Stock Purchase and Shareholders Agreement - Ensyn Group Inc. and Ivanhoe Energy (USA) Inc.
STOCK PURCHASE
AND
SHAREHOLDERS AGREEMENT
THIS AGREEMENT, dated as of January 15, 2004 between Ensyn Group, Inc. (herein
the "Seller"), an entity organized under the laws of Delaware, Ensyn Petroleum
International Ltd., a Delaware Corporation ("Ensyn") and Ivanhoe Energy (USA)
Inc. (herein the "Purchaser"), a corporation organized under the laws of the
State of Nevada.
Purchaser and Seller have agreed pursuant to the Heads of Agreement for
Acquisition of Interest in Ensyn by Purchaser, dated the 17th day of December
2003 ("HOA") that Purchaser, will acquire from Seller, and Seller will sell to
Purchaser, a 10% interest in Ensyn Petroleum International Ltd., a Delaware
corporation ("Ensyn"), represented by 10% of the issued and outstanding shares
of capital stock of Ensyn. Seller, Ensyn and Purchaser may sometimes
individually be referred to herein as a "Party" and collectively as the
"Parties."
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS. Terms used herein with initial capitalized letters are
for the purposes of this Agreement and have the meanings ascribed to them as
follows:
"AFFILIATE" means any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is
controlled by, or is under common control with, a Party. For purposes
hereof, "control" means the possession, directly or indirectly, of the
power to direct or cause direction of management and policies through
ownership of voting securities, contract, voting trusts or otherwise.
"AGREEMENT" means this Stock Purchase and Shareholders Agreement,
including all Schedules and Exhibits hereto.
"BUSINESS" means all the business, operations and activities of a
Person.
"BUSINESS DAY" means a day on which the banks in New York, New York,
are customarily open for business.
"CDF" means the commercial demonstration facility to demonstrate the
commercial viability of Ensyn's RTP(TM) process technology to upgrade
bitumen and heavy oil.
"CLAIM" means any cause of action, chose in action, claim for damages,
and/or other right, title, interest or obligation of any kind,
assessment, notice of deficiency, suit, administrative or judicial
proceeding, security interest, lien, pledge, charge, escrow, option,
proxy, right of first refusal, preemptive right, mortgage,
hypothecation, indenture, security agreement, or other such agreement,
contract, commitment, or obligation, or any other encumbrance of any
kind.
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"CLOSING" has the meaning assigned to it in Section 2.2.
"CLOSING DATE" has the meaning assigned to it in Section 2.2.
"CONSENT" of any Person means any consent, forbearance, authorization,
approval, license, filing, registration, waiver, declaration or
clearance by or with such Person.
"CONTRACT" of any Person means any contract, agreement or instrument of
any type whatsoever, including, without limitation, any purchase order,
service order, mortgage, security agreement, deed of trust, note,
warranty, guaranty, lease, pledge agreement, charge or conditional
sales agreement, to which such Person is a party or by which any of the
assets of such Person is bound.
"DELIVERY" has the meaning assigned to it in Section 2.3(b).
"DAMAGES" has the meaning ascribed to it in Section 9.3.
"DOLLARS" or the symbol "$" means lawful currency and legal tender of
the United States of America.
"ENSYN EQUITY INTEREST" has the meaning ascribed to it in Section 3.3.
"ENSYN PROCESS" means the process using Ensyn's RTP(TM) technology to
upgrade bitumen and heavy oil.
"ENSYN STOCK" means all the shares of the capital stock of Ensyn,
consisting of 100,000 authorized shares of common stock having a par
value of $0.0001 per share, of which 38,800 shares are currently issued
and outstanding.
"ENVIRONMENTAL LAW" means any Legal Requirement, as now in effect,
concerning exposure to, or the use, storage, recycling, treatment,
generation, transportation, processing, handling, labeling, production
or disposal of, or pollution by, a Hazardous Substance.
"EXCLUSIVITY PERIOD" has the meaning ascribed to it in Section 3.2.
"GOVERNMENTAL AUTHORITY" means any court, government, legislature,
council, government department, commission, board, bureau, agency,
instrumentality, or other governmental authority in any country or
jurisdiction therein.
"HAZARDOUS SUBSTANCE" means any substance that is listed, defined,
designated or classified as hazardous, toxic, radioactive or dangerous,
or is otherwise regulated as such, under any Legal Requirement, as now
in effect, whether by type or by quantity (including any substance
containing any such substance as a component), including without
limitation, and to the extent so listed, defined, designated or
classified, any toxic waste,
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pollutant, contaminant, hazardous substance, toxic substance, hazardous
waste, industrial substance or waste, petroleum, or petroleum-derived
substances or waste, gas, radon, radioactive materials, asbestos,
asbestos-containing materials, urea formaldehyde foam insulation, lead
or polychlorinated biphenyls.
"INITIAL EXCLUSIVITY PERIOD" has the meaning ascribed to it in Section
3.2.
"INTELLECTUAL PROPERTY RIGHTS" has the meaning ascribed to it in
Section 5.20.
"IVANHOE INC." means Ivanhoe Energy Inc., a corporation incorporated
under the laws of the Yukon, Canada and includes its successors and
assigns. The Purchaser is a wholly owned Subsidiary of Ivanhoe Inc.
"LEGAL REQUIREMENT" means any applicable (a) national, state or local
law (statutory, judicial or otherwise), ordinance, regulation or
similar enactment, (b) judgment, or (c) Contract with any Governmental
Authority relating to compliance with any such law, ordinance,
regulation, enactment or judgment.
"LIABILITY" means any indebtedness, liability, claim, loss, damage,
deficiency, obligation or responsibility, whether direct or indirect,
known or not known, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued, absolute, contingent or otherwise.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on the
financial condition, results of operations or Business of Ensyn or of
the subject Person.
"PATENTS" means the patents or applications for patents set forth in
Schedule "A" to the Site License Agreement.
"PERSON" means any individual, corporation, partnership, association,
trust, organization, business or government (or any agency or political
subdivision thereof), or other entity.
"PROCESS LICENSE" means the site license issued by Ensyn to Purchaser
for each RTP(TM) Project at which the Ensyn Process is used in the
Territory during the Exclusivity Period substantially in the form of
the Site License attached hereto as Exhibit "D". It is understood that
in any given country the Process License to Purchaser or a designated
Affiliate will be no less favorable than Process Licenses granted to
other licensees in that country.
"RTP(TM) PROJECT" means each project in which the Ensyn Process is
used.
"STOCK PAYMENT" has the meaning ascribed to it in Section 2.3.
"SUBSIDIARY" means, with respect to any Person, any corporation,
association or other entity, a majority (by number of votes) of the
voting share capital of which is at the time owned by such Person, or
by one or more of its Subsidiaries, or by such Person and one or more
of its Subsidiaries.
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"TERRITORY" means China, Mongolia, Iraq, Oman and all of South America,
except for Venezuela.
"TAX" means any tax, charge, fee, duty, levy or other assessment,
imposed by any taxing authority of any Governmental Authority.
1.2 INTERPRETATION. Personal pronouns, when used in this Agreement,
whether in the masculine, feminine or neuter gender, shall include all other
genders, and the singular shall include the plural, and vice versa. The word
"or" is not exclusive and the word "including" is not limiting whether or not
limiting language (such as "without limitation" or "but not limited to" or words
of similar import) is used with reference thereto. All references herein to
Sections or subdivisions hereof shall refer to the corresponding Section or
subdivision of this Agreement unless specific reference is made to a section or
subdivision of another document or instrument. All references herein to a
Schedule or Exhibit shall refer to the corresponding Schedule or Exhibit
attached hereto. Any reference to a Legal Requirement is to the same as amended
from time to time. Any reference to a Governmental Authority shall include
reference to any successor thereto or any Governmental Authority performing
similar functions. In the event that any date on which any action is required to
be taken hereunder by any Party hereto is not a Business Day, such action shall
be required to be taken on the next succeeding day which is a Business Day. All
references to "approval," "authorization," "consent" or "direction" in this
Agreement means written approval, authorization, consent or direction.
1.3. EXHIBITS. ATTACHED TO AND MADE A PART OF THIS AGREEMENT ARE THE
FOLLOWING EXHIBITS:
EXHIBIT "A" FINANCIAL STATEMENT OF SELLER FOR THE PERIOD
ENDED SEPTEMBER 30, 2003, AND BALANCE SHEET OF
ENSYN AS AT OCTOBER 1, 2003.
EXHIBIT "B" DISCLOSURE EXHIBIT OF SELLER
EXHIBIT "C" INTELLECTUAL PROPERTY RIGHTS OF SELLER
EXHIBIT "D" FORM OF PROCESS LICENSE
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ARTICLE 2
PURCHASE AND DELIVERY OF ENSYN STOCK
2.1 PURCHASE AND SALE. Subject to the terms and conditions of this
Agreement, at the Closing Seller agrees to sell and deliver, and the Purchaser
agrees to purchase and accept 4,311 newly issued shares of Ensyn Stock. Upon the
Closing the issued and outstanding Ensyn Stock shall be held and owned as
follows:
Ensyn Group Inc. 38,800 Shares
Ivanhoe Energy (USA) Inc. 4,311 Shares
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Total............43,111 Shares **
**Ensyn has a stock option plan under which 3,880 shares of Ensyn Stock are
authorized for granting .
At the Closing, Seller shall deliver to Purchaser certificates representing the
4,311 shares of Ensyn Stock, registered in the name of Purchaser.
2.2 CLOSING. The closing of the purchase and sale of Ensyn Stock (the
"CLOSING") will take place on the date (the "CLOSING DATE") which shall be
within three (3) Business Days following the satisfaction or waiver of all the
conditions set forth in Articles 6 and 7, at the offices of Purchaser, 5060
California Avenue, Suite 400,Bakersfield, California, or on such other date, or
at such other place, as may be agreed by the Parties. The Closing shall take
place no later than March 1, 2004.
2.3 CONSIDERATION FOR ENSYN STOCK. Except as hereinafter provided, the
consideration for the Ensyn Stock to be purchased by Purchaser shall be Two
Million Dollars ($2,000,000) (herein the "STOCK PAYMENT"), of which Five Hundred
Thousand ($500,000) was paid on December 19, 2003. The balance of the Stock
Payment will be paid to Purchaser as follows:
(a) Five Hundred Thousand Dollars ($500,000) within three Business Days
after signing of this Agreement,
(b) Five Hundred Thousand Dollars ($500,000) subject to the Closing and
the delivery of the CDF to a site near Bakersfield, California (the
"DELIVERY"), with such payment to be made promptly after the later of
the Closing or the Delivery, and
(c) Five Hundred Thousand Dollars ($500,000) subject to and promptly
after the date that the economic viability of the Ensyn Process is
confirmed by the CDF reaching a steady state of operation for a five
hour test period and with respect to such test period, Ensyn providing
Purchaser with (i) detailed information regarding product yield,
feedstock and product assays and (ii) a third party evaluation of the
product assay to be prepared by Purvin and Gertz or another mutually
acceptable third party that indicates the product characteristics and
yield are at least comparable to those obtained from Ensyn's pilot
facility in Ottawa.
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Notwithstanding the foregoing, in the event that prior to Ensyn reacquiring the
Ensyn Stock from Purchaser as provided in Section 2.4, the CDF is not delivered
to a site near Bakersfield as provided in (b) above or its economic viability is
not confirmed as provided in (c) above, the amount of the Stock Payment will be
reduced to amount of the Stock Payment paid by Seller to Purchaser prior to the
Delivery or confirmation of the economic viability of the CDF, as the case may
be, and Purchaser may retain ownership of the Ensyn Stock. If the Parties do not
agree within 30 days, they will refer the matter to arbitration.
2.4 REACQUISITION OF ENSYN STOCK. Purchaser may elect, during a one
year period starting two years from the effective date of this Agreement, at its
sole option, to require Ensyn to reacquire all the shares of Ensyn Stock then
owned by Purchaser in exchange for the same consideration paid by Purchaser for
such stock if, within two years from the effective date of this Agreement the
Ensyn Stock, or any stock received in exchange for Ensyn Stock, is not publicly
traded. The entitlement to the Process Licenses, as provided in Article 3, will
continue in effect in the event of such reacquisition of Ensyn Stock from
Purchaser.
2.4 REPRESENTATION OF PURCHASER ON BOARD OF DIRECTORS OF ENSYN. From
and after the Closing, Seller agrees that Purchaser, as long as Purchaser owns
the Ensyn Stock which is purchased by Purchaser hereunder, shall be entitled to
have a representative elected to the Board of Directors of Ensyn, with full
powers of such position.
ARTICLE 3
LICENSE OF ENSYN PROCESS; ENSYN'S RIGHT TO PARTICIPATE
3.1 LICENSE OF ENSYN PROCESS. Purchaser's payment of the final Five
Hundred Thousand Dollars ($500,000) of the Stock Payment pursuant to Section
2.3(c) shall entitle Purchaser to be issued a Process License for each RTP(TM)
Project Purchaser undertakes in the Territory during the Exclusivity Period.
Each Process License would involve Ensyn being entitled to a mutually agreeable
royalty or an alternative arrangement for Ensyn's equity participation in the
subject project, such matters to be negotiated on a project-by-project joint
venture basis among Ensyn, Purchaser and any third party involved in such
project in accordance with this Article 3. Purchaser shall have the right to
have each Process License hereunder issued to a designated Affiliate rather than
directly to Purchaser, such Affiliate to be the entity responsible to Purchaser
for the subject RTP(TM) Project.
3.2 TERRITORIAL RIGHTS. Purchaser shall have the sole right to be
issued the Process Licenses in the Territory for five years from the date of
this Agreement ("INITIAL EXCLUSIVITY PERIOD"). If Purchaser places an order for
an RTP(TM) Project of at least 5,000 barrels per day during the Initial
Exclusivity Period, the period of exclusivity for such sole right in the
Territory will be extended for an additional two years following the Initial
Exclusivity Period. Furthermore, each additional RTP(TM) Project order of at
least 5,000 barrels per day placed by Purchaser during the Initial Exclusivity
Period or any extension thereof shall extend such sole right in the Territory
for an additional two years, but in no event may the total period of such sole
right in the Territory exceed 13 years from the date of this Agreement (the
Initial Exclusivity Period, as so extended, is herein referred to as the
"Exclusivity Period"). It is understood that Ensyn will not use the Ensyn
Process in the Territory during the Exclusivity Period without the written
consent of Purchaser.
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3.3 ENSYN'S RIGHT TO PARTICIPATE. For each RTP(TM) Project developed by
Purchaser in the Territory, Ensyn will have the right to an equity participation
("ENSYN EQUITY INTEREST") no less than ten percent of Purchaser's interest, that
may be acquired by Ensyn for the same proportionate cost as paid by Purchaser.
The Parties intend that, if Ensyn elects to acquire an Ensyn Equity Interest,
Ensyn's Equity Interest will offset and eliminate the payment of license fees
for use of the Process License in such project. It is further agreed that for
RTP(TM) Projects that Purchaser may develop in the Territory within South
America other than in Peru, Ensyn may acquire an equity interest equal to 25% of
Purchaser's interest in such project for the same proportionate cost as paid by
Purchaser.
ARTICLE 4
COVENANTS
4.1 ACCESS TO INFORMATION. Seller shall cause the officers, employees,
financial advisors, attorneys, accountants and other authorized representatives
of Purchaser reasonable access to, the offices, facilities, properties, experts'
reports, other non-public information, and all other books and records, of
Ensyn, and prior to the Closing, the personnel responsible for preparing or
maintaining the same. Seller shall also inform and consult with Purchaser on all
material matters relating to Ensyn's Business and operations between the date of
this Agreement and the Closing.
4.2 CONFIDENTIALITY. The Parties agree that it is in their mutual and
respective best interests, to restrict the distribution of information regarding
this transaction. Each party may disclose such information to its Affiliates,
licensors and licensees, directors, officers, employees, counsel and accountants
or other agents or representatives, and the Purchaser may make such disclosures
as are necessary to or as required by the rules and regulations of the Toronto
Stock Exchange and NASDAQ. Notwithstanding the foregoing, it is understood that
any Party can disclose the fact that this Agreement exists and Seller and Ensyn
can disclose any information required by regulatory agencies or information
after it has been disclosed by Purchaser as provided above.
4.3 NO CHANGES. Seller shall ensure that Ensyn, after the execution of
this Agreement and prior to the Closing and in each case without the prior
written consent of Purchaser, such consent not to be unreasonably withheld or
delayed, shall not take any action to:
(i) Amend the Articles of Incorporation or the By-Laws of Ensyn, or
authorize the dissolution or liquidation of Ensyn;
(ii) Permit Ensyn to declare or pay any dividend, or make any other
distribution of assets;
(iii) Issue, or authorize the issuance of, any stock of Ensyn, or
repurchase, redeem, retire or otherwise alter the issued and
outstanding stock of Ensyn;
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(iv) Incur any liability for borrowed money from third parties;
(v) Enter into any Contract involving the payment or commitment by
Ensyn of $100,000 or more, or the equivalent value in another
currency. Contracts for professional legal and financial
services rendered in connection with this Agreement, shall not
be subject to this or any other restriction.
(vi) Conduct any business or engage in any activity not being, or
substantially related to, activities related to the Ensyn
Process;
(vii) Waive, or fail to enforce, any material rights of Ensyn, under
any Contract;
(viii) Make or approve any expenditure for operations other than in the
ordinary course of business or as necessitated by emergency;
(ix) Sell, transfer or otherwise dispose of any of its assets, or
create or permit to exist or modify any new security interest,
lien or encumbrance on its properties or assets, or purchase any
asset of any Person, or modify in any material respect any of
its Contracts, or purchase, lease or otherwise acquire any
property of any kind whatsoever;
(x) Engage in any Business other than in the ordinary course; or
(xi) Agree to take any action prohibited by this Section 4.3.
4.4 SELLER INDEMNIFICATION OF PURCHASER. Seller agrees to indemnify and
hold Purchaser harmless from any Damage, Claim or Legal Requirement arising out
of or which may be made by any Person or Governmental Authority against
Purchaser in respect of Ensyn's business or operations occurring prior to the
execution of this Agreement.
4.5 ALL REASONABLE EFFORTS. Seller shall use all reasonable efforts to
cause each of the conditions precedent set forth in Article 7 to be met as
promptly as practicable.
4.6 FURTHER ASSURANCES. At the request of Purchaser and without any
further consideration, Seller shall execute and deliver, such further
agreements, documents or instruments as may be reasonably requested in order (a)
to give effect to the provisions of this Agreement, or (b) to perfect or
evidence the rights of Purchaser in connection with the transactions
contemplated herein.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
5.1 ORGANIZATION OF ENSYN. Ensyn is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
Ensyn has all requisite
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corporate power and authority to own its assets and to carry on the business in
which it is engaged. Seller has delivered to Purchaser true, correct and
complete copies of the certificate of incorporation and by-laws of Ensyn.
5.2 NO SUBSIDIARIES. Except as set forth on the Disclosure Schedule
attached as Exhibit "B", Ensyn has no subsidiaries and partnerships.
5.3 OWNERSHIP OF OUTSTANDING ENSYN STOCK. Seller is, and will continue
to be, until the Closing, the sole owner, beneficially and of record, of the
outstanding Ensyn Stock. Seller has, and will continue to have, until the
Closing, good and valid title to the outstanding Ensyn Stock, free and clear of
all Claims. The outstanding Ensyn Stock is, and the Ensyn Stock to be issued to
Purchaser will be, validly issued, fully paid and nonassessable. Except as set
forth on the Disclosure Schedule attached hereto as Exhibit "B ", Ensyn has not
issued or granted any convertible security, option, warrant or right
(contractual or otherwise), or entered into any Contract (other than this
Agreement), for the purchase or other acquisition by any Person of any common
stock or any other equity, or any ownership interest in, Ensyn.
5.4 CAPITALIZATION OF ENSYN. The authorized capital stock of Ensyn
consists of 100,000 shares of common stock, par value $0.0001. As of the date of
this Agreement, 38,800 shares of common stock have been issued and are
outstanding, and after the issue at the Closing of the 4,311 shares of Ensyn
Stock to Purchaser contemplated hereby, 43,111 shares of common stock will have
been issued and will be outstanding.
5.5 TRANSFER OF OUTSTANDING ENSYN STOCK. Upon the issuance by Ensyn to
Purchaser of 4,311 shares of Ensyn Stock in accordance with the provisions of
this Agreement, Purchaser will have good and valid title to such shares of Ensyn
Stock, free and clear of all Claims.
5.6 FINANCIAL STATEMENTS OF ENSYN. [To be filled in] Ensyn has no
outstanding liabilities except as set forth on the Financial Statements attached
hereto as Exhibit "A".
5.7 OPERATIONS OF ENSYN. At the Closing, Ensyn will not carry on any
Business or operations, other than related to developing and managing the Ensyn
Process.
5.8 POSITION OF ENSYN. Since the date of the Financial Statements
attached hereto as Exhibit "A", there has occurred no Material Adverse Effect
with respect to Ensyn, and there has occurred no event which is reasonably
likely to result in any Material Adverse Effect with respect to Ensyn.
5.9 LIABILITIES OF ENSYN ON THE CLOSING DATE. As of the Closing Date,
Ensyn will not have any Liability, or be a party to any Contracts, except as set
forth on the Financial Statements attached hereto as Exhibit "A" other than
those that incurred in the ordinary course of its Business since the date of the
Financial Statements attached hereto as Exhibit "A".
5.10 ACCESS. At the Closing, Seller will provide or cause to be
provided to Purchaser, true, correct and complete copies of (a) the minutes of
each meeting and each written action of
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the shareholders or stockholders of Ensyn for the past year and, (b) the minutes
of each meeting and each written action of the board of directors of Ensyn for
the past year.
5.11 LITIGATION. Except for any matter disclosed on Exhibit "B", there
is no action, suit or proceeding pending, or, to the knowledge of Seller,
threatened against Ensyn.
5.12 TAXES. On the Closing Date, all Tax returns required to be filed
by Ensyn with any Governmental Authority for all periods ending on or prior to
the Closing will have been duly filed by Ensyn in a timely manner (in each case
to the extent due, taking into account all extensions of due dates), and each
such return will be complete and accurate in all material respects. On the
Closing Date, all taxes due for all periods ending on or prior to the Closing
Date shall have been duly paid.
5.13 DISCLOSURE. To the best of Seller's knowledge and belief, no
representation or warranty by Seller in this Agreement, or any Schedule, Exhibit
or certificate furnished to the Purchaser pursuant hereto in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
made herein or therein, not misleading. Except as set forth on the Disclosure
Schedule attached hereto as Exhibit "B", there is, to the knowledge of Seller,
no non-public fact that materially affects the Business, prospects, condition,
affairs or operations of Ensyn.
5.14 NO DEFAULT BY ENSYN. Ensyn is not in default under its Articles of
Incorporation. Ensyn is in compliance in all material respects with each Legal
Requirement applicable to Ensyn. To the knowledge of Seller, there exists no
condition or event that constitutes, or with notice or lapse of time or both
would constitute, a material default by Ensyn under, or a material violation by
Ensyn of, any Legal Requirement applicable to Ensyn. Neither Seller nor Ensyn
has received any notice that Ensyn has failed to comply (and which failure has
not been remedied) with, has been threatened with a charge of violation of, or
has received any notice that it is under investigation with respect to any
possible violation by Ensyn of any Legal Requirement of any Governmental
Authority.
5.15 NO DEFAULT BY OTHER PERSONS. Neither Seller nor Ensyn has received
any notice that any Person, which is a party to any Contract with Ensyn, is not
in compliance in all respects with each Legal Requirement with respect to such
Contract.
5.16 NO CONSENT. No Consent by any Person, other than such Consents as
have heretofore been obtained, is required to be obtained by Seller or Ensyn:
(a) in connection with the execution, delivery and validity or enforceability of
this Agreement, (b) for the performance by Seller of its obligation under this
Agreement, or (c) for the acquisition on the Closing Date by Purchaser of its
rights and benefits under the interest in Ensyn acquired hereunder.
5.17 INSOLVENCY. No administrator, receiver or administrative receiver
has been appointed in respect of Ensyn or in respect of any part of the assets
of Ensyn. No petition has been presented, no order has been made, and no
resolution has been passed, for the winding-up of Ensyn. Ensyn is not insolvent
or unable to pay its debts as they become due.
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5.18 ENVIRONMENTAL MATTERS. Ensyn has all permits, licenses, approvals,
authorizations or other Consents required under applicable Environmental Laws
necessary for the operation of its Business. In the operation of its Business
there has not occurred any discharge into the environment, or the displacement
of crude oil, natural gas and related hydrocarbons, contaminants from drilling
fluids, radioactive wastes from geological formations and similar substances.
5.19. DIVIDENDS AND LOANS. After the execution of this Agreement and
prior to the Closing, Ensyn will not (a) declare, set aside or pay, directly or
indirectly, any cash or stock dividend, or other distribution in respect of its
capital stock, or (b) make any loan to any Person, or (c) purchase, or
repurchase, any security issued by Ensyn. Except for this Agreement, there is no
Contract to which Ensyn is a party or by which it is bound which would, after
the Closing, in any way restrict the ability of Ensyn to declare or to
distribute any dividend or incur any debt.
5.20 PATENTS, TRADEMARKS AND COPYRIGHTS. Ensyn owns certain licenses
and sublicenses granted by the Seller and its Affiliates that include the right
to use the patents, patent application, trademark (whether registered or
unregistered), trademark application, trade name or copyright or any material
trade secret, or any material proprietary manufacturing process or formula
("INTELLECTUAL PROPERTY RIGHTS") shown on Exhibit "C". To the knowledge of
Ensyn, Ensyn is not infringing on any Intellectual Property Rights of any other
Person.
5.21 OWNERSHIP OF INTELLECTUAL PROPERTY RIGHTS. To the best of Seller's
knowledge and belief, (i) the Patents are the only patents or applications for
patents in existence in respect of the Ensyn Process, all of which are owned
exclusively by either Seller or its Affiliates, or Seller or its Affiliates have
a license to use and sub-license use of the Patents which is broad enough to
include the use by Purchaser or a designated Affiliate to which a Process
License is issued by Ensyn hereunder, and any successor or permitted assign of
the RTP(TM) Project, and (ii) the Patents are not dependent on any other patents
other than those licensed or sublicensed to Ensyn and the practice of the
invention described in the Patents do not infringe on any other patents; Ensyn
has and shall have when any Process License is issued hereunder, the full legal
right to issue the same pursuant to the terms of this Agreement.
ARTICLE 6
REPRESENTATIONS AND WARRANTEES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
6.1 ORGANIZATION OF PURCHASER. Purchaser is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Nevada and is a wholly owned Subsidiary of Ivanhoe Inc. Purchaser has all
requisite corporate power and authority to own its assets and to carry on the
business in which it is engaged.
6.2 AUTHORITY. Purchaser has the corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated herein. The execution and delivery by Purchaser, and the
performance by Purchaser of its obligations under this
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Agreement, have been duly and validly authorized by all necessary corporate
action on the part of Purchaser. This Agreement has been duly and validly
executed and delivered by Purchaser and constitutes the legally valid and
binding obligation of Purchaser in accordance with its terms. The execution and
delivery of this Agreement, the performance by Purchaser of its obligations
under this Agreement, and the compliance by Purchaser with the provisions of
this Agreement to be complied with by Purchaser do not (a) violate any Legal
Requirement of any competent Governmental Authority, (b) conflict with, or
result in any breach of, any of the terms, conditions or provisions of, or
constitute (with notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under the certificate of
incorporation or by-laws of Purchaser, or any Contract to which Purchaser is a
party or by which it or any of its properties or assets are bound or affected,
or (c) result in the creation of any Claim (other than as contemplated by the
performance of this Agreement) upon any of the properties or assets of
Purchaser.
6.3 ACQUIRING ENSYN STOCK FOR INVESTMENT. Purchaser is acquiring shares
of Ensyn Stock for investment and not with a view to the public sale or
distribution thereof within the meaning of the Securities Act of 1933, as
amended (the "1933 Act"). Purchaser has no present intention of selling,
granting any participation in or otherwise distributing such shares.
6.4 FURTHER ASSURANCES. At the request of Seller, Purchaser shall
execute and deliver such further agreements, documents or instruments as may be
reasonably requested in order (a) to give effect to the provisions of this
Agreement, or (b) to perfect or evidence the rights of Seller in connection with
the transactions contemplated herein.
6.5 INVESTMENT EXPERIENCE. Purchaser understands that (a) the shares of
Ensyn Stock have not been registered under the 1933 Act, (2) such shares are
being offered and sold pursuant to an exemption from registration contained in
the 1933 Act based in part upon Purchaser's representations contained in this
Agreement, and (3) the purchase of such shares involves substantial risk.
Purchaser has experience as an investor in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of its investment in shares of Ensyn Stock and has such
knowledge and experience in financial or business matters that it is capable of,
and is not relying on any other person in, evaluating the merits and risks of
this investment. Purchaser is an "accredited investor" within the meaning of
Regulation D promulgated under the 1933 Act.
6.6 RESTRICTED SECURITIES. Purchaser understands that the shares of
Ensyn Stock are characterized as "restricted securities" under the 1933 Act
inasmuch as they are being acquired from Ensyn in a transaction not involving a
public offering and that under the 1933 Act and applicable regulations
thereunder such securities may be resold without registration under the 1933 Act
only in certain limited circumstances. Purchaser must bear the economic risk of
this investment indefinitely unless such shares are registered pursuant to the
1933 Act, or an exemption from registration is available. Purchaser understands
that Ensyn has no present intention of registering such shares. Purchaser also
understands that there is no assurance that any exemption from registration
under the 1933 Act will be available and that, even if available, such exemption
may not allow Purchaser to transfer all or any portion of such shares under the
circumstances, in the amounts or at the times Purchaser might propose. In this
connection,
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<PAGE>
Purchaser represents that it is aware of the provisions of Rule 144 of the
United States Securities and Exchange Commission, as presently in effect, and
understands the resale limitations imposed thereby and by the 1933 Act.
Purchaser understands that no public market now exists for any of the securities
issued by Ensyn, and that a market may never exist for any such securities.
6.7 LEGEND. It is understood that each certificate representing shares
of Ensyn Stock shall bear the following legend:
"THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY OTHER JURISDICTION. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED
OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE
SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME.
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY
PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY
APPLICABLE STATE SECURITIES LAW."
ARTICLE 7
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser to purchase Ensyn Stock hereunder is
subject to the fulfillment, at or prior to the Closing, of each of the following
conditions (each of which may be waived, in whole or in part by the Purchaser in
its sole discretion):
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES OF SELLER. The
representations and warranties made by Seller in this Agreement shall have been
true and correct in all material respects on the date hereof (except to the
extent that such representations and warranties expressly relate to an earlier
date). Such representations and warranties shall be true and correct in all
material respects on and as of the Closing Date, with the same force and effect
as though such representations and warranties have been made on and as of the
Closing Date (except to the extent that such representations and warranties
expressly relate to an earlier date).
7.2 COMPLIANCE WITH AGREEMENT. All of the terms, covenants, agreements
and conditions of this Agreement to be complied with, and performed by Seller
and Ensyn on or prior to the Closing shall have been complied with and performed
in all material respects.
7.3 ABSENCE OF LITIGATION. No action, suit or proceeding by or before
any Governmental Authority shall be pending, or, to the knowledge of Seller,
threatened, against Seller or Ensyn, to restrain, prohibit, invalidate or delay
any of the transactions contemplated by this Agreement or which would, if
adversely determined, (a) adversely affect any right of
13
<PAGE>
Purchaser to exercise all ownership rights with respect to Ensyn Stock, or (b)
have a Material Adverse Effect on Ensyn.
7.4 LEGAL MATTERS. All actions, proceedings, instruments, opinions and
documents required to consummate the transactions contemplated by this
Agreement, and all other related legal matters, shall be reasonably satisfactory
to counsel for Purchaser.
7.5 ELECTION OF PURCHASER REPRESENTATIVE AS ENSYN DIRECTOR. A
representative of Purchaser shall have been elected a Director of Ensyn
effective as of the Closing.
7.6 NO MATERIAL ADVERSE EFFECT. Since the date of this Agreement, there
shall have occurred (a) no Material Adverse Effect with respect to Ensyn, and
(b) no event which is reasonably likely to result in any Material Adverse Effect
with respect to Ensyn.
ARTICLE 8
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller to sell Ensyn Stock hereunder is subject to
the fulfillment, at or prior to the Closing, of each of the following conditions
(any of which may be waived in whole or in part) by Seller in its sole
discretion):
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES OF PURCHASER. The
representations and warranties made by Purchaser in this Agreement shall have
been true and correct in all material respects on the date hereof (except to the
extent that such representations and warranties expressly relate to an earlier
date). Such representations and warranties shall be true and correct in all
material respects on and as of the Closing Date, with the same force and effect
as though such representations and warranties had been made on and as of the
Closing Date (except to the extent that such representations and warranties
expressly relate to an earlier date).
8.2 COMPLIANCE WITH AGREEMENT. All of the terms, covenants, agreements
and conditions of this Agreement to be complied with, and performed by Purchaser
on or prior to the Closing shall have been complied with and performed in all
material respects. The Parties agree that they shall mutually cooperate to
ensure that to the highest extent practicable, this transaction meets the
requirements of a tax-deferred reorganization in compliance with all IRC
Sections and applicable state statutes.
8.3 ABSENCE OF LITIGATION. No action, suit or proceeding by or before
any Governmental Authority shall be pending, or, to the knowledge of Purchaser,
threatened, against Purchaser or Ensyn, to restrain, prohibit, invalidate or
delay any of the transactions contemplated by this Agreement or which would, if
adversely determined, have a Material Adverse Effect on Seller.
8.4 LEGAL MATTERS. All actions, proceedings, instruments, opinions and
documents required to consummate the transactions contemplated by this
Agreement, and all other related legal matters, shall be reasonably satisfactory
to counsel for Seller.
14
<PAGE>
ARTICLE 9
INDEMNIFICATION
9.1 SELLER'S INDEMNITY. Seller, to the maximum extent permitted by law,
shall defend, indemnify and hold harmless Purchaser and its Affiliates, and
their respective directors, officers, shareholders, employees, agents,
successors, and permitted assigns, from and against all demands, claims, notices
of violation, filings, investigations, actions, suits, other legal proceedings,
payments, charges, judgments, assessments, Liabilities, Damages, deficiencies,
penalties, fines, obligations, costs, and expenses paid or incurred (including,
without limitation, any legal or other expenses reasonably incurred in
connection with investigating or defending any claim, demand, or legal
proceeding, whether or not resulting in any liability, and all amounts paid in
settlement of claims, demands, or legal proceedings) arising from or related to
any inaccuracy of any representation, any breach of any warranty, or any breach
of any covenant or agreement, made by Seller in this Agreement. Seller shall use
all reasonable efforts to mitigate such Damages and shall, to the extent
practicable, consult with Purchaser in advance with respect to any mitigation of
Damages in a material amount.
9.2 PURCHASER'S INDEMNITY. Purchaser, to the maximum extent permitted
by law, shall defend, indemnify and hold harmless Seller, its Affiliates, and
their respective directors, officers, shareholders, employees, agents,
successors, and permitted assigns, from and against all demands, claims, notices
of violation, filings, investigations, actions, suits, other legal proceedings,
payments, charges, judgments, assessments, Liabilities, Damages, deficiencies,
penalties, fines, obligations, costs, and expenses paid or incurred (including,
without limitation, any legal or other expenses reasonably incurred in
connection with investigating or defending any claim, demand, or legal
proceeding, whether or not resulting in any liability, and all amounts paid in
settlement of claims, demands, or legal proceedings) arising from or related to
any inaccuracy of any representation, any breach of any warranty, or any breach
of any covenant or agreement, made by Purchaser in this Agreement. Purchaser
shall use all reasonable efforts to mitigate such Damages and shall, to the
extent practicable, consult with Seller in advance with respect to any
mitigation of Damages in a material amount.
9.3. DAMAGES. The term "DAMAGES" means, with respect to any Person, an
amount equal to any and all legal obligations, whether civil or criminal
(including, but not limited to, any legal obligation to take an affirmative
act), Liabilities, Taxes, damages (including punitive or exemplary), penalties,
deficiencies, losses, judgments, fines, costs and expenses incurred by such
Person (including any cost or expense incurred in connection with investigating,
defending against, monitoring or performing such obligations), and any interest,
bonding or appellate costs, attorneys', accountants' and experts' fees and
disbursements.
9.4 LIABILITY FOR REPRESENTATIONS, WARRANTIES, AND COVENANTS. The
representations, warranties and agreements of each Party contained in this
Agreement and in any Schedule, Exhibit, certificate or other instrument
delivered pursuant hereto, shall survive the Closing Date and remain in full
force and effect, regardless of any investigation made by or on behalf of a
Party.
15
<PAGE>
ARTICLE 10
GENERAL PROVISIONS
10.1 BROKERS. Each Party represents that there are no agreements,
arrangements, or undertakings by it, any of its Affiliates or any party acting
on behalf of it, with any third party for brokerage or finders' fees or other
commissions in connection with this Agreement or any of the transactions
contemplated hereby.
10.2 EXPENSES. Each Party shall pay its own expenses incident to this
Agreement and the transactions contemplated herein, including, without
limitation, all legal and accounting fees and disbursements.
10.3 ASSIGNMENT. This Agreement shall inure to the benefit of, and be
binding upon, each of the Parties, and their respective successors and permitted
assigns; provided, however, that a Party without the written consent of the
other Party may not assign the rights and obligations under this Agreement.
10.4 AMENDMENT. This Agreement may not be amended or changed orally,
and, no amendment to this Agreement shall be effective unless evidenced by an
instrument in writing duly executed by the Party hereto against which
enforcement of such amendment is sought.
10.5 TERMINATION. This Agreement may be terminated at any time prior to
Closing:
(a) by mutual written consent of the Parties;
(b) by the Purchaser, if there shall have been a material breach of
this Agreement by Seller;
(c) by the Seller, if there shall have been a material breach of this
Agreement by Purchaser.
10.6 NOTICES. Any notice, request or other document to be given
hereunder shall be in writing and delivered personally or sent by facsimile,
telex or first class or registered mail, first class postage prepaid, addressed
as follows:
IF TO PURCHASER, AT:
Ivanhoe Energy (USA) Inc.
5060 California Avenue, Suite 400
Bakersfield, CA 93309
Attention: Mr. Leon Daniel, President
Telephone: 661-869-8335
Facsimile: 661-869-2820
E-mail: leon@ivancorp.com
16
<PAGE>
WITH A COPY TO
Attention: General Counsel
Telephone: 661-869-8339
Facsimile: 661-869-2820
E-mail: oblake@ivanhoeenergy.com
IF TO SELLER AT:
Ensyn Group, Inc.
20 Park Plaza
Suite 434
Boston, Massachusetts 02116
Attention: President
Fax Number: (617) 266-0557
WITH A COPY TO :
Ensyn Petroleum International Ltd.
400 West 9th Street
Wilmington, Delaware 19801
Attention: President
Fax Number:
Any such notice, request or other document shall be deemed to have been
given when received.
Any Party hereto may change its address for receiving notices by giving
notice of such change to the other Party.
10.7 GOVERNING LAW AND SEVERABILITY. This Agreement shall be governed
by, and construed and enforced in accordance with, the laws of the State of
Delaware, without regard to principles of conflicts of law. If any provision of
this Agreement is determined by any court of competent jurisdiction or
arbitrator to be invalid, illegal or unenforceable to any extent, that provision
shall, if possible, be construed as though more narrowly drawn, if a narrower
construction would avoid such invalidity, illegality or unenforceability or, if
that is not possible, such provision shall, to the extent of such invalidity,
illegality or unenforceability, be severed, and the remaining provisions of this
Agreement shall remain in effect.
10.8 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
10.9 ENTIRE AGREEMENT. This Agreement contains the entire agreement and
understanding of the Parties relating to the subject matter hereof and cancels
and supersedes all
17
<PAGE>
prior agreements and understandings between the Parties relating to the subject
matter covered hereby, whether written or oral.
10.10 SCHEDULES AND EXHIBITS. Schedules, Exhibits or any documents
executed pursuant to this Agreement are deemed to be incorporated by reference
as though set forth herein.
10.11 ATTORNEY FEES, COSTS AND DISBURSEMENTS. If any action is brought
to enforce or interpret this Agreement, or any of its terms, the prevailing
party in such action shall be entitled to its reasonable attorney fees, actual
costs and disbursements. Said costs shall be in addition to those ordinarily
awarded by statute.
IN WITNESS WHEREOF, Seller and Purchaser have caused this Agreement to
be duly executed by their duly authorized representatives the day and year first
above written.
SELLER PURCHASER
ENSYN GROUP, INC. IVANHOE ENERGY (USA) INC.
By: /s/ R. G. Graham By: /s/ E.L.Daniel
---------------- --------------
Title: President and CEO Title: President
ENSYN PETROLEUM INTERNATIONAL LTD.
By:/s/ R.G. Graham
---------------
Title: President
18
<PAGE>
EXHIBIT "A"
TO STOCK PURCHASE AGREEMENT BETWEEN IVANHOE ENERGY (USA) INC AND
ENSYN GROUP INC. AND ENSYN
ENSYN PETROLEUM INTERNATIONAL LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN ACCORDANCE WITH UNITED STATES GAAP)
AS AT OCTOBER 1, 2003
<PAGE>
ENSYN PETROLEUM INTERNATIONAL LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEET
(REPORTED IN US$)
AS AT OCTOBER 1, 2003
OCT 1/03
---------
ASSETS
CURRENT ASSETS
Cash and short term investments --
Trade and Other Receivables 444,214
Intercorporate Accounts 412,107 (note 1)
----------
856,321
INVESTMENT IN JOINT VENTURE 1,642,168 (note 2)
INTANGIBLES 339,038
----------
2,837,527
==========
LIABILITIES
CURRENT LIABILITIES
Trade Payable and accruals 90,643
Due to Ensyn Group Inc. --
----------
90,643
SHAREHOLDER'S EQUITY
Capital Stock 3,957,097
Accumulated Deficit (1,210,213)
----------
2,746,884
----------
2,837,527
==========
note 1 as at December 31, 2003, the intercorporate receivable balance has
been reduced to $148,230
note 2 the Investment in Joint Venture consists of a capital contribution of
$1,500,000 and a loan of $142,168
<PAGE>
EXHIBIT B
DISCLOSURE SCHEDULE
5.2 SUBSIDIARIES AND PARTNERSHIPS
Ensyn owns 85% of Ensyn Energy Corp., a Delaware corporation "Energy"
Energy owns approximately 72% of EEC Management Corp., a Delaware
Corporation ("EECM")
Energy owns approximately 28% of EECM
EECM is the general partner in a limited partnership, Ensyn Energy Management
LP ("EnsynLP"), that has the right to receive certain royalties when the Ensyn
Process is used to upgrade petroleum. The allocation of interests in Ensyn LP
are as follows:
General Partner EEC 10 units
Limited Partners
Energy 7136 units
Ensyn 2854 units
Ensyn owns 50% of ITS ENSYN LLC, a limited liability company which has the right
to manufacture equipment for the Ensyn Process or to receive a fixed fee when
such equipment is manufactured by others.
5.3 OWNERSHIP OF OUTSTANDING ENSYN STOCK
Ensyn has issued options to purchase 3350 of its Shares pursuant to its stock
option plan.
5.6 FINANCIAL STATEMENTS OF ENSYN
1. Ensyn has the obligation to fund to ITSENSYN LLC 50% of the cost of the CDF
facility until it is completed and then to fund the costs in excess of
revenues to operate the CDF during testing.
2. Esyn has the obligation to repay Ivanhoe Energy $500,000 in the event the
transaction envisioned in the Heads of Agreement between Ivanhoe Energy
(USA) Inc. and Ensyn ("HOA") dated December 17, 2003 does not close.
5.9 LIABILITIES OF ENSYN
1. Ensyn has certain liabilities related to the HOA.
2. In the event that Ensyn does not complete the CDF, Conoco Phillips Canada
Resources ("ConocoPhillips") would be entitled to be repaid Canadian
$600,000.
3. In conjunction with the assignment of petroleum patent applications
described in EXHIBIT C, 6., Ensyn has provided ConocoPhillips with a
covenant indicating that Ensyn will comply with the obligations of EGI,
EEM, EEC and ETI (the "Ensyn Entities") as parties to the Project
Development and License Agreement between the Ensyn Entities and
ConocoPhillips dated August 28, 2000 (the "PDA"). It should be noted that
the assignment clarifies that Ensyn is assuming the obligations of Seller
pursuant to the PDA and will be entitled to all future payments from
ConocoPhillips as indicated in Ensyn's business plan.
<PAGE>
EXHIBIT "C" (1)
INTELLECTUAL PROPERTY RIGHTS OF THE SELLER
Ensyn has rights to use all the intellectual property of Seller and its
Affiliates related to the Ensyn Process, subject to the Licenses granted to
ConocoPhillips Canada Resources Limited and ITSENSYN LLC, pursuant to the
following documents:
1. Amended and Restated License Agreement between Ensyn Technology and Ensyn
Group Inc dated December 8, 1997
2. Sub-License between Ensyn Group, Inc. and Ensyn Petroleum International, Ltd.
Dated January 14, 2002.
3. License between Ensyn Technologies Inc. and Ensyn Petroleum International Ltd
dated January 14, 2002
4. Assignment dated September 30, 2003 between Ensyn Energy Management, L.P. and
Ensyn Petroleum International Ltd.
5. Agreement dated October 1, 2003 between Ensyn Group Inc., Ensyn Technologies
Inc, Ensyn Petroleum International Ltd, Ensyn Renewables, Inc, Ensyn Energy
Corp, Ensyn Energy Management, L.P.
6. A status report of patents and patent applications is attached hereto. With
regard to the patents and patent applications listed therein, it should be noted
that the existing patents are owned by Ensyn Technologies Inc, and include all
applications of the RTP technology, i.e. petroleum, biomass and other product
processing. Ensyn Group, Inc. is the owner of the patent applications dealing
with petroleum upgrading as indicated in the attached patent list, however, the
attorneys for Ensyn Group, Inc are being instructed to assign these patent
applications to Ensyn Petroleum International Ltd.
<PAGE>
EXHIBIT "C" (2)
TO STOCK PURCHASE AGREEMENT BETWEEN IVANHOE ENERGY (USA) INC.
AND ENSYN GROUP INC. AND ENSYN
STATUS REPORT AS OF JANUARY 7, 2004
METHOD AND APPARATUS FOR A CIRCULATING BED TRANSPORT FAST PYROLYSIS REACTOR SYSTEM CORE RTP PROCESS PATENT
ENSYN TECHNOLOGIES INC.
COUNTRY ISSUE DATE PATENT NUMBER STATUS NEXT DUE DATE ITEM DUE OUR REFERENCE
CANADA 11Sep2001 2,009,021 Issued 31Jan2004 Next Renewal Deadline 08854416CA
CZECH REP 04Dec1995 280 465 Issued 31Jan2004 Next Renewal Deadline 08854416CS
DENMARK 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416DK
FINLAND 15Jan2001 106313 Issued 30Jan2004 Next Renewal Deadline 08854416FI
FRANCE 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416FR
GERMANY 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416DE
ITALY 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416IT
NETHERL. 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416NL
POLAND 08Oct1995 168638 Issued 30Jan2004 Next Renewal Deadline 08854416PL
SPAIN 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416ES
SWEDEN 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416SE
SWITZER. 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416CH
U.K. 28Dec1994 0 513 051 Issued 30Jan2004 Next Renewal Deadline 08854416GB
U.S.A. 11Aug1998 5,792,340 Issued 11Feb2006 Next Renewal Deadline 08854416US2
U.S.A. 5-Oct-99 5,961,786 Issued 5-Apr-07 Next Renewal Deadline 088854416US3
<PAGE>
THE FOLLOWING ARE PATENT APPLICATIONS, PATENTS ARE PENDING
RAPID THERMAL PROCESSING OF HEAVY HYDROCARBON FEEDSTOCKS HEAVY OIL PRODUCT (#1)
ENSYN GROUP, INC.
COUNTRY ISSUE DATE SERIAL NUMBER STATUS NEXT DUE DATE ITEM DUE OUR REFERENCE
BRAZIL 07Apr2000 (PI 0009652-0) Examination Requested 07Apr2004 Next Renewal Deadline 08881424BR
CANADA 07Apr2000 (2,369,288) Official Action Received 07Apr2004 Next Renewal Deadline 08881424CA
EUROPE 07Apr2000 (00916713.1) Official Action Received 08Feb2004 Official Action Deadline 08881424EP
MEXICO 07Apr2000 (PA/a/2001/010120) Application Filed 08881424MX
NORWAY 07Apr2000 (2001 4868) Application Filed 07Apr2004 Next Renewal Deadline 08881424NO
U.S.A. 7-Apr-2000 09/958,261 Official Action Received 26-Feb-04 Official Action Response 08881424US1
VENEZUELA 07Apr2000 (2102-2001) Application Filed 08881424VE
<PAGE>
PRODUCT PRODUCED FROM RAPID THERMAL PROCESSING OF HEAVY HYDROCARBON FEEDSTOCKS HEAVY OIL PRODUCT (#2)
ENSYN GROUP INC.
COUNTRY FILING DATE SERIAL NUMBER STATUS NEXT DUE DATE ITEM DUE OUR REFERENCE
ARGENTINA 18Sep2001 (P 01 01 04414) Application Filed 18Sep2004 Examination Deadline 08888699AR
BRAZIL 18Sep2001 (PI 0113937-1) Application Filed 18Sep2004 Next Renewal Deadline 08888699BR
CANADA 18Sep2001 (2,422,534) Application Filed 18Sep2004 Next Renewal Deadline 08888699CA
EUROPE 18Sep2001 (01971568.9) Application Filed 18Sep2004 Next Renewal Deadline 08888699EP
MEXICO 18Sep2001 (PA/a/2003/002341) Application Filed 08888699MX
NORWAY 18Sep2001 (2003 1230) Application Filed 18Sep2004 Next Renewal Deadline 08888699NO
U.S.A. 18Sep2001 (09/955,267) Application Filed 08888699US1
<PAGE>
MODIFIED THERMAL PROCESSING OF HEAVY HYDROCARBON FEEDSTOCKS IN SITU AND FLUE GAS S REMOVAL
ENSYN GROUP INC.
COUNTRY FILING DATE SERIAL NUMBER STATUS NEXT DUE DATE ITEM DUE OUR REFERENCE
ARGENTINA 10-Oct-03 (P 03 01 03715) Application filed 10-Oct-06 Examination Deadline 08894331AR
BRAZIL 13-Oct-03 (PI0303515-8) Application Filed 13-Oct-05 Next Renewal Deadline 08894331BR
CANADA 10-Oct-03 2,444,832 Application Filed 10-Oct-05 Next Renewal Deadline 08894331CA
EUROPE 10-Oct-03 3256393.4 Application Filed 10-Oct-05 Next Renewal Deadline 08894331EP
MEXICO 10-Oct-03 (PA/a/2003/009358) Application Filed 08894331MX
NORWAY 10-Oct-03 (2003 4582) Application Filed 10-Oct-05 Next Renewal Deadline 08894331NO
U.S.A. 11-Oct-02 (10/269,538) Application Complete 08894331US
U.S.A. 17-Apr-03 (10/419,053) Application Complete 17-Apr-04 Foreign Filing Deadline 08894331US1
VENEZUELA 13-Oct-03 (2003-001753) Application Filed 08894331VE
PERU Instructions to file (Jan.04)
ECUADOR " "
COLUMBIA " "
SURINAM " "
TRINIDAD " "
OMAN " "
RUSSIA " "
MONGOLIA " "
CHINA " "
UKRAINE Awaiting Instructions
Notes: Modified and Combined "Heavy Oil Product" patents 1 & 2 (second and
third patents listed above) could also be redrafted and filed in
S.America, etc.
Protection in USA, Canada and European markets prevents import from
non-protected countries
<PAGE>
EXHIBIT "D"
TO STOCK PURCHASE AGREEMENT BETWEEN IVANHOE ENERGY (USA) INC.,
ENSYN GROUP INC. AND ENSYN
SITE LICENSE
THIS SITE LICENSE MADE AS OF THE ______ DAY OF ________________, ________,
BETWEEN:
ENSYN PETROLEUM INTERNATIONAL LTD., a corporation incorporated under
the laws of the State of Delaware (hereinafter called "EPI")
- and -
_____________________________, a ________________ formed under the laws
of ___________________ (hereinafter called "Licensee")
WHEREAS, in accordance with the Formal Agreements, Licensee or its Affiliate
will cause EPI to construct and commission the Licensee Facility in accordance
with the Formal Agreements; and
WHEREAS, the Parties have agreed to enter into this License for the Licensee
Facility in accordance with the Formal Agreements.
NOW, THEREFORE, in consideration of the covenants and agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged by each of the Parties, the Parties covenant
and agree as follows:
1. INTERPRETATION
1.1 DEFINITIONS
In this Site License, including the recitals and all Schedules hereto, the
following terms and expressions will have the following meanings:
"AFFILIATE" means, in respect of a Party, a Person which controls, is controlled
by, or is under common control with such Party and for the purposes of this
definition, "CONTROL" means the direct or indirect ability, in the case of a
corporation, to vote sufficient shares of the corporation to elect a majority of
the directors thereof and in the case of other Persons, "CONTROL" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership or voting of securities, by contract, or otherwise.
<PAGE>
"ANCILLARY TECHNOLOGY IMPROVEMENTS" means all Intellectual Property applied or
used in the operation of the Licensee Facility, by any Person, which enhances
the use of the Technology at such Licensee Facility, but is not a Technology
Improvement.
"BARREL" means 0.158997 cubic meters.
"BPD" means barrels per day.
"BUSINESS DAY" means any day other than a Saturday, Sunday or statutory holiday
in the State of New York.
"BY-PRODUCTS" means all other substances produced in the Licensee Facility in
conjunction with Upgraded Products.
"COMMERCIAL PRODUCTION" means, for a Facility, that such Facility:
(a) has been mechanically completed,
(b) has been successfully tested and commissioned in accordance with
all applicable agreements, and
(c) has achieved the Performance Criteria for that Facility.
"COMPLETION" means, for a Licensee Facility, the achievement of Commercial
Production of the Licensee Facility; or, notwithstanding that the Licensee
Facility has not achieved Commercial Production, the Purchaser has taken control
of and title to the Licensee Facility, including the RTP(TM) Equipment, as
provided in the Formal Agreements. "COMPLETE" will have a corresponding meaning.
"CONFIDENTIAL INFORMATION" has the meaning given that term in Section 8.1(a).
"DISCLOSING PARTY" has the meaning given that term in Section 8.1(a).
"FACILITY" means any facility incorporating RTP(TM) Equipment designed or
constructed by EPI or Persons acting under license or other authorization from
EPI which uses the Technology for the Specified Applications.
"FEEDSTOCK" means heavy oil, bitumen and other petroleum substances.
"FORMAL AGREEMENTS" means the formal binding agreements between Licensee and EPI
with respect to the RTP(TM) Equipment containing terms and conditions commonly
found in transactions of that nature including price to complete, target date
for completion, specifications for RTP(TM) Equipment and related equipment,
Performance Criteria, payment schedule, scope of work, site location, Feedstock
and Feedstock capacity.
"IMPROVEMENTS" means the Technology Improvements and the Ancillary Technology
Improvements.
<PAGE>
"INDEMNIFIED PARTIES" has the meaning given that term in Section 7.1.
"INFRINGEMENT CLAIM" has the meaning given that term in Section 7.1.
"INTELLECTUAL PROPERTY" means any or all of the following:
(a) all Canada, United States and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof;
(b) trade secrets and proprietary information, including trade
secrets and proprietary information that are inventions (whether
patentable or not), invention disclosures, improvements,
know-how, technology, technical data, results of experiments,
formulae, specifications, procedures and tests;
(c) all copyrights, copyright registrations and applications therefor
and all other rights corresponding thereto;
(d) all industrial designs and any registrations and applications
therefor;
(e) all trade names, logos, common law trade-marks and service marks,
and all trade-mark and service mark registrations and
applications therefor and all goodwill associated therewith;
(f) any rights similar, corresponding or equivalent to, and all
documentation related to, any of the foregoing.
"LICENSEE FACILITY" means the Facility located at ___________________
constructed by or under the direction of EPI.
"LOSSES" has the meaning given that term in Section 7.1.
"PARTIES" means the parties to this Site License and "Party" means one of them.
"PATENTS" means the patents or applications for patents set forth in Schedule
"A".
"PERFORMANCE CRITERIA" means the performance standards, milestones, benchmarks
and other performance measures relating to the performance of the Licensee
Facility as agreed in the Formal Agreements.
"PERSON" means any individual, corporation, limited liability company or other
legal entity and also includes partnerships, whether limited or general, and
trusts.
"PRODUCT" means all output streams from the Licensee Facility employing the
Technology for the Specified Applications.
<PAGE>
"PRODUCTION" means all products and by-products produced from the Licensee
Facility, including Products, Upgraded Products and By-Products.
"RECEIVING PARTY" has the meaning given that term in Section 8.1(a).
"ROYALTY" means the royalty and license fees payable to EPI in an amount equal
to the following: [must be an amount equal to or greater than the amounts
required to enable EPI to satisfy all of its obligations with respect to the
Licensee Facility, including those pursuant to licenses, sub-licenses and other
agreements] for the use of the Technology at the Licensee Facility.
"RTP(TM)" means the rapid heating of carbonaceous material, at a rate of over
400 degrees Centigrade per second, to at least 300 degrees Centigrade and
retaining the said carbonaceous materials together with a particulate heat
carrier and the initial pyrolysis products in a pyrolysis reactor at a minimum
of 300 degrees Centigrade for less than 5 seconds; RTP(TM) includes the
processing of recycled RTP(TM) carbonaceous products and fractions thereof.
"RTP(TM) EQUIPMENT" means equipment located at the Licensee Facility and which
equipment was constructed or supplied by EPI, or its agents and contractors, or
whose construction was authorized by EPI, and which equipment directly utilizes
the Technology for the Specified Applications, including an RTP(TM) Reactor.
"RTP(TM) REACTOR" means a reactor for the rapid heating of carbonaceous
material, at a rate of over 400 degrees Centigrade per second, to at least 300
degrees Centigrade and retaining the said carbonaceous materials together with a
particulate heat carrier and the initial pyrolysis products in a pyrolysis
reactor at a minimum of 300 degrees Centigrade for less than 5 seconds.
"SPECIFIED APPLICATIONS" means the use of the Technology to upgrade Feedstock,
with Production not to exceed ________ bpd; but "SPECIFIED APPLICATIONS" does
not include the mixture of Feedstock with bio-oil.
"TECHNOLOGY" means (a) the application of the RTP(TM) for the upgrading of
Feedstock as improved, developed, modified, expanded or refined from time to
time, including the application of the inventions claimed by the Patents, and
(b) any and all other Intellectual Property rights owned by or licensed to EPI
relating to the upgrading of Feedstock other than those with respect to the
RTP(TM).
"TECHNOLOGY IMPROVEMENTS" means all Intellectual Property developed by EPI
and/or any licensee of the Technology, including Licensee, which (a) requires
the Technology in order to produce a useful result, (b) has its first and
primary application to the Technology, or (c) enhances the use of the Technology
in any manner which is not particular to the Licensee Facility where such
improvement was developed.
"TERM" has the meaning given that term in Section 2.1.
"TERRITORY" means ___________________________________________________.
<PAGE>
"UPGRADED PRODUCT" means those hydrocarbon products produced from the Licensee
Facility and capable of being marketed on commercial terms to third party
purchasers.
<PAGE>
1.2 NUMBER AND GENDER
Words importing the singular number only in this Site License will include the
plural number and vice versa, words importing one gender only in this Site
License will include all genders.
1.3 HEADINGS
The headings used in this Site License and the division of this Site License
into Articles and Sections is for ease of reference only and will not affect the
meaning or the interpretation of this Site License.
1.4 INCLUDING
When the word "including" or any other form of that word is used herein, it will
in all cases be deemed to mean "including without limitation."
1.5 TAXES
If, in connection with the payment by Licensee to EPI of any amounts provided
for herein, EPI is required to collect from Licensee any taxes, the Licensee
shall pay the required amount of such taxes to EPI and EPI shall remit those
amounts to the appropriate government authority in the manner required by law.
1.6 SCHEDULES
The following schedules attached to this Site License will form part of this
Site License:
Schedule "A" - Patents
Schedule "B" - Claims
Schedule "C" - RTP(TM) Equipment for Licensee Facility
2. TERM
2.1 TERM
The term of this Site License (the "Term") will commence on the date hereof and,
subject to Sections 2.2, 2.3 and 2.4, will continue until use and operation of
RTP(TM) Equipment listed on Schedule "C" hereto at the Licensee Facility has
permanently ceased (subject to any provisions concerning relocation contained in
this Site License).
2.2 EARLY TERMINATION
This Site License will terminate prior to the expiration of the Term only upon:
(a) the mutual consent of the Parties to the expiration of the Term;
or
<PAGE>
(b) termination pursuant to Section 10.1 or 10.2.
2.3 EFFECT OF TERMINATION
Notwithstanding the provisions of this Site License, the exercise of the right
of termination by a Party under this Site License arising out of a default of
another Party, or otherwise, is without prejudice to any rights or remedies at
law or equity which may have arisen at the date that the right of termination
arose.
2.4 SURVIVAL
In the event of the expiration of the Term or early termination of this Site
License, the rights and obligations of the Parties which have accrued up to such
time will survive and remain enforceable but all further rights and obligations
will cease except as specifically set forth in this Site License. Articles 5, 7,
8, 11 and 12 will survive any termination of this Site License in accordance
with their terms.
3. GRANT AND MAINTENANCE OF USE RIGHTS
3.1 GRANT OF USE AND RELOCATION
(a) Subject to the terms and conditions herein, EPI hereby grants to
Licensee, and its successors and permitted assigns, a non-exclusive
right and license to (i) use the Technology for the Specified
Applications at the Licensee Facility and (ii) operate the RTP(TM)
Equipment originally constructed for use at the Licensee Facility for
the Specified Applications, as of the date herein, for the Term. This
Site License shall continue in full force and effect in accordance
with its terms and cannot be terminated except in accordance with
Article 2 of this Site License.
(b) Licensee shall not relocate the RTP(TM) Equipment at the Licensee
Facility without the written consent of EPI. In the event the Licensee
wishes to relocate the RTP(TM) Equipment, Licensee shall give sixty
(60) days written notice to EPI of the location within the Territory
to which the Licensee wishes to relocate the RTP(TM) Equipment. In no
event shall relocation be made outside the Territory. Within thirty
(30) days of its receipt of such notice, EPI shall provide its consent
or the reasons for its failure to consent to such relocation. In the
event that EPI consents to such relocation, Licensee may utilize its
own resources or may utilize other contractors to perform such
relocation. Upon relocation of the RTP(TM) Equipment: (i) any
reference to the Licensee Facility in this Site License shall be
deemed to refer to such new location and (ii) the right and license
granted in the foregoing shall be transferred from the previous
location of the RTP(TM) Equipment and shall apply to such new
location.
(c) With the exception of Section 3.1(a), any reference in this Site
License to "use" of the Technology shall be deemed to include use of
the Technology and the Technology Improvements for the Specified
Applications and operation of the RTP(TM) Equipment as described in
Section 3.1(a).
<PAGE>
3.2 MAINTENANCE OF USE
EPI agrees that during the Term it will take all steps and do all things
reasonably necessary to honor and preserve the rights granted to Licensee under
this Site License and will take no action or do anything which may inhibit or
prevent Licensee from exercising its rights.
3.3 COVENANTS OF EPI
EPI covenants and agrees that:
(a) the right to use the Technology to operate the RTP(TM) Equipment
as set out in Section 3.1 includes the right to maintain such
RTP(TM) Equipment;
(b) all Improvements shall be disclosed and licensed to Licensee at
no additional fee;
(c) it will not enter into any assignment or transfer in the
ownership of the Technology, or the granting of any security or
other interest in the Technology to any other Person, as may be
otherwise permitted under this Site License and any other
agreement between the parties, without such other Person first
agreeing to abide by this Site License and, in particular, that
any such assignment, transfer or granting of a security interest
shall be subject to any rights or licenses granted to Licensee in
respect of the Technology for the Specified Applications;
(d) it has all necessary rights to carry out its obligations under
this Site License;
(e) any other Person licensed by EPI to use the Technology shall be
required to disclose all Technology Improvements to its licensor,
who in turn will disclose to EPI and permit EPI to disclose and
permit use of such Technology Improvements by any other Person,
including but not limited to Licensee, that has a right or
license to use the Technology.
3.4 COVENANT OF LICENSEE
Licensee covenants and agrees that it has all necessary rights to carry out its
obligations under this Site License.
3.5 USE OF TECHNOLOGY
Except for the provisions of Article 8, the terms of this Site License shall
only apply to the use or application of the Technology in the Licensee Facility
as defined herein and shall not be construed to apply, extend to, or restrict,
the use or application of the Technology in any other facility, including any
third party facility, in which Licensee may hold or acquire an interest.
<PAGE>
4. ROYALTY
4.1 ROYALTY FOR TECHNOLOGY
Licensee shall pay EPI the Royalty for the use of the Technology at the Licensee
Facility upon commencement of construction.
4.2 OWNERSHIP OF DATA
Subject to Sections 5.1 and 5.2 below, all data, information, records and
reports generated or produced in connection with the Licensee Facility will be
and remain the exclusive property of Licensee provided that EPI will have the
right to use such data, information, records and reports which primarily relate
to the use and functioning of the Technology and which Licensee is legally
entitled to disclose without further consideration. Upon request, certain such
technical data generated at the Licensee Facility will be provided to EPI and
can be used by EPI to the extent reasonably necessary to apply for and obtain
Intellectual Property protection.
5. IMPROVEMENTS
5.1 TECHNOLOGY IMPROVEMENTS
The Parties agree that the Technology and Technology Improvements will be and
remain the exclusive property of EPI. Licensee covenants and agrees to take or
cause to be taken all such reasonable actions which it is capable of taking as
may be necessary to confirm EPI's ownership of the Technology Improvements
developed by EPI or Licensee and all rights therein and thereto; provided,
however, that subject to Article 8, Licensee will have an equivalent right of
access to and use of the Technology Improvements, including any Technology
Improvements developed by other Persons granted a right to use the Technology,
as it does to the Technology.
5.2 ANCILLARY TECHNOLOGY IMPROVEMENTS
The Parties agree that the Ancillary Technology Improvements will be and remain
the exclusive property of the Party developing such Ancillary Technology
Improvements. Licensee covenants and agrees to take or cause to be taken all
such reasonable actions which they are capable of taking as may be necessary to
confirm the ownership of the Ancillary Technology Improvements and all rights
therein and thereto; provided, however, that subject to Article 8 and to the
extent the Party developing such Ancillary Technology Improvements has a legal
right to do so without further consideration, such Party shall grant Licensee a
non-transferable right of access to and use of the Ancillary Technology
Improvements. Such right of access and use shall be on an "as is" basis without
any representation or warranty by the Party developing such Ancillary Technology
Improvement, including but not limited to any relating to non-infringement, and
shall be at the sole risk of the Licensee and its permitted assigns and
sub-licensees.
5.3 DISCLOSURE
(a) EPI agrees to, as soon as reasonably possible, advise Licensee in
writing, providing particulars, with respect to any Improvements with
application or benefit to the Specified
<PAGE>
Applications invented, discovered, made or otherwise acquired by EPI
or any of its respective Affiliates, employees, agents, consultants,
contractors or subcontractors, or any other licensees of the
Technology and to provide Licensee with such information in relation
thereto as Licensee may reasonably request.
(b) The Parties agree that Licensee has a positive obligation to notify
EPI with respect to any Improvements invented, discovered or made by
Licensee or any of its Affiliates, employees, agents, consultants,
contractors or subcontractors, and that on request by EPI, Licensee
will provide EPI with such information relating to such Improvements
as EPI may reasonably request pursuant to this Site License. The
Parties agree that Licensee shall not patent or assist in the
patenting of any Improvements invented, discovered or made by Licensee
or any of its Affiliates, employees, agents, consultants, contractors
or subcontractors, except as provided in Section 5.4.
(c) Licensee agrees that, without the written approval of EPI, Licensee
will not enter into any contract or agreement with any consultant,
contractor or subcontractor pursuant to which such consultant,
contractor or subcontractor reserves the Technology or Intellectual
Property arising out of the Licensee Facility invented, discovered or
made by such consultant, contractor or subcontractor.
5.4 APPLICATIONS
EPI, in its sole discretion, will file and prosecute patent applications for
patentable subject matter arising from the Technology, Technology Improvements
and Ancillary Technology Improvements and will bear the cost and expense of all
such patent applications. Licensee will cooperate fully with EPI in the
preparation and prosecution of any such applications.
6. REPRESENTATIONS AND WARRANTIES
6.1 REPRESENTATIONS AND WARRANTIES OF EPI
EPI represents and warrants to Licensee that:
(a) it has been duly incorporated under the laws of its jurisdiction
of incorporation and has the authority to enter into this Site
License and to perform its obligations hereunder;
(b) this Site License has been duly executed and delivered by it and
constitutes a legal, valid and binding obligation of it
enforceable in accordance with its terms except to the extent
enforceability may be limited by applicable bankruptcy,
insolvency, limitation, reorganization, moratorium or other laws
of general application relating to or affecting the rights of
creditors, or by general principles of equity, including the
limitation that the grant of equitable remedies, including
specific performance, is discretionary and may not be available;
<PAGE>
(c) except as provided in Schedule "B," there are no actions, suits,
investigations or proceedings pending or, to the best of its
knowledge, threatened against it which adversely affect the
Patents or the Technology or the ability of it to consummate the
transactions contemplated hereby, at law or in equity, or before
any arbitrator of any kind, or before or by any governmental or
regulatory authority, domestic or foreign, and it is not aware of
any existing ground on which any such action or proceeding might
be commenced with any reasonable likelihood of success;
(d) to the best of its knowledge and belief, (i) the Patents are the
only patents or applications for patents in existence in respect
of the Technology for the Specified Applications, all of which
are owned exclusively by either EPI or its Affiliates, or EPI has
an exclusive license to use and sub-license use of the Patents
which is broad enough to include the use by Licensee and any
successor or permitted assign of the Licensee Facility for the
Specified Applications, and (ii) the Patents are not dependent on
any other patents and the practice of the invention described in
the Patents do not infringe on any other patents;
(e) the Patents and Technology are free and clear of any liens,
security interests and encumbrances;
(f) EPI and its Affiliates own, exclusively, the copyrights to
copyrighted works that form part of the Technology;
(g) to its knowledge, no Person is infringing or misappropriating the
Technology;
(h) assignments of rights have been obtained with respect to all
elements of the Technology created by independent contractors and
its employees;
(i) none of the Technology is subject to any proceeding or
outstanding decree, order, judgment, agreement or stipulation
that restricts in any manner the use, transfer or licensing
thereof by it or may affect the validity, or its use or
enforceability of the Technology for the Specified Applications;
(j) to the extent that any Intellectual Property forming part of the
Technology has been developed or created by any Person other than
EPI, EPI or an Affiliate of EPI has a written agreement with such
Person with respect thereto and EPI or an Affiliate of EPI
thereby has obtained ownership of, and is the exclusive owner of,
all such Intellectual Property that might otherwise vest in such
Person, or EPI has a license to use and sub-license use of the
Technology which is broad enough to include the use by Licensee
and any successor or permitted assign of the Licensee Facility
for the Specified Applications; and
(k) except as provided in Schedule "B," to the best of its knowledge
and belief, the use of the Technology as contemplated by this
Site License does not infringe or misappropriate the Intellectual
Property of any Person. Except as provided in Schedule "B," it
has not received notice from any Person claiming that the
<PAGE>
Technology or the practice thereof infringes or misappropriates
the Intellectual Property of any Person (nor is it aware of any
basis therefor).
6.2 REPRESENTATIONS AND WARRANTIES OF LICENSEE
Licensee represents and warrants to EPI that:
(a) it has been duly incorporated under the laws of its jurisdiction
of incorporation and has the authority to enter into this Site
License and to perform its obligations hereunder;
(b) this Site License has been duly executed and delivered by it and
constitutes a legal, valid and binding obligation of it
enforceable in accordance with its terms except to the extent
enforceability may be limited by applicable bankruptcy,
insolvency, limitation, reorganization, moratorium or other laws
of general application relating to or affecting the rights of
creditors, or by general principles of equity, including the
limitation that the grant of equitable remedies, including
specific performance, is discretionary and may not be available;
and
(c) there are no actions, suits, investigations or proceedings
pending or, to the best of its knowledge, threatened against it
which adversely affect the ability of it to consummate the
transactions contemplated hereby, at law or in equity, or before
any arbitrator of any kind, or before or by any governmental or
regulatory authority, domestic or foreign, and it is not aware of
any existing ground on which any such action or proceeding might
be commenced with any reasonable likelihood of success.
7. INDEMNITIES
7.1 INTELLECTUAL PROPERTY INDEMNITY
(a) Subject to Section 7.2, EPI will defend, indemnify and save harmless
Licensee, its Affiliates and their respective directors, officers,
employees and other personnel, including their successors and
permitted assigns (the "Indemnified Parties"), from and against all
claims, suits proceedings, losses, damages, charges, expenses and
other liabilities which the Indemnified Parties may suffer or incur,
directly or as a claim by a third party (the "Losses"), which relate
to a claim that the possession or use by the Indemnified Parties of
the Technology as contemplated by this Site License constitutes a
breach or misappropriation of the Intellectual Property rights of such
third party (the "Infringement Claim").
(b) EPI shall assume the control and conduct of the defense of the
Infringement Claim and the Indemnified Parties shall cooperate with
and provide reasonable assistance to EPI. Licensee and the Indemnified
Parties may at their own expense retain their own counsel to represent
their own respective interests and participate in the defense. No
Party shall agree to any settlement or make any commitment with
respect to an Infringement Claim
<PAGE>
which adversely affects any other Party without that other Party's
prior consent, such consent not to be unreasonably withheld. If an
Infringement Claim is determined to be valid by court order or
agreement, or at the election of EPI, EPI shall (i) replace the
Technology with non-infringing Technology or modify any component of
the Technology that is infringing so that it becomes non-infringing,
provided that the functionality, performance, and cost-effectiveness
of the Technology is not adversely affected by such replacement or
modification, (ii) procure the right of Licensee and the Indemnified
Parties to continue the use of the Technology as contemplated under
this Site License, or (iii) take such other steps as may be reasonably
necessary to allow Licensee or any other Indemnified Party to continue
using the Technology subject to Section 7.1(c).
(c) EPI shall pay all costs associated with defending the Infringement
Claim, including all legal expenses. EPI shall also be liable for all
Losses (other than the foregoing costs), including any judgments,
settlements or the cost of any replacements or modifications to the
Licensee Facility required to permit continued use of the Technology
free of an Infringement Claim, but such liability in respect of the
Licensee Facility shall not exceed the sum of all Royalties paid to
date in respect of the Licensee Facility.
(d) If any resolution of an Infringement Claim results in a requirement
that the Indemnified Parties pay royalties to any Person other than
EPI in order to permit continued use of the Technology free of an
Infringement Claim, then the Indemnified Parties shall be entitled to
offset any obligation to pay royalties arising from this Site License
by the amount of any royalties required to be paid to such other
Person. The Indemnified Parties shall also be entitled to claim any
deficiency arising from the payment of such royalties to such other
Person (to the extent such royalties exceed the royalties required by
this Site License) against EPI but not to exceed the foregoing
limitation.
7.2 LIMITATION ON LIABILITY
Notwithstanding anything else in this Site License, no Party will be liable to
any other Person for any indirect, consequential or punitive damages or losses
suffered by such other Party in respect to any matter relating hereto. In no
event shall the liability to Licensee for an Infringement Claim exceed the
limits set forth in Section 7.1(c).
8. CONFIDENTIAL INFORMATION
8.1 CONFIDENTIAL INFORMATION
(a) The term "Confidential Information", as used herein, will mean this
Site License, the Technology, the Improvements, the business and
affairs of a Party, and all data and information relating thereto, and
any proprietary or confidential information or materials of Licensee
or its suppliers located at or in respect of the Licensee Facility
which a Party (in this Section 8.1, the "Receiving Party") directly or
indirectly receives or acquires from another Party (in this Section
8.1, the "Disclosing Party"), either in writing or
<PAGE>
verbally or through observation, except information falling into any
one of the following categories:
(i) information which the Receiving Party can show was in its
possession on a non-confidential basis prior to the receipt or
acquisition thereof from the Disclosing Party;
(ii) information which is lawfully in the public domain at the time
of the Receiving Party's receipt or acquisition thereof from
the Disclosing Party;
(iii) information which, after the Receiving Party's receipt or
acquisition thereof from the Disclosing Party, becomes part of
the public domain through no act of the Receiving Party or its
Affiliates, agents, employees, subcontractors (other than the
Disclosing Party or its Affiliates) or their respective
employees; and
(iv) information which, after receipt or acquisition thereof from
the Disclosing Party, is lawfully obtained by the Receiving
Party from a third party, but only after such information is so
received or acquired, provided such third Party is under no
obligation of confidence with respect to such information;
and specific information will not be considered to be within the scope of any of
the exceptions listed above merely because it is included with general
information within the scope of the above exceptions.
(b) The Receiving Party will keep all Confidential Information in
confidence and will not disclose it to others without the prior
written approval of the Disclosing Party and will not use the
Confidential Information, except in the performance of its obligations
hereunder. Notwithstanding the foregoing sentence or any other
provision of this Site License, nothing in this Article 8 will prevent
a Party from disclosing Confidential Information:
(i) to those of its Affiliates, employees, subcontractors and their
respective employees to whom disclosure is required in order
for the Receiving Party to perform its obligations hereunder,
(ii) to any governmental agency or authority in connection with a
public or private offering of securities or a financing or in
connection with any filings required to be made by any Party
hereto with such governmental agency or authority including
pursuant to the rules or regulations of any stock exchange on
which a Party's shares or the shares of any of its Affiliates
are listed or are proposed to be listed or to any other person
where such disclosure is required by law;
(iii) to an investor, potential investor, bank, investment bank or
other financial institution to the extent reasonably required
for a Party to arrange for funding or as required by existing
funding arrangements provided that the Party disclosing such
Confidential Information takes the same steps to maintain the
confidentiality of
<PAGE>
such Confidential Information that such Party takes to protect
its own Confidential Information in similar circumstances;
(iv) to a mediator or arbitrator in connection with mediation or
arbitration commenced pursuant to this Site License; or
(v) in the case of disclosure by EPI of a technical nature to a
third party, including those visiting the Licensee Facility,
relating to the design and performance of the Licensee
Facility, in connection with the marketing of the Technology or
their related services provided that, prior to any such
disclosure to a third party, EPI obtains the consent of
Licensee and an agreement in writing of such third party not to
disclose the Confidential Information, in form and substance
reasonably satisfactory to Licensee.
(c) Notwithstanding the foregoing, no Party will disclose any of the
contents of this Site License to others without the prior written
approval of the other Parties, except as necessary to perform its
obligations hereunder and except as provided in Sections 8.1(b) and
8.1(d). The foregoing shall not be interpreted to prevent a Party from
disclosing the existence of this Site License to any other Person.
(d) Notwithstanding the foregoing provisions of this Article 8, Licensee
may disclose Confidential Information to a Person which acquires or
proposes to acquire an interest in the Licensee Facility provided
that, prior to such disclosure, Licensee obtains an agreement in
writing of such Person not to disclose the Confidential Information in
form and substance reasonably satisfactory to the non-disclosing
Party.
(e) No Party may use another Party's name or any of its Affiliates' or
their direct or indirect shareholders' names or any registered or
unregistered trademarks of any of such Persons in any advertising or
promotional materials or publicity releases without the written
consent of the other Party.
(f) The Receiving Party will be responsible to the Disclosing Party to
ensure that its employees, agents and subcontractors comply with this
Article 8. Nothing in this Article 8 shall affect any obligation of
confidence that any Party has to another pursuant to any other
agreement.
9. ASSIGNMENT
9.1 ASSIGNMENT BY EPI
(a) Except as provided in Sections 9.1(b), EPI may not assign any of its
rights, duties and obligations under this Site License without the
prior written consent of Licensee, such consent not to be unreasonably
withheld.
(b) EPI will not be required to obtain the consent of Licensee as
contemplated by Section 9.1(a) if the proposed assignment is made (i)
to one of its Affiliates, provided however
<PAGE>
that the assignor will remain liable to Licensee for the performance
by such Affiliate of its obligations hereunder and further provided
that such Affiliate has acquired the rights or access to the
Technology and the right to grant use of the Technology to Licensee as
required under this Site License, has covenanted with Licensee in
writing to comply with the obligations of the assignor hereunder and
is able to demonstrate to the reasonable satisfaction of Licensee that
it has the technical knowledge and capability to perform the
obligations of the proposed assignor, or (ii) by way of collateral
assignment for security by EPI of its entitlements to payments of
Royalties hereunder provided that such assignment will not in any way
adversely affect or encumber Licensee rights under this Site License.
9.2 ASSIGNMENT BY LICENSEE
Licensee may not sell, assign, transfer or otherwise dispose of all or a portion
of its interest in the Licensee Facility and a corresponding interest in this
Site License without the prior written consent of EPI, such consent not to be
unreasonably withheld. Further, no sale, assignment, transfer or other
disposition will be effective to release Licensee from its obligations hereunder
unless and until the assignee agrees to be bound by the terms of this Site
License.
10. DEFAULT
10.1 DEFAULT BY LICENSEE
If:
(a) Licensee fails to pay any amount payable by it hereunder within
thirty (30) days after notice in writing is given by EPI that
such payment has not been made when due and payable; or
(b) Licensee fails to perform or observe, in any material respect,
any material covenant, condition or provision of this Site
License and such failure to perform is not remedied within thirty
(30) days after written notice thereof has been given by EPI or
within such longer period as may be agreed to by EPI having
regard to the subject matter of the failure;
EPI may, by written notice to Licensee, terminate this Site License whereupon
EPI will be entitled, at its sole discretion, without further notice or further
demand, to immediately put into force and exercise all the powers and remedies
including specific performance of any provision which survives termination,
possessed by it according to applicable law.
For greater certainty, in the event this Site License is terminated by EPI for
cause, the license granted herein shall be immediately terminated and the
Technology shall not be further used at the Licensee Facility.
<PAGE>
10.2 DEFAULT BY EPI
If EPI fails to perform or observe, in any material respect, any material
covenant, condition or provision of this Site License and such failure to
perform is not remedied within thirty (30) days after written notice thereof has
been given by Licensee or within such longer period as may be agreed to by
Licensee having regard to the subject matter of the failure, Licensee may, by
written notice to such Party, terminate this Site License whereupon Licensee
will be entitled, at its sole discretion, without further notice or further
demand, to immediately put into force and exercise all the powers and remedies
including specific performance of any provision which survives termination,
possessed by it according to applicable law.
11. DISPUTE RESOLUTION
11.1 GENERAL
Upon the written agreement of all Parties to a dispute at the relevant time,
disputes between the Parties arising under or in connection with this Site
License will be resolved in accordance with this Article 11.
11.2 MEDIATION
The Parties will use all commercially reasonable efforts to resolve and finally
settle all claims and disputes referred to in Section 11.1 through mediation by
an independent third party mediator chosen by the disputing Parties. Each of the
disputing Parties agrees that during any mediation process it will provide
reasonable access to an officer with requisite decision-making authority for and
on its behalf. The mediation process will be completed within thirty (30) days
following a request for mediation by any one of the disputing Parties. Costs of
the mediator will be borne equally between the disputing Parties. Each Party
will bear its own costs of the mediation.
11.3 ARBITRATION
Any claim or dispute not resolved by mediation within the time period prescribed
in Section 11.2 will be settled by binding arbitration in accordance with the
following:
(a) an arbitration will be commenced by a Party giving a written
notice to the other Party containing a statement of the issue in
dispute, a description of the claim being made and a statement
that a dispute is being submitted to arbitration. The arbitration
will be held in Delaware, or in another location mutually agreed
upon by the Parties, pursuant to the rules of the American
Arbitration Association before a single arbitrator who is
knowledgeable in the petroleum processing industry. The Parties
will appoint the arbitrator by agreement within fifteen (15)
Business Days after the notice commencing the arbitration,
failing which the arbitrator will be appointed by the American
Arbitration Association in Delaware upon application by either
Party. The arbitrator's decision and award will be final and
binding and may be entered in any court having jurisdiction over
the
<PAGE>
enforcement of such award. The arbitrator will not have the power
to award any damages excluded by or in excess of any damage
limitations expressed in this Agreement or any subsequent
agreement between the Parties. In order to prevent irreparable
harm, the arbitrator may grant temporary or permanent injunctive
or other equitable relief in accordance with the rules of equity;
(b) while the arbitrator will generally determine, in accordance with
the rules of the American Arbitration Association, the procedure
to be followed in connection with an arbitration, the Parties
agree that each will have the right to carry out examinations in
aid of discovery of, and in respect of, each of the other Parties
in connection with such arbitrated dispute and such examination
in aid of discovery will be conducted pursuant to the rules of
Delaware's Court of Chancery as though such arbitration
proceeding were a litigation proceeding; and
(c) in the final award, the arbitrator may award costs in accordance
with Delaware's Court of Chancery as if the arbitration were a
trial of a matter before such court.
12. NOTICES AND COMMUNICATIONS
12.1 NOTICES AND COMMUNICATIONS
The address and fax number for notice of each of the Parties hereto will be as
follows:
EPI:
400 West 9th Street
Wilmington, Delaware 19801
Attention: President
Fax Number:
With a copy sent as follows:
Ensyn Group, Inc.
20 Park Plaza
Suite 434
Boston, Massachusetts 02116
Attention: President
Fax Number: (617) 266-0557
Licensee:
__________________________
__________________________
Attention: ______________
Fax Number: _____________
<PAGE>
Any Party may from time to time change its address or fax number for notice by
giving written notice to the other Parties. Any notice may be served by a
reputable courier service or other personal service upon a Party at its address
for notices during normal business hours on a Business Day or by facsimile to
its fax number for notices. Any notice sent by a reputable courier service or
other personal service will be deemed received upon receipt. Any notice or
communication sent by facsimile or similar means will be deemed received when
reception of the transmission is confirmed by electronic receipt except that, if
such transmission is sent on a Saturday, Sunday or day when the receiving
party's office is not open for the regular conduct of business, or after 4:00
p.m., such notice or communication will be deemed to be received on the next day
that such office is open for the regular conduct of business.
13. MISCELLANEOUS
13.1 AMENDMENT OR WAIVER
No amendment or variation of this Site License will be effective unless the same
is expressed in writing and executed by the Parties. No waiver on behalf of a
Party of any breach of the covenants, conditions and provisions herein contained
will take effect or be binding upon such Party unless the same is expressed in
writing and any waiver so expressed will extend only to the particular breach so
waived and will not limit or affect such Party's rights with respect to any
other or future breach.
13.2 APPLICABLE LAW AND JURISDICTION
This Site License and the respective rights and obligations of the Parties
hereto will be interpreted in accordance with the laws of the State of Delaware
and in accordance with the laws applicable therein, excluding all conflict of
laws principles or rules embodied therein which may permit or require the
application of the laws of another jurisdiction. In respect of any matter
relating hereto which is not subject to Article 11, the courts of the State of
Delaware will, to the extent that such courts accept such jurisdiction, have
exclusive original jurisdiction in respect of any matters arising out of or
relating to this Site License and the Parties hereby agree to accept and attorn
to such jurisdiction. The venue for any action or proceedings hereunder will be
in the City of Wilmington, Delaware.
13.3 TIME OF ESSENCE
Time will be of the essence in respect to all matters relating to this Site
License.
13.4 FURTHER ASSURANCES
The Parties will, from time to time, do and perform all such further acts and
things, and will execute and deliver all such further documents and instruments
as may be reasonably required in order to carry out and implement the true
intent and meaning of this Site License.
<PAGE>
13.5 ASSIGNS AND SUCCESSORS
This Site License will enure to the benefit of and will be binding upon the
Parties and their respective successors and assigns as permitted herein.
13.6 NO PARTNERSHIP OR AGENCY
Nothing herein contained or otherwise arising will constitute the Parties as
partners with one another, nor will anything contained herein constitute or be
deemed to constitute either Party as the agent of the other except as expressly
provided herein.
13.7 COUNTERPART EXECUTION
This Site License may be executed in counterpart and the counterparts of each
Party will together constitute a completely executed agreement.
14. EXECUTION
14.1 EXECUTION
This Site License has been executed by the Parties as of the date first above
written.
ENSYN PETROLEUM INTERNATIONAL LTD.
By: ___________________________
Name:__________________________
Title: ________________________
LICENSEE: _____________________________________
By: ___________________________
Name:__________________________
Title: ________________________