Exhibit 10.4
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT is made as of the 11th day of July, 2008, by IVANHOE
ENERGY INC., a corporation incorporated under the laws of the Yukon Territory
(the “Corporation”) in favour of TALISMAN ENERGY CANADA (who and whose
successors and assigns are herein called the “Secured Party”).
WHEREAS:
The Corporation has issued its debenture dated as of the date hereof to the
Secured Party in the principal amount of Cdn. $67,500,000 (such debenture as
amended, supplemented or restated from time to time is herein called the
“Debenture”); and
The Corporation has agreed to pledge the Debenture to the Secured Party as
general and continuing collateral security for the indebtedness and obligations
of the Corporation as hereinafter set forth;
NOW THEREFORE in consideration of the premises and of the sum of $10.00 now paid
by the Secured Party to the Corporation, the receipt and sufficiency of which
are hereby acknowledged, the Corporation agrees with the Secured Party as
follows:

1.   Defined Terms and Headings

  (a)   Terms and expressions which are defined in the Debenture shall, when
used herein, and unless otherwise defined or indicated herein, have the meanings
ascribed to them in the Debenture;

  (b)   The division of this Agreement into Sections and the insertion of
headings is for convenience of reference only and shall not affect the
construction or interpretation of this Agreement;

  (c)   The terms “this Agreement”, “hereof”, “hereunder” and similar
expressions refer to this Agreement and not to any particular Section or other
portion hereof and include any amendments or supplements hereto. Unless
otherwise stated, references herein to Sections are to Sections of this
Agreement;

  (d)   Words importing the singular number shall include the plural and vice
versa, and words importing gender shall include the masculine, feminine and
neuter genders; and

  (e)   The word “including” shall not be construed to limit or restrict the
matter that precedes it.

2.   Pledge of Debenture

The Debenture is hereby delivered and assigned, deposited with and pledged to
the Secured Party to be held by the Secured Party as continuing collateral
security for the payment and performance in full by the Corporation of all of
the liabilities and obligations, present or future,

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direct or indirect, absolute or contingent, matured or not, at any time owing by
the Corporation to the Secured Party under or in connection with each of the
Transaction Documents and every part of such liabilities and obligations
(collectively, the “Liabilities”).

3.   Rights as Secured Party to Enforce Debenture

The Secured Party is hereby authorized as the Secured Party of the Debenture,
and without selling or purchasing the Debenture, to exercise any and all rights
of a Secured Party of the Debenture, both before and after the occurrence of an
Event of Default under the Debenture (herein called an “Event of Default”), to
enforce all terms, covenants, provisions and agreements therein contained, and
after an Event of Default has occurred and is continuing, to enforce the
security thereby constituted and to exercise or cause to be exercised all or any
of the remedies therein provided to or for the benefit of the Secured Party
under the Debenture. Except as provided in Sections 8 and 9 hereof, nothing
herein shall be deemed to suspend or otherwise modify or affect the obligations
of the Corporation or the rights of the Secured Party under the Debenture, all
as provided in the Debenture.

4.   Realization by Sale

In addition to the foregoing rights and remedies, the Secured Party shall be
entitled, upon an Event of Default occurring, to sell or otherwise dispose of
the Debenture by public sale (including public auction) or private or closed
tender or by private contract, with only those notices, if any, as are required
by Applicable Law, and with or without advertising and without any other
formality (except as otherwise required by applicable law), and such sale or
disposition shall be on such terms and conditions as to title, credit and
otherwise and as to upset or reserve bid or price as may seem advantageous to
the Secured Party, and the Secured Party shall not be required to accept the
highest or any bid or tender at any public sale. The Secured Party may itself
purchase the Debenture unless prohibited from doing so by Applicable Law. The
Secured Party may rescind or vary any contract for the sale or other disposition
of the Debenture and may resell the Debenture without being answerable for any
loss occasioned thereby, and may delay any sale or disposition of the Debenture
in whole or in part.

5.   Proceeds of Realization

The proceeds from any exercise or enforcement of all or any of the rights and
remedies of the Secured Party hereunder shall be applied by the Secured Party on
account of the Liabilities in such order or manner as the Secured Party and
Corporation may agree to or, failing that, as the Secured Party may determine,
all without prejudice to the Secured Party’s claim upon the Corporation for any
deficiency under the Liabilities, provided the Secured Party shall only be
liable to account for amounts actually received by it.

6.   Power of Attorney

To give full effect hereto, the Secured Party or any officer of the Secured
Party is hereby appointed attorney irrevocably of the Corporation, with full
power of substitution, for and in the name of the Corporation to sign and seal
all documents and to fill in all blanks in signed powers of attorney and
transfers necessary in order to complete the transfer of the Debenture to the
Secured Party or its officers or to any purchaser.

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7.   Records

The records of the Secured Party as to payment of any Liabilities being in
default or of any demand for payment having been made will be prima facie
evidence of such default or demand, absent manifest error.

8.   Satisfaction of Interest

Full payment by the Corporation to the Secured Party of interest as may be
provided for in the Notes or the Asset Transfer Agreement for any period in
respect of the debts, liabilities and obligations of the Corporation to the
Secured Party thereunder shall be deemed to be payment in full satisfaction of
any interest payment for the same period in respect of the corresponding
Principal Sum provided for under the terms of the Debenture.

9.   Principal Sum

Notwithstanding the Principal Sum of the Debenture and the interest rate
provided for therein on such Principal Sum, the obligations secured by the
deposit to the Secured Party of the Debenture as provided for herein shall not
exceed the amount of the Liabilities.

10.   Charges and Expenses

The Corporation shall pay to the Secured Party all reasonable out-of-pocket
costs and expenses, including all reasonable legal fees (on a solicitor and his
own client basis) and other reasonable expenses incurred by the Secured Party
from time to time in the registration, enforcement, realization and collection
of or in respect of this Agreement. All such amounts shall become part of the
Liabilities, shall be payable by the Corporation on demand, shall bear interest
at the rate set forth in the Debenture in respect of the principal amount
thereof calculated from the date incurred by the Secured Party to the date paid
by the Corporation, and such amounts and interest shall be secured by the
Debenture. This provision shall not be construed to limit any other provisions
of the Debenture dealing with the charge-back to the Corporation of expenses
incurred by the Secured Party.

11.   Remedies Not Exclusive

Each and every right, remedy and power conferred by this Agreement is in
supplement of and in addition to and not in substitution for any other right,
remedy or power the Secured Party may have from time to time under this
Agreement, the Debenture or the other Transaction Documents, or in any other
agreement or under the law in force at the time of the exercise of such right,
remedy or power. The Secured Party may proceed by way of any action, suit,
remedy or other proceeding at law or in equity and no such remedy for the
enforcement of the rights of the Secured Party shall be exclusive of or
dependent on any other such remedy. Any one or more of such remedies may from
time to time be exercised separately or in combination. Notwithstanding the
foregoing, the Secured Party shall not be bound to deal with the Debenture, to
exercise any right or remedy as aforesaid, or to preserve rights against other
persons.

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12.   Extensions

The Secured Party may grant renewals, extensions of time and other indulgences,
take, release and give up securities, accept compositions, grant releases and
discharges, perfect or fail to perfect any securities, and otherwise deal or
fail to deal with the Corporation, guarantors, sureties and others and with the
Debenture and other securities as the Secured Party may see fit, all without
prejudice to the liability of the Corporation to the Secured Party or the rights
and powers of the Secured Party under this Debenture or the other Transaction
Documents.

13.   Amendments or Supplemental Debentures

Any amendments or supplemental debentures to or restatements of the Debenture
shall, upon execution by the Corporation and delivery to the Secured Party, be
deemed to be deposited hereunder and included in the term “Debenture” for the
purposes hereof, unless expressly provided otherwise.

14.   No Merger

Neither the taking of any judgment nor the exercise of any power of sale shall
operate to extinguish the liability of the Corporation to make payment of, or to
satisfy the Liabilities nor shall the acceptance of any payment or alternate
security constitute or create any novation, and it is further agreed that the
taking of a judgment or judgments under any of the covenants herein contained
shall not operate as a merger of such covenants.

15.   Governing Law

This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of Alberta and the laws of Canada applicable therein and shall
be treated as an Alberta contract. The Corporation irrevocably submits to the
non-exclusive jurisdiction of the courts of the Province of Alberta, without
prejudice to the rights of the Secured Party to take proceedings in any other
jurisdictions.

16.   Assignment by Corporation

Subject to Section 4.1(t) of the Debenture, the Corporation shall not and cannot
assign its obligations under this Agreement, or take any steps or enter into any
transaction of any nature which would have that effect, without the prior
written consent of the Secured Party, which may be arbitrarily withheld. Subject
thereto, all obligations of the Corporation hereunder shall bind the Corporation
and its successors and assigns.

17.   Assignment by Secured Party

Subject to any agreement to the contrary between the Corporation and the Secured
Party, the Secured Party may at any time assign this Agreement.

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18.   Copy Received

The Corporation acknowledges having received from the Secured Party a copy of
this executed Agreement and waives its right to receive a copy of any financing
statement or financing change statement registered in respect thereof or any
verification or confirmation statement provided in respect thereof.

19.   Severability

If one or more of the provisions of this Agreement is, or is adjudged to be,
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby, and such invalid, illegal or unenforceable
provision shall, to the extent permitted at law, be severable.

20.   Waivers and Consents

No waiver of any provision hereof, or consent to any action or inaction shall be
effective unless the same is in writing and signed by the party granting the
same. Such waivers and consents shall not extend to any matters other than those
in respect of which the same were given, and the same may be subject to such
conditions as the party giving the same may stipulate.

21.   Further Assurances

  (a)   Each party shall promptly cure any defect by it in the execution and
delivery of this Agreement.

  (b)   The Corporation, at its expense, shall promptly deliver to the Secured
Party, upon request by the Secured Party in writing, all such other and further
documents, agreements, opinions, certificates and instruments (executed, as
necessary) in order to give effect to the covenants and agreements of the
Corporation in this Agreement, all as may be reasonably necessary or appropriate
in connection therewith.

22.   Not Bound to Advance or Commit

Neither the execution and delivery nor the registration of the Debenture shall
for any reason whatsoever obligate or bind the Secured Party to advance any
moneys or provide any credit or make any commitment or, having advanced or
committed a portion, obligate the Secured Party in any way to advance or commit
the balance or any further portion thereof; but nevertheless the Debenture and
the mortgages, charges and security interests thereby constituted shall take
effect forthwith upon execution of the Debenture and shall operate as security
for the Liabilities.

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23.   Effective Notice

Any and all notices or other communications required or permitted pursuant to
this Agreement shall be in writing and shall be given in the manner stipulated
in the Debenture.
     IN WITNESS WHEREOF the Corporation has executed and delivered this
Agreement as of the 11th day of July, 2008.

            IVANHOE ENERGY INC.
                  Per:   /s/ “Ian S. Barnett”