printer-friendly

Sample Business Contracts

Standstill Agreement - Ivanhoe Energy Inc. and Linyi Holdings Ltd.

Sponsored Links

                               IVANHOE ENERGY INC.
                          Suite 654 - 999 Canada Place
                              Vancouver, BC V6C 3E1

                                                                     May 5, 2003

LINYI HOLDINGS LIMITED
13/F Gloucester Tower
The Landmark
11 Pedder Street
Central
Hong Kong


ATTENTION:        ANDREW BURGIN

Dear Sir:

RE:      AMENDED STANDSTILL AGREEMENT

This letter is intended to reflect our recent discussions and, when executed and
delivered by each of us, will constitute a binding agreement (the "Amended
Standstill Agreement") between Ivanhoe Energy Inc. ("Ivanhoe") and Linyi
Holdings Limited. ("Linyi") wherein Linyi will refrain from demanding payment of
the Principal Amount of the Loan under the Amended and Restated Convertible Loan
Agreement between the parties dated August 4, 1999 (the "Loan Agreement") and
the associated Convertible Note (the "Convertible Note") issued by Ivanhoe to
Linyi dated August 4, 1999. The terms of the Loan Agreement and the Convertible
Note were amended by a Standstill Agreement between Ivanhoe and Linyi dated
October 29, 2002 (the "Original Standstill Agreement"). A copy of the Original
Standstill Agreement is attached to this Letter.

We confirm the terms of our Amended Standstill Agreement as follows:

1.    INTERPRETATION

      Terms denoted with initial capital letters and not otherwise defined
      herein have the meanings assigned to them in the Loan Agreement.

2.    STANDSTILL

      Linyi hereby agrees that it will not, under any circumstances, demand
      payment of the Principal Amount under the Loan Agreement and the
      Convertible Note before the close of business on December 27, 2003. The
      Agreement of Linyi hereunder not to demand payment of the Principal Amount
      does not affect its rights with respect to accrued and unpaid interest,
      and Linyi may continue to demand payment of any accrued and unpaid
<PAGE>
                                     - 2 -


      interest on the Principal Amount in accordance with the terms of the Loan
      Agreement and the Convertible Note.

3.    CONSIDERATION

      In consideration of Linyi's forbearance in demanding payment under the
      Loan Agreement and the Convertible Note, Ivanhoe hereby grants to Linyi an
      option (the "Option") to convert all or any part of the Principal Amount
      and all accrued and unpaid interest up until December 27, 2003 into common
      shares of Ivanhoe ("Common Shares"), in whole or in part at a deemed issue
      price of US$0.50 per Common Share (the "Conversion Price"). The Option
      will be exercisable commencing on the date hereof and ending on December
      27, 2003 (the "Option Period"). Linyi may exercise the Option at any time
      during the Option Period by delivering notice in writing to Ivanhoe to
      convert all or any part of the Principal amount and accrued and unpaid
      interest until December 27, 2003. Upon receipt of notice of exercise of
      the Option, Ivanhoe will take all steps necessary to issue the appropriate
      number of Common Shares to, or to the direction of, Linyi, and will
      deliver to Linyi share certificates representing such Common Shares. Upon
      delivery of the share certificates to Linyi, Ivanhoe will be deemed to
      have repaid the amount of the Principal Amount and/or accrued and unpaid
      interest which is equal to the Option Price.

      Linyi acknowledges that any Common Shares issued to Linyi hereunder will
      be subject to restrictions on resale in the United States and Canada and
      that certificates representing such Common Shares may be inscribed with
      legends describing such restrictions.

4.    ADJUSTMENT

      The number of Common Shares issuable to the Linyi upon any conversion of
      the outstanding Principal Amount and accrued and unpaid interest in
      respect thereof, will be subject to adjustment as follows:

      (a)   if the Common Shares are subdivided, consolidated or changed, the
            outstanding Principal Amount and accrued and unpaid interest in
            respect thereof, will be convertible at the Option Price into that
            number of common shares or other class or kind of securities of
            Ivanhoe as would have been held by Linyi following such subdivision,
            consolidation or change had Linyi effected such conversion
            immediately prior to the subdivision, consolidation or change; or

      (b)   in the event of any capital reorganization of Ivanhoe or
            reclassification or reclassifications of the Common Shares or in the
            event of any merger or amalgamation of Ivanhoe with or into any
            other corporation resulting in a reclassification of the Common
            Shares or a change of the Common Shares into other shares or
            securities or in the event of a transaction whereby all or
            substantially all of Ivanhoe's undertakings and assets become the
            property of another corporation, Linyi will thereafter acquire and
            accept, in lieu of the Common Shares immediately theretofore
            receivable upon the conversion of the outstanding Principal Amount
            and accrued and unpaid interest in respect thereof, the kind, class,
            series and amount of
<PAGE>
                                     - 3 -


            shares or other securities or property that Linyi would have been
            entitled to receive upon such capital reorganization,
            reclassification, merger, amalgamation or transaction if, on the
            effective date thereof, Linyi had been the holder of the number of
            Common Shares that Linyi would have acquired by the conversion of
            the outstanding Principal Amount and accrued and unpaid interest in
            respect thereof immediately before the effective date thereof. The
            subdivision or consolidation of Common Shares at any time
            outstanding into a greater or lesser number of Common Shares
            (whether with or without par value) will not be deemed to be a
            capital reorganization or a reclassification of the capital of
            Ivanhoe for the purposes of this section 4.

5.    APPROVALS

      Ivanhoe's obligations under this Standstill Agreement are subject to
      approval of the board of directors of Ivanhoe and approval of the
      transaction by the Toronto Stock Exchange.

6.    GENERAL

      This Amended Standstill Agreement is subject to the following additional
      terms and conditions:

      (a)   except as otherwise expressly provided herein, neither party may
            assign any right, title or interest in this Amended Standstill
            Agreement without the written consent of the other party, and any
            purported assignment without such consent will be void;

      (b)   this Amended Standstill Agreement constitutes the entire agreement
            between the parties with respect to the forbearance of the payment
            of the Principal Amount and accrued interest and supersedes every
            previous agreement, communication, expectation, negotiation,
            representation, warranty or understanding whether oral or written,
            express or implied, statutory or otherwise, between the parties with
            respect to the subject matter of this Amended Standstill Agreement;

      (c)   each party will execute and deliver such further agreements and
            documents and do such further acts and things as any party
            reasonably requests to evidence, carry out or give full effect to
            the intent of this Amended Standstill Agreement;

      (d)   this Amended Standstill Agreement is and will be deemed to have been
            made in British Columbia, Canada for all purposes and will be
            governed exclusively by and construed and enforced in accordance
            with the laws prevailing in British Columbia and the rights and
            remedies of the parties will be determined in accordance with those
            laws. Each of the parties hereby attorns to the non-exclusive
            jurisdiction of the courts of British Columbia;

      (e)   this Amended Standstill Agreement will enure to the benefit of and
            binding upon the respective legal representatives and successors of
            the parties;
<PAGE>
                                     - 4 -


      (f)   this Amended Standstill Agreement may be executed in any number of
            counterparts with the same effect as if all parties to this Amended
            Standstill Agreement had signed the same document and all
            counterparts will construed together and constitute one and the same
            document; and

      (g)   a reference to "approval", "authorization" or "consent" means
            written approval, authorization or consent.

Yours Truly,

IVANHOE ENERGY INC.


Per:  /s/ "J. O'Keefe"
      ------------------------------
           Authorized Signatory



Agreed to this 5th day of May, 2003


LINYI HOLDINGS LIMITED


Per:  /s/ "Andrew Burgin"
      ------------------------------
           Authorized Signatory