Document:

FIXED AND FLOATING CHARGE DEPENTURE - JUL 11, 2008

Exhibit 10.3

IVANHOE ENERGY INC.

FIXED AND FLOATING CHARGE DEBENTURE

dated as of July 11, 2008

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Article 1  PROMISE TO PAY
	 	 	1	 
	1.1     Promise to Pay
	 	 	1	 
	1.2     Interest
	 	 	1	 
	Article 2  INTERPRETATION
	 	 	1	 
	2.1     Defined Terms
	 	 	1	 
	2.2     Industry Terms
	 	 	5	 
	2.3     Time
	 	 	6	 
	2.4     Schedules
	 	 	6	 
	2.5     References
	 	 	6	 
	2.6     Headings
	 	 	6	 
	2.7     Currency
	 	 	6	 
	2.8     Usage
	 	 	6	 
	2.9     Knowledge or Awareness
	 	 	7	 
	Article 3  REPRESENTATIONS AND WARRANTIES
	 	 	7	 
	3.1     Representations and Warranties
	 	 	7	 
	3.2     Survival
	 	 	9	 
	Article 4  COVENANTS
	 	 	9	 
	4.1     Covenants
	 	 	9	 
	Article 5  SECURITY
	 	 	14	 
	5.1     Mortgage, Charge and Security Interest
	 	 	14	 
	5.2     Last Day of Leases
	 	 	15	 
	5.3     Contractual Rights
	 	 	15	 
	5.4     The Secured Party Not Liable
	 	 	15	 
	5.5     Valid Irrespective of Incurring Obligations
	 	 	15	 
	5.6     Separate Security
	 	 	15	 
	5.7     Amalgamations
	 	 	16	 
	5.8     Guarantees
	 	 	16	 
	Article 6  SECURED PARTY RIGHTS
	 	 	16	 
	6.1     The Secured Party’s Right to Perform
	 	 	16	 
	6.2     Payment of Costs
	 	 	17	 
	6.3     Further Security
	 	 	17	 
	Article 7  PARTIAL RELEASES
	 	 	18	 
	7.1     Eminent Domain
	 	 	18	 
	7.2     Partial Release
	 	 	18	 
	Article 8  SUPPLEMENTAL DEBENTURES AND MODIFICATIONS
	 	 	18	 
	8.1     Supplemental Debentures
	 	 	18	 
	8.2     One Debenture
	 	 	18	 
	Article 9  DEFAULT
	 	 	19	 
	9.1     Security Becomes Enforceable
	 	 	19	 
	9.2     Receiver Appointed by the Secured Party
	 	 	20	 
	9.3     Receiver Appointed by the Court
	 	 	21	 
	9.4     Consultant Appointed by the Secured Party
	 	 	22	 
	9.5     Right of Possession, Collection, Sale, etc.
	 	 	22	 
	9.6     Retention of Mortgaged Property
	 	 	22	 
	9.7     Remedies under the PPSA
	 	 	23	 
	9.8     Specific Performance, Foreclosure, etc.
	 	 	23	 

 

 

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	9.9     Effect of Appointment of Receiver
	 	 	23	 
	9.10   Costs and Expenses
	 	 	23	 
	9.11   Notice
	 	 	24	 
	9.12   Power of Attorney
	 	 	24	 
	9.13   Remedies Cumulative, Waiver of Defaults
	 	 	24	 
	9.14   Disposition of Amounts
	 	 	24	 
	9.15   Collection of Accounts
	 	 	25	 
	9.16   Trust During Stay
	 	 	25	 
	9.17   Rights of Third Parties
	 	 	25	 
	9.18   Judgment Against the Corporation
	 	 	26	 
	9.19   Conflict with Laws
	 	 	26	 
	9.20   Insolvency Proceedings
	 	 	26	 
	Article 10  DEFEASANCE
	 	 	27	 
	10.1   Defeasance
	 	 	27	 
	Article 11  SEVERABILITY
	 	 	27	 
	11.1   Severability
	 	 	27	 
	Article 12  NOTICES
	 	 	28	 
	12.1   Notices
	 	 	28	 
	Article 13  ASSIGNMENTS
	 	 	28	 
	13.1   Assignments
	 	 	28	 
	Article 14  INDEMNITIES
	 	 	29	 
	14.1   No Liability for Error of Judgment
	 	 	29	 
	14.2   No Liability in Receivership
	 	 	29	 
	14.3   Indemnity respecting Payments
	 	 	29	 
	14.4   General Indemnity
	 	 	30	 
	Article 15  GENERAL
	 	 	30	 
	15.1   Enurement
	 	 	30	 
	15.2   Waiver
	 	 	30	 
	15.3   Waiver of Presentment
	 	 	31	 
	15.4   Delay Not Waiver
	 	 	31	 
	15.5   Further Assurances
	 	 	31	 
	15.6   Governing Law
	 	 	31	 
	15.7   Pledge
	 	 	31	 
	15.8   Time is of the Essence
	 	 	31	 
	15.9   No Set-off or Counterclaim
	 	 	32	 
	15.10 Additional Security
	 	 	32	 
	15.11 Copy Received
	 	 	32	 
	15.12 Dealings by Secured Party
	 	 	32	 
	15.13 Acknowledgement
	 	 	32	 

 

FIXED AND FLOATING CHARGE DEBENTURE

	DATE: 	 	July 11, 2008
	SECURED 	 	Talisman Energy Canada
	PARTY’S 	 	Suite 2000, 888-3rd Street SW
	ADDRESS: 	 	Calgary, Alberta T2P 5C5

ARTICLE 1

PROMISE TO PAY

	1.1	 	Promise to Pay
	 
	 	 	IVANHOE ENERGY INC. (the “Corporation”), a corporation incorporated under the laws of the
Yukon Territory, for value received hereby acknowledges itself indebted and promises to pay,
on demand, to or to the order of the Secured Party (as hereinafter defined), the principal
sum of Sixty Seven Million Five Hundred Thousand Dollars ($67,500,000) (the “Principal Sum”)
in lawful money of Canada, together with all accrued and unpaid interest thereon and all
other amounts due to the Secured Party under the terms hereof at the Secured Party’s address
hereunder, or at such other place as the Secured Party may designate by notice in writing to
the Corporation. Notwithstanding the Principal Sum of this Debenture and the interest rate
provided for herein 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.
	 
	1.2	 	Interest
	 
	 	 	The Principal Sum shall bear and accrue interest at the Interest Rate from the date hereof
until paid, both before and after default and/or judgment (to the extent permitted by
Applicable Law).

ARTICLE 2

INTERPRETATION

	2.1	 	Defined Terms

     The following terms when used in this Debenture shall have the following meanings:

	 	(a)	 	the words “Accessions”, “Accounts”, “Chattel Paper”, “Documents of Title”,
“Goods”, “Instruments”, “Intangibles”, “Inventory”, “Money”, “Proceeds”, and
“Investment Property” (including any singular or plural variation thereof whenever used
herein) shall have the respective meanings given to such words in the PPSA;
	 
	 	(b)	 	“Account Debtor” shall mean a Person who is obligated to pay any Account,
Chattel Paper and Instrument forming part of the Mortgaged Property;

 

 

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	 	(c)	 	“Applicable Law” shall mean any statute, law, bylaw, rule or regulation or any
judgment, order, writ, injunction, decree or direction of any Governmental Entity to
which a specified person or property is subject;
	 
	 	(d)	 	“Applicable Securities Laws” means all applicable Canadian and U.S. securities
regulations, including the rules, regulations, notices, instruments and policies of the
Securities Commissions;
	 
	 	(e)	 	“Asset Transfer Agreement” shall mean that certain asset transfer agreement
dated July 11, 2008 between the Corporation and the Secured Party;
	 
	 	(f)	 	“Business Day” shall mean a day, excluding Saturday and Sunday, on which
banking institutions are open for business in Calgary, Alberta, Toronto, Ontario and
Vancouver, British Columbia;
	 
	 	(g)	 	“Contractual Rights” shall have the meaning ascribed thereto in Section 5.3;
	 
	 	(h)	 	“Corporation” shall mean Ivanhoe Energy Inc. and its successors and permitted
assigns;
	 
	 	(i)	 	“Crude Bitumen” means a viscous mixture, mainly of hydrocarbons heavier then
pentane, that may contain sulphur compounds;
	 
	 	(j)	 	“Debenture” shall mean this Debenture, as same may be amended, modified,
supplemented or restated from time to time;
	 
	 	(k)	 	“Encumbrance” shall mean any mortgage, pledge, lien, charge, assignment,
hypothecation, security interest, title retention or any other security arrangement
howsoever created or arising and whether perfected or not;
	 
	 	(l)	 	“Event of Default” shall have the meaning ascribed thereto in Section 9.1;
	 
	 	(m)	 	“Excluded Securities” means all present and after-acquired shares or other
securities of the Corporation in the capital of:

	 	(i)	 	every existing Subsidiary (as defined in the Asset Transfer
Agreement); and
	 
	 	(ii)	 	every subsidiary of the Corporation created, acquired or coming
into existence after the date hereof,

	 	 	 	but excluding in all events the shares, partnership interests and other equity
interests in and to the Affiliates, partnerships and subsidiaries as set forth in
Section 4.1(r);
	 
	 	(n)	 	“Governmental Entity” shall mean any court or tribunal in any jurisdiction or
any federal, territorial, provincial, municipal or other governmental body, agency,
authority, department, commission, board or instrumentality;

 

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	 	(o)	 	“Hedging Arrangements” has the meaning ascribed to that term in Section 4.1(u);
	 
	 	(p)	 	“Indebtedness” shall mean all present and future indebtedness and liability of
the Corporation to the Secured Party arising in connection with or pursuant to, or as
evidenced by, the Asset Transfer Agreement and the Notes;
	 
	 	(q)	 	“Intellectual Property” means all present and after acquired intellectual or
industrial property of the Corporation, including, without limitation, all, Canadian
and Non-Canadian, patents, patent applications, inventions, copyright (whether
registered or not), copyright applications, trademarks, (whether registered or not),
trademark applications, trade names, moral and personality rights, industrial designs
(whether registered or not), industrial design applications, trade secrets, know-how,
confidential and other proprietary information, and contractual rights and any and all
covenants not to compete in favour of the Corporation, and all income, royalties,
damages, payments and claims now and hereafter due and or payable to the Corporation
with respect thereto; including, but without limitation, the Intellectual Property, if
any, described in Schedule “B”.
	 
	 	(r)	 	“Interest Rate” shall mean the annual rate of interest equal to the Prime Rate
plus five (5) percent, calculated daily and not compounded;
	 
	 	(s)	 	“LaSalle Credit Agreement” means the credit agreement dated as of October 30,
2006 among Ivanhoe Energy (USA) Inc., as borrower, the Corporation and certain other
persons, as guarantors, LaSalle Bank, National Association, as administrative agent and
issuing lender, and the financial institutions from time to time party thereto;
	 
	 	(t)	 	“LaSalle Guaranty” means the continuing guaranty agreement dated as of October
30, 2006 from the Corporation and certain other persons, as guarantors, to LaSalle
Bank, National Association;
	 
	 	(u)	 	“LaSalle Security Agreement” means the security agreement and pledge dated as
of October 30, 2006 from the Corporation to LaSalle Bank, National Association;
	 
	 	(v)	 	“Liabilities” shall mean the liabilities and obligations, present or future,
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 party of such liabilities and obligations;
	 
	 	(w)	 	“Material Adverse Effect” means an effect which, taking into account all
relevant circumstances would reasonably be expected to be:

	 	(i)	 	materially adverse to the Corporation’s ability to perform its
obligations under the Transaction Documents; or

 

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	 	(ii)	 	materially prejudicial to the validity, enforceability or
intended priority of the Security.

	 	(x)	 	“Mortgaged Property” has the meaning ascribed to that term in Section 5.1;
	 
	 	(y)	 	“Notes” shall mean the two promissory notes dated as of the date hereof granted
by the Corporation in favour of the Secured Party in the amounts of $12,500,000 and
$40,000,000 respectively, as such notes may be amended, modified, supplemented or
restated from time to time;
	 
	 	(z)	 	“Oil Sands” shall mean:

	 	(i)	 	sands and other rock materials containing Crude Bitumen;
	 
	 	(ii)	 	the Crude Bitumen contained in those sands and other rock
materials; and
	 
	 	(iii)	 	any other hydrocarbon or mineral substances, other than
natural gas, in association with that Crude Bitumen or those sands and other
rock materials referred to in subsections (i) and (ii);

	 	(aa)	 	“Oil Sands Leases” shall mean those leases described in Exhibit “1” to Schedule
A hereto, as such leases may be amended, modified, supplemented, restated or replaced
from time to time, together with all other instruments that may be issued pursuant
thereto or in connection therewith from time to time;
	 
	 	(bb)	 	“PPSA” shall mean the Personal Property Security Act (Alberta) as amended;
	 
	 	(cc)	 	“Permitted Encumbrances” shall have the meaning ascribed thereto in the Asset
Transfer Agreement; provided that “Permitted Encumbrances” shall include (i) any liens
or security on the Specifically Mortgaged Property ranking subsequent to or subordinate
to the Security where the holder of such lien or security has entered into an
intercreditor or subordination agreement satisfying the requirements set forth in
clause 13.1(a) of the Asset Transfer Agreement and (ii) such Encumbrances on the
Mortgaged Property other than the Specifically Mortgaged Property (which for greater
certainty shall include any personal property that may form part of, or constitute
proceeds from, such Specifically Mortgaged Property) or the Pledged Shares (as that
term is defined in the Asset Transfer Agreement);
	 
	 	(dd)	 	“Person” shall mean an individual, firm, partnership, company, corporation,
Governmental Entity, unincorporated body of persons or association or other entity
recognized by law;
	 
	 	(ee)	 	“Principal Sum” shall mean Sixty Seven Million Five Hundred Thousand Dollars
($67,500,000) in lawful money of Canada;
	 
	 	(ff)	 	“Product” shall mean any products obtained pursuant to the Oil Sands Leases by:

	 	(i)	 	processing Oil Sands, Crude Bitumen or derivatives of Crude
Bitumen, or

 

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	 	(ii)	 	by reprocessing a product referred to in subclause (i),

	 	 	 	and includes any products obtained by any subsequent reprocessing of the products
obtained under subclauses (i) and (ii);

	 	(gg)	 	“Receivables” shall mean all debts, claims and choses in action (including,
without limitation, Accounts and Chattel Paper) now or in the future due or owing to or
owned by the Corporation;
	 
	 	(hh)	 	“Receiver” shall mean any receiver appointed (whether pursuant to court order
or otherwise) as hereinafter contemplated or provided for, and shall include a
receiver, manager and a receiver manager;
	 
	 	(ii)	 	“SEC” means the United States Securities and Exchange Commission;
	 
	 	(jj)	 	“Secured Party” shall mean Talisman Energy Canada, and its successors and
permitted assigns;
	 
	 	(kk)	 	“Securities Commissions” means the securities commissions or securities
regulatory authorities in each of the provinces of Canada and the Yukon Territory, and
the SEC;
	 
	 	(ll)	 	“Security” shall mean the mortgages, charges and security interests referred to
in Section 5.1, created or intended to be created by this Debenture;
	 
	 	(mm)	 	“Specifically Mortgaged Lands” shall mean the lands described in Exhibit “1” to
Schedule A hereto, together with any and all lands which may now or hereafter be
pooled, unitized or otherwise combined therewith, and including all Oil Sands and other
hydrocarbons within, upon or under such lands;
	 
	 	(nn)	 	“Specifically Mortgaged Property” has the meaning ascribed thereto in Section
5.1(a);
	 
	 	(oo)	 	“Taxes” shall mean all ad valorem, property, occupation, gathering, pipeline,
regulating, windfall profit, severance, gross production, sales, GST, excise and other
taxes and governmental charges and assessments imposed upon the Corporation or its
assets excluding income taxes;
	 
	 	(pp)	 	“Transaction Documents” shall mean this Debenture, the Asset Transfer Agreement
and the Notes; and
	 
	 	(qq)	 	“Wells” shall mean the wells now or hereafter located on the Specifically
Mortgaged Lands.

	2.2	 	Industry Terms

     In this Debenture, words, phrases or expressions which are not defined herein, and which in
the usage or custom of the North American petroleum and natural gas industry have an accepted
meaning, shall have that meaning.

 

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	2.3	 	Time

     Unless clearly stated otherwise, all references to time in this Debenture shall refer to local
time in Calgary, Alberta.

	2.4	 	Schedules

     The following schedules which are appended hereto are incorporated into and are part of this
Debenture, by this reference, as fully as though contained in the body of this Debenture:

	 	Schedule A  	— 	Specifically Mortgaged Property,

Specifically Mortgaged Lands and 

Oil Sands Leases
	 
	 	Schedule B 	— 	Intellectual Property

	2.5	 	References

     Whenever any provision of any schedule to this Debenture conflicts with any provision in the
body of this Debenture, the provisions of the body of this Debenture shall prevail. References
herein to a schedule shall mean a reference to a schedule to this Debenture.

	2.6	 	Headings

     The division of this Debenture into table of contents, articles, sections, subsections,
paragraphs and sub-paragraphs and the provision of headings for all or any of them is for
convenience of reference only and shall not affect the interpretation of this Debenture.

	2.7	 	Currency

     Unless otherwise specified herein, all references to currency are to lawful money of Canada
and all payments contemplated hereby shall be in the currency of Canada.

	2.8	 	Usage

     In this Debenture, unless there is something in the subject matter or context inconsistent
therewith:

	 	(a)	 	words importing the singular shall include the plural and vice versa;
	 
	 	(b)	 	words importing gender shall include the masculine, feminine and neuter
genders; and
	 
	 	(c)	 	references to any statute shall extend to any orders-in-council or regulations
passed under and pursuant thereto, or any amendment or re-enactment of such statute,
orders-in-council or regulations, or any statute, orders-in-council or regulations
substantially in replacement thereof.

 

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	2.9	 	Knowledge or Awareness

     In this Debenture, the stated knowledge, information, belief or awareness of the Corporation
consists only of the actual knowledge or awareness, as the case may be, of the current officers and
managers of the Corporation whose normal responsibilities relate to the matter in question in the
course of their normal duties after due enquiry, and does not include knowledge, information or
belief and awareness of any other Person or Persons or any constructive or imputed knowledge. The
Corporation does not have any obligation to make inquiry of third parties or the files and records
of any third party or public authority in connection with representations and warranties that are
made to its knowledge, information, belief or awareness.

ARTICLE 3

REPRESENTATIONS AND WARRANTIES

	3.1	 	Representations and Warranties

     The Corporation hereby represents and warrants to the Secured Party as follows:

	 	(a)	 	the Corporation is a corporation duly organized, validly subsisting and in good
standing under the laws of its jurisdiction of incorporation and duly registered,
validly subsisting and authorized to carry on business in the jurisdictions in which
the Specifically Mortgaged Property is located; the Corporation has all requisite
corporate authority and power to carry on its business and to own its properties and
assets;
	 
	 	(b)	 	the Corporation has taken all necessary corporate actions and has all requisite
capacity, power and authority to enter into this Debenture and the other Transaction
Documents, and to perform all other obligations of the Corporation under this Debenture
and the other Transaction Documents (including the issuance of securities upon the
conversion of the convertible Note);
	 
	 	(c)	 	this Debenture and the other Transaction Documents have been duly executed and
delivered by it and constitute legal, valid, binding and enforceable obligations of the
Corporation subject to the qualification that such enforceability may be subject to:

	 	(i)	 	bankruptcy, insolvency, fraudulent preference, reorganization
or other laws affecting creditor’s rights generally; and
	 
	 	(ii)	 	general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or law);

	 	(d)	 	the consummation by the Corporation of the transactions contemplated herein
will not, in any material respect, violate, be in breach of, or conflict with any of
the constating documents, charter, by-laws or other governing documents of the
Corporation or any provision of any material agreement or instrument to which the
Corporation is party or by which the Corporation, its shares or the Specifically
Mortgaged Property are bound, or any Applicable Law;

 

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	 	(e)	 	the Corporation meets all qualification requirements of all Governmental
Entities and under Applicable Laws to purchase, accept and hold the Specifically
Mortgaged Property;
	 
	 	(f)	 	none of the Securities Commissions, the Toronto Stock Exchange and NASDAQ has
issued any order which is currently outstanding preventing or suspending trading in any
securities of the Corporation, and the Corporation is not in default of any material
requirement of Applicable Securities Laws except where such default could not
reasonably be expected to have a Material Adverse Effect;
	 
	 	(g)	 	upon conversion of the Convertible Note in accordance with its terms, the
securities so issued will be validly issued as fully paid and non-assessable securities
of the Corporation;
	 
	 	(h)	 	this Debenture is granted in accordance with resolutions of the directors of
the Corporation and all necessary corporate action has been taken so as to authorize
and make the execution and delivery of this Debenture and the performance of the
obligations of the Corporation hereunder legal, valid and binding and enforceable by
the Secured Party against the Corporation and the Mortgaged Property in accordance with
its terms;
	 
	 	(i)	 	the Corporation confirms that, except for the Permitted Encumbrances,

	 	(i)	 	it has not assigned, mortgaged or in any way alienated or
encumbered all or any portion of its interest in the Specifically Mortgaged
Property; and
	 
	 	(ii)	 	it has good right and lawful authority to charge the Mortgaged
Property in accordance with Section 5.1;

	 	(j)	 	as of the date hereof, the address of the Corporation’s chief executive office
is Vancouver, British Columbia and the Corporation, through its subsidiaries, carries
on business only in the Province of Alberta, the States of California and Texas and in
the People’s Republic of China;
	 
	 	(k)	 	the Specifically Mortgaged Property is free and clear of all Encumbrances and
adverse claims created by, through or under the Corporation other than (i) the Security
and (ii) the Permitted Encumbrances; except for the Permitted Encumbrances, there is no
fact or circumstance in existence which could support the registration, exercise or
enforcement of any Encumbrance created by, through or under the Corporation against the
Mortgaged Property;
	 
	 	(l)	 	the Corporation has obtained all consents, waivers and other similar
instruments that may be required under the LaSalle Credit Agreement, the LaSalle
Guaranty and the LaSalle Security Agreement (and any instruments issued in connection
therewith) in connection with the execution and delivery of this Debenture and the
other Transaction Documents, and the performance of the Corporation’s obligations
hereunder and thereunder;

 

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	 	(m)	 	no default or Event of Default exists or would be reasonably expected to result
from the incurring of the Indebtedness by the Corporation or the execution, delivery or
performance of this Debenture and the other Transaction Documents;
	 
	 	(n)	 	upon the occurrence of an Event of Default the Secured Party shall be entitled
to quiet possession of the Specifically Mortgaged Property free from all Encumbrances
except for the Permitted Encumbrances subject to bankruptcy and insolvency laws and
other similar laws of general application affecting the enforcement of creditors; to
the discretion of the courts in granting equitable remedies, and to general principles
of law and equity; and
	 
	 	(o)	 	the Corporation is the owner of the Intellectual Property applications and
registrations (if any) described in Schedule “B”; to the best knowledge of the
Corporation, there are no outstanding claims of ownership by third parties in respect
of such registrations and applications; and all are valid and in good standing.

	3.2	 	Survival

     The representations and warranties contained in Section 3.1 shall continue until the
Indebtedness has been paid in full and shall survive the execution and delivery of this Debenture
and the provision of any obligation secured hereby.

ARTICLE 4

COVENANTS

	4.1	 	Covenants

     The Corporation covenants and agrees with the Secured Party:

	 	(a)	 	to pay the Indebtedness and other monies hereby secured in accordance with the
terms of this Debenture and the other Transaction Documents;
	 
	 	(b)	 	to advise the Secured Party promptly in reasonable detail of:

	 	(i)	 	any change in the location of the chief executive office of the
Corporation;
	 
	 	(ii)	 	any additional places where the Corporation is carrying on
business;
	 
	 	(iii)	 	any acquisition of any additional lands in connection with the
Specifically Mortgaged Property and any rights acquired in connection
therewith;

	 	(c)	 	to comply with each and every term, covenant, condition and agreement under the
Transaction Documents and to not do anything which would result in a breach of the
Transaction Documents that may have a Material Adverse Effect;

 

- 10 -

	 	(d)	 	that it will furnish to the Secured Party:

	 	(i)	 	annual audited consolidated financial statements of the
Corporation within ninety (90) days after each fiscal year end, together with
notes thereto as required by Canadian generally accepted accounting principles;
	 
	 	(ii)	 	such periodic reports (including any reserve reports it obtains
or receives in connection with all or any of the Specifically Mortgaged
Property) and filings the Corporation makes with securities commissions, if
any, that the Corporation is also obligated to provide to any of its
shareholders; and
	 
	 	(iii)	 	a quarterly report within forty-five (45) days after each
fiscal quarter end containing a copy of any reserve reports it obtains or
receives in connection with all or any of the Specifically Mortgaged Property,
and such other production, exploration, development, financial, environmental
and other information pertaining to the Specifically Mortgaged Property as
customarily prepared by the Corporation for its own purposes or for disclosure
to the public or which relates to a material matter in respect of the
Specifically Mortgaged Property,

	 	 	 	provided that the Corporation shall be deemed to have made such delivery of such
information if it shall have made timely disclosure of such information on “SEDAR”
(at the date of this Debenture located on the world wide web at
http://www.sedar.com);
	 
	 	(e)	 	that it will give the Secured Party prompt notice of any Event of Default or
any event which, with notice or lapse of time, or both, could reasonably be expected to
have a Material Adverse Effect or could reasonably be expected to constitute (with the
passage of time or otherwise) an Event of Default and specify in such notice the nature
of the event and the steps taken or proposed to be taken to remedy same;
	 
	 	(f)	 	that it will: (i) maintain its properties and title thereto (including the
Specifically Mortgaged Property); (ii) maintain, repair and keep in good working order
and condition its property and assets; (iii) carry on and continuously conduct its
business; and (iv) operate its hydrocarbon assets for which it is operator, in
accordance with good oilfield practices, accepted industry standards except to the
extent failure to do so would not reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect;
	 
	 	(g)	 	that it will comply with all Applicable Laws including, without limitation, all
Applicable Laws relating to the environment, and it will obtain and maintain in good
standing at all times those permits, licenses, instruments and other authorizations
which are required pursuant to Applicable Law to operate its business, including all
necessary environmental permits, except to the extent failure to do so would not
reasonably be expected to have, singly or in the aggregate, a Material Adverse Effect;

 

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	 	(h)	 	that it will provide to the Secured Party as soon as reasonably practicable
upon receiving a request therefor from the Secured Party, any and all reports, studies,
information and documents the Secured Party may reasonably request respecting the
environmental condition of the Specifically Mortgaged Land, or any liability the
Corporation may have for environmental claims or damage relating thereto;
	 
	 	(i)	 	that it will promptly upon acquiring knowledge thereof, notify the Secured
Party of the discovery of any contaminant or of any release of a contaminant into the
environment from or upon the Specifically Mortgaged Land which contaminant or release
could reasonably be expected to have a Material Adverse Effect;
	 
	 	(j)	 	that it will obtain and maintain in full force and effect such policies of
insurance in such amounts, with such deductibles and issued by insurers of recognized
standing covering the Specifically Mortgaged Property as are customarily maintained by
Persons engaged in the same or a similar business in the localities where its
properties and operations are located and it will deliver to the Secured Party upon
request evidence that all such policies of insurance are in full force and effect; the
loss payable clauses or provisions in said insurance policies insuring any of the
Specifically Mortgaged Property shall be endorsed in favor of and name the Secured
Party as the first loss payee, and such policies shall also name the Secured Party as
an “additional insured” and provide that the insurer will give at least thirty (30)
days prior notice of any cancellation to the Secured Party;
	 
	 	(k)	 	that it will file all income tax returns which are or will be required to be
filed, pay or make provision for payment of all taxes, levies (including without
limitation income taxes, GST, withholding taxes and property taxes), assessments,
deductions at source (including without limitation Canada Pension Plan and Employment
Insurance deductions, and Worker’s Compensation Board premiums, assessments, claims and
charges), crown royalties, severance taxes and all other financial obligations
(including interest and penalties) to any Governmental Entity, to any regulatory
authority or agency, and to any other Person having similar lien rights which are or
will become due and payable, and provide adequate reserves in accordance with Canadian
generally accepted accounting practices for the payment of any of the aforementioned
items if the payment thereof is being contested, with concurrent notice thereof to the
Secured Party of such contest;
	 
	 	(l)	 	that it will defend the Specifically Mortgaged Property from all adverse claims
where the failure to do so could reasonably be expected to have, singly or in the
aggregate, a Material Adverse Effect;
	 
	 	(m)	 	that it will forthwith notify the Secured Party of the receipt by the
Corporation or any agent or trustee on its behalf, of any notification respecting a
pending or actual refusal, variation, rescission or cancellation of any of the leases
(including the Oil Sands Leases), permits, licenses, approvals, consents or inspections
required by or relating to the Specifically Mortgaged Property if any such refusal,
variation, rescission or cancellation could reasonably be expected to have, singly
or in the aggregate with any other refusal, variation, rescission or cancellation, a
Material Adverse Effect;

 

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	 	(n)	 	that it will perform all obligations under all leases (including the Oil Sands
Leases), title documents, licenses, permits, contracts, agreements and other
instruments relating to the Specifically Mortgaged Property, including payment of
rentals, royalties, taxes or other charges in respect thereof which are necessary to
maintain all such leases, title documents, licenses, permits, contracts and agreements
in good standing in all respects, except to the extent failure to do so would not have
a Material Adverse Effect;
	 
	 	(o)	 	that it will do all things reasonably requested by the Secured Party to protect
and maintain the Security and the priority thereof with respect to the Specifically
Mortgaged Property (as contemplated herein) in relation to other Persons; that it will
promptly cure any defects in the creation, issuance execution or delivery of this
Debenture or any other Transaction Documents; and that it will satisfy all claims and
charges which in the reasonable opinion of the Secured Party might prejudice, impair or
otherwise have a Material Adverse Effect on any of the Specifically Mortgaged Property
or the Encumbrances thereon in favor of the Secured Party;
	 
	 	(p)	 	that it will keep and maintain proper books of account and records covering its
business and affairs respecting the Specifically Mortgaged Property in accordance with
generally accepted industry standards except to the extent failure to do so would not
have a Material Adverse Effect;
	 
	 	(q)	 	that it will forthwith notify the Secured Party of:

	 	(i)	 	any actual, pending or threatened exercise of any Encumbrance
against the Corporation or any of its property or assets, including any actual,
pending or threatened filing or registration of any builders or operators lien
and any certificate of lis pendens against the Specifically Mortgaged Property;
and
	 
	 	(ii)	 	any actual, pending or threatened action or proceeding against
the Corporation or any of its property or assets, which could reasonably be
expected to have, singly or in the aggregate, a Material Adverse Effect;

	 	(r)	 	that it will not, without the prior written consent of the Secured Party, which
consent may be withheld in the Secured Party’s sole discretion, sell, transfer, convey,
lease or otherwise dispose of any interest in and to the Specifically Mortgaged
Property; provided that, upon written notice, it shall be entitled assign an interest
to a wholly owned Affiliate (as such term is defined in the Asset Transfer Agreement)
or a partnership with respect to which the Corporation and one or more direct or
indirect wholly owned subsidiaries of the Corporation are the only partners thereof if,
and only if:

	 	(i)	 	the Corporation first pledges in favor of the Secured Party the
 shares, partnership interests and other equity interests in each such
Affiliate,

 

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	 	 	 	partnership, and subsidiary pursuant to a securities pledge agreement in
form and substance satisfactory to the Secured Party, acting reasonably; and

	 	(ii)	 	each such Affiliate, partnership and subsidiary:

	 	(A)	 	first agrees with the Secured Party and the
Corporation pursuant to an agreement in form and substance satisfactory
to the Secured Party, acting reasonably, to be jointly and severally
liable for all obligations and liabilities of the Corporation under
this Debenture and each other Transaction Document; such agreement
shall also confirm that notwithstanding any such assignment the
Corporation shall at all times remain responsible for all, and shall
not be released from any, obligations and liabilities under this
Debenture and each other Transaction Document and that the Corporation
shall do all such things required to cause such Affiliate, partnership
and subsidiary to perform all obligations and liabilities assumed by
them; and

	 	(B)	 	first executes and delivers to the Secured
Party a debenture and deposit agreement that is substantially in the
form of this Debenture and the associated deposit agreement, pursuant
to which each such Affiliate, partnership and subsidiary inter alia
grants to the Secured Party a first priority mortgage, charge and
security interest in all of its right, title, estate and interest in
and to the Specifically Mortgaged Property;

	 	(s)	 	that it will not provide, create, grant, assume or otherwise allow a security
interest or Encumbrance over any of the Specifically Mortgaged Property or any of its
right, title, estate or interest therein, except for the Permitted Encumbrances;

	 	(t)	 	that it will not be a party to any amalgamation, merger, plan of arrangement,
consolidation, non-arms length transaction, or any transaction not in the ordinary
course of business, that may have a Material Adverse Effect;

	 	(u)	 	that it will not enter into any other arrangements respecting the sale of any
hydrocarbons within, upon or under the Specifically Mortgaged Lands or any Products on
a fixed price basis for a term in excess of thirty (30) days, including forward sale
arrangements, commodity swap arrangements or other hedging arrangements (collectively,
“Hedging Arrangements”); and

	 	(v)	 	that it will not enter into any contract respecting Hedging Arrangements the
effect of which is to monetize or settle any amount that may at any time be owing under
any of such Hedging Arrangements for an amount that is less than the fixed amounts
payable under such Hedging Arrangements over the full term thereof.

     All covenants contained herein shall remain in force for the benefit of the Secured Party at
all times before, on and after the making of the date hereof.

 

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ARTICLE 5

SECURITY

	5.1	 	Mortgage, Charge and Security Interest

     As security for the payment of the Indebtedness and for the performance of any and all
indebtedness, liabilities, obligations, covenants, agreements and undertakings, present or future,
direct or indirect, absolute or contingent, matured or not, extended or renewed, of the Corporation
to the Secured Party, of whatsoever nature and kind and howsoever arising including, without
limitation, those arising under or in connection with the Transaction Documents, the Corporation
hereby:

	 	(a)	 	mortgages and charges as and by way of a fixed and specific mortgage and charge
to and in favour of the Secured Party, and grants to the Secured Party a security
interest, in and to all of the Corporation’s present and after—acquired right, title,
estate and interest in and to the Specifically Mortgaged Lands, the Oil Sands Leases,
all Oil Sands and other hydrocarbons produced from the Specifically Mortgaged Lands,
the Products, and all proceeds arising from or in connection with any of the foregoing,
together with any and all accretions and accessions to the Specifically Mortgaged
Lands, substitutions for the Oil Sands Leases, and any and all fixtures and attachments
as may be necessary for the effective use and operation of the Specifically Mortgaged
Lands, and including all of the Corporation’s present and after-acquired right, title,
estate and interest in and to: (i) the interests in the Specifically Mortgaged Lands
and the Oil Sands Leases as set forth in Exhibit “1” to Schedule “A” hereto; (ii) the
property, rights, interests and other items described in Schedule “A” hereto; (iii) the
Wells; and (iv) all Proceeds derived from any of the foregoing (collectively, the
“Specifically Mortgaged Property”);
	 
	 	(b)	 	mortgages, charges, grants and assigns to and in favour of the Secured Party as
and by way of a floating mortgage, charge and security interest all of its present and
after-acquired right, title, estate and interest in and to all real property that is
not subject to the fixed and specific mortgage, charge and security interest provided
for in Section 5.1(a), including proceeds thereof together with any and all accretions
and accessions thereto, substitutions therefor and any and all fixtures and attachments
and other property at any time or times placed upon or associated with, or as may be
necessary for the effective use and operation of, such property; and
	 
	 	(c)	 	mortgages, charges, grants, creates and assigns to and in favour of the Secured
Party as and by way of a fixed and specific mortgage, charge and security interest, and
the Secured Party hereby takes a continuing security interest, in all of the
Corporation’s present and after-acquired personal property of whatsoever nature and
kind and wheresoever situate including, without limitation, all of its right, title,
estate and interest in its Goods, Chattel Paper, Investment Property (other than the
Excluded Securities), Documents of Title, Instruments, Money, Intangibles, Receivables
and Intellectual Property, together with any and all other property and undertakings
not included in Section 5.1(a) or (b) above.

 

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     For all purposes in this Debenture, the term “Mortgaged Property” shall mean and include all
present, after-acquired and future undertakings, property and assets of the Corporation, all as
described in Sections 5.1(a), (b) and (c).

	5.2	 	Last Day of Leases

     The Security shall not extend or apply to, and the Mortgaged Property shall not include, the
last day of the term of any lease or agreement therefor; however, the Corporation will hold such
last day in trust for the Secured Party and upon the enforcement of the Security the Corporation
will assign the same as directed by the Secured Party.

	5.3	 	Contractual Rights

     The Security shall not extend or apply to, and the Mortgaged Property shall not include, any
agreement, right, franchise, license or permit (the “Contractual Rights”) to which the Corporation
is a party or of which the Corporation has the benefit, to the extent that the creation of the
Security herein would constitute a breach of the terms of or permit any person to terminate the
Contractual Rights, but the Corporation shall hold its interest therein in trust for the Secured
Party, shall use its best efforts to forthwith obtain such consent, and shall assign such
Contractual Rights to the Secured Party forthwith upon obtaining the consent of the other party or
parties thereto. To the best of the Corporation’s knowledge, as at the date hereof there are no
Contractual Rights which may by breached by the grant of the Security herein or which may permit
any person to terminate any Contractual Rights, nor is the Corporation required to obtain the
consent of any person in connection with the grant of the Security other than those consents
already obtained in connection with the LaSalle Credit Agreement.

	5.4	 	The Secured Party Not Liable

     Notwithstanding the provisions contained in this Article 5, the Corporation shall remain
liable to perform all of its duties and obligations in respect of the Mortgaged Property to the
same extent as if this Debenture had not been executed, and the exercise by the Secured Party of
any of its rights under this Debenture shall not release the Corporation from such duties and
obligations and the Secured Party shall have no liability for such duties or obligations by reason
of the execution and delivery of this Debenture.

	5.5	 	Valid Irrespective of Incurring Obligations

     The Security shall be effective whether or not the obligations hereby secured or intended to
be secured or any part thereof shall be extended, made or provided before or after or upon the date
of execution of this Debenture.

	5.6	 	Separate Security

     Each of the mortgage, charge and security interests contained in this Debenture is a separate
collateral security given in addition to and independent of the other.

 

- 16 -

	5.7	 	Amalgamations

     The Corporation acknowledges and agrees that in the event it amalgamates with any other
corporation or corporations it is the intention of the Corporation and the Secured Party that the
term “Corporation” when used herein shall apply to each of the amalgamating corporations and to the
amalgamated corporation, such that the Security shall secure the indebtedness of each of the
amalgamating corporations and the amalgamated corporation to the Secured Party at the time of
amalgamation and any indebtedness of the amalgamated corporation to the Secured Party thereafter
arising. The Security shall attach to all of the Mortgaged Property owned by each corporation
amalgamating with the Corporation, and by the amalgamated corporation, at the time of amalgamation,
and shall attach to any Mortgaged Property thereafter owned or acquired by the amalgamated
corporation when such becomes owned or is acquired.

	5.8	 	Guarantees

     This Debenture shall also operate as security for the due observance and performance of all
obligations of the Corporation under all guarantees made by the Corporation in favour of the
Secured Party whether the same are made prior to, concurrent with or after the date hereof, and for
the due payment of all monies that at any time and from time to time become payable by the
Corporation to the Secured Party pursuant to any and all such guarantees

ARTICLE 6

SECURED PARTY RIGHTS

	6.1	 	The Secured Party’s Right to Perform

	 	(a)	 	The Corporation agrees that if it fails punctually to perform any act or to
take any action under this Debenture or the other Transaction Documents which it is
required to perform or take or to pay timely any money which the Corporation is
required to pay under this Debenture or the other Transaction Documents, the Secured
Party, in the Corporation’s name or its own name, may (but shall not be obligated to)
perform or cause to be performed such act or take such action or pay such money, and
any expenses incurred by the Secured Party in regard thereto and any money so paid by
the Secured Party shall be payable by the Corporation to the Secured Party on demand,
shall bear interest from the date of the making of payment thereof by the Secured Party
until paid at the Interest Rate (with all provisions pertaining to the calculation and
payment of interest in this Debenture applying thereto) and shall form part of the
Indebtedness secured hereby. The Secured Party, upon making any such payment, shall be
subrogated to all of the rights of the Person receiving such payment. The exercise of
the privileges granted in this Section 6.1 shall in no way be considered or constitute
a waiver of the right of the Secured Party to at any time demand payment of the
Principal Sum, interest thereon and all other monies secured hereby, but is cumulative
of such right and all other rights herein given.

	 	(b)	 	The Corporation agrees that the Secured Party, in the Corporation’s name or its
own name, may (but shall not be obligated to) pay or satisfy all or any part of any
Encumbrance (other than a Permitted Encumbrance unless an Event of Default

 

- 17 -

	 	 	 	has occurred and is continuing) now existing or hereafter created or claimed on any
part of the Specifically Mortgaged Property or any amount secured thereby, where in
the Secured Party’s opinion such Encumbrance ranks, purports to rank or may be
capable of ranking in priority to or pari passu with the Security on any of the
Specifically Mortgaged Property or may impair the value to the Secured Party of the
Security, may impair in any way the Secured Party’s flexibility, discretion, rights
or options in regard to the Security or the enforcement of the same in respect of
any of the Specifically Mortgaged Property; and any amount so paid by the Secured
Party shall be payable by the Corporation to the Secured Party on demand, shall bear
interest from the date of the making of payment thereof by the Secured Party until
paid at the Interest Rate (with all provisions pertaining to the calculation and
payment of interest in this Debenture applying thereto), and shall form part of the
Indebtedness secured hereby. The Secured Party, upon making any such payment, shall
be subrogated to all of the rights of the Person receiving such payment.

	6.2	 	Payment of Costs

     The Corporation agrees to pay all costs, charges and expenses (including reasonable legal fees
on a solicitor and client basis) of, or incurred by the Secured Party in connection with the
filing, recording and registration of this Debenture and the Security, the collection of the
Indebtedness, the enforcement of the Security against the Mortgaged Property or any part thereof
and the enforcement of other rights and remedies hereunder. All costs, charges and expenses so
incurred shall be payable by the Corporation to the Secured Party on demand, shall bear interest at
the Interest Rate (with all provisions pertaining to the calculation and payment of interest in
this Debenture applying thereto) and shall form part of the Indebtedness secured hereby.

	6.3	 	Further Security

     If and whenever and as often as the Secured Party may request, the Corporation will duly
execute and deliver all such supplementary and corrective instruments and other documents and
assurances as the Secured Party, acting reasonably, deems necessary or advisable for the perfection
and protection of the Security and the rights conferred or intended to be conferred upon the
Secured Party hereunder. The Corporation hereby authorizes the Secured Party to file such
financing statements, financing change statements and other documents including, without
limitation, this Debenture (or a caveat or notice in respect thereof) with the Alberta Department
of Energy or any other Governmental Entity or public registry, in respect of the Mortgaged Property
as the Secured Party may deem appropriate to perfect on an ongoing basis and continue the Security,
and to protect and preserve the Mortgaged Property. The Corporation hereby acknowledges that the
Secured Party is to be granted a first priority fixed and specific mortgage, charge and security
interest in and to the Specifically Mortgaged Property.

 

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ARTICLE 7

PARTIAL RELEASES

	7.1	 	Eminent Domain

     Should any interest in or any part of the Specifically Mortgaged Property be taken by the
exercise of the right of eminent domain or taken, purchased or expropriated by any Governmental
Entity or taken by a power reserved in any grant, the Secured Party may release the Specifically
Mortgaged Property so taken or purchased and shall be fully protected in so doing upon being
furnished with an opinion of its counsel to the effect that such Specifically Mortgaged Property
has been taken by exercise of the right of eminent domain or purchased or expropriated by any
Governmental Entity or a power reserved in any grant. The Proceeds of all Specifically Mortgaged
Property so taken, purchased or expropriated shall be paid over to the Secured Party to satisfy, in
whole or in part as the case may be, the Indebtedness.

	7.2	 	Partial Release

     No postponement or partial release or discharge of the Security in respect of all or any part
of the Mortgaged Property shall in any way operate or be construed so as to release and discharge
the Security in respect of the Mortgaged Property except as therein specifically provided, or so as
to release or discharge the Corporation from its liability to the Secured Party to fully pay and
satisfy the Indebtedness and all other monies due or remaining unpaid by the Corporation to the
Secured Party.

ARTICLE 8

SUPPLEMENTAL DEBENTURES AND MODIFICATIONS

	8.1	 	Supplemental Debentures

     At any time and from time to time, at the request of the Secured Party, the Corporation shall
execute supplemental debentures hereto for any purpose, including without limitation, to more
particularly describe the Mortgaged Property or to correct or amplify the description of the
Mortgaged Property, to better assure, convey and confirm unto the Secured Party any Mortgaged
Property, to update Schedule A or to more effectively subject any after-acquired property to the
Security.

	8.2	 	One Debenture

     Upon the execution of any supplemental debenture under this Article 8 or any other
modification agreed to by the Secured Party, this Debenture shall be modified in accordance
therewith, and each supplemental debenture or modification shall form a part of this Debenture for
all purposes and the Corporation shall be bound thereby.

 

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ARTICLE 9

DEFAULT

	9.1	 	Security Becomes Enforceable

     Without limiting in any way the right of the Secured Party to make demand for payment of the
Indebtedness and any other monies secured by this Debenture, at any time, the Indebtedness and any
other monies secured by this Debenture shall, at the option of the Secured Party, become
immediately due and payable and the Security shall become immediately enforceable and the Secured
Party may enforce or resort to the Security or any part or parts thereof and exercise any remedy
hereunder or under law or equity in each and every of the following events (each of such events
being hereinafter called an “Event of Default”):

	 	(a)	 	if the Corporation makes a default in the payment, in whole or in part, of the
Indebtedness or any other monies secured hereby (including without limitation any
principal or interest amounts payable pursuant to either of the Notes) when due and
payable to the Secured Party and such amount is not paid within two (2) Business Days
following notice from the Secured Party;
	 
	 	(b)	 	if the Corporation institutes proceedings for its winding up, liquidation or
dissolution or to be adjudicated a voluntary bankrupt, or consents to the filing of a
bankruptcy proceeding against it, or files a petition, application, proposal, answer or
consent seeking reorganization, readjustment, arrangement, composition, protection from
creditors or similar relief under any bankruptcy or creditor’s arrangement laws or any
other similar Applicable Law (or delivers or files any notice of an intention to do any
of the foregoing) or consents to the filing of any such petition, proposal, answer or
consent or consents to the appointment of a receiver, liquidator, trustee or assignee
in bankruptcy or insolvency of any of its property or makes an assignment for the
benefit of creditors, or admits in writing its inability to pay its debts generally as
they become due or if it takes any corporate action approving, consenting to or
authorizing any of the foregoing;
	 
	 	(c)	 	if a court having jurisdiction in the circumstances enters a decree or order
adjudging the Corporation bankrupt or insolvent, or grants a petition seeking
reorganization, readjustment, arrangement, composition, protection from creditors or
similar relief with respect to the Corporation under any bankruptcy law, creditor’s
arrangement law or any other similar Applicable Law, or if a decree or order of a court
having jurisdiction in the circumstances for the appointment of a receiver, liquidator,
trustee or assignee in bankruptcy or insolvency of any of the property of the
Corporation or for the winding up, dissolution or liquidation of its affairs, is
entered;
	 
	 	(d)	 	if, for a period of three (3) Business Days after written notice from the
Secured Party this Debenture shall for any reason be invalid or no longer in effect;
	 
	 	(e)	 	if any representation or warranty in this Debenture shall be false or
inaccurate in any material respect and is not remedied to the satisfaction of the
Secured Party within twenty (20) days after written notice of the same from the Secured
Party where such false or inaccurate representation or warranty could reasonably be
expected to have a Material Adverse Effect;

 

- 20 -

	 	(f)	 	if a final judgment or judgments (in respect of which all appeal periods have
expired) are obtained against the Corporation for an amount in excess of $500,000 in
the aggregate, and any or all of such judgments remain unsatisfied for a period of
thirty (30) days from the issuance thereof;
	 
	 	(g)	 	if a writ, execution or attachment or similar process is issued or levied
against the property of the Corporation in connection with any judgment or judgments
aggregating in excess of $500,000 and such writ, execution, attachment or similar
process is not released, bonded, satisfied, discharged, vacated or stayed within thirty
(30) days after its entry, commencement or levy;
	 
	 	(h)	 	default by the Corporation under any obligation (including without limitation
guaranteed obligations) to repay indebtedness for borrowed money when due (including
pursuant to the LaSalle Credit Agreement) other than those amounts so due which, in the
aggregate, are less than $500,000;
	 
	 	(i)	 	failure of the Corporation to cure or remedy any non-observance or
non-performance of any of the covenants set forth in Section 4.1 of this Agreement
within twenty (20) days after written notice of same from the Secured Party to the
Corporation; and
	 
	 	(j)	 	the Corporation ceases or proposes to cease carrying on business.

	9.2	 	Receiver Appointed by the Secured Party

     Upon the occurrence of an Event of Default that is continuing, the Secured Party may appoint
or reappoint by instrument in writing, any Person, except an officer or an employee of the Secured
Party, to be a Receiver of the Mortgaged Property or any part thereof (including any interest,
income or profits therefrom) and may remove any Receiver so appointed and appoint another in his
stead. Any such Receiver shall, so far as concerns responsibility for his acts, be deemed the
agent of the Corporation and not the Secured Party, and the Secured Party shall not be in any way
responsible for any misconduct, negligence, or nonfeasance on the part of any such Receiver, his
servants, agents or employees. The Secured Party may from time to time fix the Receiver’s
remuneration. Subject to the provisions of the instrument appointing him, any such Receiver shall
have power to take possession of the Mortgaged Property or any part thereof, to preserve its value,
to carry on or concur in carrying on, or cease the carrying on, all or any part of the business of
the Corporation and to sell, lease or otherwise dispose of or concur in selling, leasing or
otherwise disposing of the Mortgaged Property or any part thereof (in its existing condition or
after any repair, processing or preparation for disposition) in such manner, at such time or times
and place or places, for such consideration and upon such terms and conditions as to the Receiver
may seem reasonable including terms for deferred payment, upset, reserve bid or price.

 

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     The Receiver may seize, collect, realize, maintain, dispose of, enforce, repair, replace,
protect, preserve, substitute, prepare, process, release to third parties or otherwise deal with
(and exercise
the Corporation’s rights in) any Mortgaged Property in such manner, upon such terms and
conditions and at such time as it deems advisable without notice to the Corporation, including:

	 	(a)	 	to ask, demand, collect, sue for, recover, compromise, receive and give
acquittance and receipts for moneys due and to become due under or in connection with
the Mortgaged Property;
	 
	 	(b)	 	to require the Corporation to deliver possession of the Mortgaged Property at
such place or places as directed by the Receiver;
	 
	 	(c)	 	to receive, endorse and collect any drafts or other Instruments, Documents of
Title and Chattel Paper in connection with Section 9.2(a) above;
	 
	 	(d)	 	to file any claims or take any action or institute any proceedings which the
Receiver may deem to be necessary or desirable for the collection of the Mortgaged
Property or to enforce compliance with the terms and conditions of any contract or any
account; and
	 
	 	(e)	 	to perform the obligations of the Corporation hereunder and under any of the
other Transaction Documents.

     To facilitate the foregoing powers, any such Receiver may, to the exclusion of all others,
including the Corporation, enter upon, use and occupy all lands and premises owned or occupied by
the Corporation wherein the Mortgaged Property or any part thereof may be situate, maintain the
Mortgaged Property upon such premises, borrow Money on a secured or unsecured basis and use the
Mortgaged Property directly in carrying on the Corporation’s business or as security for loans or
advances or other credit to enable him to carry on the Corporation’s business or otherwise, as such
Receiver shall, in his discretion, determine. Except as may be otherwise directed by the Secured
Party, all amounts received from time to time by such Receiver in carrying out his appointment
shall be received in trust for and paid over to the Secured Party. Every such Receiver may, in
the discretion of the Secured Party, be vested with all or any of the rights and powers of the
Secured Party. The Secured Party may, either directly or through its agents or nominees, exercise
any or all of the powers and rights which could be available to a Receiver appointed pursuant to
the foregoing.

     Upon the occurrence of an Event of Default the Secured Party or any Receiver may commence and
proceed with any actions or judicial proceedings seeking such legal and/or equitable remedies as
the Secured Party or Receiver deems advisable to protect and enforce its rights hereunder and in
the Mortgaged Property, and may settle or adjust disputes and claims directly with debtors of the
Corporation for amounts and on terms that the Secured Party considers advisable.

	9.3	 	Receiver Appointed by the Court

     Upon the occurrence of an Event of Default that is continuing, the Secured Party may make
application to a court of competent jurisdiction for the appointment of a Receiver.

 

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	9.4	 	Consultant Appointed by the Secured Party

     If the Secured Party in good faith believes that (a) the prospect of payment of the
Indebtedness or the performance of any and all obligations, covenants, agreements and undertakings
of the Corporation to the Secured Party, or to any of them, is or is about to be impaired, or (b)
the Mortgaged Property or the Security is or is about to be placed in jeopardy, then, if an Event
of Default exists, the Secured Party may (without prejudice to any other remedies it may have from
time to time), on two (2) Business Days notice to the Corporation, engage a consultant or monitor
for the purposes of reviewing the Corporation’s businesses, affairs and prospects, and reporting to
the Secured Party on any matter relating thereto. The Corporation hereby authorizes any such
consultant or monitor so appointed to enter onto the business premises of the Corporation and any
other premises in which the Corporation is entitled to enter onto, and to inspect any of the
Corporation’s books, records, information systems or property for such purposes, and the
Corporation shall make available its senior officers and employees to assist such consultant or
monitor in performing its duties. The reasonable costs and expenses of such consultant shall be
for the account of the Corporation and shall be payable by the Corporation to the Secured Party on
demand and shall bear interest at the Interest Rate, calculated from the date incurred by the
Secured Party to the date paid by the Corporation and such amounts and such interest shall be
secured by the Security.

	9.5	 	Right of Possession, Collection, Sale, etc.

     Upon the occurrence of an Event of Default that is continuing, the Secured Party, subject to
Applicable Law, may take possession of, collect, demand, sue on, enforce, recover and receive the
Mortgaged Property or any part thereof and give valid and binding receipts and discharges therefor
and in respect thereof and, upon the occurrence of an Event of Default that is continuing, the
Secured Party may sell, lease or otherwise dispose of the Mortgaged Property or any part thereof
(in its existing condition or after any repair, processing, or preparation for disposition) in such
manner, at such time or times and place or places, for such consideration and upon such terms and
conditions as to the Secured Party may seem reasonable including terms for deferred payment,
credit, reserve bid or price. The Corporation acknowledges that the Secured Party or any Receiver
may take possession of the Mortgaged Property wherever it may be located and by any method
permitted by Applicable Law and the Corporation agrees upon request from the Secured Party or any
Receiver to assemble and deliver possession of the Mortgaged Property at such place or places as
directed.

	9.6	 	Retention of Mortgaged Property

     Upon the occurrence of an Event of Default the Secured Party may elect to retain all or any
Mortgaged Property in satisfaction of the Indebtedness. The Corporation may designate any part of
the Indebtedness to be satisfied by the retention of particular Mortgaged Property which the
Secured Party considers, acting reasonably, to have a net realizable value approximating the amount
of the designated part of the Indebtedness, in which case only the designated part of the
Indebtedness will be deemed to be satisfied by the retention of the particular Mortgaged Property.

 

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	9.7	 	Remedies under the PPSA

     In addition to those rights granted herein and in addition to any other rights the Secured
Party or any Receiver may have at law or in equity, the Secured Party shall have, both before and
after the occurrence of an Event of Default, all rights and remedies of a secured party under the
PPSA and the Receiver shall have all rights and remedies of a secured party under and to the extent
provided in the PPSA. Provided always, that the Secured Party or any Receiver shall not be liable
or accountable for any failure to exercise its remedies, take possession of, collect, enforce,
realize, sell, lease, or otherwise dispose of the Mortgaged Property or to institute any
proceedings for such purposes. Furthermore, neither the Secured Party nor any Receiver shall have
any obligation to take any steps to preserve rights against other parties to any Security,
Instrument or Chattel Paper whether or not in the Secured Party’s or Receiver’s possession and
shall not be liable or accountable for failure to do so.

	9.8	 	Specific Performance, Foreclosure, etc.

     Upon the occurrence of an Event of Default that is continuing, the Secured Party may with or
without taking possession or entry, proceed to enforce the Security by sale under judgment or order
in any judicial proceeding or by a suit or suits in equity or at law or otherwise whether for
specific performance of any covenant or agreement contained herein, judicial sale or for
foreclosure or for the enforcement of any other legal or equitable remedy available to enforce its
rights under this Debenture.

	9.9	 	Effect of Appointment of Receiver

     As soon as the Secured Party takes possession of any Mortgaged Property or appoints a
Receiver, all powers, functions, rights and privileges of the Corporation including any such
powers, functions, rights and privileges which have been delegated to directors, officers of the
Corporation or committees with respect to such Mortgaged Property will cease, unless specifically
continued by the written consent of the Secured Party or the Receiver.

	9.10	 	Costs and Expenses

     The Corporation agrees to pay all costs, charges and expenses reasonably incurred by the
Secured Party or any Receiver whether directly or for services rendered (including reasonable costs
of solicitors and auditors and other legal expenses and Receiver remuneration), in operating any
accounts of the Corporation with the Secured Party, in discharging or satisfying any Encumbrances
(other than any Permitted Encumbrances unless an Event of Default has occurred and is continuing)
upon the Mortgaged Property ranking in priority or pari passu to the Security, borrowings, Taxes
and other outgoings affecting the Mortgaged Property, in preparing or enforcing the Security, in
taking custody of, holding, preserving, repairing, processing, preparing for sale, lease or other
disposition and selling, leasing or otherwise disposing of the Mortgaged Property, in carrying on
the business of the Corporation and in enforcing or collecting the Indebtedness; and the
Corporation further agrees that all such costs, charges and expenses, together with any amounts
owing as a result of any borrowing by the Secured Party or any Receiver, as permitted hereby, shall
be a first and prior charge on the proceeds of realization, collection or disposition of the
Mortgaged Property and shall be secured hereby.

 

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	9.11	 	Notice

     The Secured Party will give the Corporation such notice or notices, if any, with respect to
the disposition of the Mortgaged Property as may be required by the PPSA.

	9.12	 	Power of Attorney

     Upon the occurrence of an Event of Default that is continuing, the Receiver or the Secured
Party shall have power to make any sale, lease or other disposition of the Mortgaged Property as
contemplated above in the name and on behalf of the Corporation or otherwise and the Receiver or
any officer from time to time of the Secured Party is hereby appointed the irrevocable attorney of
the Corporation (with full powers of substitution and delegation) for the purpose of making any
such sale, lease or other disposition and of executing agreements or documents and taking such
action required to complete the same. Each power of attorney in this Debenture is coupled with an
interest.

	9.13	 	Remedies Cumulative, Waiver of Defaults

     No right, power or remedy herein conferred upon or reserved to the Secured Party is intended
to be exclusive of any other right, power or remedy or remedies, and each and every right, power
and remedy shall, to the extent permitted by law, be cumulative and shall be in addition to every
other right, power or remedy given hereunder or now or hereafter existing at law or in equity. The
Secured Party shall have the power to waive any Event of Default, provided no such waiver shall be
effective unless made in writing and shall not constitute a waiver of any subsequent Event of
Default (whether similar or dissimilar). No delay or omission of the Secured Party in the exercise
of any right, power or remedy accruing upon any Event of Default shall impair any such right, power
or remedy or shall be construed to be a waiver of any such Event of Default or an acquiescence
therein. Every right, power and remedy given hereunder to the Secured Party or under Applicable
Law may be exercised from time to time and as often as may be deemed expedient by the Secured
Party.

	9.14	 	Disposition of Amounts

     Subject to any applicable requirements of the PPSA and to the rights of the Secured Party or
any Receiver under this Debenture or the PPSA or other provisions of law to make deductions in
respect of costs, charges and expenses or to apply costs, charges and expenses as a first or prior
charge on the proceeds of realization, collection or disposition of the Mortgaged Property, all
amounts collected or received by the Secured Party or any Receiver pursuant to or in exercise of
any right it possesses with respect to the Mortgaged Property shall be applied in the following
order:

	 	(a)	 	first, to the payment in full of all fees of the Secured Party and all
out-of-pocket costs, fees and expenses (including reasonable legal fees on a solicitor
and his own client full indemnity basis) incurred by the Secured Party and any Receiver
or other enforcement agent appointed by the Secured Party or a court of competent
jurisdiction, as the case may be, in connection with the collection or enforcement of
the Indebtedness owed to the Secured Party, as applicable, the enforcement of the
security interest created hereby or the preservation of the Mortgaged Property;

 

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	 	(b)	 	second, to the payment in full of the Indebtedness; and
	 
	 	(c)	 	third, the balance, if any, will be paid, subject to Applicable Law, to the
Corporation.

     The Secured Party shall have no liability to the Receiver for the Receiver’s remuneration,
costs, charges or expenses.

	9.15	 	Collection of Accounts

     Upon the occurrence of an Event of Default that is continuing, the Secured Party may notify
all or any Account Debtors of the Security and may also direct such Account Debtors to make all
payments on Accounts, Chattel Paper and Instruments forming part of the Mortgaged Property to the
Secured Party. The Corporation acknowledges that any payments on Accounts, Chattel Paper and
Instruments forming part of the Mortgaged Property or other Proceeds of the Mortgaged Property
received by the Corporation from Account Debtors or other Persons, after notification of this
Security to Account Debtors shall be received and held by the Corporation in trust for the Secured
Party and shall be turned over to the Secured Party forthwith upon request. Nothing contained in
this Section 9.15 shall or shall be deemed to have the effect of making the Secured Party
responsible to ascertain the Account Debtors or for the collection of any such accounts or amounts,
nor shall the Secured Party, by reason of this Section 9.15 or by reason of any steps, actions,
notices or other proceedings, taken or given to enforce such rights be or be deemed to be a
mortgagee in possession of the Mortgaged Property or any part thereof nor be liable or accountable
for any monies except those actually received.

	9.16	 	Trust During Stay

     The Corporation acknowledges that if a stay of proceedings is issued against the Corporation
pursuant to the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangements Act
(Canada) or otherwise, the Secured Party would be irreparably harmed and materially prejudiced if
any Proceeds of the Mortgaged Property were used for any purpose other than the repayment of the
Indebtedness and any other amounts secured hereby, and the Corporation hereby acknowledges and
agrees that, without limiting the operation of Section 9.14 hereof, any Proceeds of the Mortgaged
Property received by the Corporation while such stay is in effect shall be received and held by the
Corporation in trust for the Secured Party.

	9.17	 	Rights of Third Parties

     No person dealing with the Secured Party or its agents or any Receiver shall be concerned to
inquire whether the Security has become enforceable, or whether the powers which the Secured Party
or its agents or any Receiver is purporting to exercise have become exercisable, or whether any of
the Indebtedness remains outstanding or is due, or as to the necessity or expediency of the
stipulations and conditions subject to which any sale shall be made, or otherwise as to the
propriety or regularity of any sale or of any other dealing by the Secured Party or its agents or
any Receiver with the Mortgaged Property or any part thereof or to see to the application of any
money paid to the Secured Party or its agents or any Receiver, and, in the absence of fraud on the
part of such person, such dealings shall be deemed, as regards the safety and protection of such
person, to be within the powers hereby conferred upon the Secured Party or its agents or any
Receiver and to be valid and effective accordingly.

 

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	9.18	 	Judgment Against the Corporation

     The Corporation covenants and agrees with the Secured Party that, in the case of any judicial
or other proceeding to enforce the Security, judgment may be rendered against it in favour of the
Secured Party, for any amount which may remain due in respect of the Indebtedness and for any other
amount for which the Corporation may be liable hereunder, after the application to the payment
thereof of the proceeds realized hereunder. The covenant of the Corporation to pay interest at the
Interest Rate shall not merge in any such judgment and such judgment shall, to the extent permitted
by Applicable Law, bear interest at the Interest Rate until such judgment and all interest thereon
has been paid in full.

	9.19	 	Conflict with Laws

     If the law of any Province or Territory of Canada within which any foreclosure, enforcement or
sale hereunder is to be conducted shall provide for different or additional requirements than those
specified herein as prerequisites to or incidental to such foreclosure, enforcement or sale of or
under the security hereby constituted or any part thereof, then and in that event the laws of such
Province or Territory shall be deemed to have been set forth herein at length, and any conflicting
provisions hereof shall be disregarded, and the method of foreclosure, enforcement or sale of or
under the Security, required by any such laws shall, insofar as may be necessary, be substituted
herein as the method of foreclosure, enforcement or sale in lieu of that set forth above.

	9.20	 	Insolvency Proceedings

     The Corporation shall have the following obligations with respect to insolvency proceedings:

	 	(a)	 	the Corporation shall not commence any insolvency proceedings which would have
the effect of staying or otherwise delaying or restricting in any way the rights of the
Secured Party or under which the Secured Party would be an affected creditor in any
other respect;
	 
	 	(b)	 	if the Corporation seeks the appointment of a trustee or monitor in any
insolvency proceedings, the proposed appointee shall be subject to the Secured Party’s
prior approval;
	 
	 	(c)	 	in the case of any insolvency proceedings, the Corporation does hereby and will
consent to an application by the Secured Party to a court of competent jurisdiction for
an order to appoint an interim receiver pursuant to the provisions of the Bankruptcy
and Insolvency Act (Canada) or a similar official appointed under similar legislation
of any other jurisdiction;
	 
	 	(d)	 	if the exercise of any of the Secured Party’s rights are stayed or otherwise
delayed or restricted in any way pursuant to any insolvency proceedings, the
Corporation

 

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	 	 	 	does hereby and will consent to an application by the Secured Party to a court of
competent jurisdiction for an order to lift the stay or other restrictions; and
	 
	 	(e)	 	in the case of any commencement by the Corporation of any insolvency
proceeding, the Corporation hereby authorizes and consents (to the extent not already
previously done by the Corporation and without any requirement for any notice or demand
whatsoever) to the Secured Party notifying and directing all debtors of the Corporation
to make payment to the Secured Party directly and the Corporation acknowledges,
confirms and agrees that such amounts shall be the sole and exclusive property of the
Secured Party, that any such actions, in and of itself, shall not constitute or be
regarded in any way as an enforcement of any of the Secured Party’s security or
remedies and that in the event that, notwithstanding the above, any amounts are
received by the Corporation, such amounts shall be, and shall be deemed to be, held
separate and apart and in trust for the exclusive benefit of the Secured Party.

ARTICLE 10

DEFEASANCE

	10.1	 	Defeasance

     If the Corporation shall pay indefeasibly and in full the Indebtedness, and all other sums
secured by this Debenture in the manner and upon the terms and conditions hereinbefore or elsewhere
provided or permitted then and in that case the estate, right, title and interest of the Secured
Party hereunder shall cease and determine and all the Mortgaged Property shall revert to the
Corporation or to whomsoever may be entitled thereto, and the Secured Party shall execute,
acknowledge and deliver to the Corporation, at the Corporation’s expense, a release or reconveyance
without warranty of all the Mortgaged Property then held hereunder, or such other instruments as
may be necessary or appropriate therefor, and shall assign or cause to be assigned and delivered to
the Corporation all documents pledged by it under this Debenture, or any debenture supplemental
hereto.

ARTICLE 11

SEVERABILITY

	11.1	 	Severability

     All rights, remedies, and powers provided herein may be exercised only to the extent that the
exercise thereof does not violate Applicable Law and all the provisions of this Debenture are
intended to be subject to Applicable Law and to be limited to the extent necessary so that they
will not render this Debenture invalid, unenforceable or not entitled to be recorded, registered or
filed under the provisions of any Applicable Law. Any provision hereof contrary to Applicable Law
or unenforceable under Applicable Law shall be deemed to be ineffective and shall be severable from
and shall not invalidate any other provision of this Debenture.

 

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ARTICLE 12

NOTICES

	12.1	 	Notices

     All statements, invoices, notices, requests, demands, instructions and other communications
required or permitted to be given hereunder shall be in writing and shall be delivered by personal
delivery or by transmittal by telecopy or other electronic means of communication addressed to the
Corporation or the Secured Party as follows:

	 	 	 	If to the Corporation, addressed to:

	 	 	 	Ivanhoe Energy Inc.

654 – 999 Canada Place

Vancouver, BC V6C 3E1

Attention: Corporate Secretary

Fax No.: (604) 682-2060
	 
	 	 	 	If to the Secured Party, addressed to:
	 
	 	 	 	Talisman Energy Canada

2000 – 888 3rd Street SW

Calgary, AB T2P 5C5
	 
	 	 	 	Attention: Executive Vice President, Legal

Fax No.: (403) 231-3633

or to such other address or telecopy number as either the Corporation or the Secured Party may
designate as to itself by notice to the other. Any statement, notice, demand or other
communication made or given by personal delivery or by telecopier or other electronic means of
communication during normal business hours at the place of receipt prior to 5:00 p.m. (Calgary
time) on a Business Day shall be conclusively deemed to have been made or given at the time of
actual delivery or transmittal on such Business Day; otherwise they shall be deemed delivered on
the next following Business Day. Each notice or communication given by the Corporation or the
Secured Party hereunder shall be binding on it and shall not be revocable without the consent of
the other.

ARTICLE 13

ASSIGNMENTS

	13.1	 	Assignments

     Except as provided herein and in the other Transaction Documents, neither the Corporation nor
the Secured Party shall assign, mortgage, charge or grant a security interest in the Corporation’s
interest and obligations in and under this Debenture or other Transaction Documents without the
prior written consent of the other party, not to be unreasonably withheld; provided that, nothing
shall in any way limit or restrict the right of the Secured Party to:

 

- 29 -

	 	(a)	 	assign, mortgage, charge or grant a security interest in the Secured Party’s
interest in and under this Debenture in whole or in part to a financial institution, or
to such other entity consented to by the Corporation in writing, such consent not to be
unreasonably withheld;

	 	(b)	 	assign this Debenture and all of its rights hereunder to Talisman Energy Inc.
or any of its direct or indirect wholly owned subsidiaries.

ARTICLE 14

INDEMNITIES

	14.1	 	No Liability for Error of Judgment

     The Secured Party shall not be liable for any error of judgment or act done by it in good
faith, or be otherwise responsible or accountable under any circumstances whatsoever, except for
its gross negligence or wilful misconduct. The Secured Party shall have the right to rely on any
instrument, document or signature authorizing or supporting any action taken or proposed to be
taken by the Secured Party hereunder, believed by the Secured Party in good faith to be genuine.
All moneys received by the Secured Party shall, until used or applied as herein provided, be held
in trust for the purposes for which they were received, but need not be segregated in any manner
from any other moneys (except to the extent required by Applicable Law), and the Secured Party
shall be under no liability for interest on any moneys received by it hereunder. The Corporation
hereby ratifies and confirms any and all acts which the Secured Party or its successors or
substitutes shall do lawfully by virtue hereof.

	14.2	 	No Liability in Receivership

     Neither the Secured Party nor any Receiver nor any agent of the Secured Party shall: (i) be
responsible or liable for any debts contracted by it, for damages to persons or property, for
salaries or for non-fulfillment of contracts during any period when the Secured Party or any
Receiver shall manage or be in possession of any security interest created hereby; (ii) be liable
to account as mortgagee in possession or for anything except actual receipts or be liable for any
loss on realization or for any default or omission for which a mortgagee in possession may be
liable; (iii) nor be bound to do, observe or perform or to see to the observance or performance by
the Corporation of any obligations or covenants imposed upon the Corporation; (iv) nor in the case
of any Chattel Paper, Security or Instrument, be obligated to preserve rights against any other
persons. The Corporation hereby waives any law permitted to be waived by it which imposes higher
or greater obligations upon the Secured Party or any Receiver than aforesaid.

	14.3	 	Indemnity respecting Payments

     The Corporation hereby indemnifies and agrees to hold harmless the Secured Party and its
successors and assigns from and against all liabilities, actions, claims, demands, judgments, costs
(including all reasonable legal fees and expenses whatsoever), charges and reasonable legal fees
that may be made against or incurred by the Secured Party as a result of, in respect of or arising
out of any claim, action or charge that the Secured Party has received funds that are or may be the
property of or be claimed by a third person, either before or after the payment in full of the
Principal Sum, interest and other monies secured hereby and either before or after the

 

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release either wholly or partially of the mortgage, charge and security interest created
hereby except where the Secured Party has received such funds as a result of the gross negligence
or wilful misconduct of the Secured Party or any Receiver; and the Secured Party shall have the
right to defend against any such claims, actions and charges, and claim from the Corporation all
expenses incurred by the Secured Party in connection therewith, including without limitation all
reasonable legal fees and expenses whatsoever that may be paid by the Secured Party in connection
therewith. This covenant and indemnity shall survive the repayment of the Indebtedness and shall
remain in full force and effect for the benefit of the Secured Party notwithstanding the full or
partial release of the mortgage, charge and security interest created hereby, or any foreclosure in
respect thereof. If any such claim, action or charge as aforesaid is made after the full or
partial release of the mortgage, charge and security interest created hereby, or any foreclosure in
respect thereof, such mortgage, charge and security interest shall automatically be reinstated
without any further action by the Corporation or the Secured Party, as if and as though such
security interest had never been released or foreclosed, and shall constitute security for all such
amounts claimed by the Secured Party pursuant to this indemnity.

	14.4	 	General Indemnity

     The Corporation hereby indemnifies and agrees to save harmless the Secured Party and every
Receiver from and against any and all liabilities, actions, claims, demands, judgments, costs
(including all reasonable legal fees and expenses whatsoever), charges, fines, penal or
administrative sanctions made against, suffered or incurred by the Secured Party or any Receiver as
a result of, in respect of or arising out of the taking of this Debenture, save and except for
gross negligence and willful misconduct of the Secured Party; and the Secured Party and every
Receiver shall have the right to defend against any such liabilities, actions, claims, demands,
charges and sanctions and to claim from the Corporation all expenses incurred in connection
therewith (including all reasonable legal fees and expenses whatsoever). It is understood and
agreed that the covenants and conditions of this indemnity shall remain in full force and effect
notwithstanding the payment or release, either partially or wholly, of the mortgage, charge and
security interest created hereby, or any foreclosure in respect thereof.

ARTICLE 15

GENERAL

	15.1	 	Enurement

     This Debenture shall be binding upon and shall ensure to the benefit of the Secured Party and
its successors and assigns and shall be binding upon the Corporation and its permitted successors
and assigns.

	15.2	 	Waiver

     No waiver by the Secured Party of any provision, or the breach of any provision, of this
Debenture shall be effective unless it is contained in a written instrument signed by authorized
officers or representatives of the Secured Party. Such written waiver shall effect only the matter
specifically identified in the instrument granting the waiver and shall not extend to any other
matter, provision or breach.

 

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	15.3	 	Waiver of Presentment

     The Corporation hereby expressly waives demand for payment, presentment, protest and notice of
dishonor of this Debenture. Any failure or omission by the Secured Party to present this Debenture
for payment, protest or provide notice of dishonor will not invalidate or adversely affect in any
way any demand for payment or enforcement proceeding taken under this Debenture.

	15.4	 	Delay Not Waiver

     The failure of the Secured Party to give notice to the Corporation or to take any other steps
in exercising any right, or in respect of the breach or nonfulfillment of any provision of this
Debenture, shall not operate as a waiver of that right, breach or provision nor shall any single or
partial exercise of any right preclude any other or future exercise of that right or the exercise
of any other right, whether in law or in equity or otherwise.

	15.5	 	Further Assurances

     The Corporation shall at its own cost and expense, from time to time and without further
consideration, execute or cause to be executed all documents and take such regulatory or other
actions which are necessary or desirable for the better assuring, mortgaging, charging,
transferring, assigning, granting, delivering and confirming unto the Secured Party the Mortgaged
Property, or any part thereof, and for the better accomplishing and effectuating the purpose of
this Debenture.

	15.6	 	Governing Law

     This Debenture shall be governed by and construed according to the laws of the Province of
Alberta and the laws of Canada applicable therein and the Corporation shall submit and attorn to
the non-exclusive jurisdiction of the Alberta courts, without prejudice to the rights of the
Secured Party to take proceedings in any other jurisdictions.

	15.7	 	Pledge

     This Debenture may be assigned, deposited and pledged by the Corporation as security for the
payment and performance by the Corporation of its present and future obligations, indebtedness and
liabilities to the Secured Party or to any of them, of whatsoever nature and kind. This Debenture
shall not be deemed to have been redeemed by reason of the account of the Corporation having ceased
to be indebted while this Debenture was so assigned, deposited or pledged and no payment shall
reduce the amount owing or payable under this Debenture unless specifically appropriated to and
noted on this Debenture at the time of payment.

	15.8	 	Time is of the Essence

     Time is of the essence hereof.

 

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	15.9	 	No Set-off or Counterclaim

     The Corporation agrees that all amounts payable by it hereunder will be paid and will be
assignable free from any right of set-off or counterclaim or equities between the Corporation and
the Secured Party.

	15.10	 	Additional Security

     The Corporation agrees that this Debenture is given in addition to and not in substitution for
any other security now held or hereafter acquired by the Secured Party and no payment to the
Secured Party shall constitute payment on account of the Indebtedness unless specifically so
appropriated in writing by the Secured Party. The taking of any action or proceedings or
refraining from so doing, or any other dealing with any other security for the Indebtedness shall
not release or affect the Security and the taking of the Security or any proceedings hereunder for
the realization of the Security shall not release or affect any other security held by the Secured
Party for the Indebtedness.

	15.11	 	Copy Received

     The Corporation acknowledges having received and retained a copy of this Debenture and waives
its right to receive a copy of any financing statement or financing change statement registered in
respect thereof.

	15.12	 	Dealings by Secured Party

     The Secured Party may grant extensions of time and other indulgences, take and give up
securities, accept compositions, grant releases and discharges, and otherwise deal with the
Mortgaged Property, the Corporation, debtors of the Corporation, sureties of the Corporation, and
others as the Secured Party may see fit, without prejudice to the Indebtedness and the rights of
the Secured Party to hold and realize upon the Security. The Secured Party has no obligation to
keep Mortgaged Property identifiable, or to preserve rights against other persons in respect of any
Mortgaged Property.

	15.13	 	No Subordination

     Nothing in this Debenture shall be construed as a subordination by the Secured Party of the
mortgages, charges and secured interests created hereby in and to any of the Mortgaged Property,
provided that the provisions of clause 13.1(a) of the Asset Transfer Agreement are acknowledged.

	15.14	 	Acknowledgement

     The Corporation, by executing this Debenture, hereby acknowledges and agrees that:

	 	(a)	 	value has been given by the Secured Party;
	 
	 	(b)	 	the Corporation has rights in the Mortgaged Property; and

 

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	 	(c)	 	notwithstanding that the mortgage, charge and security interest created
pursuant to Section 5.1(b) is stated to be a floating charge, the time for attachment
of the mortgage, charge and security interest created pursuant to this Debenture has
not been postponed and is intended to attach when this Debenture is signed by the
Corporation, and attaches at that time to property in which the Corporation then has
any right, title or interest and attaches to property in which the Corporation
subsequently acquires any right, title or interest at the time when the Corporation
first acquires such right, title or interest.

     IN WITNESS WHEREOF this Debenture is executed effective as of the day and year first above
written.

	 	 	 	 	 
	 	
IVANHOE ENERGY INC.

 	 
	 	Per:  	/s/  “Ian S. Barnett”
 	 
	 	 	Name:  	Ian S. Barnett 	 
	 	 	Title:  	Executive Vice-President,

Corporate Development and
Finance 	 
	 

 

SCHEDULE A

to this Debenture dated July 11, 2008

Specifically Mortgaged Property

The Specifically Mortgaged Property referred to in Section 5.1(a) to the Debenture to which this
Schedule “A” forms part includes all of the present and after-acquired right, title and interest of
the Corporation in and to:

	 	(a)	 	all Crude Bitumen, petroleum, natural gas and related hydrocarbons or minerals
in place or in storage within, upon or under the Specifically Mortgaged Lands (the
interest of the Corporation therein being represented to be not less than that set
forth in Exhibit “1” to this Schedule “A”);

	 	(b)	 	all rights, licences, agreements, leases, permits, servitudes, privileges,
easements, rights of way, rights of entry, rights of ingress and egress, and other
surface rights, governmental or administrative authorizations, licenses, permits and
consents and other rights now owned or hereafter acquired by the Corporation under
which the Corporation derives, holds or maintains the right to enter upon, occupy and
use the Specifically Mortgaged Lands and any other lands whatsoever used in connection
with operations relating to such lands, including without limitation the right to drill
for, produce, store, gather, treat, process, ship, or transport hydrocarbons and
associated waste products now or hereafter produced or allocated to the Specifically
Mortgaged Lands;

	 	(c)	 	all leases, licenses, permits, reservations, agreements, authorizations and
other instruments (including, without limitation, such as may be described in Exhibit
“1” attached hereto) under which the Corporation derives, holds or maintains rights in
and to the Specifically Mortgaged Lands or any Products, including agreements
respecting the right to drill for, produce, store, gather, treat, process, ship, or
transport hydrocarbons and associated waste products now or hereafter produced or
allocated to the Specifically Mortgaged Lands, and all rights, benefits, privileges and
advantages of the Corporation thereunder or derived therefrom;

	 	(d)	 	all the estate or interest of the Corporation in or to any of the said
hydrocarbons or minerals, rights, licences, permits and lands;

	 	(e)	 	all the right, title and interest of the Corporation in and to all surface and
subsurface machinery, apparatus, equipment, field facilities and other property and
assets of whatsoever nature and kind (including without limitation all wells, casing,
tubing, rods, pumps and pumping equipment, wellhead equipment, separators, flow lines,
pipelines, tanks, treaters, heaters, plans and systems to gather, treat, compress,
process and/or upgrade hydrocarbons, plants and systems to treat, dispose of or inject
water or other substances, power plants, poles, lines, transformers, starters,
controllers and machine shops) used, useful, or intended to be used in connection with
operations on or relating to the Specifically Mortgaged Lands, including with respect
to the

 

-2-

	 	 	 	production, injection, compression, treatment, processing, storage, upgrading,
measuring, gathering or transportation of hydrocarbons therefrom or allocated
thereto to the extent such property and assets constitute a fixture on or serving
the Specifically Mortgaged Property; and
	 
	 	(f)	 	all buildings, structures, improvements, expansions, erections, works and
fixtures now or hereafter brought, built, erected, constructed, placed or otherwise
situate on or serving the Specifically Mortgaged Lands;

and in particular, but without limitation, the rights and interests of the Corporation referred to
in Exhibit “1” hereto.

 

-3-

EXHIBIT 1 TO SCHEDULE A

to this Debenture dated July 11, 2008

Specifically Mortgaged Lands and Oil Sands Leases

 

-4-

SCHEDULE B

to this Debenture dated July 11, 2008

Intellectual Property

	 	 	 	 	 	 	 
	RTPTM Heavy Oil Upgrading Method and Product
	 	 	Patent # or	 	 	 	 
	Patent	 	Application #	 	Jurisdiction	 	Ownership
	Rapid Thermal
Processing of Heavy
Hydrocarbon
Feedstocks

	 	09/958,261 (Pending)
	 	United States
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	Kuwait
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	Libya
	 	Ivanhoe Energy Inc.

	 	 	 	 	 	 	 	 	 
	RTPTM Heavy Oil Upgrading Product
	 	 	Patent # or	 	 	 	 
	Patent	 	Application #	 	Jurisdiction	 	Ownership
	Products Produced
from Rapid Thermal
Processing of Heavy
Hydrocarbon
Feedstocks

	 	7,270,743	 	 	 	United States
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 	 	 
	 

	 	11/713,520	 	 	 	United States
	 	Ivanhoe Energy Inc.

	 	 	 	 	 	 	 
	Modified RTPTM Process — Upgrading Method
	 	 	Patent # or	 	 	 	 
	Patent	 	Application #	 	Jurisdiction	 	Ownership
	Modified Thermal
Processing of Heavy
Hydrocarbon
Feedstocks

	 	10/269,538 (Pending)
	 	United States
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	10/419,053 (Pending)
	 	United States
	 	Ivanhoe Energy Inc.

 

-5-

	 	 	 	 	 	 	 
	Low Resid Application
	 	 	Patent # or	 	 	 	 
	Patent	 	Application#	 	Jurisdiction	 	Ownership
	Methods and Systems
for Producing
Reduced Resid and
Bottomless Products
from Heavy
Hydrocarbon
Feedstocks

	 	12/046363

(Pending)
	 	United States
	 	Ivanhoe Energy Inc.
	 

	 

	 	08-8261

(Pending)
	 	Brazil
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	Canada
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	China
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	Columbia
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	Ecuador
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	EP
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	Eurasian Patent
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	479/KOL/2008

(Pending)
	 	India
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	p.00200800144

(Pending)
	 	Indonesia
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	52/2008

(Pending)
	 	Iraq
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	2008-61888

(Pending)
	 	Japan
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	Kuwait
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	3580/2008

(Pending)
	 	Libya
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	MX/A/2008/003534

(Pending)
	 	Mexico
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	42/2008

(Pending)
	 	Oman
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	455.2008
(Pending)
	 	Peru
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	(Pending)
	 	Saudi Arabia
	 	Ivanhoe Energy Inc.
	 
	 	 	 	 	 	 
	 

	 	2008-000463

(Pending)
	 	Venezuela
	 	Ivanhoe Energy Inc.PLEDGE AGREEMENT DATED JULY 11, 2008

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,

 

-2-

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.

 

-3-

	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.

 

-4-

	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.

 

-5-

	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.

 

-6-

	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”

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