Document:

Exhibit 10.01

                                      LEASE

THIS LEASE, dated for reference the 1st day of September, 2001 is made between:

CANDEN INDURSTRIES LTD., a company duly incorporated
under the laws of the Province of British Columbia under
Certificate of Incorporation Number 128371 and having an office
at #201-10185 199B Street, Langley, B.C., VIM 3W9

("Landlord")

AND

ESSENTIAL INNOVATIONS CORP. a company duly
incorporated under the laws of Canada under Certificate of
Incorporation Number 54149 and having an office at #406-8342-
130th Street, Surrey, B.C., V3W 8J9

("Tenant")

BACKGROUND

         A. The Landlord is the registered owner of those lands and premises
located at Unit #200-10125 199B Street, Langley, B.C. and more particularly
described herein;

         B. The Landlord has agreed to lease to the Tenant a portion of the
Building, on the terms and conditions set out below.

AGREEMENTS

         For good and valuable consideration, the receipt and sufficiency of
which each party acknowledges, the parties covenant and agree as follows:

                                     PART 1.
                                   DEFINITIONS

1.1 Defined Terms. In this Lease:

         (a) "Additional Rent" means all sums of money to be paid by the Tenant,
whether to the Landlord or otherwise, under this Lease other than Basic Rent;

         (b) "Affiliate" of any of the parties means any corporation which is
Controlled by or which Controls that party or any other corporation Controlled
by, or which Controls, that corporation, whether the Control be direct or
indirect;

         (c) "Basic Rent" means the rent provided for in paragraph 4.2 of this
Lease;

         (d) "Building" means the building located on the Land in which the
Premises are located having a civic address of #200 10125 199B Street, Langley,
B.C., VIM 3W9.

         (e) "Commencement Date" shall mean September 1, 2001;

         (f) "Common Area" means those areas of the Land and Building that are
for the common or joint use or benefit of the Tenant, its employees, customers
and other invitees in common with others entitled to the use and benefit of such
areas in the manner and for the purposes permitted by this Lease, including
without limitation public hallways, stairwells, mechanical rooms, parking areas,
roadways, sidewalks, landscaped areas, common loading areas and driveways;

<PAGE>

         (g) "Common Facilities" means the electrical system, the heating,
ventilating and air-conditioning system, the roof membrane, the plumbing and
drainage system, fountains, the exterior irrigation system, signs, lamp
standards, public washroom, facilities, and all other facilities which are
provided or designated by the Landlord for the common or joint use and benefit
of the occupants of the Building;

         (h) "Control" "Controls" and "Controlled" includes, without limitation:

                  (i)      the right to exercise a majority of the votes which
                           may be cast at a general meeting of a corporation,

                  (ii)     the right to elect or appoint, directly or
                           indirectly, a majority of the directors of a
                           corporation or other persons who have the right to
                           manage or supervise the management of the affairs and
                           business of the corporation, and

                  (iii)    any change in the general partners of a partnership,
                           including the resignation of a partner;

         (i) "Fixturing Period" means the period commencing on July 1, 2001 and
ending on August 31, 2001.

         (j) "Hazardous Substance" means any substance which, when released into
the Building or the Land or any part thereof, or into the natural environment,
is likely to cause, at any time, material harm or degradation to the Building or
the Land or any part thereof, or to the natural environment or material risk to
human health, and includes, without limitation, any flammables, explosives,
radioactive materials, asbestos, polycholorinatedbiphenyls, chlorofluorocarbons,
hydrochlorofluorocarbons, urea formaldehyde foam insulation, radon gas,
chemicals known to cause cancer or other toxicity, pollutants, contaminants,
hazardous wastes, toxic substances or related materials, petroleum and petroleum
products, or any substance declared to be hazardous or toxic or a pollutant,
dangerous good, deleterious substance, effluent, hazardous waste or special
waste, or words of similar meaning under any laws now or enacted in the future,
which affect or apply to the Building, the Land, the Landlord, the Tenant, or
any of them;

         (k) "Land" means the land on which the Building is situated being
legally described as Parcel A (See BJ201429) of lots 2 & 3 District Lot 124
Group 1 New Westminister Plan LMP 11591; PID 018-870-261, Lot F District Lot 118
Group 1 New Westminister District Plan LMP17879;

         (l) "Leasehold Improvements" means all improvements, installations,
alterations and additions from time to time made, erected or installed by, or on
behalf of, the Tenant in the Premises, with the exception of all those items
commonly referred to as tenant trade fixtures, furniture and equipment not of
the nature of Leasehold fixtures, but includes all partitions affixed to the
Building (including floor to ceiling partitions) and includes all wall-to-wall
carpeting with the exception of carpeting laid over vinyl tile or other finished
floor and affixed so as to be readily removable without damage;

         (m) "Lease Year" means, in the case of the first Lease Year, the period
beginning on the Commencement Date and terminating 12 months from the last day
of the calendar month in which the Commencement Date occurs (except that if the
Commencement Date occurs on the first day of a calendar month, the first Lease
Year shall terminate on the day prior to the first anniversary of the
Commencement Date) and, in the case of each subsequent Lease Year, means each
12-month period after the first Lease Year;

<PAGE>

         (n) "Operating Costs" means all costs and expenses incurred by or on
behalf of the Landlord, without duplication, for the ownership, operation,
maintenance, repair, replacement and management of the Building and the Land,
including, without limitation:

                  (i)      the cost of all insurance which the Landlord is
                           obligated to obtain, and any other insurance its
                           mortgagee, if any, requires to be obtained, in
                           respect of any risk or casualty normally insured
                           against by prudent landlords, including public
                           liability, property damage and loss of rental income
                           insurance, as may be allocated by the Landlord to the
                           Building,

                  (ii)     the cost of repairs, maintenance and such
                           replacements to the Common Area and the Common
                           Facilities as are properly chargeable in accordance
                           with sound accounting practice to operating expenses
                           as distinguished from capital replacements or
                           improvements,

                  (iii)    the cost of cleaning, painting, gardening,
                           landscaping, removal of snow, removal of garbage and
                           other waste, including, without limitation, the cost
                           of all plate glass cleaning,

                  (iv)     the cost of all light bulb and tube replacements for
                           the Common Area,

                  (v)      all charges for public services and utilities
                           including hot and cold water, gas, electricity, sewer
                           (sanitary and storm) furnished to the Common Area and
                           Common Facilities,

                  (vi)     the cost of all security systems and security
                           personnel,

                  (vii)    fees and other remuneration payable for operating and
                           maintaining the Building,

                  (viii)   building supplies and the rental equipment used by
                           the Landlord in maintenance and operating services
                           for the Building,

                  (ix)     depreciation or amortization (computed by the
                           Landlord in accordance with accounting principles
                           generally accepted in British Columbia) of the
                           capital equipment included as Common Facilities,

                  (x)      all non-capital costs incurred in acquiring,
                           installing, operating, maintaining, revising
                           repairing, restoring, renewing and replacing any
                           energy conservation, fire safety, sprinkler and life
                           safety systems and equipment for the Building, and
                           for effecting any improvements to the Building made
                           to comply with any changes in insurance or legal
                           requirements,

                  (xi)     the portion of Taxes which may be reasonably
                           allocated to the Common Area and the Common
                           Facilities, and

<PAGE>

                  (xii)    a management fee to reimburse the Landlord for its
                           reasonable administrative costs relating to its
                           management of the Building, not to exceed 5% of the
                           Rent;

but does not include any debt service or taxes personal to the Landlord. If any
of the costs and expenses apply to the Building as a whole or a portion thereof
and are not separately allocated to the Premises of one or more tenants of the
Building, the Landlord in its sole discretion acting reasonably, may allocate a
portion of those costs to the Operating Costs;

         (o) "Premises" means the portion of the Building as outlined in heavy
black on the plan attached hereto as Schedule 1, but excludes the surface of any
exterior walls, doors and windows of the Building and any area below the upper
surface of the subfloor or above the undersurface of the roof structure;

         (p) "Rent" means Basic Rent and Additional Rent;

         (q) "Rentable Area" applied to the premises set aside by the Landlord
for leasing to a tenant of the Building or applied to the Premises means:

                  (i)      the area expressed in square feet, as determined by
                           an architect, of the Premises, including basement
                           floors and mezzanines, measured from the centre line
                           of all walls separating the Premises from adjacent
                           leasable premises, from the lease line separating
                           areas where no wall exists, and from the exterior
                           surfaces of exterior walls, walls adjoining corridors
                           or other common facilities and other permanent
                           partitions; without deduction for any space occupied
                           or used for columns, stairs, elevators, escalators or
                           other interior construction or equipment, but if part
                           of a wall or the front of the Premises is recessed
                           from the line of the building or the line of a wall
                           of the building, as the case may be, in which the
                           Premises are situate, the last-mentioned lines are
                           considered to be the outer surface of the outside
                           walls of the Premises,

                  (ii)     a proportionate share, reasonably and equitably
                           designated by the Landlord, of the area of the access
                           corridors, refuge areas, public washrooms,
                           administration areas, and electrical, telephone,
                           sprinkler and janitorial closets in the Building, and

                  (iii)    for the purposes of this lease, the Rentable Area of
                           the Premises is 7000 square feet.

         (r) "Taxes" means all taxes, rates, duties, levies and assessments
whatsoever, whether municipal, parliamentary or otherwise, levied, imposed or
assessed against the Building or the Land, or both, or any part of either of
them or upon the Landlord in respect of the Building or the Land or in respect
of the use and occupation of the Building or the Land by any competent
authority, including, without limitation:

                  (i)      those levied, imposed or assessed for education,
                           schools, sewage, water consumption and local
                           improvements,

                  (ii)     all costs and expenses (including legal and other
                           professional fees) reasonably incurred by the
                           Landlord in good faith in contesting, resisting or
                           appealing any taxes, rates, duties, levies or
                           assessments, and

<PAGE>

                  (iii)    any and all taxes which may in future be levied in
                           lieu of taxes as set out above provided such taxes
                           relate to the value of the Building or the Land or
                           both or any part of either of them, but excluding:

                  (iv)     taxes and license fees in respect of any business
                           carried on by tenants and occupants of the Building
                           including the Landlord, and (v) income or profit
                           taxes on the income of the Landlord or taxes
                           otherwise personal to the Landlord to the extent
                           those taxes are not levied in lieu of taxes, rates,
                           duties, levies and assessments against the Building
                           or the Land, or both, or any part of either of them
                           or upon the Landlord in respect of them;

         (s) "Tenant's Proportionate Share" means a fraction the numerator of
which is the Rentable Area of the Premises and the denominator of which is the
Rentable Area of all premises in the Building intended for leasing, whether
actually leased or not;

         (t) "Term" means the period of time set out in paragraph 3.2.

                                     PART 2.
                                     INTENT

2.1 Net Lease. The Tenant will pay to the Landlord duly and punctually all Rent
without any deduction, abatement or set-off whatsoever, it being the intention
of the Landlord and the Tenant that this Lease is to be a completely carefree
net lease to the Landlord. All expenses, costs, payments and outgoings incurred
in respect of, or relating to, the Premises or the Building or the Land whether
or not referred to in this Lease, and whether or not within the present
contemplation of the Landlord or the Tenant, will be borne by the Tenant so that
Rent will be absolutely net to the Landlord except as otherwise specifically
provided in this Lease.

                                     PART 3.
                                 PREMISES, TERM

3.1 Demise. The Landlord leases the Premises to the Tenant for the Term, and the
Tenant leases the Premises from the Landlord, on and subject to the covenants
and agreements contained in this Lease.

3.2 Commencement of Term. The Term of this Lease is for 36 months and will
commence on September 1, 2001.

3.3 Extension of Term. If the Term commences on a day other than the first day
of a month, the term will be extended by the period from the commencement date
of the Lease to and including the last day of the month in which the
commencement date occurs.

3.4 Fixturing Period. The Tenant shall be granted possession of the Premises
during the Fixturing Period. The Tenant will not be required to pay Rent during
the Fixturing Period, however, the Tenant will comply with all other terms and
provisions of this Lease.

                                     PART 4.
                            RENT AND ADDITIONAL RENT

4.1 Covenant to Pay Rent. The Tenant covenants to pay when due Rent and all
other costs and charges payable by it under this Lease.

<PAGE>

4.2 Basic Rent.

         (a) During the first two Lease Years, the Tenant will pay to the
Landlord, at the office of the Landlord or at such other place in Canada as the
Landlord designates from time to time in writing, in lawful money of Canada and
without deduction, set-off or abatement Basic Rent of $41,650.00 per year plus
G.S.T. payable in equal consecutive monthly instalments of $3,470.83 each plus
G.S.T. in advance on the first day of each calendar month;

         (b) Basic Rent for the first two Lease Years has been determined on the
basis that the Rentable Area of the Premises is 7000 square feet and Basic Rent
is payable at a rate of $5.95 per square foot of the Rentable Area. If the
Landlord determines the Rentable Area of the Premises to be other than the
number of square feet, specified in this paragraph, the Basic Rent will be
adjusted accordingly based on the rate above;

         (c) During the third Lease Year, the Tenant will pay to the Landlord,
at the office of the Landlord or at such other place in Canada as the Landlord
designates from time to time in writing, in lawful money of Canada and without
deduction, set-off or abatement Basic Rent of $45,150.00 per year plus G.S.T.
payable in equal consecutive monthly instalments of $3,762.50 each plus G.S.T.
in advance on the first day of each calendar month;

         (d) Basic Rent for the third Lease Year has been determined on the
basis that the Rentable Area of the Premises is 7000 square feet and Basic Rent
is payable at a rate of $6.45 per square foot of the Rentable Area. If the
Landlord determines the Rentable Area of the Premises to be other than the
number of square feet, specified in this paragraph, the Basic Rent will be
adjusted accordingly based on the rate above;

         (e) If an adjustment is required the Landlord will calculate the amount
of the difference between the original Basic Rent and the revised Basic Rent for
the period prior to the revision and if that results in an increase in Basic
Rent the Tenant will pay the amount immediately or if a decrease the Landlord
will reimburse the Tenant for it immediately without any interest.

         (f) All Rent will accrue from day to day, and if for any reason it is
necessary to calculate Rent for less than 1 year or 1 month, an appropriate
adjustment will be made pro rata on a daily basis to compute the Rent for that
irregular period.

4.3 Additional Rent. In each calendar year the Tenant will pay to the Landlord,
as Additional Rent:

         (a) the Tenant's Proportionate Share of Operating Costs,

         (b) the Tenant's Proportionate Share of Taxes,

         (c) the cost of all utilities, including without limitation,
electricity, gas, other fuel, water and telephone, as set out in paragraph 8.1,

         (d) all other sums of money required under this Lease to be paid to the
Landlord by the Tenant whether or not designated as Additional Rent other than
Basic Rent.

4.4 Payment of Additional Rent. Additional Rent will be payable as follows:

         (a) Whenever the Tenant is to pay an amount of money referable to a
period of time wholly or partly within a calendar year, the Landlord will,
acting reasonably, estimate the amount payable by the Tenant before the
beginning of the calendar year and the Tenant will pay to the Landlord that
amount in equal consecutive monthly instalments in advance during the calendar
year with the other Rent payments provided for in this Lease. Additional Rent
payments will be subject to GST, payable by the Tenant. The Landlord may
reasonably adjust its estimates and the amount payable by the Tenant from time
to time during the calendar year.

<PAGE>

         (b) Within 90 days after the end of each calendar year the Landlord
will make a final determination of the Additional Rent for the calendar year.

         (c) If the amount determined under paragraph 4.4(b) exceeds the sum of
the instalments paid by the Tenant for the relevant period, then the Tenant will
pay to the Landlord as Additional Rent within 30 days of being notified by the
Landlord the excess without interest or, if the sum of the instalments paid by
the Tenant during the preceding calendar year exceed the amounts calculated
under paragraphs 4.4(b), the Landlord will pay the excess to the Tenant.

4.5 Free Rent Period. Despite paragraph 4.2, the Landlord and Tenant each
acknowledge and agree that the Tenant shall not be required to pay any Basic
Rent for the period from October 1,2001 to November 30, 2001, however, the
Tenant shall be required to pay Additional Rent during this period of time and
shall comply with all other terms and provisions of this Lease.

4.6 Post Dated Cheques or Pre-authorized Payment Plan. The Tenant, at the
request of the Landlord, will provide the Landlord with post-dated cheques for
the each month of the Term, dated the first day each month, in an amount equal
to monthly payments for Basic Rent and Additional Rent, or alternatively, the
Tenant will authorize the financial institution at which the Tenant maintains an
account to pay the Landlord and debit the account of the Tenant amounts equal to
the monthly payments for Basic Rent and Additional Rent, as estimated by the
Landlord, such payments to be made on the dates that they accrue due under this
Lease. The Tenant will instruct the financial institution to transfer these
payments to the account designated by the Landlord from time to time and the
Tenant will pay all service charges incurred as a result of this pre-authorized
payment plan.

4.7 Security Deposit. Upon the execution of this Lease, or before, the Tenant,
or its agent, will pay to the Landlord a security deposit in the amount of
$10,049.09 including GST (the "Security Deposit"), which will be held in trust
as a deposit to be applied to the first month's Basic Rent plus one month's
Additional Rent. The remainder of the Security Deposit will be held in trust
without interest, as security for the performance by the Tenant of all the
Tenant's agreements in this Lease. If at any time during the Term the Tenant is
in default of this Lease, then the Landlord may, at its option, may apply all or
any portion of the Security Deposit as may in the Landlord's reasonable opinion
be necessary to compensate it for the breach, including the Landlord's legal
fees and disbursements on a solicitor and own client basis. If the Tenant is not
in default under this Lease at the expiry or earlier termination of the Term,
then the Security Deposit will be paid to the Tenant at that time. If the
Landlord does apply all or any portion of the Security Deposit as compensation
for breach of the Lease, then the Tenant will upon written demand remit to the
Landlord a sufficient amount to restore the Security Deposit to the original sum
deposited, plus any G.S.T. owing in connection therewith. The Landlord may, at
any time, return the Security Deposit to the Tenant rather than apply it to
rectify a breach of the Lease by the Tenant.

<PAGE>

                                     PART 5.
                                 USE OF PREMISES

5.1 Permitted Business. The Tenant will use the Premises as an office as well as
for light manufacturing and any and all uses incidental and necessary thereto.
The Tenant will not use the Premises or permit them to be used for any other
purpose without the Landlord's prior written consent.

5.2 Operations by Tenant. The Tenant will operate the Premises in a good,
efficient and business-like manner and will keep the Premises neat and clean.

                                     PART 6.
                                     PARKING

6.1 Tenant Parking. The tenant shall have the sole and exclusive use of parking
stalls #1 through #7 as shown on attached Schedule 1.

                                     PART 7.
                                     REPAIR

7.1 Landlord's Repair. The Landlord will keep in a state of repair, as a prudent
owner of a first class commercial development would do, the foundations, roofs,
exterior walls (excluding fronts of premises and glass in premises set aside by
the Landlord for leases to tenants of the Building), structural sub-floors,
bearing walls, columns, beams and other structural elements of the Building, the
systems provided for bringing utilities to the Premises, the Common Areas and
the Common Facilities.

7.2 Tenant's Repair. The Tenant will at its cost, subject to paragraph 7.3:

         (a) keep the Premises in good and substantial state of repair, subject
to reasonable wear and tear, including all Leasehold Improvements but with the
exception of structural elements of the Building;

         (b) permit the Landlord upon not less than 3 days notice or at any time
during an emergency or perceived emergency to enter and examine the state of
maintenance and repair, and to perform at its cost such maintenance and repair
as required by the Landlord, according to notice in writing, and leave the
Premises in a good and substantial state of repair as required above; and

         (c) if any part of the Building, including, without limitation,
structural elements thereof and any part of the Common Area becomes damaged or
destroyed through the wilful act, negligence, or omission of the Tenant or any
of its officers, employees, customers or other invitees, reimburse the Landlord
for the reasonable cost of repairs or replacement promptly upon demand.

7.3 Termination in Event of Damage

         (a) The Landlord or the Tenant by written notice to the other given
within 60 days of the occurrence of damage to the Building, may terminate this
Lease:

                  (i)      if the Building is damaged by any cause and in the
                           reasonable opinion of the Landlord either cannot be
                           repaired or rebuilt with reasonable diligence within
                           180 days after the occurrence of the damage or the
                           cost of repairing or rebuilding it would exceed by
                           more than $10,000 the proceeds of the Landlord's
                           insurance available for that purpose, or

                  (ii)     if the Premises are damaged by any cause and the
                           damage is such that the Premises or a substantial
                           part of the Premises are rendered not reasonably
                           capable of use by the Tenant for the conduct of its
                           business and in the reasonable opinion of the
                           Landlord cannot be repaired or rebuilt with
                           reasonable diligence by 6 months before the end of
                           the Term.

<PAGE>

         (b) If this Lease is terminated under either (a) or (b) above, neither
the Landlord nor the Tenant will be bound to repair as provided in paragraphs
7.1 and 7.2, and the Tenant will deliver up possession of the Premises to the
Landlord with reasonable speed but in any event within 15 days after the giving
of the notice of termination, and all Rent will be apportioned and paid to the
date of damage. In the event of damage to the Premises or to the Building and if
the damage is such that the Premises or any substantial part thereof is rendered
not reasonably capable for use and occupancy by the Tenant for the purpose of
its business, then from and after the date of the damage and until the Premises
are again reasonably capable of use and occupancy as aforesaid Basic Rent and
Additional Rent shall abate in proportion to the part or parts of the Premises
not reasonably capable of use and occupation.

7.4 Diligence and Quality. All repairs to be done by either the Landlord or the
Tenant will be commenced as soon as reasonably practicable and completed
diligently and in a good and workmanlike manner.

7.5 Landlord's Approval.

         (a) Before commencing any repairs, replacements, maintenance,
alteration, decoration or improvements set out above, or elsewhere referred to
in this Lease, which are reasonably estimated by the Tenant to cost in excess of
$5,000 the Tenant will obtain the Landlord's written approval, which approval
will not be unreasonably withheld or delayed, and will, if reasonably required
by the Landlord to do so, submit plans and specifications therefor.
Notwithstanding the foregoing, the Tenant shall not replace or repair any plate
glass within the Premises without the Landlord's prior written approval.

         (b) The Tenant will not in any event make any alterations to the
structure of the Building or to the exterior appearance of the Building.

7.6 Landlord's Right to do Tenant's Repair. If the Tenant refuses or neglects to
repair properly as required under this Part and to the reasonable satisfaction
of the Landlord, the Landlord may make such repairs without liability to the
Tenant for any loss or damage that may accrue to the Tenant by reason thereof,
and upon completion thereof, the Tenant will pay the Landlord's actual
reasonable costs in the circumstances plus 15% of such costs, for making such
repairs, immediately upon presentation of an invoice for such costs.

                                     PART 8.
                        UTILITIES AND SERVICES - PREMISES

8.1 Utility and Service Charges.

         (a) The Landlord will use commercially reasonable efforts to have the
utilities such as gas and electricity, provided to the Premises, separately
metered and invoiced directly to the Tenant from the supplier.

         (b) The Tenant will pay directly to the supplier when due all charges
for all utilities separately metered and invoiced for the Premises.

         (c) For all utilities not so separately metered and invoiced the Tenant
will pay its share of all costs for them as reasonably allocated by the Landlord
under this Lease.

         (d) The Tenant will pay when due all costs for all other utilities and
services provided to the Premises, including window cleaning and janitorial
service (if any).

8.2 Limitation of Liability. The Landlord will not be liable to the Tenant in
damages or otherwise for an interruption or failure in the supply of utilities
or services to the Premises unless caused by the wilful act, negligence or
omission of the Landlord but the Landlord will use diligent efforts to secure
the re-supply of that utility or service.

<PAGE>

8.3 Tenant not to Overload Utility and Service Facilities. The Tenant will not
install equipment that will exceed or overload the capacity of utility or
service facilities and if, in the reasonable opinion of the Landlord, equipment
installed by the Tenant requires additional facilities, they will be installed
at the Tenant's expense. The Landlord reserves the right to install such
additional equipment at the Tenant's expense, which will not exceed 15% of the
cost of the additional equipment.

                                     PART 9.
                          SUBORDINATION, ATTORNMENT AND
                           STATUS STATEMENT BY TENANT

9.1 Subordination and Attornment. This Lease is subordinate to every mortgage
and the Tenant will subordinate this Lease to every mortgage that comes into
being after the date of this Lease and execute promptly and in registrable form
a document in confirmation of the subordination if requested by the Landlord, in
which the Tenant also will agree with the mortgagee that if the mortgagee
becomes a mortgagee in possession or takes action to realize the security of the
mortgage the Tenant will attorn to the mortgagee as a tenant upon all the terms
of this Lease, but only if the mortgagee agrees in writing to accept the
attornment and permit the Tenant, if not in default, to continue in occupation
of the Premises until this Lease is terminated by the passage of time or by
action taken because of a default of the Tenant.

9.2 Status Statement. At any time and from time to time within 10 days after a
written request by the Landlord, the Tenant will execute, acknowledge and
deliver to the Landlord or an assignee, mortgagee, proposed purchaser or other
person as the Landlord designates, a certificate in a form and content
reasonably requested by the Landlord to include, without limitation, statements
that:

         (a) this Lease is unmodified and in force in accordance with its terms
(or if there have been modifications, that this Lease is in force as modified,
and identifying the modifications, or if this Lease is not in force, that it is
not) and that the Tenant is in possession of the Premises;

         (b) the commencement date and expiry date of the Lease;

         (c) the date to which Rent has been paid with particulars of any
prepayment of Rent;

         (d) whether or not there is an existing default by the Tenant in the
payment of Rent or any other sum of money under this Lease, and whether or not
there is any other existing default by any party under this Lease concerning
which a notice of default has been given, and if there is any, specifying its
nature and extent; and

         (e) whether or not there are any set-offs, defences or counterclaims
against the enforcement of the obligations of the Tenant under this Lease.

                                    PART 10.
                             INSURANCE AND INDEMNITY

10.1 Landlord's Insurance. The Landlord will take out and keep in force:

         (a) all risks, property insurance on the Building and comprehensive
boiler and machinery insurance on the equipment contained therein and owned by
the Landlord (excluding any property required to be insured by the Tenant or
other tenants), which insurance will be endorsed to cover the gross rental value
of the Building, all in such reasonable amounts and with reasonable deductibles
as determined by the Landlord, having regard to the size, age and location of
the Building;

         (b) commercial general liability insurance concerning the Landlord's
operations in the Building in such reasonable amounts and with such reasonable
deductibles as the Landlord acting as a prudent owner, determines, having regard
to the size, age and location of the Building; and

<PAGE>

         (c) such other form or forms of insurance as the mortgagee of the
Landlord reasonably considers advisable. The cost of insurance obtained under
this paragraph 10.1 will be included, in whole or in part, in Operating Costs.
The Landlord's insurance under paragraph 10(1)(a) will contain a waiver of
subrogation against the Tenant and its employees and agents. The Landlord's
insurance under paragraph 10(1)(b) will name the Tenant as a named insured and
contain cross liability and severability of interest provisions.

10.2 Tenant's Insurance. The Tenant, at its expense, will maintain, throughout
the Term and any period when it is in possession of all or any portion of the
Premises, the insurance ("Insurance") described in this paragraph 10.2. The
Tenant will cause each insurance policy to be (i) primary, noncontributing with,
and not excess of, any other insurance available to the Landlord or a mortgagee,
(ii) contain a prohibition against cancellation or material change that reduces
or restricts the insurance (except on 30 days' prior written notice to the
Landlord), (iii) in those instances in which the Landlord and a mortgagee are
insureds, contain a waiver in respect of the interests of the Landlord and a
mortgagee of any provision in any such insurance policies concerning any breach
or violation of any warranties, representations or conditions in such policies,
and (iv) be in a form and with insurers reasonably satisfactory to the Landlord
and a mortgagee. The insurance is as follows:

         (a) all risks property insurance on insurable property including,
without limitation, merchandise, furniture, fixtures and Leasehold Improvements,
to the full replacement value thereof;

         (b) commercial general liability insurance concerning the Premises and
the business conducted by the Tenant and any other persons in or from the
Premises with inclusive limits of $2,000,000 per occurrence. This insurance will
name the Landlord and a mortgagee as additional insureds and will contain cross
liability and severability of interests provisions;

         (c) Tenant's legal liability insurance for the actual cash value of the
Premises, including loss of use; and

         (d) non-owned automobile insurance, including contractual liability
and, on an owner's form, covering all licensed vehicles operated by or on behalf
of the Tenant, each with inclusive limits of not less than $2,000,000.

10.3 Waiver of Subrogation, Cross-Liability, Co-Insurance. Any policy of
insurance under paragraph 10.2(a), (b) and (c) will as is appropriate:

         (a) name the Landlord as a loss payee and contain a waiver of
subrogation against the Landlord and its employees and agents or a mortgagee,
whether the loss or damage is caused by the negligence of the Landlord or those
for whom the Landlord is in law responsible;

         (b) except concerning the Tenant's stock-in-trade, and furniture,
incorporate the standard mortgage clause of a mortgagee;

         (c) cover all property owned by the Tenant or for which the Tenant is
legally liable, located within the Building, in an amount not less than the full
replacement cost thereof, including by-laws extension, which will be reviewed at
least annually by the Tenant.

10.4 Proceeds of Tenant's Insurance. If this Lease is terminated in accordance
with the provisions of paragraph 7.3, the Tenant will be entitled solely to
those proceeds of insurance which represent the value of its stock-in-trade or
other items it is entitled to remove at the expiration of the Term, and not to
the extent of the value of Leasehold Improvements.

<PAGE>

10.5 No Alienation of Proceeds. Except as provided in this Lease, the Tenant
will not assign or otherwise alienate any proceeds of insurance.

10.6 Landlord's Right to Insure for Tenant. If the Tenant fails to take out or
keep in force any such Insurance, the Landlord will on not less than 72 hours
written notice to the Tenant have the right, but not the obligation, to do so
and to pay the premium therefor and in such event the Tenant will repay to the
Landlord the amount so paid by the Landlord as Additional Rent, payable on the
first day of the next month following the payment by the Landlord, but if the
Tenant cures that failure the Landlord will secure cancellation of the insurance
taken out by the Landlord at the Tenant's cost.

10.7 Limitation of Liability. The Landlord or the Landlord's insurer will not
make any claim against the Tenant or its employees or agents in respect of
damage, howsoever caused, to property which the Landlord has agreed to insure
hereunder. The Tenant or the Tenant's insurer will not make any claim against
the Landlord, or its employees and agents, in respect of damage, howsoever
caused, to property which the Tenant has agreed to insure hereunder.

10.8 Indemnification of Landlord. Except to the extent that liability is caused
by the wilful act or negligence of the Landlord or of persons for whom the
Landlord is responsible at law, the Tenant will indemnify the Landlord and save
it harmless from and against all claims, actions, damages, liabilities, costs
and expenses in connection with loss of life, personal injury or damage to
property arising from any occurrence on the Premises, or the occupancy or use of
the Premises, or occasioned wholly or in part by an act or omission of the
Tenant, its officers, employees, agents, customers, contractors or other
invitees, licensees or concessionaires or by anyone permitted by the Tenant to
be on the Premises.

10.9 Tenant's Contractor's Insurance and WCB Registration. The Tenant will
require any contractor performing work on "the Premises to carry and maintain,
at no expense to the Landlord, comprehensive general liability insurance and
other insurance in amounts and on terms reasonably determined by the Landlord
and provide the Landlord with satisfactory proof of that insurance from time to
time. The Tenant will also require that any such contractor be registered with
the Workers' Compensation Board of B.C.

10.10    Acts Conflict With or Increase Insurance.

         (a) The Tenant will not do, or omit to do, anything, or keep, use, sell
or offer for sale on or from the Premises anything that may contravene any of
the Landlord's policies of insurance relating to any part of the Building, or
which will prevent the Landlord from procuring policies of insurance with
companies acceptable to the Landlord.

         (b) The Tenant will not do or permit to be done, or omit to do or
permit another person to omit to be done, any act which may render void or
voidable, or which may conflict with, the requirements of any policy or policies
of insurance relative to the Premises or the Building, including any regulations
of fire insurance underwriters applicable to such policy or policies.

10.11 Cancellation of Insurance. If any insurance policy on the Building or any
part of it is cancelled, or threatened by the insurer to be cancelled, or the
coverage is reduced or threatened to be reduced by the insurer, because of the
use or occupation of the Premises, and if the Tenant fails to remedy the
condition giving rise to cancellation, threatened cancellation, reduction or
threatened reduction of coverage within 72 hours after notice from the Landlord,
the Landlord may either:

         (a) re-enter the Premises and Part 15 will apply;

<PAGE>

         (b) enter the Premises and remedy that condition, and the Tenant will
pay to the Landlord the cost of doing so on demand as Additional Rent, and the
Landlord will not be liable for damage or injury caused to property of the
Tenant or others located on the Premises as a result of the entry or remedy
provided the Landlord has acted reasonably in all circumstances; or

         (c) terminate this Lease.

10.12 Tenant's Property at its Risk. All property of the Tenant kept or stored
in the Premises is at the risk of the Tenant.

10.13 Survival. The provisions of paragraph 10.8 will survive the expiration or
sooner termination of the Term.

                                    PART II.
                            ASSIGNMENT AND SUBLETTING

11.1 Landlord's Consent. Subject to paragraph 11.2 the Tenant may not assign,
mortgage, charge or encumber the Lease, in whole or in part, nor sublease all or
any part of the Premises or permit them to be used or occupied by any other
person (collectively "Transfer"), without the prior written consent of the
Landlord, which consent may not be unreasonably withheld or delayed. Any
Transfer made in violation of this Part 11 will be void.

11.2 Terms and Conditions of Transfer. The following terms and conditions apply
in respect of any Transfer:

         (a) the Landlord's consent to a Transfer, if granted, will not
constitute a waiver of the requirement for the Tenant to obtain the Landlord's
prior written consent to any subsequent Transfer;

         (b) in spite of any Transfer, the Tenant will remain fully liable for
and will not be released from the performance of each and every one of the
obligations of the Tenant under this Lease for the balance of the Term and any
renewal term, whether exercised by the Tenant or the Transferee. Without
limitation, the foregoing applies whether or not the Transferee is in default of
the Lease and whether or not the Lease is assigned by a trustee in bankruptcy of
the Transferee. The Tenant is not relieved of liability for any breach of the
Lease, whether occurring before or after the Transfer; and

         (c) any Transfer will provide that the Transferee has the rights and is
subject to the obligations, of the Tenant under the Lease, except as it may be
amended by the terms of the consent.

11.3 Assignment by Operation of Law. The prohibition against Transfer without
the consent required by this Part 11 will be construed to include a prohibition
against any Transfer by operation of law.

11.4 Acceptance of Rent. If this Lease, or any part of it, is assigned, or if
all or part of the Premises is sublet or occupied by any party other than the
Tenant, in any case without the consent of the Landlord, the Landlord may
collect Rent from the assignee, subtenant or occupant, and apply the net amount
collected to the Rent reserved in this Lease, but the assignment, sublease,
occupancy or collection will not be considered a waiver of this covenant, or the
acceptance of the assignee, subtenant or occupant as Tenant.

11.5 No Advertising. The Tenant will not advertise the whole or any part of the
Premises for lease nor permit any agent or broker to do so, unless the prior
written approval of the Landlord has been received.

<PAGE>

11.6 Corporate Ownership.

         (a) If after the date of execution of this Lease shares either of the
Tenant or of an Affiliate of the Tenant which Controls the Tenant are
transferred or disposed of by operation of law or otherwise, or issued or
redeemed, so as to result in a change in the Control of the Tenant from the
person or persons holding Control on the date of execution of this Lease or if
other steps are taken to accomplish a change of Control, the Tenant will
promptly notify the Landlord in writing of the change, which will be considered
to be an assignment of this Lease to which this Part 11 applies; and whether or
not the Tenant notifies the Landlord, the Landlord may terminate this Lease
within 60 days after the Landlord becomes aware of the change unless the
Landlord previously had consented to the change. Any subsequent change of
Control will similarly be subject to the prior written consent of the Landlord.
The Tenant will make available to the Landlord or its lawful representative all
corporate books and records of the Tenant and of any Affiliate of the Tenant for
inspection at all reasonable times, to ascertain to the extent possible whether
there has been a change in Control.

         (b) Paragraph 11.6(a) will not apply to the Tenant if:

                  (i)      the Tenant is a public corporation whose shares are
                           listed for sale on a recognized stock exchange in
                           Canada, or

                  (ii)     the Tenant is a private corporation which is
                           Controlled by a public corporation as defined in
                           paragraph 11.6(b)(i), so long as in each of the
                           foregoing provisions there continues to be a
                           continuity of management policies and practices of
                           the Tenant, in spite of any such change in Control.

11.7 Time to Complete Transfer. If the Landlord consents to a Transfer, the
Tenant will have a period of 60 days thereafter to complete the Transfer, and
failing which, the Landlord's consent, at the Landlord's option, will be null
and void.

11.8 Assignment by Landlord. If the Landlord sells or otherwise transfers an
interest in the Building or the Land, or both, or in this Lease, in whole or in
part, to the extent that the purchaser or other party is responsible for
compliance with the obligations of the Landlord under this Lease, the Landlord
without further written agreement will be released from all of its obligations
in this Lease.

                                    PART 12.
                                WASTE OR NUISANCE

12.1 Waste or Nuisance. The Tenant will not commit or permit to be committed
waste upon the Premises, or nuisance or other thing that may unreasonably
disturb or interfere with the use or enjoyment by any other tenant in the
Building of its premises and the Common Area or that may unreasonably disturb
any person within a 500 feet boundary of the Building or the Land.

12.2 Governmental, Insurance Underwriters' and Environmental Regulations.

         (a) The Tenant, at the Tenant's cost, will comply with and cause all
those under its control to comply with the applicable requirements of all
municipal, provincial, federal and other governmental authorities now in force
or which may hereafter be in force, including without limitation, all laws and
regulations pertaining to the use, possession, control, discharge, removal,
disposal and abatement of Hazardous Substances and all other laws and
regulations pertaining to the Tenant's occupancy or use of the Premises and will
observe in any occupancy and use of the Premises all municipal by-laws and
provincial and federal statutes and regulations now in force or which may
hereafter be in force, and will comply with all regulations or orders made by
fire insurance underwriters or by authorities having jurisdiction. The
provisions of this paragraph 12.2(a) will survive the expiration or earlier
termination of this Lease.

<PAGE>

         (b) The Landlord may enter the Premises at any time or times, with as
little interference to the conduct of the Tenant's business as is reasonably
possible, to enable the Landlord to inspect the Premises and to comply with or
cause the Tenant to comply with any municipal by-law or provincial statute now
or in the future applicable to the Premises whether or not the application of
the by-law or statute to the Premises results from an act or omission of the
Landlord or any other person.

         (c) If the Tenant has knowledge, or has reasonable cause to believe
that any Hazardous Substance has come to be located on, under or about the
Premises, the Tenant will, upon discovery of the presence or suspected presence
of Hazardous Substance, give written notice of that condition to the Landlord.
Failure to provide written notice will be a default, permitting the Landlord to
terminate the Lease immediately.

         (d) If the Landlord, in its sole discretion, believes that the Premises
or the environment have become contaminated with any Hazardous Substance, the
Landlord, in addition to its other rights under this Lease, may enter upon the
Premises and obtain samples from the Premises and under the Premises, for the
purpose of analyzing the same to determine whether and to what extent the
Premises or the environment have become so contaminated. To the extent that
contamination is found and that such contamination was caused by the Tenant, the
Tenant will reimburse the Landlord for the costs of such inspection, sampling
and analysis.

         (e) Without limiting the above, the Tenant will indemnify and save
harmless the Landlord and its directors, officers and agents from and against
any and all claims, losses, liabilities, damages, costs and expenses, including
without limitation, legal fees and costs on a solicitor and own client basis,
arising out of or in any way connected with the use, manufacture, transportation
storage, emission or disposal of Hazardous Substances by the Tenant, its agents
or contractors, or any others under the control of the Tenant, on, under or
about the Premises or elsewhere in the Building including, without limitation,
the cost of any required or necessary repair, remediation or detoxification and
the preparation of any closure or other required plans in connection with this
Lease. The indemnity obligations of the Tenant under this paragraph will survive
any termination of this Lease.

         (f) Notwithstanding paragraph 12.2 (c), the Landlord acknowledges that
the Tenant will store approximately 22 pounds of propane on the Premises and
that the Tenant will manufacture hydrogen, oxygen and ozone on the Premises as
part of its business. The Landlord's acknowledgment that these substances "will
be located on the Premises in no way diminishes the Tenant's duty to comply with
the other provisions of this Part 12 or of this Lease.

                                    PART 13.
                             ACCEPTANCE OF PREMISES

13.1 Acceptance of Premises. The Tenant will notify the Landlord of any defects
in the Premises that prevent or diminish their use within 10 days after the date
when the Landlord's improvements referred to herein have been completed, and
failing the giving of notice, the Tenant will be considered for all purposes to
have accepted the Premises in their then existing condition. Except where
otherwise provided for herein, the Landlord will not have any further obligation
to the Tenant for defects or faults other than:

         (a) latent defects in the Premises or the Landlord's work which cannot
be discovered on a reasonable examination, and

<PAGE>

         (b) faults in structural elements relating to the Premises not caused
by the Tenant's act or negligence.

13.2 No Representation. The Tenant acknowledges that there is no promise,
representation, warranty, or undertaking by, or binding upon, the Landlord
concerning the condition or layout of, or the alterations, remodelling,
decoration or installation of improvements, equipment or fixtures in the
Premises or of the Building, except as expressly contained in this Lease.
Without limitation, the Tenant acknowledges that the Building may not conform to
the plan depicted in Schedule 1.

                                    PART 14.
                    LEASEHOLD IMPROVEMENTS AND TRADE FIXTURES

14.1 Installation and Changes by Tenant.

         (a) All Leasehold Improvements including, without limitation, trade
fixtures installed by, or on behalf of, the Tenant will be of first class
quality. The Tenant will not make or cause to be made any Leasehold Improvement,
change, decoration, addition or improvement or cut or drill into, nail or
otherwise attach, secure or install any trade fixture, exterior sign, floor
covering, interior or exterior lighting, or mechanical, or electrical system or
fixture, or plumbing fixture, shade or awning to any part of the Premises or to
the exterior of the Premises or hang from or affix anything to the ceiling,
without first obtaining the Landlord's written approval. The Tenant will not
create or cause to be created any mortgage, conditional sale agreement or other
encumbrance in respect of the Leasehold improvements (including trade fixtures),
except with the prior written consent of the Landlord.

         (b) The Tenant will present to the Landlord plans and specifications
for any works the Tenant proposes to undertake at the time approval is sought
and the work will be done in a good and workmanlike manner with first class
materials.

         (c) The Tenant will not make or permit to be made any changes,
alterations, substitutions, replacements or improvements affecting the structure
of the Building or the exterior appearance of the Building or the operation of
the mechanical systems without obtaining the prior written consent of the
Landlord.

         (d) The Tenant will pay, on demand, as Additional Rent, all the
Landlord's reasonable costs and expenses in connection with any installations
and changes by the Tenant, including, without limitation, the costs of
supervising and inspecting the work and the cost of examining the Tenant's
drawings and specifications.

14.2 Removal of Installations and Restoration by Tenant.

         (a) All Leasehold improvements when installed become the property of
the Landlord at the end of the Term or earlier termination of this Lease,
without compensation to the Tenant, but the Landlord will have no responsibility
for the repair, replacement, operation, maintenance or insurance of the
Leasehold improvements, which will remain the responsibility of the Tenant.

         (b) At the end of the Term the Tenant will, at its expense, remove the
Leasehold improvements to the extent requested by the Landlord and all
furniture, furnishings, equipment and trade fixtures and make good any damage
caused to the Premises or the Building or the Land by such installation or
removal and restore the Premises to a condition of good and substantial repair,
as required in paragraph 7.2. Every installation, removal or restoration by the
Tenant of furniture, furnishings, equipment and, if applicable, Leasehold
improvements, will be done at the sole expense of the Tenant.

<PAGE>

         (c) If the Tenant does not remove any Leasehold improvements, or its
furnishings, furniture or equipment as required by the Landlord, the Landlord
may, without liability on its part, and not as a bailee, without notice to the
Tenant, enter the Premises and remove such items at the Tenant's expense, plus
ad administration charge of 15% of such amount, which will be paid by the Tenant
to the Landlord as Additional Rent, on demand, and such items may, without
notice to the Tenant or to any other person and without obligation to account
for them, be sold, destroyed, disposed of or used by the Landlord as it
determines.

         (d) The Tenant's obligations under this paragraph 14.2 will survive the
expiration or earlier termination of this Lease.

14.3 Not to Overload Floors. The Tenant will not bring on the Premises anything
that by reason of its weight, size or use, might damage the Premises and will
not overload the floors of the Premises. If overloading occurs the Tenant will
immediately repair any damage or pay to the Landlord the cost of repairing the
damage and will also pay for any consequential damages arising from the
overloading.

14.4 Tenant to Discharge All Liens. The Tenant will promptly pay all its
contractors, subcontractors and materialmen and do all things necessary to
ensure that no lien is claimed against the Premises or the Land or any other
part of the Building or the Land in connection with work, services or material
supplied or claimed to have been supplied by the Tenant and should such a claim
of lien be filed, the Tenant will cause it to be discharged or vacated at the
Tenant's expense within 21 days after it is brought to the attention of the
Tenant or provide adequate security for it to the extent approved by the
Landlord. The Landlord may, but it is not obligated to discharge the lien by
paying the amount claimed to be due into court, or by any other means available
to the Landlord, and the amount paid, plus all costs, including without
limitation, professional and solicitors fees (on a solicitor and own client
basis) incurred by or on behalf of the Landlord concerning the lien, plus any
damages suffered by the Landlord as a result of the filing of the lien will be
forthwith paid, on demand, by the Tenant as Additional Rent. The Tenant will
allow and keep posted on the Premises any notice which the Landlord may wish to
post under the provisions of the Builders' Lien Act or any legislation in
amendment or substitution thereof.

14.5 Signs, Awnings and Canopies.

         (a) The Tenant will not place or permit to be placed or maintained on
the roof or on any exterior or interior door, wall or window of the Building or
elsewhere in the Building or upon the Land any sign, awning, canopy, decoration,
lettering, advertising matter or other thing of any kind and will not place or
maintain any decoration, lettering or advertising matter on the glass of any
window or door of the Building without first obtaining the Landlord's written
consent.

         (b) The Landlord, acting reasonably, will have the right to prescribe
the size, materials, colours, design features, pattern, appearance, location,
illumination and any other specifications of any sign.

         (c) The Tenant will comply, at its expense, with all requirements of
authorities having jurisdiction regarding permits, licences and other consents
for any signs installed.

         (d) Following approval by the Landlord, any exterior sign erected by
the Tenant will be illuminated in the manner and at the times required by the
Landlord. All costs, including, without limitation, electrical costs pertaining
to the sign, whether separately metered or allocated by the Landlord, will be
paid, when due, as Additional Rent.

         (e) At the expiration or earlier termination of the Lease, the Tenant
will remove, at its expense, any sign installed by it, repairing any damage
caused thereby.

<PAGE>

         (f) The Tenant will indemnify and save the Landlord harmless from any
claims, loss or damage arising directly or indirectly from the Tenant's signage
provided that such claim, damage or loss is not caused by the wilful act,
negligence or omission of the Landlord or those persons for whom the Landlord is
responsible at law.

         (g) The Tenant waives all statutory rights now or in the future granted
under municipal by-law in respect of any sign or signs that the Landlord erects
in the Building and will execute immediately on the Landlord's request waivers,
certificates or other papers in order to give effect to this waiver.

                                    PART 15.
                                DEFAULT OF TENANT

15.1 Tenant's Default. If the Tenant fails to pay any Rent when due, whether or
not demanded by the Landlord and such default continues after 5 days notice from
the Landlord, or if the Tenant fails to observe or perform any of its other
obligations under this, Lease, and the Tenant has not within 10 business days
after notice from the Landlord specifying the default, cured the default or if
curing the default should reasonably require a longer period if the Tenant has
not commenced to cure and diligently pursues the curing of the default, or if
re-entry is permitted under other terms of this Lease or if the Landlord has
reasonable cause to believe the Tenant intends to cease operating or to vacate
the Premises, the Landlord in addition to any other right or remedy may:

         (a) re-enter and remove all persons and property from the Premises and
the property may be removed and stored in a public warehouse or elsewhere at the
cost of, and for the account of, the Tenant, all without service of notice or
resort to legal process and without the Landlord being guilty of trespass or
becoming liable for loss or damage occasioned by any of those actions; and

         (b) terminate this Lease and all of the Tenant's rights under it.

15.2 Bankruptcy or Insolvency of Tenant. If:

         (a) any of the goods and chattels of the Tenant on the Premises at any
time during the Term are seized or taken in execution or attachment by a
creditor of the Tenant or the Tenant receives a notice from one or more of its
secured creditors that the creditor(s) intend to realize on security located at
or upon the premises,

         (b) the Tenant makes an assignment for the benefit of (creditors or any
arrangement or compromise, or a bulk sale from the Premises other than a bulk
sale to an assignee or sublessee under an assignment or sublease which under
paragraph 11 was consented to,

         (c) a receiver-manager is appointed to control the conduct of the
business of the Tenant on or from the Premises and such appointment is not
vacated within 8 days,

         (d) the Tenant becomes bankrupt or insolvent or takes the benefit of an
Act now or hereafter in force for bankrupt or insolvent debtors or files any
proposal or a notice of intention to file a proposal,

         (e) proceedings are instituted by the Tenant or any other person for an
order for the winding-up of the Tenant, or other termination of the corporate
existence of the Tenant,

         (f) the Premises, without the written consent of the Landlord, become
and remain vacant for a period of 30 days except as necessitated for the
completion of repairs or are used by any persons other than those entitled to
use them under the terms of this Lease,

<PAGE>

         (g) the Tenant, without the written consent of the Landlord, abandons
or attempts to abandon the Premises or sells or disposes of its goods or
chattels or removes any of them from the Premises so that there would not, in
the event of abandonment, sale or disposal, be sufficient goods on the Premises
subject to distress to satisfy all Rent due or accruing due hereunder, or

         (h) the Lease or any of the Tenant's assets on the Premises are taken
under a writ of execution, charge, debenture or other security instrument, then
the Landlord may re-enter and take possession of the Premises as though the
Tenant or any other occupant of the Premises was holding over after the
expiration of the Term and this Lease may, at its option be immediately
terminated by notice left upon the Premises.

15.3 Notice from Secured Creditors. The Tenant will immediately notify the
Landlord if it receives from any of its secured creditors a notice under the
Bankruptcy and Insolvency Act, or any legislation in amendment or substitution
therefor, advising the Tenant that the secured creditor intends to realize upon
its security located on the Premises.

15.4 Proposals. Unless the Landlord expressly consents thereto, which the
Landlord is not obliged to do, the Tenant will not exercise any right to
repudiate the Lease under the terms of a proposal filed under the Bankruptcy and
Insolvency Act, or any legislation in amendment or substitution therefor.

15.5 Landlord may Perform Tenant's Obligations. If the Tenant fails to perform
an obligation of the Tenant under this Lease after the expiration of the notice
periods set out in paragraph 15(1), the Landlord may perform the obligation and
for that purpose may enter on the Premises without notice and do anything in
respect of the Premises that the Landlord considers necessary to cure the
default. The Tenant will pay as Additional Rent all costs and expenses incurred
by or on behalf of the Landlord plus 15% for overhead upon presentation of a
bill. The Landlord will not be liable to the Tenant for loss or damage resulting
from such action by the Landlord, including loss or damage resulting from the
negligence of the Landlord or another person for whose negligence the Landlord
is responsible in law.

15.6 Right to Relet.

         (a) If the Landlord re-enters, as provided in this Lease, it may,
without terminating the Tenant's rights under this Lease, make alterations and
repairs considered by the Landlord necessary to facilitate a reletting, and
relet the Premises or any part thereof as agent of the Tenant for such period of
time and at such rent and upon such other terms and conditions as the Landlord
in its discretion considers advisable.

         (b) Upon each reletting all rent and other monies received by the
Landlord from the reletting will be applied, first to the payment of
indebtedness other than Rent due hereunder from the Tenant to the Landlord,
secondly to the payment of costs and expenses of the reletting including
brokerage fees and legal fees and costs of the alterations and repairs, and
third to the payment of Rent due and unpaid under this Lease. The residue, if
any, will be held by the Landlord and applied in payment of future rent as it
becomes due and payable.

         (c) If the rent received from the reletting during a month is less than
the Rent to be paid during that month by the Tenant, the Tenant will pay the
deficiency to the Landlord. The deficiency will be calculated and paid monthly.

15.7 Reentry Without Termination. No re-entry by the Landlord will be construed
as an election on its part to terminate this Lease unless a written notice of
that intention is given to the Tenant. Despite a reletting without termination,
the Landlord may elect at any time to terminate this Lease for a previous
unremedied breach.

<PAGE>

15.8 Damages. If the Landlord terminates this Lease for any breach, then, in
addition to other remedies, it may recover from the Tenant all damages it incurs
by reason of the breach including, without limitation, the cost of recovering
the Premises, reasonable professional and other legal fees (on a solicitor and
own client basis), the unamortized portion of any allowance, concession or
inducement paid by the Landlord under the terms of the tenancy (on the basis of
an assumed rate of depreciation on a straight line basis to zero over the Term)
and the worth at the time of termination of the excess, if any, of (i) the
amount of rent and charges equivalent to Rent reserved in this Lease for the
remainder of the Term over (ii) the then reasonable rental value of the Premises
for the remainder of the Term, calculated on a present value basis, all of which
amounts will be immediately due and payable by the Tenant to the Landlord.

15.9 Acceleration of Rent. If any of the events referred to in paragraph 15.1 or
paragraph 15.2 occur then, in addition to all other rights available to the
Landlord, including the rights referred to in this paragraph 15.9, the full
amount of the current month's Basic Rent and Additional Rent, and all other
payments required to be made monthly by the Tenant, and the next ensuing 3
months' Basic Rent and Additional Rent will immediately become due and payable
as accelerated rent, and the Landlord may recover the accelerated rent in the
same manner as Rent in arrears, including immediately distraining for it
together with all other arrears then unpaid.

15.10 Expenses for Remedying Breach. If the Landlord brings any proceeding
against the Tenant arising from an alleged breach of an obligation of the Tenant
in this Lease and it is established that the Tenant is in breach of that
obligation, the Tenant will pay to file Landlord all reasonable costs and
expenses incurred by the Landlord in those proceedings including, without
limitation, legal fees, on a solicitor and own client basis.

15.11 Interest on Overdue Monies. All overdue monies payable to the Landlord by
the Tenant on any account whatever will bear interest at the prime rate of HSBC
Bank Canada per annum plus 5% from the due date until paid in full.

15.12 No Exemption from Distress. None of the property of the Tenant on the
Premises is exempt from levy by distress for Rent in arrears, and a claim being
made for exemption by the Tenant or on distress being made by the Landlord, this
paragraph 15.12 may be pleaded as an estoppel against the Tenant in any
proceedings brought to test the right to levy upon property claimed to be
exempt.

                                    PART 16.
                         REMEDIES OF LANDLORD AND WAIVER

16.1 Remedies Cumulative. No exercise of a specific right or remedy by the
Landlord or by the Tenant precludes it from, or prejudices it in, exercising
another right or pursuing another remedy or maintaining an action to which it
may otherwise be entitled either at law or in equity.

16.2 No Waiver. The waiver by the Landlord or the Tenant of a breach of an
obligation in this Lease will not be considered to be a waiver of a subsequent
breach of that obligation or another obligation. The subsequent acceptance of
Rent by the Landlord will not be a waiver of a preceding breach by the Tenant of
an obligation in this Lease, regardless of the Landlord's knowledge of the
preceding breach at the time of acceptance of the Rent. No obligation in this
Lease will be considered to have been waived by the Landlord or by the Tenant
unless the waiver is in writing signed by the Landlord or by the Tenant, as the
case may be.

16.3 Injunctive Relief. If the Tenant breaches or threatens to breach any of the
terms of this Lease, the Landlord will have the right to injunctive relief, as
if no other remedies were provided for in this Lease.

<PAGE>

16.4 Effect of Tenant Default on Renewals. If the Tenant is in default under
this Lease at the time fixed as the commencement of any renewal or extension of
this Lease, whether by renewal or extension option contained in this Lease or in
a separate agreement, the Landlord may cancel such option or agreement for
renewal or extension of the Lease, upon written notice to the Tenant.

                                    PART 17.
                               ACCESS BY LANDLORD

17.1 Right of Entry.

         (a) The Landlord and its agents may enter the Premises on reasonable
notice at all reasonable times to examine them and to show them to a prospective
purchaser, tenant or mortgagee.

         (b) During the 6 months prior to the expiration of the Term the
Landlord may place upon the Premises a notice "For rent" which the Tenant will
permit to remain without interference.

         (c) If after notice to the Tenant as provided for in this Lease or if
no notice is provided for, upon reasonable notice in the circumstances, the
Tenant is not present to open and permit entry into the Premises when the
Landlord reasonably requires entry, the Landlord or its agents may enter by a
master key or may forcibly enter without rendering the Landlord or its agents
liable for any damage or trespass and without affecting the Lease. Provided that
the Landlord acts in a reasonable manner, nothing in this paragraph 17.1 imposes
on the Landlord an obligation, responsibility or liability for the care,
maintenance or repair of the Premises or any part thereof except as specifically
provided in this Lease. The Landlord will have the right upon reasonable notice
to enter on the Premises in order to install, construct, operate, maintain,
repair and replace any utilities and services, but the Landlord in doing so will
exercise such right in a manner which is commercially reasonable to minimize the
extent of interference with the use and enjoyment of the Premises.

17.2 Roof and Walls. The Landlord will have the exclusive right to use all or
any part of the roof of the Building for any purpose; to erect additional
stories or other structures over all of any part of the Building; to erect in
connection with the construction thereof temporary scaffolds and other aids to
construction on the exterior of the Building, provided that access to the
Premises will not be unreasonably denied and that there is no unreasonable
interference with the Tenant's business and occupation of the Premises.

17.3 Excavation. If an excavation is made upon the Land or any lands adjacent to
the Premises, or is authorized to be made, the Tenant will give to the person
making the excavation permission to enter the Premises for the purpose of doing
work required by the Landlord, without claim for damages or indemnification
against the Landlord or abatement or diminution of Rent.

                                    PART 18.
                      LANDLORD'S COVENANTS AND OBLIGATIONS

18.1 Taxes. Subject to Part 4, the Landlord will pay all real property taxes
(including local improvement rates) that may be assessed by a lawful authority
against the Building and the Land or either of them.

18.2 Quiet Enjoyment. Subject to the observance and performance by the Tenant of
all of its obligations under this Lease, the Tenant may use and possess the
Premises, in accordance with the provisions of this Lease, for the Term, without
interference by the Landlord, or any other party claiming by, through or under
the Landlord, except as otherwise provided in this Lease.

<PAGE>

                                    PART 19.
                                   OVERHOLDING

19.1 No Tacit Renewal. If the Tenant remains in possession of the Premises after
the end of the Term and without the execution and delivery of a new lease or
written renewal or extension of this Lease, there is no tacit or other renewal
of this Lease, and the Tenant will be considered to be occupying the Premises as
a Tenant from month to month at a monthly rental payable in advance on the first
day of each month equal to the total Rent payable for the previous month plus 50
per cent.

                                    PART 20.
                                 OPTION TO RENEW

20.1 Option to Renew. Provided that:

         (a) Tenant pays the Rent and all other monies payable by it under this
Lease and performs and has consistently performed all of its obligations under
this Lease punctually and in accordance with this Lease and is otherwise not in
default of any of its obligations to the Landlord; and

         (b) the original Tenant has not assigned this Lease or sublet or
permitted a change in occupancy or other Transfer of the Premises; and

         (c) there has been no change in Control of the Tenant; then the Tenant
will have the option of renewing this Lease by notice in writing given to the
Landlord not later than 6 months nor earlier than 8 months prior to the expiry
of the Term for an additional term of 3 years on the same terms and conditions
set out in this Lease, except that:,

         (d) the Basic Rent to be paid during each renewal term will be the fair
market rent at the time of the exercise of the option for space of comparable
size, quality and location to that of the Premises, as determined by agreement
between the Landlord and the Tenant, with or without the assistance of
mediation, or if they fail to agree within months prior to the expiration of the
existing Term, then the Basic Rent will be determined by a single arbitrator
appointed under the Commercial Arbitration Act, as such legislation may be
amended or substituted from time to time, whose decision will be final and
binding upon the Landlord and the Tenant. The cost of the arbitration will be
borne by the Landlord and the Tenant equally. In any event the Basic Rent for
any renewal term will not be less than the Basic Rent applicable during the most
recent Lease Year nor will it be less than the Basic Rent paid during the last
12 month period of the preceding term, and

         (e) concerning any renewal term, the Landlord will have no obligation
to pay or provide to the Tenant any allowance, concession or inducement of any
nature, or provide any free rent or discounted rent of any nature, or provide
any fixturing period, or do or perform any work in the Premises.

20.2 Renewal Documentation.

         (a) The Landlord may, at its option, and at the Tenant's expense,
require that the Tenant enter into an agreement prepared by the Landlord to give
effect to the renewal term or execute a new lease for the renewal term on the
Landlord's standard net lease form for the Building currently in use at such
time.

         (b) During the period, if any, between the expiration of the Term, or
most recent renewal term, and the date upon which the new renewal rent is
determined by an arbitrator, or otherwise, the Tenant will pay Rent at the rates
and in the manner provided for in the Lease for the period immediately preceding
the expiry of the Term or most recent renewal term and, following determination
of the renewal rent, the Tenant will pay to the Landlord interest, at the rate
prescribed in paragraph 15.11 on the excess amount of the renewal rent.

<PAGE>

                                    PART 21.
                                  MISCELLANEOUS

21.1 Accord and Satisfaction. No payment by the Tenant or receipt by the
Landlord of a lesser amount than the Rent stipulated in this Lease will be
considered to be other than on account of the earliest stipulated Rent, nor will
an endorsement or statement on a cheque or in a letter accompanying a cheque or
payment as rent be considered to be an accord or satisfaction, and the Landlord
may accept a cheque or payment without prejudice to the Landlord's right to
recover the balance of the Rent or pursue any other remedy.

21.2 No Partnership. The Landlord does not in any way or for any purpose become
a partner of, or joint venturer or a member of a joint enterprise with, the
Tenant.

21.3 Partial Invalidity. If a term, covenant or condition of this lease or the
application thereof to any person or circumstances is held to any extent invalid
or unenforceable, the remainder of this Lease or the application of the term,
covenant or condition to persons or circumstances other than those as to which
it is held invalid or unenforceable will not be affected.

21.4 Joint and Several Liability. If two or more individuals, corporations,
partnerships or other business associations compose the Tenant, the liability of
each individual, corporation, partnership or other business association to pay
Rent and perform all other obligations of the Tenant under this Lease is joint
and several.

21.5 Registration. The Tenant will not register this Lease and the Landlord is
not obliged to deliver this Lease in registrable form. If the Landlord requires
this Lease to be registered, it will be at the cost of the Landlord and the
Tenant will execute any documents required by the Landlord for this purpose.

21.6 Notice. Any notice or other communication required or permitted to be given
under this Lease will be in writing unless otherwise specified and will be
considered to have been given if delivered by hand or mailed by prepaid
registered post in Canada, to the address of the party set out on the first page
of this Lease.

21.7 No Modification. No representations, understandings or agreements have been
made or relied upon in the making of this Lease other than those specifically
set out in this Lease. This Lease may only be modified in writing signed by the
party against whom the modification is enforceable.

21.8 Successors and Assigns. This Lease binds and benefits the parties and their
respective heirs, executors, administrators, successors and assigns. No rights,
however, benefit an assignee of the Tenant unless under Part 11 the assignment
was consented to by the Landlord.

21.9 Number and Gender. The necessary grammatical changes required to make the
provisions of this Lease apply in the plural sense where the Tenant comprises
more than one entity and to corporations, associations, partnerships, or
individuals, males or females, in all cases will be assumed as though in each
case fully expressed.

21.10 Headings and Captions. The table of contents, part numbers, part headings,
paragraph numbers and paragraph headings are inserted for convenience of
reference only and are not to be considered when interpreting this Lease.

21.11 Obligations as Covenants. Each obligation of the Landlord or the Tenant in
this Lease, even though not expressed as a covenant, is considered to be a
covenant for all purposes.

<PAGE>

21.12 Expropriation. If at any time during the Term all or any part of the
Premises is acquired or expropriated by any expropriating authority, then the
Landlord may, at its option, terminate this Lease as of the date of such
expropriation and the Tenant will have no claim against the Landlord for damages
or for any reason whatsoever

21.13 Entire Agreement. This Lease contains all the representations, warranties,
covenants, agreements, conditions and understandings between the Landlord and
the Tenant concerning the Premises or the subject matter of this Lease.

21.14 Time is of the Essence. Time will be of the essence.

21.15 Unavoidable Delay. If either party to this Lease fails to observe or
perform any of the covenants or obligations herein imposed upon it and such
failure has been occasioned by or in connection with or as a consequence of an
event beyond the control of the party, other than impecuniosity, such failure
shall not be deemed to be a breach of such covenant or obligation.

21.16 Governing Law. This Lease will be interpreted under and is governed by the
laws of the Province of British Columbia.

21.17 Counterparts. This Lease may be signed in counterparts which together
shall constitute the Lease. Counterparts maybe transmitted by fax. The effective
date of this Lease is September 1, 2001 and not the date any counterpart is
signed. Counterparts may be transmitted by fax.

TO EVIDENCE THEIR AGREEMENT each of the parties has executed this Lease on the
date appearing below.

ESSENTIAL INNOVATIONS CORP.

Per:
/s/ unintelligible
---------------------------
Authorized Signatory
Date: August 31st/2001

CANDEN INDUSTRIES LTD.

Per:

/s/ unintelligible
---------------------------
Authorized Signatory
Date: August 31, 2001

<PAGE>

                                  SCHEDULE "C"

                        LANDLORD IMPROVEMENTS AND TENANT
                                  IMPROVEMENTS

LANDLORD IMPROVEMENTS

The Landlord will provide the following improvements to the Leased Premises at
it's sole cost and expense:

         o        Install necessary equipment to alleviate the chemical smell
                  being emitted from the neighbor's property.Exhibit 10.02

                            TECHNOLOGY SALE AGREEMENT

THIS AGREEMENT dated for reference the 20 day of February, 2002.

BETWEEN:
                   WILLIAM BAUMGARTNER,
                   of  Unit 11 - 1126 Osprey Lane,
                   13th Avenue, Invermere,
                   British Columbia V0A 1K0
                   (hereinafter referred to as "Inventor")

OF THE FIRST PART

AND:

                   ESSENTIAL INNOVATIONS TECHNOLOGY CORPORATION, a
                   company duly incorporated under the laws of the State
                   of Nevada, and having its registered office at One
                   East First Street, Reno, Nevada, U.S.A., 89501
                   (hereinafter referred to as "Essential")

OF THE SECOND PART

WHEREAS:

A. Inventor has filed a Provisional Patent Application with the United States
Patent and Trademark Office in regard to a "Device for Intensive Aeration of
Waste Water" (herein the "Aeration Technology");

B. Essential is desirous of obtaining the worldwide rights to the Aeration;

C. Inventor has agreed to transfer all his right, title and interest in the
Aeration Technology, including any patents now or hereafter granted in any
country, free and clear of all liens, charges and encumbrances, subject to the
grant of a royalty to him;

D. The parties wish to enter into this Agreement to set forth their respective
rights and obligations.

         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

         1.01 In this Agreement the following words, phrases and expressions
shall have the following meanings:

         (a)      "Aeration Technology" means a process for, inter alia, the
                  efficient oxygenation of a liquid, such as waste water, or
                  bio-mass in municipal waste treatment plants, 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

<PAGE>

                  (ii)     all designs, improvements, discoveries, concepts,
                           ideas, knowledge and inventions, 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)      "Gross Sales Proceeds" means the actual gross proceeds
                  received by Essential from third parties in the sale,
                  licensing, franchising or exploitation of the Aeration
                  Technology less any administrative costs, direct costs or
                  marketing costs or deductions in regard thereto; and

         (d)      "Know-how" means the technical information, knowledge and
                  expertise concerning the design, construction, operation and
                  use of the Aeration 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
                  Aeration Technology.

ARTICLE 2 - SALE OF AERATION TECHNOLOGY AND ROYALTY INTEREST

         2.01 Inventor hereby sells, transfers, assigns and conveys to Essential
all right title and interest in and to the Aeration Technology.

         2.02 The parties shall co-operate in the development and marketing of
the Aeration Technology and in such regard shall inform each other of all
Know-how.

         2.03 In consideration of the transfer of his interest in and to the
Aeration Technology Inventor shall be entitled to receive and Essential shall
pay to him a royalty of one percent (1%) of Gross Sales Proceeds (the
"Royalty").

         2.04 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 sale of the Aeration 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 Inventor 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 Inventor. Essential shall be responsible for
maintaining books and records which accurately document its revenues and the
Royalty.

         2.05 Report of Aeration Technology Sales: Within 30 days following the
close of the first calendar quarter in which there are any revenues generated
from the Aeration Technology, Essential shall provide Inventor 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
Inventor with a written report showing the amount of sales in such quarter and
the amount of Royalty payable with respect thereto.

<PAGE>

         2.06 Examination of Books and Records: Upon the written request of
Inventor and, except as otherwise provided below, at Inventor's expense,
Essential shall allow and make available (during reasonable times and with
reasonable advance notice so as to minimize interference with Essential's
business operations) its books and records to be examined and audited by an
independent firm of chartered accountants appointed 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 Inventor 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 Inventor in
connection therewith, in addition to all previously unpaid Royalties. Inventor
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 - PATENT TRANSFERS

         3.01 Essential shall be entitled to a transfer of any patents issued
and the right to receive and apply for any future patents and to utilize and
exploit the Aeration Technology throughout the world.

ARTICLE 4 - PATENTS AND TRADEMARKS

         4.01 Inventor warrants, represents and covenants with Essential that
the Inventor is the owner of the Aeration Technology and technical information,
theory, knowledge, process and expertise concerning the design, construction and
use of the Aeration Technology and that he has the right to sell, transfer,
assign and convey the rights to the Aeration Technology to Essential.

         4.02 Any modification, improvement or variance of the Aeration
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 Aeration Technology.

         4.03 Essential shall pay and be responsible for any maintenance fees
payable to the United States Patent and Trademark Office and shall be
responsible for the same in any jurisdiction in which it elects to apply for
patent protection and which may be required to maintain any patents hereafter
issued during the term of this Agreement.

         4.04 Inventor agrees to use his best efforts to obtain a United States
patent for the Aeration 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.

         4.05 Inventor agrees to cooperate fully with Essential in the filing of
all necessary documents and applications to protect the Aeration Technology in
such other jurisdictions as Essential may consider appropriate.

ARTICLE 5 - INFRINGEMENT

         5.01 If a patent is issued for the Aeration Technology and subsequent
thereto any person other than Inventor, Essential or an authorized licensee of
Essential, is utilizing technology which appears to infringe any patents or
trademarks issued with respect to the Aeration Technology Essential shall at its
expense take all reasonable steps to terminate or enjoin the apparent
infringement thereof and the Inventor agrees 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 sole benefit of
Essential.

<PAGE>

         5.02 If Essential fails to comply with article 5.01 aforesaid within
sixty (60) days after receiving written notice from Inventor of such apparent
infringement, then Inventor shall have the right to take all steps, proceedings
and actions in his own name and sole discretion as he may deem advisable to
terminate or enjoin the apparent infringement and in such event Essential hereby
transfers and assigns to Inventor all claims, actions or right to action to
institute any suit and shall cooperate and participate in any such suit or
proceedings to terminate or enjoin such infringement, and in such event any
damage award or settlement shall enure to the sole benefit of Inventor.

ARTICLE 6 - NON COMPETITION

         6.01 Inventor shall not market, sell or distribute or utilize the
Aeration 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.

ARTICLE 7 - WARRANTIES AND REPRESENTATIONS OF INVENTOR

         7.01 Inventor warrants and represents to Essential as follows:

         (a)      he has developed the Aeration Technology and owns, possesses
                  and has title to such and all documentation, designs,
                  flowsheets and related materials free and clear of all liens,
                  charges and encumbrances ;

         (b)      he has 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 Aeration Technology; and

         (c)      this Agreement has been duly and properly executed by him and
                  is binding upon him.

ARTICLE 8 - WARRANTIES AND REPRESENTATIONS OF ESSENTIAL

         8.01 Essential warrants and represents to Inventor 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 Aeration Technology in accordance with the terms
                  and conditions of this Agreement;

         (c)      it shall comply with all applicable laws, orders and
                  regulations relating to the utilization of the Aeration
                  Technology and, where required by applicable laws, become
                  registered in such jurisdictions where it may exploit the
                  Aeration Technology; and

         (d)      all projects utilizing the Aeration Technology shall be done
                  in a professional manner that maintains the reputation and
                  integrity of Inventor and the Aeration Technology.

ARTICLE 9 - GENERAL PROVISIONS

         9.01 This Agreement shall be governed by and construed in accordance
with the laws of the Province of British Columbia and the parties agree that any
legal proceedings for the enforcement of any rights or obligations under this
Agreement or arising therefrom shall be commenced and prosecuted in the Supreme
Court of British Columbia at Vancouver, British Columbia.

<PAGE>

         9.02 Any notice required or permitted to be given hereunder shall be in
writing and shall be delivered personally or mailed by registered mail, postage
prepaid, to the parties at their addresses set out on the first page hereof or
such other address as a party may advise the other in writing, and any such
notice shall be effective on the date of receipt thereof.

         9.03 This Agreement shall enure to the benefit of and be binding upon
the parties hereto and their respective heirs, executors, administrators,
successors and permitted assigns.

         IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the day and year first written above.

SIGNED, SEALED AND DELIVERED by     )
WILLIAM BAUMGARTNER in the          )
Presence of                         )
                                    )
                                    )
/s/ Jason McDiarmid                 )        /s/ William Baumgartner
---------------------------------   )       ------------------------------
Signature                           )        WILLIAM BAUMGARTNER
                                    )
Jason McDiarmid                     )
---------------------------------   )
Name                                )
                                    )
1839 Laronde Dr.                    )
---------------------------------   )
Address                             )
                                    )
S. Surrey / B.C. V4A 8R6            )
---------------------------------   )
                                    )
President                           )
---------------------------------   )
Occupation                          )

THE CORPORATE SEAL of               )
THE ESSENTIAL INNOVATIONS           )
TECHNOLOGY CORPORATION was          )
affixed hereto in the presence of:  )
                                    )                  C/S
/s/ Jason McDiarmid                 )
---------------------------------   )
Authorized Signatory                )
                                    )
President                           )
---------------------------------   )

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