LOAN AGREEMENT

 

 

THIS AGREEMENT, dated for reference the 9^th day of June, 2006, is made

 

VENTURE CAPITAL FIRST LLC, a company incorporated under the laws of the State of Nevada, having an office at Suite 3000, 700 West Georgia Street, Vancouver, British Columbia, V7Y 1A1

(hereinafter referred to as the “Lender”)

RANCHER ENERGY CORP., a company incorporated under the laws of the State of Nevada, having an office at Suite 1700, 1050 17^th Street, Denver, Colorado, USA, 90265

(hereinafter referred to as the “Borrower”)

 

WHEREAS the Borrower wishes to borrow and the Lender is willing to lend to the Borrower the sum of Five Hundred Thousand Dollars in US funds (US$500,000) on the terms hereinafter set out.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows:

 

Where used in this Agreement, the following words and phrases shall have the following meaning:

 

 

 

 

 

 

 

2.1	Governing Law

 

This Agreement is governed by the laws of the State of Nevada and the parties attorn to the non-exclusive jurisdiction of the courts of Nevada for the resolution of all disputes under this Agreement.

If any one or more of the provisions contained in this Agreement is found to be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein will not in any way be affected or impaired thereby.

 

 

This Agreement enures to the benefit of and is binding on the parties hereto and their respective successors and permitted assigns.

 

The division of this Agreement into sections, subsections, paragraphs and subparagraphs and the insertion of headings are for convenience of reference only and do not affect the construction or interpretation of this Agreement.

 

All statements of, or references to, dollar amounts in this Agreement means lawful currency of the United States of America.

 

The Lender agrees, on the terms and conditions set forth in this Agreement, to lend to the Borrower the sum of Five Hundred Thousand Dollars ($500,000).

 

Indebtedness of the Borrower to the Lender in respect of the Loan will be evidenced by the Note, which will be made by the Borrower to the Lender at the time funds are advanced, a copy of which form is attached hereto as Schedule “A”.

 

The Borrower will repay the Loan on or before December 9, 2006. The Loan will be subject to interest payable to the Lender at maturity at a rate of Six Percent (6%) per annum. The interest will be payable concurrently with repayment of the principal amount of the Loan. In the event the Loan is repaid on a date prior to the date of Maturity, interest will be paid on the principal amount up to the date the Loan is repaid.

The Borrower may repay the Loan at any time without penalty, bonus or charges.

During the term of the Agreement or upon maturity, the Lender will have the option to convert the Loan, or any portion thereof, into securities of the Company.

 

In the event the Lender wishes to convert the loan into shares, the shares will be offered at a price per share equal to the closing price of the Company’s shares on the OTC.BB market on the day preceding notice from the Lender of its intent to convert the Loan, or any portion thereof, into shares of the Company, subject only to the following:

 

 

 

A Notice of Conversion is attached hereto as Schedule “B”.

The Borrower will assume and pay all costs, charges and expenses, including reasonable solicitors’ costs, charges and expenses on a special costs basis, which may be incurred by the Lender in respect of this Agreement or the Lender’s Security or which may be incurred by the Lender in respect of any proceedings taken or things done by the Lender in connection therewith to collect, protect, realize or enforce the Lender’s Security.

The Borrower represents and warrants to the Lender that:

 

(a)	the Borrower is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada;

 

(b)	the Borrower has all requisite corporate power and authority to enter into this Agreement and to grant the Lender’s Security and to carry out the obligations contemplated herein and therein;

 

(c)	this Agreement and the Lender’s Security have been duly and validly authorized, executed and delivered by the Borrower and are valid obligations of it; and

 

(d)	no Event of Default and no event which, with the giving of notice or lapse of time would become an Event of Default, has occurred or is continuing.

 

All representations and warranties made herein will survive the delivery of this Agreement to the Lender and no investigation at any time made by or on behalf of the Lender shall diminish in any respect whatsoever its rights to rely on those representations and warranties. All statements contained in any certificate or other instrument delivered by or on behalf of the Borrower under or pursuant to this Agreement will constitute representations and warranties made by the Borrower thereunder.

The Borrower covenants and agrees with the Lender that, at all times during the currency of this Agreement, it will:

 

(a)	pay the Loan and all other monies required to be paid to the Lender pursuant to this Agreement in the manner set forth herein;

 

(b)	duly observe and perform each and every of its covenants and agreements set forth in this Agreement and the Lender’s Security;

 

(c)	provide the Lender with immediate notice of any Event of Default; and

 

(d)	do all things necessary to obtain and maintain the Lender’s Security in good standing and make payment of all fees and charges in respect thereto.

 

The Loan, costs and any other money owing to the Lender under this Agreement will immediately become payable upon demand by the Lender or, unless otherwise waived in writing by the Lender, in any of the following events:

 

(a)	if the Borrower defaults in any payment when due under this Agreement;

 

(b)	if the Borrower commits any default under any of the Lender’s Security instruments;

 

(c)

if the Borrower becomes insolvent or makes a general assignment for the benefit of its creditors, or if any order is made or an effective resolution is passed for the winding-up, merger or amalgamation of the Borrower or if the Borrower is declared bankrupt or if a custodian or receiver be appointed for the Borrower under the applicable bankruptcy or insolvency legislation, or if a compromise or arrangement is proposed by the Borrower to its creditors or any class of its creditors, or if a receiver or other officer with like powers is appointed for the Borrower;

 

 

 

(d)	if the Borrower defaults in observing or performing any other covenant or agreement of this Agreement on its part to be observed or performed and such default has continued for a period of seven (7) days after notice in writing has been given by the Lender to the Borrower specifying the default.

 

No failure on the part of the Lender in exercising any power or right hereunder will operate as a waiver of power or right nor will any single or partial exercise of such right or power preclude any other right or power hereunder. No amendment, modification or waiver of any condition of this Agreement or consent to any departure by the Borrower therefrom will be effective unless it is in writing signed by the Lender. No notice to or demand on the Borrower will entitle the Borrower to any other further notice or demand in similar or other circumstances unless specifically provided for in this Agreement.

 

Time is of the essence of this Agreement.

The parties to this Agreement will do, execute and deliver or will cause to be done, executed and delivered all such further acts, documents and things as may be reasonably required for the purpose of giving effect to this Agreement.

The Borrower may not assign this Agreement or its interest herein or any part hereof except with the prior written consent of the Lender.

This Agreement may be amended, waived, discharged, or terminated only by instrument in writing signed by the party against whom enforcement of the amendment, waiver, discharge or termination is sought.

 

This Agreement may be signed in counterpart and each such counterpart, whether in original or facsimile form, together shall constitute a true original and provide satisfactory evidence that this Agreement has been duly executed by the parties hereto.

 

IN WITNESS WHEREOF the Lender and the Borrower have executed and delivered this Agreement as of the day and year first written above.

_________________________________________________

Per: Mike Veldhuis, Director

 

_________________________________________________
Per:  John Works, President

 

 

 

 

to the Loan Agreement dated for reference the 9^th day of June, 2006

 

between Venture Capital First LLC and Rancher Energy Corp.

 

 

Principal Amount: US $500,000      

For value received, Rancher Energy Corp. (the "Borrower") hereby promises to pay to Venture Capital First LLC (the "Lender") the principal sum of Five Hundred Thousand Dollars in US funds (US$500,000) on the earlier of:

 

(i) December 9, 2006 :

 

(ii) any change of control of the Borrower ("control" being defined as ownership of or control of direction over, directly or indirectly, 50% or more of the outstanding voting securities of the Borrower); and

 

(iii) the occurrence of an Event of Default (as defined in the Loan Agreement between the Borrower and the Lender dated for reference June 9, 2006),

together with interest calculated at a rate of Six Percent (6%) per annum accruing on the outstanding principal amount, payable at maturity or upon repayment of the Loan. All payments under this promissory note will be made by cheque, bank draft or wire transfer (pursuant to wire transfer instructions provided by the Lender from time to time) and delivered to the Lender. All payments made by the Borrower will be applied first to interest and any other costs or charges owed to the Lender, then to principal.

The undersigned is entitled to prepay this promissory note, in whole or in part, without notice or penalty. The undersigned waives demand and presentment for payment, notice of non-payment, protest, notice of protest and notice of dishonor. This promissory note will be governed by and construed in accordance with the laws of the State of Nevada.

Dated: June 9, 2006.

 

_________________________________________________
Per: John Works, President

 

to the Loan Agreement dated for reference the 9^th day of June, 2006

 

between Venture Capital First LLC and Rancher Energy Corp.

 

TO: Rancher Energy Corp. (Company)

The undersigned Holder of a Loan in the amount of Five Hundred Thousand Dollars in US funds (US$500,000) hereby irrevocably elects to convert the said Loan (or $ ______________ principal thereof) into securities in accordance with the Terms and Conditions of the Loan Agreement and directs that the securities issuable and deliverable upon the conversion be issued and delivered to the address indicated below.

Dated: _______________________________________________________________	___________________________________________________________
____________________________________________________________	(Signature of Holder)
(Name of Holder)
____________________________________________________________
(Address of Holder)