RANCHER ENERGY CORP.

2006 STOCK INCENTIVE PLAN

This 2006 Stock Incentive Plan (the "Plan") is adopted in consideration for
services rendered and to be rendered to Rancher Energy Corp.

1. Definitions.

The terms used in this Plan shall, unless otherwise indicated or required by the
particular context, have the following meanings:

Agreement: The written agreement (and any amendment or supplement thereto)
between the Company and an Eligible Person designating the terms and conditions
of an Award.

Award: Any Option, Restricted Stock or Restricted Stock Unit, together with any
other right or interest granted to a Participant pursuant to this Plan.

Board: The Board of Directors of Rancher Energy Corp.

Change in Control: (i) The acquisition, directly or indirectly, by any person or
group (within the meaning of Section 13(d)(3) of the Securities Exchange Act of
1934) of the beneficial ownership of more than fifty percent of the outstanding
securities of the Company, (ii) a merger or consolidation in which the Company
is not the surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated, (iii) the
sale, transfer or other disposition of all or substantially all of the assets of
the Company, (iv) a complete liquidation or dissolution of the Company, or (v)
any reverse merger in which the Company is the surviving entity but in which
securities possessing more than fifty percent of the total combined voting power
of the Company’s outstanding securities are transferred to a person or persons
different from the persons holding those securities immediately prior to such
merger.

Code: The Internal Revenue Code of 1986, as amended, from time to time,
including regulations thereunder and successor provisions and regulations
thereto.

Common Stock: The Common Stock of Rancher Energy Corp.

Company: Rancher Energy Corp., a corporation incorporated under the laws of
Nevada, and any successors in interest by merger, operation of law, assignment
or purchase of all or substantially all of the property, assets or business of
the Company.

Continuous Status: The employment by, or relationship with, the Company or any
Related Company is not interrupted or terminated. The Board, at its sole
discretion, may determine whether Continuous Status shall be considered
interrupted due to personal or other mitigating circumstances, including leaves
of absence.

Date of Grant: The date on which an Option is granted under the Plan.

Eligible Person: Officers and Employees and other persons who provide services
to the Company or any Related Company, including directors of the Company or any
Related Company.

Employee: An Employee is an employee of the Company or any Related Company.

 
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Exchange Act: The Securities Exchange Act of 1934, as amended from time to time,
including rules thereunder and successor provisions and rules thereto.

Exercise Price: The price per share of Common Stock payable upon exercise of an
Option.

Fair Market Value: Fair Market Value of a share of Common Stock shall be the
closing price of a share on the date of calculation (or on the last preceding
trading day if shares were not traded on such date) if the shares are readily
tradable on a national securities exchange or other market system, and if the
shares are not readily tradable, Fair Market Value shall be determined, in good
faith, by the Option Committee.

Incentive Stock Options ("ISOs"): An Option granted with the intention that it
qualify as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.

Non-Incentive Stock Options ("Non-ISOs"): Options which are not intended to
qualify as "Incentive Stock Options" under Section 422 of the Code or any
successor provision thereto.

Option: The rights granted to an Eligible Person to purchase Common Stock
pursuant to the terms and conditions of an Agreement.

Option Committee: The Plan shall be administered by the Option Committee which
shall consist of the Board or a committee of the Board as the Board may time to
time designate.

Option Shares: The shares of Common Stock underlying an Option granted to an
Eligible Person.

Optionee: An Eligible Person who has been granted an Option.

Participant: A person who has been granted an Option, Restricted Stock or a
Restricted Stock Unit which remains outstanding, including a person who is no
longer an Eligible Person.

Related Company: Any subsidiary of the Company and any other business venture in
which the Company has a significant interest as determined in the discretion of
the Option Committee.

Restricted Stock: An Award of shares of Common Stock granted to a Participant
pursuant to Section 15, subject to any restrictions and conditions as are
established pursuant to such Section 15.

Restricted Stock Unit: A right, granted to a Participant pursuant to Section 15,
to receive Common Stock, cash or a combination thereof at the end of a specified
deferral period.

Rule 16b-3: Rule 16b-3, promulgated by the SEC under Section 16 of the Exchange
Act, as from time to time in effect and applicable to this Plan.

Securities Act: The Securities Act of 1933, as amended from time to time,
including rules thereunder and successor provisions and rules thereto.

2. Purpose and Scope.

(a) The purpose of this Plan is to advance the interests of the Company and its
stockholders by affording Eligible Persons an opportunity for investment in the
Company and the incentive advantages inherent in stock ownership in this
Company.

 
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(b) This Plan authorizes the Option Committee to grant Options to purchase
shares of Common Stock to Eligible Persons selected by the Option Committee
while considering criteria such as employment position or other relationship
with the Company, duties and responsibilities, ability, productivity, length of
service or association, morale, interest in the Company, recommendations by
supervisors, and other matters.

3. Administration of the Plan. The Plan shall be administered by the Option
Committee. The Option Committee shall have the authority granted to it under
this section and under each other section of the Plan. The Option Committee
shall have the authority, in its sole discretion, to determine the type or types
of Awards to be granted pursuant to the Plan. Such Awards may be granted either
alone, in addition to, or in tandem with, any other type of Award.

In accordance with and subject to the provisions of the Plan and Rule 16b-3, the
Option Committee shall select the Eligible Persons to receive Awards, shall
determine (i) the number of shares of Common Stock, Restricted Stock or
Restricted Stock Units to be subject to each Award, (ii) the time at which each
Award is to be granted, (iii) the extent to which the transferability of shares
of Common Stock issued or transferred pursuant to any Award is restricted, (iv)
the Fair Market Value of the Common Stock, (v) whether to accelerate the time of
exercisability of any Award that has been granted, (vi) the period or periods
and extent of exercisability of the Options, and (vii) the manner in which an
Option becomes exercisable. In addition, the Option Committee shall fix such
other terms of each Option, Restricted Stock Award and Restricted Stock Units as
the Option Committee may deem necessary or desirable. The Option Committee shall
determine the form, terms and provisions of each Agreement to evidence each
Award (which need not be identical).

The Option Committee from time to time may adopt such rules and regulations for
carrying out the purposes of the Plan as it may deem proper and in the best
interests of the Company. The Option Committee shall keep minutes of its
meetings and those minutes shall be available to every member of the Board.

All actions taken and all interpretations and determinations made by the Option
Committee in good faith (including determinations of Fair Market Value) shall be
final and binding upon all Participants, the Company and all other interested
persons. No member of the Option Committee shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan, and all members of the Option Committee shall, in addition to rights they
may have if Directors of the Company, be fully protected by the Company with
respect to any such action, determination or interpretation.

4. The Common Stock. The Board is authorized to appropriate, issue and sell for
the purposes of the Plan, and the Option Committee is authorized to grant
Options, Restricted Stock and Restricted Stock Units with respect to, a total
number, not in excess of 10,000,000 shares of Common Stock, either treasury or
authorized but unissued, as adjusted pursuant to Section 16. All or any unsold
shares subject to an Option, Restricted Stock or Restricted Stock Units that for
any reason expires or otherwise terminates may again be made subject to Options,
Restricted Stock or Restricted Stock Units under the Plan. No Eligible Person
may be granted Options, Restricted Stock and Restricted Stock Units under this
Plan covering in excess of an aggregate of 3,000,000 Option Shares and shares of
Restricted Stock and Restricted Stock Units in any calendar year, subject to
adjustments pursuant to Section 16.

5. Eligibility. Options which are intended to qualify as ISOs will be granted
only to Employees. Eligible Persons may hold more than one Option under the Plan
and may hold Options under the Plan and options granted pursuant to other plans
or otherwise, and may hold Restricted Stock and Restricted Stock Units under the
Plan.

 
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6. Option Price. The Exercise Price for the Option Shares shall be established
by the Option Committee or shall be determined by a method established by the
Option Committee; provided that the Exercise Price to be paid by Optionees for
the Option Shares that are intended to qualify as ISOs, shall not be less than
100 percent of the Fair Market Value of the Option Shares on the Date of Grant
(or, in the case of an individual who owns stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company, 110
percent of the Fair Market Value of the Option Shares on the Date of Grant).

7. Duration and Exercise of Options.

(a) The option period shall commence on the Date of Grant and shall be as set by
the Option Committee, but not to exceed 10 years in length.

(b) The Option Committee may determine whether any Option shall be exercisable
in installments only; if the Option Committee determines that an Option shall be
exercisable in installments, it shall determine the number of installments and
the percentage of the Option exercisable at each installment date. All such
installments shall be cumulative.

(c) The Option Committee shall establish and set forth in each Agreement that
evidences an Option whether the Option shall continue to be exercisable, and the
terms and conditions of such exercise, after a termination of Continuous Status,
any of which provisions may be waived or modified by the Option Committee at any
time, provided that any such waiver or modification shall satisfy the
requirements for exemption under Section 409A of the Code.

(d) Each Option shall be exercised in whole or in part by delivering to the
Company (or to a brokerage firm designated or approved by the Company) of
written notice of the number of shares with respect to which the Option is to be
exercised and by paying in full the Exercise Price for the Option Shares
purchased as set forth in Section 8; provided, that an Option may not be
exercised in part unless the aggregate purchase price for the Option Shares
purchased is at least $1,000.

(e) No Option may be granted under this Plan until the Plan is approved by the
shareholders of the Company as provided in Section 17 below.

8. Payment for Option Shares. If the aggregate purchase price of the Option
Shares purchased by any Optionee at one time exceeds $5,000, the Option
Committee may permit all or part of the Exercise Price for the Option Shares to
be paid by delivery to the Company for cancellation shares of the Company's
Common Stock owned by the Optionee with an aggregate Fair Market Value as of the
date of payment equal to the portion of the Exercise Price for the Option Shares
that the Optionee does not pay in cash. In the case of all other Option
exercises, the Exercise Price shall be paid in cash or check upon exercise of
the Option, except that the Option Committee may permit an Optionee to elect to
pay the Exercise Price upon the exercise of an Option by authorizing a third
party broker-dealer in securities approved by the Option Committee to sell some
or all of the Option Shares acquired upon exercise of an Option and remit to the
Company a sufficient portion of the sale proceeds to pay the entire Exercise
Price and any tax withholding resulting from such exercise.

9. Relationship to Employment or Position. Nothing contained in the Plan, or in
any Option, Restricted Stock Award or Restricted Stock Units granted pursuant to
the Plan, shall confer upon any Participant any right with respect to
continuance of employment by, or other relationship with, the Company, or
interfere in any way with the right of the Company to terminate the
Participant’s employment as an Employee or other position or relationship, at
any time.

 
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10. Nontransferability of Option. Except as otherwise provided by the Option
Committee, no Option granted under the Plan shall be transferable by the
Optionee, either voluntarily or involuntarily, except by will or the laws of
descent and distribution.

11. Rights as a Stockholder. No person shall have any rights as a shareholder
with respect to any share covered by an Option until that person shall become
the holder of record of such share and, except as provided in Section 16, no
adjustments shall be made for dividends or other distributions or other rights
as to which there is an earlier record date.

12. Securities Laws Requirements. No Option Shares shall be issued unless and
until, in the opinion of the Company, any applicable registration requirements
of the Securities Act of 1933, as amended, any applicable listing requirements
of any securities exchange on which stock of the same class is then listed, and
any other requirements of law or of any regulatory bodies having jurisdiction
over such issuance and delivery, have been fully complied with. Each Option and
each Option Share certificate may be imprinted with legends reflecting federal
and state securities laws, restrictions and conditions, and the Company may
comply therewith and issue "stop transfer" instructions to its transfer agent
and registrar in good faith without liability.

13. Disposition of Shares. Each Optionee, as a condition of exercise, shall
represent, warrant and agree, in a form of written certificate approved by the
Company, as follows: (a) that all Option Shares are being acquired solely for
his own account and not on behalf of any other person or entity; (b) that no
Option Shares will be sold or otherwise distributed in violation of the
Securities Act of 1933, as amended, or any other applicable federal or state
securities laws; and (c) that he will report all sales of Option Shares to the
Company in writing on a form prescribed by the Company; and (d) that if he is
subject to reporting requirements under Section 16(a) of the Exchange Act, (i)
he will not violate Section 16(b) of the Exchange Act, (ii) he will furnish the
Company with a copy of each Form 4 and Form 5 filed by him or her, and (iii) he
will timely file all reports required under the federal securities laws.

Each Optionee shall immediately notify the Company in writing of any sale,
transfer, assignment or other disposition (or action constituting a
disqualifying disposition within the meaning of Section 421 of the Code) of any
shares of Common Stock acquired through exercise of an ISO, within two years
after the grant of such ISO or within one year after the acquisition of such
shares, setting forth the date and manner of disposition, the number of shares
disposed of and the price at which such shares were disposed. The Company shall
be entitled to withhold from any compensation or other payments then or
thereafter due to the Optionee such amounts as may be necessary to satisfy any
withholding requirements of federal or state law or regulation and, further, to
collect from the Optionee any additional amounts which may be required for such
purpose. The Company may, in its discretion, require shares of Common Stock
acquired by an Optionee upon exercise of an ISO to be held in an escrow
arrangement for the purpose of enabling compliance with the provisions of this
section.

14. Incentive Stock Options. To the extent that the aggregate Fair Market Value
of Common Stock with respect to which ISO’s are exercisable for the first time
by a Participant during any calendar year exceeds $100,000 or, if different, the
maximum limitation in effect at the Date of Grant under the Code (the Fair
Market Value being determined as of the Date of Grant for the Option), such
portion in excess of $100,000 shall be treated as Non-ISO’s.

15. Restricted Stock and Restricted Stock Units.

(a) Restricted Stock. The Option Committee is authorized to grant Restricted
Stock to Participants on the following terms and conditions:

 
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i. Grant and Restrictions. Restricted Stock shall be subject to such
restrictions on transferability, risk of forfeiture and other restrictions, if
any, as the Option Committee may impose, which restrictions may lapse separately
or in combination at such times, under such circumstances (including based on
achievement of performance goals and/or future service requirements), in such
installments or otherwise, as the Option Committee may determine at the date of
grant or thereafter. During the restricted period applicable to the Restricted
Stock, the Restricted Stock may not be sold, transferred, pledged, hypothecated,
margined or otherwise encumbered by the Participant.

ii. Certificates for Stock. Restricted Stock granted under this Plan may be
evidenced in such manner as the Option Committee shall determine. If
certificates representing Restricted Stock are registered in the name of the
Participant, the Option Committee may require that such certificates bear an
appropriate legend referring to the terms, conditions and restrictions of the
certificates, and that the Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.

iii. Dividends and Splits. As a condition to the grant of an Award of Restricted
Stock, the Option Committee may require or permit a Participant to elect that
any cash dividends paid on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or applied to the purchase
of additional Awards under this Plan. Unless otherwise determined by the Option
Committee, stock distributed in connection with a stock split or stock dividend,
and other property distributed as a dividend, shall be subject to restrictions
and a risk of forfeiture to the same extent as the Restricted Stock with respect
to which such stock or other property has been distributed.

(b) Restricted Stock Units. The Option Committee is authorized to grant
Restricted Stock Units to Participants, which are rights to receive Common Stock
at the end of a specified deferral period, subject to the following terms and
conditions:

i. Award and Restrictions. Settlement of an Award of Restricted Stock Units
shall occur upon expiration of the deferral period specified for such Restricted
Stock Unit by the Option Committee (or, if permitted by the Option Committee, as
elected by the Participant). In addition, Restricted Stock Units shall be
subject to such restrictions (which may include a risk of forfeiture) as the
Option Committee may impose, if any, which restrictions may lapse at the
expiration of the deferral period or at earlier specified times (including based
on achievement of performance goals and/or future service requirements),
separately or in combination, in installments or otherwise, as the Option
Committee may determine. Restricted Stock Units shall be satisfied by the
delivery of cash or Common Stock in the amount equal to the Fair Market Value
for the specified number of shares of Common Stock covered by the Restricted
Stock Units, or a combination thereof, as determined by the Option Committee at
the date of grant or thereafter.

 
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ii. Dividend Equivalents. Unless otherwise determined by the Option Committee at
date of grant, Dividend Equivalents on the specified number of shares of Common
Stock covered by an Award of Restricted Stock Units shall be either (a) paid
with respect to such Restricted Stock Units on the dividend payment date in cash
or in shares of unrestricted Common Stock having a Fair Market Value equal to
the amount of such dividends, or (b) deferred with respect to such Restricted
Stock Units and the amount or value thereof automatically deemed reinvested in
additional Restricted Stock Units, other Awards or other investment vehicles, as
the Option Committee shall determine or permit the Participant to elect.

(c) Waiver of Restrictions. The Option Committee, in its sole discretion, may
waive the repurchase or forfeiture period and any other terms, conditions, or
restrictions on any Restricted Stock or Restricted Stock Units under such
circumstances and subject to such terms and conditions as the Option Committee
shall deem appropriate; provided, however, that the Option Committee may not
adjust performance goals for any Restricted Stock or Restricted Stock Units
intended to be exempt under Section 162(m) of the Code for the year in which the
Restricted Stock or Restricted Stock Unit is settled in such a manner as would
increase the amount of compensation otherwise payable to a Participant.

16. Change in Stock, Adjustments, Etc. In the event that each of the outstanding
shares of Common Stock (other than shares held by dissenting shareholders which
are not changed or exchanged) should be changed into, or exchanged for, a
different number or kind of shares of stock or other securities of the Company,
or, if further changes or exchanges of any stock or other securities into which
the Common Stock shall have been changed, or for which it shall have been
exchanged, shall be made (whether by reason of merger, consolidation,
reorganization, recapitalization, stock dividends, reclassification, split-up,
combination of shares or otherwise), then appropriate adjustment shall be made
by the Option Committee to the aggregate number and kind of shares subject to
this Plan, and the number and kind of shares and the price per share subject to
outstanding Options, Restricted Stock and Restricted Stock Units as provided in
the respective Agreements in order to preserve, as nearly as practical, but not
to increase, the benefits to Participants.

17. Effective Date of Plan; Termination Date of Plan. Subject to the approval of
the Plan by the affirmative vote of the holders of a majority of the Company's
securities entitled to vote and represented at a meeting duly held in accordance
with applicable law, the Plan shall be deemed effective October 2, 2006. The
Plan shall terminate at midnight on October 2, 2016, except as to Options
previously granted and outstanding under the Plan at that time. No Options,
Restricted Stock and Restricted Stock Units shall be granted after the date on
which the Plan terminates. The Plan may be abandoned or terminated at any
earlier time by the Board, except with respect to any Options, Restricted Stock
and Restricted Stock Units then outstanding under the Plan.

18. Withholding Taxes. The Company, or any Related Company, may take such steps
as it may deem necessary or appropriate for the withholding of any taxes which
the Company, or any Related Company, is required by any law or regulation or any
governmental authority, whether federal, state or local, domestic or foreign, to
withhold in connection with any Award including, but not limited to, the
withholding of all or any portion of any payment or the withholding of issuance
of Option Shares or Restricted Stock.

 
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19. Change in Control.

In the event of a Change in Control of the Company, (a) the Option Committee, in
its discretion, may, at any time an Award is granted, or at any time thereafter,
accelerate the time period relating to the exercise or realization of any
Options, Restricted Stock and Restated Stock Units, and (b) with respect to
Options, Restricted Stock and Restricted Stock Units, the Option Committee in
its sole discretion may, at any time an Award is granted, or at any time
thereafter, take one or more of the following actions, which may vary among
individual Participants: (i) provide for the purchase of an Option, Restricted
Stock and Restricted Stock Units for an amount of cash or other property that
could have been received upon the exercise of the Option, Restricted Stock and
Restricted Stock Unit had the Option been currently exercisable, (ii) adjust the
terms of the Awards in a manner determined by the Option Committee to reflect
the Change in Control, (iii) cause the Awards to be assumed, or new rights
substituted therefor, by another entity, through the continuance of the Plan and
the assumption of outstanding Options, Restricted Stock and Restricted Stock
Units, or the substitution for such Options, Restricted Stock and Restricted
Stock Units of comparable value covering shares of a successor corporation, with
appropriate adjustments as to the number and kind of shares and exercise prices,
in which event the Plan and such Options, Restricted Stock and Restricted Stock
Units, or the new options and rights substituted therefor, shall continue in the
manner and under the terms so provided, (iv) accelerate the time at which
Options then outstanding may be exercised so that such Options may be exercised
for a limited period of time on or before a specified date fixed by the Option
Committee, after which specified date, all unexercised Options and all rights of
Optionees thereunder shall terminate, or (v) make such other provision as the
Committee may consider equitable.

20. Amendment.

(a) The Board may amend, alter or discontinue the Plan, but no amendment,
alteration or discontinuation shall be made which would impair the right of a
Participant under an outstanding Agreement. In addition, no such amendment shall
be made without the approval of the Company's shareholders to the extent such
approval is required by law or agreement.

(b) The Committee may amend the terms of any Award theretofore granted,
prospectively or retroactively, but no such amendment shall impair the rights of
any Participant without the Participant's consent.

(c) Subject to the above provisions, the Board shall have authority to amend the
Plan to take into account changes in law and tax and accounting rules as well as
other developments, and to grant Awards which qualify for beneficial treatment
under such rules without shareholder approval.

 
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21. Other Provisions.

(a) The use of a masculine gender in the Plan shall also include within its
meaning the feminine, and the singular may include the plural, and the plural
may include the singular, unless the context clearly indicates to the contrary.

(b) Any expenses of administering the Plan shall be borne by the Company.

(c) This Plan shall be construed to be in addition to any and all other
compensation plans or programs. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the shareholders of the Company for approval
shall be construed as creating any limitations on the power or authority of the
Board to adopt such other additional incentive or other compensation
arrangements as the Board may deem necessary or desirable.
 
(d) The validity, construction, interpretation, administration and effect of the
Plan and of its rules and regulations, and the rights of any and all personnel
having or claiming to have an interest therein or thereunder shall be governed
by and determined exclusively and solely in accordance with the laws of the
State of Nevada.

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