COO Employment Agreement - Joseph Gasca

EMPLOYMENT AGREEMENT


THIS AGREEMENT made as of the 15th day of May 2006


BETWEEN:


IVANHOE ENERGY INC., a corporation continued under the laws
of the Yukon Territory, having an office at Suite 654 - 999
Canada Place, Vancouver, British Columbia, Canada, V6C 3E1


(the "COMPANY")


AND:


JOSEPH I. GASCA
(the "EXECUTIVE")


WHEREAS:


A. the Company is an international oil and gas company;


B. the Executive has extensive experience in the international oil and gas
industry;


C. the Company wishes to have the Executive serve as the President and Chief
Operating Officer of the Company; and


D. the parties hereto wish to enter into this agreement to set forth the
terms and conditions applicable to the employment of the Executive in
such capacity.


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


PART 1
DEFINITIONS AND INTERPRETATION


DEFINITIONS


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


"AGREEMENT" means this agreement and all amendments made to it by
written agreement between the Company and the Executive;


"BOARD" means the board of directors of the Company;


"BUSINESS DAY" means a day other than Saturday, Sunday or statutory
holiday in British Columbia;


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"CHANGE OF CONTROL" means an event occurring after the Commencement
Date pursuant to which:


(a) a merger, amalgamation, arrangement, consolidation,
reorganization or transfer takes place in which securities
of the Company possessing more than 50% of the total
combined voting power of the Company's outstanding voting
securities are acquired by a person or persons different
from the persons holding those voting securities immediately
prior to such event, and the composition of the Board
following such event is such that the directors of the
Company prior to the transaction constitute less than 50% of
the Board membership following the event;


(b) any person, or any combination of persons acting jointly or
in concert by virtue of an agreement, arrangement,
commitment or understanding acquires, directly or
indirectly, 50% or more of the voting rights attached to all
outstanding voting securities; or


(c) any person, or any combination of persons acting jointly or
in concert by virtue of an agreement, arrangement,
commitment or understanding acquires, directly or
indirectly, the right to appoint a majority of the directors
of the Company; or


(d) the Company sells, transfers or otherwise disposes of all or
substantially all of its assets, except that no Change of
Control will be deemed to occur if such sale or disposition
is made to a subsidiary or subsidiaries of the Company.


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


INTERPRETATION


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


(a) "THIS AGREEMENT" means this Agreement, including the
schedules hereto, and not any particular part, section or
other portion hereof, and includes any agreement, document
or instrument entered into, made or delivered pursuant to
the terms hereof, as the same may, from time to time, be
supplemented or amended and in effect;


(b) all references in this Agreement to a designated "part",
"section" or other subdivision or to a schedule are
references to the designated part, section, or other
subdivision of, or schedule to, this Agreement;


(c) the words "hereof", "herein", "hereto" and "hereunder" and
other words of similar import refer to this Agreement as a


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whole and not to any particular part, section or other
subdivision or schedule unless the context or subject matter
otherwise requires;


(d) the division of this Agreement into parts, sections and
other portions and the insertion of headings are for
convenience of reference only and are not intended to
interpret, define or limit the scope, extent or intent of
this Agreement or any provision hereof;


(e) unless otherwise provided herein, all references to currency
in this Agreement are to lawful money of the United States
of America and all amounts to be calculated or paid pursuant
to this Agreement are to be calculated in lawful money of
the United States of America;


(f) the singular of any term includes the plural, and vice
versa, and the use of any term is generally applicable to
any gender and, where applicable, a body corporate, firm or
other entity, and the word "or" is not exclusive and the
word "including" is not limiting whether or not non-limiting
language (such as "without limitation" or "but not limited
to" or words of similar import) is used with reference
thereto; and


(g) all references to "approval", "authorization", "consent" or
"direction" in this Agreement means written approval,
authorization, consent or direction.


PART 2
EMPLOYMENT


EMPLOYMENT


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


PERIOD OF ACTIVE EMPLOYMENT


2.2 In this Employment Agreement, "PERIOD OF ACTIVE EMPLOYMENT" shall mean the period beginning on the first date on which the Executive reports to work in Bakersfield, California, but in any case no later than August 1, 2006 (the "COMMENCEMENT DATE") and terminating on the date on which the first of the following occurs:


(a) three (3) years from the Commencement Date;


(b) the termination of the Executive's employment by the Company
for cause as provided in Section 6.1 hereof;


(c) the resignation of employment by the Executive pursuant to
Section 6.2;


(d) the termination of this Employment Agreement pursuant to
Section 6.3;
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(e) the Disability of the Executive; or


(f) the death of the Executive.


PART 3
POSITION


CAPACITY AND SERVICES


3.1 The Company shall employ the Executive as President and Chief Operating Officer of the Company. As such, the Executive shall be subject to the supervision of the Board ans shall perform such duties and have such authority as may from time to time be assigned, delegated or limited by the Board. The Executive shall perform these duties in accordance with the charter documents and by-laws of the Company, the instructions of the Board, Company policy, applicable law and the rules and policies of each stock exchange upon which securities of the Company may be listed from time to time. Notwithstanding the foregoing, it is anticipated that the Executive will be elected to the Board and designated the Chief Executive Officer of the Company prior to the date which is six (6) months from the Commencement Date. Prior to such election, the Executive will report to one or more members of the Board, as directed by the Board. In the event that the Executive is not elected to the Board and designated the Chief Executive Officer of the Company prior to the later of (a) January 1, 2007, or (b) the date which is six (6) months from the Commencement Date, the Executive, at his sole discretion, shall have the option to resign under the terms set forth in Section 6.2(b).


BOARD APPOINTMENT


3.2 The Executive's place of work will be the Company's offices in Bakersfield, California, but the Company may require the Executive to work at any place throughout the world on a temporary basis.


FULL TIME AND ATTENTION


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


CONFLICTS OF INTEREST


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


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PART 4
COMPENSATION AND BENEFITS


COMPENSATION


4.1 The base salary rate ("BASE SALARY") of the Executive shall be $310,000 per year payable monthly on the last business day of each month.


BENEFITS


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


INCENTIVE STOCK OPTIONS


4.3 Subject to all requisite corporate and stock exchange approvals, the Executive will receive incentive stock options exercisable to purchase up to 1,000,000 common shares of the Company pursuant to the Company's Employees' and Directors' Equity Incentive Plan dated June 19, 2003 (the "PLAN") at a price per common share determined in accordance with the terms of the Plan. The Executive's incentive stock options will vest and become exercisable in accordance with the following schedule:


(a) options in respect of an initial 250,000 common shares will
become exercisable as of the Commencement Date;


(b) options in respect of an additional 250,000 common shares
will become exercisable as of the first (1st) anniversary of
the Commencement Date;


(c) options in respect of an additional 250,000 common shares
will become exercisable as of the second (2nd) anniversary
of the Commencement Date; and


(d) options in respect of the remaining 250,000 common shares
will become exercisable as of the third (3rd) anniversary of
the Commencement Date.


Subject to earlier termination pursuant to the terms of the Plan, any of the Executive's incentive stock options remaining unexercised as of the tenth (10th) anniversary of the Commencement Date will, as of that date, expire and cease to be exercisable. In addition to the incentive stock options referred to above, the Executive will also be eligible to receive additi ...