Exhibit 10.4
LOAN AGREEMENT
 
 
THIS AGREEMENT, dated for reference the 6th day of June, 2006, is made
 
BETWEEN:
ENEREX CAPITAL, CORP., a company incorporated under the laws of the Province of
British Columbia, having an office at Suite 2410, 650 West Georgia Street,
Vancouver, British Columbia, V6B 4N7

(hereinafter referred to as the “Lender”)

AND:
RANCHER ENERGY CORP., a company incorporated under the laws of the State of
Nevada, having an office at Suite 1700, 1050 17th 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 One Hundred Fifty Thousand Dollars in US funds (US$150,000)
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:
 
1. DEFINITIONS
 
Where used in this Agreement, the following words and phrases shall have the
following meaning:
 

(a)  
“Agreement” means this Agreement and the schedules hereto, as at any time
amended or modified and in effect;

 

(b)  
“Charter” means the Memorandum and Articles, the Articles and By-Laws or other
constating documents of the Borrower, as at any time amended or modified and in
effect;

 

(c)  
“Event of Default” means any event specified in subsection 7.1;

 

(d)  
“Lender’s Security” means the Note;

 

(e)  
“Loan” means the loan by the Lender to the Borrower established pursuant to
subsection 3.1; and

 

(f)  
“Note” means the non-interest bearing promissory note to be made by the Borrower
to the Lender as evidence of the Loan which shall substantially be in the form
set out in Schedule “A”.

 
2. INTERPRETATION
 
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 Province of British
Columbia for the resolution of all disputes under this Agreement.

 

- 1 -

--------------------------------------------------------------------------------

 
2.2  Severability
 
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.
 
2.3 Parties in Interest
 
This Agreement enures to the benefit of and is binding on the parties hereto and
their respective successors and permitted assigns.
 
2.4  Headings and Marginal References
 
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.
 
2.5  Currency
 
All statements of, or references to, dollar amounts in this Agreement means
lawful currency of the United States of America.
 
3.  THE LOAN
 
3.1  Establishment of the Loan
 
The Lender agrees, on the terms and conditions set forth in this Agreement, to
lend to the Borrower the sum of One Hundred Fifty Thousand Dollars ($150,000).
 
3.2  Evidence of Indebtedness
 
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”.
 
3.3  Repayment of the Loan
 
The Borrower will repay the Loan on or before June 30, 2006. The Loan will be
subject to interest payable to a Two Percent (2%) lender’s fee payable to the
Lender at maturity. The lender’s fee will be payable concurrently with repayment
of the Loan.
 
3.4  Repayment of the Loan
 
The Borrower may repay the Loan at any time without penalty, bonus or charges.
 
3.5 Conversion into Securities
 
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

 

- 2 -

--------------------------------------------------------------------------------

 
its intent to convert the Loan, or any portion thereof, into shares of the
Company, subject only to the following:
 
In the event the Borrower is offering a financing opportunity to the general
public, the Lender will be granted the opportunity to convert the Loan into
shares or units of the Borrower, whichever is being offered, at such price as is
being offered to the general investing public.
 
A Notice of Conversion is attached hereto as Schedule “B”.
 

 
4.  SECURITY FOR THE LOAN
 
4.1  Costs, Charges and Expenses
 
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.
 
5. REPRESENTATIONS AND WARRANTIES
 
5.1 Representations and Warranties
 
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.

 
5.2   Survival of Representations and Warranties
 
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.
 
6.   COVENANTS OF THE BORROWER
 
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;

 

- 3 -

--------------------------------------------------------------------------------

 
(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.

 
7.  EVENT OF DEFAULT
 
7.1  Definition of Event of Default
 
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.

 
8. GENERAL
 
8.1 Waiver or Modification
 
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.
 
8.2 Time
 
Time is of the essence of this Agreement.
 
8.3 Further Assurances
 
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.
 
- 4 -

--------------------------------------------------------------------------------

8.4 Assignment
 
The Borrower may not assign this Agreement or its interest herein or any part
hereof except with the prior written consent of the Lender.
 
9. NOTICES
 
9.1Any notice under this Agreement will be given in writing and may be sent by
fax, telex, telegram or may be delivered or mailed by prepaid post addressed to
the party to which notice is to be given at the address indicated above, or at
another address designated by that party in writing.
 
9.2If notice is sent by fax, telex, telegram or is delivered, it will be deemed
to have been given at the time of transmission or delivery.
 
9.3If notice is mailed, it will be deemed to have been received 48 hours
following the date of mailing of the notice.
 
9.4If there is an interruption in normal mail service due to strike, labour
unrest or other cause at or before the time a notice is mailed the notice will
be sent by fax, telex, telegram or will be delivered.
 
10. AMENDMENTS
 
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.
 

 
11. EXECUTION IN COUNTERPART

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.

ENEREX CAPITAL, CORP.

/s/ William Frieson
Per: William Frieson, President

RANCHER ENERGY CORP.

/s/ John Works
Per:  John Works, President

 

- 5 -

--------------------------------------------------------------------------------

 
SCHEDULE “A”
 
to the Loan Agreement dated for reference the 6th day of June, 2006
 
between Enerex Capital, Corp. and Rancher Energy Corp.
 

PROMISSORY NOTE
 
Principal Amount: US $150,000      

For value received, Rancher Energy Corp. (the "Borrower") hereby promises to pay
to Enerex Capital, Corp. (the "Lender") the principal sum of One Hundred Fifty
Thousand Dollars in US funds (US$150,000) on the earlier of:
 
(i) June 30, 2006 :
 
(ii) any change of control of the Borrower ("control" being defined as ownership
of or control of direction over, directly or indirectly, 20% 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 6, 2006),

together with lender’s fee calculated at a rate of Two Percent (2%) payable 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.

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 6, 2006.

RANCHER ENERGY CORP.

/s/ John Works
Per: John Works, President

 

- 6 -

--------------------------------------------------------------------------------

SCHEDULE “B”

 
to the Loan Agreement dated for reference the 6th day of June, 2006
 
between Enerex Capital, Corp. and Rancher Energy Corp.
 

CONVERSION FORM

TO: Rancher Energy Corp. (Company)

The undersigned Holder of a Loan in the amount of One Hundred Fifty Thousand
Dollars in US funds (US$150,000) 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)

 

 
- 7 -

--------------------------------------------------------------------------------