Document:

Employment Agreement dated May 2, 2007

 

Exhibit 10.17

EMPLOYMENT AGREEMENT

THIS AGREEMENT made as of the 2nd day of May, 2007

BETWEEN:

IVANHOE ENERGY INC., a corporation continued under the laws of the Yukon
Territory, having its principal executive office at Suite 654 – 999 Canada
Place, Vancouver, British Columbia, V6C 3E1 and its operations headquarters at
5060 California Avenue, Suite 400, Bakersfield, California 93309

(the “Company”)

AND:

MICHAEL SILVERMAN of 1327 Ashland Street, Houston, Texas 77008

(the “Executive”)

WHEREAS:

	A.	 	the Company is an international oil and gas company;
	 
	B.	 	the Executive has extensive experience in heavy oil technologies and technology development
and project management;
	 
	C.	 	the Company wishes to have the Executive serve as the Vice President, Technology of the
Company; and
	 
	D.	 	the parties hereto wish to enter into this agreement to set forth the terms and conditions
applicable to the employment of the Executive in such capacity.

NOW THEREFORE THIS AGREEMENT WITNESSES that the parties hereto, in consideration of the premises
and of the respective covenants and agreements on the part of those herein contained, do hereby
covenant each with the other as follows:

PART 1

DEFINITIONS AND INTERPRETATION

Definitions

1.1 In this Agreement, the following terms shall have the meanings ascribed
thereto:

“Agreement” means this agreement and all amendments made to it by written agreement
between the Company and the Executive;

“Board” means the Board of Directors of the Company;

 

 

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“Business Day” means a day other than Saturday, Sunday or statutory holiday in
British Columbia;

“Change of Control” means an event occurring after the Commencement Date pursuant to
which:

	 	(a)	 	a merger, amalgamation, arrangement, consolidation,
reorganization or transfer takes place in which securities of the Company
having more than 50% of the total combined voting power of the Company’s
outstanding voting securities are acquired by a person or persons different
from the persons holding those voting securities immediately prior to such
event, and the composition of the Board following such event is such that the
directors of the Company prior to the transaction constitute less than 50% of
the Board membership following the event;
	 
	 	(b)	 	any person, or any combination of persons acting jointly or in
concert by virtue of an agreement, arrangement, commitment or understanding
acquires, directly or indirectly, 50% or more of the voting rights attached to
all outstanding voting securities; or
	 
	 	(c)	 	any person, or any combination of persons acting jointly or in
concert by virtue of an agreement, arrangement, commitment or understanding
acquires, directly or indirectly, the right to appoint a majority of the
directors of the Company; or
	 
	 	(d)	 	the Company sells, transfers or otherwise disposes of all or
substantially all of its assets, except that no Change of Control will be
deemed to occur if such sale or disposition is made to a subsidiary or
subsidiaries of the Company.

“Disability” means a physical or mental incapacity of the Executive that has
prevented the Executive from performing the duties customarily assigned to the
Executive for one hundred and eighty (180) days, whether or not consecutive, out of
any twelve (12) consecutive months and that in the opinion of the Board is likely to
continue.

Interpretation

1.2 For the purposes of this Agreement, except as otherwise expressly provided:

	 	(a)	 	“this Agreement” means this Agreement, including the schedules
hereto, and not any particular part, section or other portion hereof, and
includes any agreement, document or instrument entered into, made or delivered
pursuant to the terms hereof, as the same may, from time to time, be
supplemented or amended and in effect;
	 
	 	(b)	 	all references in this Agreement to a designated “part”,
“section” or other subdivision or to a schedule are references to the
designated part, section, or other subdivision of, or schedule to, this
Agreement;

 

 

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	 	(c)	 	the words “hereof”, “herein”, “hereto” and “hereunder” and
other words of similar import refer to this Agreement as a whole and not to any
particular part, section or other subdivision or schedule unless the context or
subject matter otherwise requires;
	 
	 	(d)	 	the division of this Agreement into parts, sections and other
portions and the insertion of headings are for convenience of reference only
and are not intended to interpret, define or limit the scope, extent or intent
of this Agreement or any provision hereof;
	 
	 	(e)	 	unless otherwise provided herein, all references to currency in
this Agreement are to lawful money of the United States of America and all
amounts to be calculated or paid pursuant to this Agreement are to be
calculated in lawful money of the United States of America;
	 
	 	(f)	 	the singular of any term includes the plural, and vice versa,
and the use of any term is generally applicable to any gender and, where
applicable, a body corporate, firm or other entity, and the word “or” is not
exclusive and the word “including” is not limiting whether or not non-limiting
language (such as “without limitation” or “but not limited to” or words of
similar import) is used with reference thereto; and
	 
	 	(g)	 	all references to “approval”, “authorization”, “consent” or
“direction” in this Agreement means written approval, authorization, consent or
direction.

PART 2

EMPLOYMENT

Employment

2.1 The Company shall employ the Executive and the Executive shall perform
services on behalf of the Company as its employee as provided herein during the Period of Active
Employment (as hereinafter defined).

Period of Active Employment

2.2 In this Employment Agreement, “Period of Active Employment” shall mean the
period beginning on the first date on which the Executive reports to work in Bakersfield,
California, or at such other location as agreed by the President and CEO but in any case no later
than May 31, 2007 (the “Commencement Date”) and terminating on the date on which the first of the
following occurs:

	 	(a)	 	the termination of the Executive’s employment by the Company
for cause as provided in Section 6.1 hereof;
	 
	 	(b)	 	the resignation of employment by the Executive pursuant to
Section 6.2;
	 
	 	(c)	 	the termination of this Employment Agreement pursuant to
Section 6.3;
	 
	 	(d)	 	the Disability of the Executive; or
	 
	 	(e)	 	the death of the Executive.

 

 

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PART 3

POSITION

Capacity and Services

3.1 The Company shall employ the Executive as Vice President, Technology of the
Company. As such, the Executive shall be subject to the supervision of the President and CEO and
shall perform such duties and have such authority as may from time to time be assigned, delegated
or limited by the President and CEO. The Executive shall perform these duties in accordance with
the charter documents and by-laws of the Company, the instructions of the President and CEO,
Company policy, applicable law and the rules and policies of each stock exchange upon which
securities of the Company may be listed from time to time.

Place of Employment

3.2 The Executive’s place of work will be the Company’s offices in Bakersfield,
California or other such location as approved by the President and CEO, but the Company may require
the Executive to work at any place throughout the world on a temporary basis.

Full Time and Attention

3.3 The Executive shall devote one hundred percent (100%) of the Executive’s
business time to the Executive’s duties hereunder. The Executive may, however, serve as a member
of the board of directors of another company if the Board determines in its sole discretion that
such membership is not adverse to the interests of the Company.

Conflicts of Interest

3.4 The Executive agrees that as an executive officer of the Company, he shall
refer to the President and CEO all matters and transactions in which a potential conflict of
interest between the Executive and the Company may arise and shall not proceed with such matters or
transactions until the Board’s express approval thereof is obtained. For purposes of
clarification, this Section 3.4 is not intended to limit in any way the Executive’s other fiduciary
obligations to the Company which may arise in law or equity.

PART 4

COMPENSATION AND BENEFITS

Compensation

4.1 The base salary rate (“Base Salary”) of the Executive shall be $225,000.00
per year, payable monthly on the last business day of each month.

Benefits

4.2 The Company shall provide the Executive and his dependent immediate family
members with the same comprehensive medical, dental, life, disability and related insurance
coverage as are available to the other executive officers of the Company.

Long Term Incentive Plan

4.3 Subject to Board approval, the Executive will receive incentive stock options
exercisable to purchase up to 80,000 common shares of the Company pursuant to the

 

 

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Company’s Employees’ and Directors’ Equity Incentive Plan (the “Plan”) at a price per common share
determined in accordance with the terms of the Plan. The Executive’s incentive stock options will
vest and become exercisable in accordance with the following schedule:

	 	(a)	 	options in respect of an initial 20,000 common shares will
become exercisable as of the first (1st) anniversary of the
Commencement Date;
	 
	 	(b)	 	options in respect of an additional 20,000 common shares will
become exercisable as of the second (2nd) anniversary of the
Commencement Date; and
	 
	 	(c)	 	options in respect of the remaining 20,000 common shares will
become exercisable as of the third (3rd) anniversary of the
Commencement Date.
	 
	 	(d)	 	options in respect of the remaining 20,000 common shares will
become exercisable as of the fourth (4th) anniversary of the
Commencement Date.

Subject to earlier termination pursuant to the terms of the Plan, any of the Executive’s incentive
stock options remaining unexercised as of the fifth (5th) anniversary of the
Commencement Date will, as of that date, expire and cease to be exercisable. In addition to the
incentive stock options referred to above, the Executive will be eligible to receive additional
incentive stock option grants annually pursuant the Company’s Compensation Programme subject to
approval and ratification by the Board. All such grants will be made pursuant to, and in accordance
with the terms of, the Plan.

Short Term Incentive Plan

4.4 The Executive shall be eligible for an annual bonus award pursuant to the Company’s
Compensation Programme and payable after the end of the Company’s fiscal year. The annual bonus
award will be based on an overall performance rating and job specific criteria. The bonus award
will be a combination of unrestricted shares of the Company and cash. Award levels are outlined in
the Company’s Compensation Programme.

Vacation

4.5 The Executive is entitled to take four (4) weeks vacation per calendar year
in accordance with the Company’s policies and practices in effect at the relevant time for senior
executives and subject to the needs of the Company. Notwithstanding the foregoing, any vacation of
greater than 10 consecutive Business Days in length shall require the approval of the President and
CEO.

Expenses Incidental to Employment

4.6 The Company shall reimburse the Executive in accordance with its normal
policies and practices for the Executive’s travel and other expenses or disbursements reasonably
and necessarily incurred or made in connection with the Company’s business. The Executive will
furnish the Company with an itemized account of his expenses in such form or forms as may
reasonably be required by the Company and at such times or intervals as may be required by the
Company.

 

 

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Relocation Allowance

4.7 If required and as full reimbursement for the Executive relocating to
Bakersfield, California, the Company will pay to the Executive a reasonable amount, to be
determined by the President & CEO, towards his out-of-pocket relocation costs, such as housing
related expenses, shipping, storage, temporary living expenses and incidental expenses.

PART 5

CONFIDENTIALITY AND NON-COMPETITION

Non-Competition

5.1 The Executive acknowledges that the Executive’s services are unique and
extraordinary. The Executive also acknowledges that the Executive’s position will give the
Executive access to confidential information of substantial importance to the Company and its
business. During the Non-Competition Period (as hereinafter defined), the Executive shall not,
either individually or in partnership or jointly or in conjunction with any other person, entity or
organization, as principal, agent, consultant, lender, contractor, employer, employee, investor,
shareholder or in any other manner, directly or indirectly, advise, manage, carry on, establish,
control, engage in, invest in, offer financial assistance or services to, or permit the Executive’s
name or any part thereof to be used by any business in any jurisdiction in which Executive knows or
ought reasonably to have known that the Company is conducting business, that competes with the
business of the Company, its parent, affiliated or subsidiary companies, or any business in which
the Company, its parent, affiliated or subsidiary companies is engaged (the “Business”). For
purposes of this Agreement, “Non-Competition Period” means a period beginning on the date hereof
and ending at the 

later of:

	 	(a)	 	six (6) months after the end of the Period of Active Employment; or
	 
	 	(b)	 	the date on which the Executive no longer is receiving
compensation pursuant to any of the terms of this Agreement.

Other Executives

5.2 The Executive agrees that during the period beginning on the date hereof and
ending twelve (12) months after the Period of Active Employment, neither the Executive nor any
entity with whom the Executive is at the time associated, related or affiliated shall, directly or
indirectly, hire or offer to hire or entice away or in any other manner persuade or attempt to
persuade any officer, employee or agent of the Business to discontinue or alter any one of their or
its relationships with the Company.

Confidentiality

5.3 Except in the normal and proper course of the Executive’s duties
hereunder, the Executive will not use for the Executive’s own account or disclose to anyone else,
during or for a period of three (3) years after the Period of Active Employment, any confidential
or proprietary information or material relating to the Company’s operations or business which the
Executive obtains from the Company or its officers or employees, agents, suppliers or customers or
otherwise by virtue of the Executive’s employment by the Company or by the Company’s predecessor.
Confidential or proprietary information or material includes, without limitation, the following
types of information or material, both existing and contemplated, regarding the Company or its
parent, affiliated or subsidiary companies: corporate information,

 

 

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plans, strategies, tactics, policies, resolutions, litigation or negotiations, financial
information, including debt arrangements, equity structure, investors and holdings; operational
and scientific information, technical information, and personnel information, including personnel
lists, resumes, personnel data, organizational structure and performance evaluations (the
“Confidential Information

Notwithstanding the preceding, “Confidential Information” shall; not include information which
(a) was in the Executive’s possession prior to the Commencement Date, (b) is or becomes publicly
known, except for any such information that becomes publicly known because of disclosure by the
Executive in violation of this Agreement, or (c) is required to be disclosed pursuant to judicial
or regulatory action, law or similar process.

Return of Documents

5.4 The Executive agrees that all documents of any nature pertaining to
activities of the Company and to its parent and their respective affiliated, related, associated or
subsidiary companies, including Confidential Information, in the Executive’s possession now or at
any time during the Period of Active Employment, are and shall be the property of the Company and
its parent, and their respective affiliated, related, associated or subsidiary companies, and that
all such documents and all copies of them shall be surrendered to the Company whenever requested by
the Company.

Invalidity

5.5 If any court determines that any provision contained in this Agreement
including, without limitation, a restrictive covenant or any part thereof is unenforceable because
of the duration or geographical scope of the provision or for any other reason, the duration or
scope of the provision, as the case may be, shall be reduced so that the provision becomes
enforceable and, in its reduced form, the provision shall then be enforceable and shall be
enforced.

Acknowledgement

5.6 The Executive acknowledges that, in connection with the Executive’s
employment by the Company, the Executive will receive or will become eligible to receive
substantial benefits and compensation. The Executive acknowledges that the Executive’s employment
by the Company and all compensation and benefits and potential compensation and benefits to the
Executive from such employment shall be conferred by the Company upon the Executive only because
and on condition of the Executive’s willingness to commit the Executive’s best efforts and loyalty
to the Company, including protecting the Company’s right to have its Confidential Information
protected and abiding by the confidentiality, non-competition and other provisions herein. The
Executive understands the Executive’s duties and obligations as set forth in this Agreement and
agrees that such duties and obligations would not unduly restrict or curtail the Executive’s
legitimate efforts to earn a livelihood following any termination of the Executive’s employment
with the Company. The Executive agrees that the restrictions contained in this Part 5 are
reasonable and valid and all defences to the strict enforcement thereof by the Company are waived
by the Executive. The Executive further acknowledges that irreparable damage would result to the
Company if the provisions of Sections 5.1 through 5.4 are not specifically enforced, and agrees
that the Company shall be entitled to any appropriate legal, equitable, or other remedy, including
injunctive relief, in respect of any failure or continuing failure to comply with the provisions of
Sections 5.1 through 5.4.

 

 

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Corporate Opportunities

5.7 Any business opportunities related to the business of the Company which become
known to the Executive during the period of his employment hereunder must be fully disclosed and
made available to the Board by the Executive and the Executive agrees not to take or omit to take
any action if the result would be to divert from the Company any opportunity which is within the
scope of its Business as known to the Executive from time to time.

Ivanhoe Related Developments. Executive will promptly disclose and assign, in writing, to
Ivanhoe any inventions, improvements, or discoveries, methods, developments, software, and works of
authorship, whether patentable or not, which are made, conceived, or improved by Executive, solely
or jointly with others, during Consultant’s engagement by Ivanhoe hereunder or while providing
Services to an Ivanhoe Affiliate, either during or outside the regular hours of Executive’s
engagement (“Ivanhoe Related Developments”) that (A) use equipment, supplies, facilities, trade
secret information, or other Confidential Information of Ivanhoe or any Affiliate of Ivanhoe, or
(B) directly relate, at the time of conception, development, reduction to practice, or use, to the
RTPTM technology of Ivanhoe or one or more Affiliates of Ivanhoe (the “Technology”), or to actual
research or development related to the Technology, or one or more Affiliates of Ivanhoe, or (C)
that result directly from any work performed by Executive for Ivanhoe or any Affiliate of Ivanhoe.

     Upon request, Executive will assist Ivanhoe and its nominees in every proper way at Ivanhoe’s
expense (and without additional compensation to Executive), both during Executive’s engagement by
Ivanhoe and thereafter, to obtain and retain for Ivanhoe’s sole benefit patent protection for any
and all Ivanhoe Related Developments, which will remain the property of Ivanhoe, its successors,
assigns, or nominees, whether patented or not, and, for that purpose, upon written request by and
at the expense of Ivanhoe, Executive will within thirty (30) days following a request therefore
execute any and all documents relating thereto that are deemed necessary by Ivanhoe to the extent
such request is reasonable. All such Ivanhoe Related Developments will be subject to the provision
of this Agreement (regarding Confidential Information). Notwithstanding the foregoing, in the
event that, after termination of Executive’s engagement, Executive incurs expenses, provides
Services, or otherwise assists Ivanhoe or its nominees at such party’s request, Ivanhoe shall
compensate Executive therefor, with such compensation to be reasonably agreed upon by Executive and
Ivanhoe. The obligations of Executive and Ivanhoe under this section 5.3 will survive the
termination of Executive’s engagement for any reason or no reason, will be applicable regardless
of any actual or alleged breach of this Agreement by Ivanhoe, and will continue indefinitely.

Passive Investment

5.8 Notwithstanding anything in this Article, nothing in this Agreement shall be
deemed to prevent or prohibit the Executive from owning shares in a publicly listed company as a
passive investment, so long as the Executive does not own more than five per cent (5%) of the
shares thereof.

 

 

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PART 6

TERMINATION AND RESIGNATION

Termination for Cause

6.1 The Company may immediately terminate this Agreement at any time for cause by
written notice to the Executive. Without limiting the foregoing, any one or more of the following
events shall constitute cause:

	 	(a)	 	the Executive’s appropriation of corporate opportunities for
his direct or indirect benefit or his failure to disclose any material conflict
of interest;
	 
	 	(b)	 	the Executive’s failure to disclose material facts concerning
his business interests or employment by other than the Company;
	 
	 	(c)	 	any of the following acts or circumstances of the Executive:
fraud, illegality, breach of statute or regulation, or gross incompetence;
	 
	 	(d)	 	the Executive’s breach of fiduciary duty to the Company;
	 
	 	(e)	 	the Executive’s material breach of this Agreement or gross
negligence in carrying out his duties under this Agreement;
	 
	 	(f)	 	the failure of or refusal by the Executive to follow the
reasonable and lawful directions of the Board or to comply with the policies,
rules and regulations of the Company (except to the extent that such policies,
rules and regulations expressly conflict with the provisions of this
Agreement);
	 
	 	(g)	 	any conduct which would materially impair or prevent the
Executive from continuing as an officer or director of the Company under
applicable corporate or securities laws, or the rules and policies of any stock
exchange or securities market upon which the Company’s shares are listed from
time to time; or
	 
	 	(h)	 	the Executive’s plea of guilty to or conviction of an offence
punishable by imprisonment.

If the Company terminates this Agreement for cause under this Section 6.1, the Company shall not be
obligated to make any further payments under this Agreement, except for the payment of any Base
Salary due and owing pursuant to Section 4.1 at the time of termination and reasonable expenses due
and owing pursuant to Section 4.5 at the time of the termination. If the Company terminates this
Agreement for cause under this Section 6.1, all vested incentive stock options will remain
exercisable for a period of one month from the date of termination and all unvested incentive stock
options will immediately terminate.

Resignation by Executive

6.2 The Executive shall give the Company not less than three (3) months notice
of the resignation of the Executive’s employment hereunder. The Company may waive or abridge any
notice period specified in such notice, in its absolute discretion. If the Executive resigns the
Executive’s employment and terminates this Agreement for any reason, the Company shall have no
further obligations or responsibilities hereunder to the Executive, and nothing herein

 

 

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contained shall be construed to limit or restrict in any way the Company’s ability to pursue any
remedies it may have at law or equity pursuant to the provisions of this Agreement. Notwithstanding
the foregoing, all of the Executive’s vested incentive stock options will remain exercisable for a
period of three (3) months from the date that the Executive’s employment terminates.

Termination Without Cause

6.3 The Company may terminate this Agreement at any time without cause or upon
the Disability of the Executive. Should the Company terminate the Executive without cause during
the first three years of employment; the Company will provide the Executive with a lump sum payment
of an amount equal to twelve (12) monthly payments of the Executive’s Base Salary. Should the
Company terminate the executive without cause during the fourth or fifth years of employment; the
Company will provide the Executive with a lump sum payment of an amount equal to six (6) monthly
payments of the Executive’s Base Salary. Should this occur after the fifth anniversary of the
Executive’s employment date, the Company will provide the Executive with a lump sum payment of an
amount equal to three (3) monthly payments of the Executive’s Base Salary. The payments provided
for in this Section 6.3 shall be inclusive of the Executive’s entitlement to notice and severance
pay at common law or by statute. Notwithstanding the foregoing, those of the Executive’s unvested
stock options that would have vested within one (1) year from the date that the Executive’s
employment terminates will be deemed to have vested, and all of the Executive’s unexercised stock
options that have vested or are deemed to have vested will remain exercisable for a period of six
(6) months from the date that the Executive’s employment terminates.

Termination of Employment after Change of Control

6.4 If a Change of Control occurs and this Agreement is terminated by the Company
within twelve (12) months of such Change of Control, the Executive shall be entitled to receive a
lump sum payment in an amount equal to twelve (12) monthly payments of the Executive’s Base Salary.
The Company shall not be obligated to make any further payments under this Agreement, except for
the payment of any reasonable expenses due and owing pursuant to Section 4.7. Notwithstanding the
foregoing, all of the Executive’s unexercised stock options, vested or unvested, will be deemed to
have vested and will remain exercisable for a period of six (6) months from the date that the
Executive’s employment terminates.

Benefits on Termination

6.5 If this Agreement is terminated in accordance with Section 6.3 or Section
6.4, the benefits provided to the Executive pursuant to Section 4.2 shall continue for the amount
of months of Base Salary the Executive is entitled to following the termination of this Agreement
pursuant to this Part or until the Executive commences alternative employment, whichever occurs
first.

Results of Termination

6.6 Upon termination or resignation of the Executive’s employment pursuant to
this Part, this Agreement and the employment of the Executive shall be wholly terminated with the
exception of the clauses specifically contemplated to continue in full force and effect beyond the
termination of this Agreement, including those set out in Part 5.

 

 

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PART 7

REPRESENTATIONS AND WARRANTIES

No Breach

7.1 The Executive represents and warrants to the Company that the execution and
performance of this Agreement will not result in or constitute a default, breach, violation or
event that, with notice or lapse of time or both, would be a default, breach or violation of any
understanding, agreement or commitment, written or oral, express or implied, to which the Executive
is currently a party or by which the Executive or the Executive’s property is currently bound.

Indemnity

7.2 The Executive shall defend, indemnify and hold the Company harmless from any
liability, expense or claim (including solicitor’s fees incurred in respect thereof) by any person
in any way arising out of, relating to, or in connection with any incorrectness or breach of the
representations and warranties in Section 7.1.

Right of Termination

7.3 The Executive acknowledges that a breach of this Part by the Executive shall
entitle the Company to terminate the Executive’s employment and this Agreement for cause.

Company Indemnity and Insurance

7.4 The Company shall defend, indemnify and hold the Executive harmless from any
liability, expense or claim (including solicitor’s fees incurred in respect thereof) in any way
arising out of, relating to, or in connection with his performance of services for the Company, to
the fullest extent permitted by applicable law. The Company shall make reasonable efforts to
ensure that the Executive shall fully participate as a covered insured under the Company’s
directors’ and officers’ liability insurance policy with respect to the Period of Active
Employment.

PART 8

MISCELLANEOUS PROVISIONS

Rights and Waivers

8.1 All rights and remedies of the parties are separate and cumulative, and none
of them, whether exercised or not, shall be deemed to be to the exclusion of any other rights or
remedies or shall be deemed to limit or prejudice any other legal or equitable rights or remedies
which either of the parties may have.

Waiver

8.2 Any purported waiver of any default, breach or non-compliance under this
Agreement is not effective unless in writing and signed by the party to be bound by the waiver. No
waiver shall be inferred from or implied by any failure to act or delay in acting by a party in
respect of any default, breach or non-observance or by anything done or omitted to be done by the
other party. The waiver by a party of any default, breach or non-compliance under this Agreement
shall not operate as a waiver of that party’s rights under this Agreement in respect of

 

 

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any continuing or subsequent default, breach or non-observance (whether of the same or any other
nature).

Severability

8.3 Any provision of this Agreement that is prohibited or unenforceable in any
jurisdiction shall, as to that jurisdiction, be ineffective to the extent of the prohibition or
unenforceability and shall be severed from the balance of this Agreement, all without affecting the
remaining provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

Notices

8.4 Any notice, certificate, consent, determination or other communication
required or permitted to be given or made under this Agreement shall be in writing and shall be
effectively given and made if (i) delivered personally, (ii) sent by prepaid same day courier
service, or (iii) sent by fax or other similar means of electronic communication, in each case to
the applicable address set out below:

if to the Company, to:

Suite 654

999 Canada Place

Vancouver, British Columbia

V6C 3E1

Attention:
Vice President & Corporate Secretary

Fax: (604) 682-2060

E-M: beverlyb@ivancorp.com

if to the Executive, to:

Michael
Silverman

1327 Ashland Street

Houston, Texas 77008

Fax: l

E-M: Michael_silverman@sbcglobal.net

Any such communication so given or made shall be deemed to have been given or made and to have been
received on the day of delivery if delivered personally or by courier service, or on the day of
faxing or sending by other means of recorded electronic communication, provided that the day in
either event is a Business Day and the communication is so delivered, faxed or sent prior to 4:30
p.m. (local time at destination) on that day. Otherwise, the communication shall be deemed to have
been given and made and to have been received on the next following Business Day. Any such
communication given or made in any other manner shall be deemed to have been given or made and to
have been received only upon actual receipt. Any party may from time to time change its address
under this Section 8.4 by notice to the other party given in the manner provided by this
Section 8.4.

 

 

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Time of Essence

8.5 Time shall be of the essence of this Agreement in all respects.

Successors and Assigns

8.6 This Agreement shall enure to the benefit of, and be binding on, the parties
and their respective heirs, administrators, executors, successors and permitted assigns. The
Company shall have the right to assign this Agreement to any successor (whether direct or indirect,
by purchase, amalgamation, arrangement, merger, consolidation or otherwise) to all or substantially
all of the business and/or assets of the Company provided only that the Company must first require
the successor to expressly assume and agree to perform this Agreement in the same manner and to the
same extent that the Company would be required to perform it if no such succession had taken place.
The Executive by the Executive’s signature hereto expressly consents to such assignment. The
Executive shall not assign or transfer, whether absolutely, by way of security or otherwise, all or
any part of the Executive’s rights or obligations under this Agreement without the prior consent of
the Company, which may be arbitrarily withheld.

Amendment

8.7 No amendment of this Agreement will be effective unless made in writing and
signed by the parties.

Entire Agreement

8.8 This Agreement constitutes the entire agreement between the parties
pertaining to the subject matter of this Agreement and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written. There are no conditions,
warranties, representations or other agreements between the parties in connection with the subject
matter of this Agreement (whether oral or written, express or implied, statutory or otherwise)
except as specifically set out in this Agreement.

Governing Law

8.9 This Agreement shall be governed by and construed in accordance with the laws
of the State of California, without regard to rules that would refer the matter to the laws of
another jurisdiction. .

Headings

8.10 The division of this Agreement into Parts and Sections and the insertion of
headings are for convenience or reference only and shall not affect the construction or
interpretation of this Agreement.

Full Satisfaction

8.11 The terms set out in this Agreement, provided that such terms are satisfied by
the Company, are in lieu of (and not in addition to) and in full satisfaction of any and all other
claims or entitlements which the Executive has or may have upon the termination of the Executive’s
employment pursuant to Part 6 and the compliance by the Company with these terms will affect a full
and complete release of the Company and its parent and their respective affiliates, associates,
subsidiaries and related companies from any and all claims which the Executive may have for
whatever reason or cause in connection with the Executive’s

 

 

- 14 -

employment and the termination of it, other than those obligations specifically set out in this
Agreement. In agreeing to the terms set out in this Agreement, the Executive specifically agrees
to execute a formal release document to that effect and will deliver upon request appropriate
resignations from all offices and positions with the Company and its parent and their respective
affiliated, associated subsidiary or affiliated companies if, as and when requested by the Company
upon termination of the Executive’s employment within the circumstances contemplated by this
Agreement.

Executive Acknowledgements

8.12 The Executive acknowledges that:

	 	(a)	 	the Executive has had sufficient time to review this Agreement
thoroughly;
	 
	 	(b)	 	the Executive has read and understands the terms of this
Agreement and the obligations hereunder;
	 
	 	(c)	 	the Executive has been given an opportunity to obtain
independent legal advice concerning the interpretation and effect of this
Agreement; and
	 
	 	(d)	 	the Executive has received a fully executed counterpart copy of
this Agreement.

          IN WITNESS WHEREOF the parties have executed counterpart copies of this Agreement the date
first set forth above.

	 	 	 	 	 
	 

	 	MICHAEL SILVERMAN	 	 
	 
	 	 	 	 
	Hope M. Basralian
 

Witness: Hope M. Basralian

	 	Michael A. Silverman
 

	 	 

	 	 	 	 	 	 	 
	 

	 	 	 	IVANHOE ENERGY INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	Joseph Gasca
 

Name: Joseph Gasca
	 	 
	 

	 	 	 	Title: President & Chief Executive Officerexh10-1_note.htm

     

    
      

      

    

     

     

     

     

     

     

     

     

     

     

    EXHIBIT 10.1

     

    UNSECURED PROMISSORY NOTE 

    DATED MARCH 13, 2008

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    This Security has not been registered
under the Securities Act of 1933 (hereinafter the “1933 Act”) or under
applicable state securities law (hereinafter the “State Acts”) and may not be
sold, assigned, pledged, transferred or hypothecated, whether or not for
consideration, by the holder except upon issuance to the Company of a favorable
written opinion of Counsel for the Company or upon submission to the Company of
such other evidence as may be satisfactory to counsel to the Company to the
effect that any such sale, assignment, pledge, transfer or hypothecation will
not be in violation of the 1933 Act or the State Acts.

    

    

    GALAXY
ENERGY CORPORATION

     

    Unsecured
Promissory Note

    

    March 13,
2008

    $145,000.00                                                                                                                                                  
Denver, Colorado

    

    FOR VALUE RECEIVED, Galaxy Energy Corporation, a
Colorado corporation (hereinafter the “Company”) promises to pay to the order of
Bruner Family Trust UTD March
28, 2005 (hereinafter the “Holder”), the principal sum of One Hundred
Forty-Five Thousand Dollars ($145,000.00), together with interest at the rate of
eight percent (8.0%) per annum (hereinafter “Interest”), such principal and
Interest to be payable one hundred twenty (120) days from the date hereof in
lawful money of the United States of America.  Holder shall advance
the principal amount of this Note to the Company in one or more advances and
interest shall accrue from the date of each such advance.

    

    1. EVENTS OF DEFAULT.

    

    If one or more of the following events
(hereinafter “events of default”) shall occur:

     

    (a) default in the payment of any
principal of or interest on this Note and the continuation of such default for a
period of 10 days;

     

    (b) breach of any covenant contained in
this Note and the continuation of such breach for a period of 30 days or more
after written notice thereof;

     

    (c) the Company or any of its
subsidiaries files or is served with any petition for relief under the
Bankruptcy Code or any similar federal or state statute (the “Code”) or the
entry by a court of competent jurisdiction of a decree or order adjudging the
company or the subsidiary, as the case may be, a bankrupt or insolvent or
approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company or the subsidiary
under the Code or appointing a receiver, trustee or other similar official of
the Company or the subsidiary or all or substantially all of its assets or the
subsidiary’s assets, or ordering the winding up or liquidation of its affairs or
the subsidiary’s affairs, and the continuation of such decree or order unstayed
and in effect for a period of 60 consecutive days;

     

    
      Galaxy
Energy Corporation Unsecured Promissory Note - Page 1 of
3

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (d) the institution by the Company or
any of its subsidiaries or the consent to the institution by the Company or its
subsidiary of proceedings to adjudicate the Company or its subsidiary a bankrupt
or insolvent or the filing or consent by the Company or its subsidiary to the
filing of a petition or answer seeking reorganization or relief under the Code,
the consent by the Company or its subsidiary to the appointment of a receiver,
trustee or other similar official of the Company or its subsidiary or of any
substantial part of its property of its subsidiary’s property, an assignment by
the Company or its subsidiary for the benefit of creditors or the admission by
the Company or its subsidiary in writing of its inability to pay its debts
generally as they become due; or

     

    (e) a default by the Company in any of
its obligations under any other promissory note or any mortgage, credit
agreement or other facility, indenture agreement, factoring agreement or other
instrument under which there may be issued, or by which there may be secured or
evidenced any indebtedness for borrowed money or money due under any long term
leasing or factoring arrangement of the Company in an amount exceeding $50,000,
whether such indebtedness now exists or shall hereafter be created and such
default shall result in such indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise become due and
payable;

    

    then, the
Holder of this Note may, by written notice to the Company, declare the entire
unpaid principal of and accrued and unpaid Interest on this Note to be due and
payable and, upon such declaration, the same shall become due and payable
forthwith without further demand or notice.

    

    2. MISCELLANEOUS.

     

    2.1. All powers and remedies given by
this Note to the Holder hereof shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other power or remedy or of any other powers
and remedies available to the Holder hereof, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Note.  No delay or omission of the Holder
hereof to exercise any right or power accruing upon any default occurring and
continuing as aforesaid shall impair any such right or power or shall be
construed to be a waiver of any such default or any acquiescence
therein.  Every power and remedy given by this Note or by law to the
Holder hereof may be exercised from time to time, and as often as shall be
deemed expedient, by the Holder hereof, all subject, as hereinabove provided, to
the payment of the principal of and the interest on this Note being expressly
subordinated in right of payment to the prior payment in full of all Senior
Indebtedness.

     

    2.2. In addition to the payments
provided for above, the Company agrees to pay all expenses incurred, including
reasonable attorneys’ fees, if this Note is placed in the hands of an attorney
for collection or if it is collected through bankruptcy or other judicial
proceedings.

     

    2.3. The Company, to the extent
permitted by law, waives notice, demand, presentment for payment, protest, the
filing of suit or the taking of any other action by any Holder hereof for the
purpose of fixing its liability hereon.

     

    
      Galaxy
Energy Corporation Unsecured Promissory Note - Page 2 of
3

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    2.4. This Note has been executed and
delivered in and shall be governed by and construed in accordance with the laws
of the State of Colorado.

    

     

    IN WITNESS WHEREOF, the Company has
executed this Note under seal on the day and year first above
written.

    

    
      	 
      	
              GALAXY
      ENERGY CORPORATION

            
	 
      	
               

               

              By:  /s/ Christopher S.
      Hardesty                          
      

              Christopher S.
      Hardesty

                            
      Chief Financial Officer

            

    

    

    

    

    

    

    

    
      Galaxy
Energy Corporation Unsecured Promissory Note - Page 3 of
3

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