an international
        clientele and possesses a legitimate interest in protecting goodwill in that
        geographic territory, the geographic scope of this non-competition covenant
        will
        be limited to locations in which the Company sells its products and services
        as
        well as the entire United States of America.




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8.  Disclosure
      to Media .
      Employee agrees not to advertise or make any public announcements to the media
      or to others regarding the existence of this Agreement or the performance
      hereunder without the prior written approval of the Company.





9.  Non-Disparagement .
      Employee agrees that neither he, nor any person or entity in active concert
      or
      participation with him or who is acting under his direction, will make any
      statement or otherwise communicate with anyone (including, but not limited
      to,
      any vendors, suppliers, business affiliates and associates, partners, employees,
      shareholders, Employees, advisors, distributors, sales representatives,
      customers, underwriters, attorneys and agents) in a manner that is disparaging
      to the Company or any of the Released Parties.





10.  Injunctive
      Relief .
      Employee agrees that the breach by him of any of the foregoing covenants
      contained in paragraphs 5 through 9 hereof is likely to result in irreparable
      harm, directly or indirectly, to the Company and therefore Employee consents
      and
      agrees that if he violates any of such obligations, the Company shall be
      entitled, among and in addition to any other rights or remedies available
      hereunder or otherwise, to temporary and permanent injunctive relief to prevent
      Employee from committing or continuing a breach of such
      obligations.





11.  Severability,
      Reformation .
      It is
      the desire, intent and agreement of the parties hereto that the restrictions
      placed upon Employee by paragraphs 5 through 10 hereof shall be enforced to
      the
      fullest extent permissible under the law and public policy applied by any
      jurisdiction in which enforcement is sought. Accordingly, if, and to the extent
      that, any portion of the covenants contained in these paragraphs shall be
      adjudicated to be unenforceable, such portion shall be deemed amended to delete
      therefrom or to reform the portion thus adjudicated to be invalid or
      unenforceable, such deletion or reformation to apply only with respect to the
      operation of such portion in the particular jurisdiction in which such
      adjudication is sought.




12.  Attorneys’
        Fees, etc .
        If it
        shall be necessary for either party to place this Agreement in the hands
        of an
        attorney at law for enforcement of any of the provisions hereof, the
        non-prevailing party in such matter shall be liable to the prevailing party
        for
        all costs, expenses and reasonable attorney’s fees incurred in connection
        therewith, irrespective of whether suit shall be commenced. The costs, expenses
        and attorney’s fees shall include, but not be limited to, costs, expenses and
        attorney’s fees incurred on appeal or in administrative
        proceedings.
 
 13.  No
        Withholding of Taxes .
        Employee acknowledges that the issuance of the Shares shall constitute taxable
        compensation to him and that any tax liability related thereto shall be the
        sole
        responsibility of Employee. By reason of the independent status of Employee,
        the
        Company is not required to and will not withhold federal, state or local
        income
        or any other tax from any payment to Employee under this Agreement and may
        file
        information returns with the United States Internal Revenue Service or similar
        state or local agencies regarding such payments under conditions imposed
        by
        applicable law or regulations.
 
 14.  Notices .
        Any
        notices or communications hereunder must be in writing, delivered in person
        or
        transmitted by Registered or Certified United States Mail, postage prepaid,
        return receipt requested, addressed as follows, unless such address is changed
        by written notice:
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If to Company:
            Tankless Systems Worldwide,Inc.
              7650
                E. Evans Rd., Suite C
              Scottsdale,
                Az 85260If
              to the Employee:
            Michael D. Stebbins




15.  Governing
      Law .
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Arizona.





16.  Successors
      and Assigns .
      This
      Agreement shall inure to the benefit of and be binding upon the parties hereto
      and their respective successors and assigns. The Company may, from time to
      time,
      in its sole discretion, assign all or part of its rights, duties and obligations
      herein to any of its affiliates or subsidiaries, without Employee’s prior
      consent.





17.  Third-Party
      Beneficiaries .
      To the
      extent appropriate, the Released Parties, and each of them, shall be deemed
      third-party beneficiaries to this Agreement.














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18.  Entire
      Agreement .
      This
      Agreement contains the entire agreement between the parties hereto and
      supersedes any prior understandings, commitments, or agreements, written or
      oral, with respect to the subject hereof. This Agreement shall not be modified,
      varied or amended except by written instrument of subsequent date duly executed
      by an authorized representative of each party. If any court of competent
      jurisdiction finds any provision of this Agreement invalid, unenforceable,
      or
      illegal, any such finding shall not affect the validity of the remaining
      provisions which shall remain in full force and effect.





19.  Counterparts .
      This
      Agreement may be executed in one or more counterparts, each of which shall
      be
      deemed an original but all of which shall constitute one and the same
      instrument.





IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement in multiple
      counterparts effective as of the date first written above.







“COMPANY”
            
            
            “EMPLOYEE”TANKLESS
                SYSTEMS WORLDWIDE, INC.,
              a
                Nevada corporation/s/ Thomas
              Kreitzer
            
            
            /s/ Michael
              D. StebbinsThomas
              Kreitzer, CEO
            
            
            Michael
              D. Stebbins