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Exhibit 10.14
COOPERATION AGREEMENT
THIS COOPERATION AGREEMENT dated the 30th day of May, 2003 is
entered
into by and between ENSYN PETROLEUM
INTERNATIONAL LTD., a Delaware corporation
having offices at the City of Boston,
Massachusetts 02116 (hereinafter called
"Ensyn"), and IVANHOE ENERGY (USA) INC., a
Nevada corporation having offices at
the City of Bakersfield, California
(hereinafter called "Ivanhoe").
WHEREAS, Ensyn and its Affiliates are constructing the Pilot
Project;
WHEREAS, Ensyn and Ivanhoe entered into the Project Agreement;
and
WHEREAS, pursuant to the Project Agreement, Ensyn may install the
Pilot
Project at an Ivanhoe Site, or Ensyn may
install the Pilot Project at an
Alternate Site.
NOW, THEREFORE, in consideration of the Parties' mutual promises
and
agreements and subject to the terms and
conditions set forth below, the Parties
agree as follows:
1. DEFINITIONS. In this Agreement, including the recital, unless
there
is something in the subject matter or the
context inconsistent therewith, the
following terms shall have the following
meanings:
"AFFILIATE" means, in respect to 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. Notwithstanding the
foregoing, it is understood and agreed that
ITS ENSYN LLC, a Delaware limited
liability company, shall be considered an
Affiliate of Ensyn for purposes of
this Agreement.
"AGREEMENT" means this Cooperation Agreement, together with any
amendments to or replacements of or
substitutions for this Agreement.
"AI EXCLUSIVE PERIOD" has the meaning of that term provided in
Section
3(a) of this Agreement.
"ALTERNATE
SITE" means a site that is not owned or controlled by
Ivanhoe.
"AREAS OF INTEREST" has the meaning of that term provided in
Section
3(a) of this Agreement.
"BPD" means barrels per day.
"BARREL" means 0.15891 cubic meters.
"BUSINESS DAY" means any day on which banks are generally open
to
transact commercial business in the State
of Delaware, excluding any Saturday,
Sunday or statutory holiday in Delaware
"BUSINESS INFORMATION" has the meaning of that term provided in
Section
2(f) of this Agreement.
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"BUSINESS PLAN" has the meaning of that term provided in Section
2(f)
of this Agreement.
"CONFIDENTIAL INFORMATION" means with respect to a Party, as the
case
may be, any and all information of a
confidential nature of such Party, and of
the Affiliates of such Party and of the
shippers and customers of such Party or
its Affiliates, whether received in
writing, verbally or through observation,
including without limitation, all data and
information relating to the Pilot
Project and any process, technology or
system relating thereto, and the design,
construction, operation, maintenance or any
aspect of the Pilot Project,
including Pilot Project plans, production
characteristics and testing results
related thereto and use of the RTP(TM) with
respect to the Pilot Project.
"CONFIDENTIALITY AGREEMENT" means the Confidentiality Agreement
dated
July 14, 2002 by and among Ivanhoe and its
subsidiaries and affiliates and Ensyn
Group, Inc. and Ensyn Technologies Inc.
"EFFECTIVE DATE" means the date first set forth above.
"EXCLUSIVITY EXTENSION PREPAYMENT" has the meaning of that term
provided in Section 2(g) of this
Agreement.
"FORCE MAJEURE" shall mean any act of God, accident, explosion,
fire,
storm, earthquake, flood, drought, riot,
embargo, civil commotion, war, act of
war, labor dispute or disruption, or any
other circumstance or event beyond the
reasonable control of the Party relying
upon such circumstance or event.
"INFORMATION PERIOD" has the meaning of that term provided in
Section
2(f) of this Agreement.
"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, copyrights 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.
"IVANHOE ANALYSIS" has the meaning of that term provided in
Section
2(f) of this Agreement.
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"IVANHOE DATA" has the meaning of that term provided in Section
2(f)
of this Agreement.
"IVANHOE RESULTS DATE" means the date on which Ensyn provides
Ivanhoe
with the results of the Ivanhoe
Testing.
"IVANHOE SITE" means a site controlled by Ivanhoe in the State
of
California.
"IVANHOE TESTING" means upgrading petroleum supplied by Ivanhoe by
use
of the Technology and supplying the results
of such upgrading to Ivanhoe,
including assays and other data and
information regarding the characteristics of
such petroleum and the upgraded product
produced therefrom.
"NOTICE DEADLINE" means December 31, 2003.
"OPERATING COSTS" shall include all costs for activities necessary
for
the operation of the Project, including
labor, raw materials, utilities,
insurance costs, replacement parts and
maintenance. It is understood and agreed
that "OPERATING COSTS" will not include any
allocations for depreciation or the
capital costs of the RTP(TM) equipment.
"OTHER FIELDS" has the meaning of that term provided in Section
2(f) of
this Agreement.
"OWNER" means the owner of the Alternate Site at which the
Pilot
Project is sited.
"PARTIES" means the parties to this Agreement, and "PARTY" means
one of
them.
"PERSON" means any individual, corporation, limited liability
company
or other legal entity and also includes
partnerships, whether limited or
general, and any trust.
"PILOT PROJECT" means a pilot project for Ensyn to demonstrate
the
commercial viability of the Technology to
partially upgrade bitumen and heavy
oil.
"PREPAID LICENSE FEE" has the meaning of that term provided in
Section
2(f) of this Agreement.
"PROJECT AGREEMENT" means the Project Agreement dated the 18th day
of
March, 2003 between Ivanhoe and Ensyn.
"PROJECT DATA" has the meaning of that term provided in Section
2(e) of
this Agreement.
"PROJECT DATA PERIOD" has the meaning of that term provided in
Section
2(e) of this Agreement.
"RTP(TM)" means Ensyn's patented Rapid Thermal Pyrolysis technology
and
its related Intellectual Property,
including that having U.S. Patent No.
5,792,340.
"TECHNOLOGY" means (a) RTP(TM), as improved, developed,
modified,
expanded or refined from time to time, (b)
any Intellectual Property rights
relating to any Production, and (c) any and
all other Intellectual Property
rights dealing with rapid pyrolysis
technology owned by or licensed to Ensyn.
"TESTING NOTICE" has the meaning of that term provided in Section
2(d)
of this Agreement.
"THIRD PARTIES" means Persons other than Ensyn or Ivanhoe, and
"THIRD
PARTY" means one of them.
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2. COOPERATION. In the event that Ensyn installs the Pilot Project
on
an Alternate Site, the Parties agree as
follows:
(a) Subject to Ensyn obtaining any necessary approvals, including
that
of the Owner, at the request of Ensyn,
Ivanhoe agrees to provide up to twenty
(20) hours per month of consulting services
with respect to the Pilot Project
for a 12-month period commencing on August
1, 2003, with such services
consisting of evaluating construction and
Operating Costs of the Pilot Project
and preparing reports with respect
thereto
(b) Ivanhoe agrees to fund one-half of the cost of a study to
be
performed by Purvin & Gertz, with
Ivanhoe's portion not to exceed Seven
Thousand, Five Hundred and 00/100
($7,500.00) Dollars, to analyze and evaluate
the market in the State of California for
RTP(TM) upgraded products produced in
the amount of one thousand (1,000), three
thousand (3,000) and ten thousand
(10,000) bpd.
(c) Ivanhoe agrees that, at Ensyn's request, it will deliver
petroleum
to the Alternate Site for a 24-hour test on
the Pilot Project (i.e., up to 250
barrels) and, in such case, will pay,
within thirty (30) days of Ensyn providing
an invoice with respect thereto, an amount
equal to one-half of the cost of
assays and evaluations for the products
produced from such petroleum. Ensyn will
provide Ivanhoe with the results of such
testing, including assays and other
data and information regarding the
characteristics of such petroleum and the
upgraded product produced therefrom.
(d) If Ivanhoe delivers notice to Ensyn no later than the
Notice
Deadline in the form attached hereto as
Appendix "A" that Ivanhoe requires Ensyn
to operate the Pilot Project for a period
of up to seven (7) days for the
Ivanhoe Testing of petroleum delivered to
the Alternate Site by Ivanhoe
("Testing Notice") and Ivanhoe delivers
such petroleum to the Alternate Site,
Ensyn shall perform such testing at a time
reasonably agreed upon by the
Parties, but in no case later than June 30,
2004 unless the parties otherwise
agree in writing. In such case, Ivanhoe
agrees to pay Ensyn within thirty (30)
days of Ensyn providing an invoice with
respect thereto, an amount equal to all
Operating Costs of the Pilot Project during
such period, as well as for the cost
of assays and evaluations for the products
produced from such petroleum.
Provided that Ivanhoe gives Ensyn and the
Owner reasonable notice and agrees to
ensure that persons visiting the Alternate
Site adhere to the safety and other
reasonable requirements of Ensyn and the
Owner, Ivanhoe has the right to visit
the Alternate Site during the Ivanhoe
Testing and to visit the Alternate Site
with Third Parties with the prior approval
of Ensyn, which approval shall not be
unreasonably withheld. It is understood and
agreed that any Third Parties
visiting the Alternate Site at the request
of Ivanhoe shall be required by
Ivanhoe to deliver to Ensyn a written
acknowledgement of their familiarity with
the provisions of the Confidentiality
Agreement and their agreement to be bound
by such provisions.
(e) Subject to any confidentiality or nondisclosure agreements
with
Third Parties, if Ivanhoe delivers the
Testing Notice to Ensyn by the Notice
Deadline, during the period beginning on
the date on which Ivanhoe provides the
Testing Notice to Ensyn ("Notice Date") and
ending six months after the Ivanhoe
Results Date ("Project Data Period"),
Ivanhoe shall have access to any and all
data with respect to the operation of the
Pilot Project and the products
produced at the Pilot Project, including
data with respect to the Ivanhoe
Testing ("Project Data") to enable Ivanhoe
to understand the operation of the
Pilot Project and to analyze the economics
of the Pilot Project and future
facilities at which the RTP(TM) technology
may be utilized, including an Ivanhoe
Site. Notwithstanding the preceding
sentence, it is understood and agreed that
Ivanhoe may share the results from the
Ivanhoe Testing with Third Parties
provided that any Third Parties to whom
Ivanhoe gives access to such data that
constitutes Confidential Information within
the meaning of such term in the
Confidentiality Agreement shall be required
by Ivanhoe to deliver to Ensyn a
written acknowledgement of their
familiarity with the provisions of the
Confidentiality Agreement and their
agreement to be bound by such provisions.
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(f) It is understood that prior to or during discussions with
Third
Parties, at its own expense, Ivanhoe will
have completed an analysis of the oil
proposed to be the raw material, the
characteristics of the upgraded product
based on testing, the markets for the
upgraded product, and transportation
studies regarding delivery of the products
to the market ("Ivanhoe Analysis").
If Ivanhoe delivers the Testing Notice, as
soon as it is available, but in no
case later than the end of the Project Data
Period, Ivanhoe shall also deliver
the Ivanhoe Analysis to Ensyn, as well as
data substantiating the initiation of
discussions with Third Parties, including
information regarding, and
identification of, specific sites and the
progress of such discussions ("Ivanhoe
Data").
If Ivanhoe delivers the Testing Notice to Ensyn, Ivanhoe also
agrees
that during the period from the Notice Date
to the date that is one (1) year
after the Ivanhoe Results Date
("Information Period"), in addition to providing
Ensyn with the Ivanhoe Analysis and the
Ivanhoe Data, Ivanhoe may obtain and
prepare information regarding the economics
and other business considerations,
including preparing pro formas of the
economics related to upgrading and selling
oil, with respect to certain oil fields or
other areas in Peru and Oman that are
owned by others and which may be acquired
by Ivanhoe ("Other Fields"), at which
the RTP(TM) could be utilized with the
approval of Ensyn, ("Business
Information") so that the Parties can
develop a business plan for such fields
("Business Plan"). The Business Plan shall
also consider, if agreed to by the
Parties, the possibility that the Pilot
Project could be installed and operated
at an Ivanhoe Site for an extended period
of time or that the Technology would
be offered by Ensyn and Ivanhoe jointly to
Third Parties for use at the Other
Fields, with Ivanhoe
