Grant No.: _____
 
RANCHER ENERGY CORP.
2006 STOCK INCENTIVE PLAN
 
RESTRICTED STOCK AGREEMENT
 
The Rancher Energy Corp., a Nevada corporation (the “Company”), hereby grants
shares of its common stock, $0.0001 par value, (the “Stock”) to the Grantee
named below, subject to the vesting conditions set forth in the attachment.
Additional terms and conditions of the grant are set forth in this cover sheet,
in the attachment and in the Company’s 2006 Stock Incentive Plan (the “Plan”).
 
Grant Date: ______________
 
Name of Grantee: __________
 
Grantee's Social Security Number: ___________
 
Number of Shares of Stock Covered by Grant: __________
 
Number of Shares to be Deposited into Escrow: _________
 
Grant Price per Share of Stock: $___________
 
By signing this cover sheet, you agree to all of the terms and conditions
described in the attached Agreement and in the Plan, a copy of which is also
attached. You acknowledge that you have carefully reviewed the Plan, and agree
that the Plan will control in the event any provision of this Agreement should
appear to be inconsistent.
 
 
 
Grantee: _________________________________________________________ 
(Signature)
   
Address: ___________________________________________
 
Company: ________________________________________________________ 
(Signature)
   
Title: ______________________________________________

 
Attachment
 
This is not a stock certificate or a negotiable instrument.
 
 

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RANCHER ENERGY CORP.
2006 STOCK INCENTIVE PLAN
 
RESTRICTED STOCK AGREEMENT
 
Restricted Stock/ Nontransferability
This grant is an award of Stock in the number of shares set forth on the cover
sheet, at the grant price set forth on the cover sheet, and subject to the
vesting conditions described below (“Restricted Stock”). To the extent not yet
vested, your Restricted Stock may not be sold, transferred, assigned, pledged,
hypothecated, or otherwise disposed of, whether by operation of law or
otherwise, and will be subject to a risk of forfeiture.
   
Issuance and Vesting
The Company will issue your Restricted Stock in your name as of the Grant Date.
As described below, your right to the Stock under this Restricted Stock grant
vests on the Grant Date and on the one-year anniversary dates of the Grant Date
for each vesting date that you remain in Service as follows:

 
Vesting Date
 
Percentage of Shares of
Restricted Stock Vested
                                         

 
 
The resulting aggregate number of vested shares will be rounded to the nearest
whole number, and you cannot vest in more than the number of shares covered by
this grant.
For purposes of this agreement, “Service” means service as an employee, officer,
director or other service provider of the Company or an affiliate of the
Company. If your Service relationship with the Company terminates for any reason
prior to the Fourth Anniversary of the Grant Date, then the Restricted Stock and
any and all accrued but unpaid dividends that are, at that time subject to the
restrictions set forth herein, shall be forfeited to the Company, and you shall
have no further rights or interests in such shares of Restricted Stock or
certificates. No additional shares of Stock will vest after your Service has
terminated for any reason.

 
 
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Escrow
The certificates for the unvested Restricted Stock (each of which shall
correspond to the applicable vesting percentages described above) shall be
deposited in escrow with the Secretary of the Company to be held in accordance
with the provisions of this paragraph. Each deposited certificate shall be
accompanied by a duly executed Assignment Separate from Certificate in the form
attached hereto as Exhibit A. The deposited certificates shall remain in escrow
until such time or times as the certificates are to be released or otherwise
surrendered for cancellation as discussed below.
 
All regular cash dividends on the Stock (or other securities at the time held in
escrow) shall be paid directly to you and shall not be held in escrow. However,
in the event of any stock dividend, stock split, recapitalization or other
change affecting the Company's outstanding common stock as a class effected
without receipt of consideration or in the event of a stock split, a stock
dividend or a similar change in the Company’s stock, any new, substituted or
additional securities or other property which is by reason of such transaction
distributed with respect to the Stock shall be immediately delivered to the
Secretary of the Company to be held in escrow hereunder, but only to the extent
the Stock is at the time subject to the escrow requirements hereof.
 
The shares of Stock held in escrow hereunder shall be subject to the following
terms and conditions relating to their release from escrow or their surrender to
the Company for cancellation:
 * As your interest in the shares of Restricted Stock vests as described above,
   the certificates for such vested shares shall be released from escrow and
   delivered to you, at your request, within thirty (30) days following the date
   on which such shares become vested.

 * Upon termination of your Service, any escrowed shares in which you are at the
   time vested shall be promptly released from escrow.

 * Upon termination of your Service, escrowed shares which are not vested shall
   be surrendered to the Company for cancellation, and you shall have no further
   rights with respect to such shares of Stock.

Withholding Taxes
You agree, as a condition of this grant, that you will make acceptable
arrangements to pay any withholding or other taxes that may be due as a result
of the vesting of Stock acquired under this grant. If the Company determines
that any federal, state, local or foreign tax or withholding payment is required
relating to the vesting of shares arising from this grant, the Company shall
have the right to require such payments from you, or withhold such amounts from
other payments due to you from the Company or any Affiliate.

 
 
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Section 83(b)
Election
Under Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”),
the fair market value of the Stock on the date any forfeiture restrictions
applicable to the shares lapse will be reportable as ordinary income at that
time. You may elect to be taxed currently rather than when such shares cease to
be subject to such forfeiture restrictions by filing an election under Section
83(b) of the Code with the Internal Revenue Service within thirty days after the
Grant Date. The form for making this election is attached as Exhibit B hereto.
Failure to make this filing within the thirty day period will result in the
recognition of ordinary income by you (in the event the fair market value of the
shares increases after the date of the grant) as the forfeiture restrictions
lapse.
 
YOU ACKNOWLEDGE THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO
FILE A TIMELY ELECTION UNDER SECTION 83(b), EVEN IF YOU REQUEST THE COMPANY OR
ITS REPRESENTATIVES TO MAKE THIS FILING ON YOUR BEHALF. YOU ARE RELYING SOLELY
ON YOUR OWN ADVISORS WITH RESPECT TO THE DECISION AS TO WHETHER TO FILE ANY
83(b) ELECTION.
   
Market Stand-off Agreement
In connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Securities Act, you agree not to sell, make any short sale of, loan,
hypothecate, pledge, grant any option for the purchase of, or otherwise dispose
or transfer for value or agree to engage in any of the foregoing transactions
with respect to any shares of vested Stock without the prior written consent of
the Company or its underwriters, for such period of time after the effective
date of such registration statement as may be requested by the Company or the
underwriters (not to exceed 180 days in length).
   
Investment Representations
You hereby agree and represent, as a condition of this grant of Restricted
Stock, that:
 
(i) you are acquiring the shares of Restricted Stock for investment for your own
account and not with a view to, or intention of, or otherwise for resale in
connection with, any distribution to any person or entity,
 
(ii) neither the offer nor the grant of the shares of Restricted Stock
hereunder, or the shares of Restricted Stock themselves, have been registered
under the Securities Act or registered or qualified under any applicable state
securities laws and that the shares of Restricted Stock are being granted to you
by reason of and in reliance upon a specific exemption from the registration
provisions of the Securities Act and exemptions from registration or
qualification provisions of such applicable state or other jurisdiction's
securities laws which depend upon, among other things, the bona fide nature of
the investment intent as expressed herein and the truth and accuracy of your
representations, warranties, agreements, acknowledgments and understandings as
set forth herein,

 
 
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(iii) you must, and are able to, bear the economic risk of the value of the
shares of Restricted Stock for an indefinite period of time,
 
(iv) you are sophisticated in financial matters and have such knowledge and
experience in financial and business matters as to be capable of evaluating the
risks and benefits of your investment in the shares of Restricted Stock,
 
(v) you are as of the date hereof an “accredited investor” as such term is
defined under Rule 501 of the Securities Act, and
 
(vii) the Company has made available to you all documents that you have
requested relating to the Company, the shares of Restricted Stock and your
acquisition of the shares of Restricted Stock, and you have had an opportunity
to ask questions and receive answers concerning the Company and the terms and
conditions of the offering and acquisition of the shares of Restricted Stock
pursuant to this Restricted Stock Agreement and have had full access to such
other information concerning the Company and the shares of Restricted Stock as
you deemed necessary or desirable.
   
Retention Rights
This Agreement does not give you the right to be retained or employed by the
Company (or any parent, subsidiary or affiliate) in any capacity. The
description of vesting schedules in this Agreement in units of years or months
shall not be construed as guaranteeing you any term of employment or service to
the end of any such period of time or for any period of time. The Company (and
any parent, subsidiary or affiliate) reserve the right to terminate your Service
at any time and for any reason.
   
Shareholder Rights
You have the right to vote the Restricted Stock and to receive any dividends
declared or paid on such stock. Any distributions you receive as a result of any
stock split, stock dividend, combination of shares or other similar transaction
shall be deemed to be a part of the Restricted Stock and subject to the same
conditions and restrictions applicable thereto. The Company may in its sole
discretion require any dividends paid on the Restricted Stock to be reinvested
in shares of Stock, which the Company may in its sole discretion deem to be a
part of the shares of Restricted Stock and subject to the same conditions and
restrictions applicable thereto. Except as described in the Plan, no adjustments
are made for dividends or other rights if the applicable record date occurs
before your stock certificate is issued.

 
 
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Adjustments
In the event of a stock split, a stock dividend or a similar change in the
Company’s stock, the number of shares covered by this grant may be adjusted (and
rounded down to the nearest whole number) pursuant to the Plan. Your Restricted
Stock shall be subject to the terms of the agreement of merger, liquidation or
reorganization in the event the Company is subject to such corporate activity.
   
Legends
All certificates representing the Stock issued in connection with this grant
shall, where applicable, have endorsed thereon substantially the following
legends:
 
“THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS
ON TRANSFER AND A RIGHT OF FORFEITURE ON BEHALF OF THE COMPANY ON SUCH SHARES
SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR HIS
OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED
BY THIS CERTIFICATE.”
     
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, TRANSFERRED OR ASSIGNED (I)
IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL, IN A
FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED
UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT.

 
 
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Applicable Law
This Agreement will be interpreted and enforced under the laws of the State of
Colorado, other than any conflicts or choice of law rule or principle that might
otherwise refer construction or interpretation of this Agreement to the
substantive law of another jurisdiction, except that the Nevada Revised Statutes
shall govern as to corporate law.
   
The Plan
The text of the Plan is incorporated in this Agreement by reference.
This Agreement and the Plan constitute the entire understanding between you and
the Company regarding this grant of Restricted Stock. Any prior agreements,
commitments or negotiations concerning this grant are superseded.
   
Amendment
This Agreement may be amended or modified only by a written instrument executed
by both the Company and the Grantee.
   
Notice
All notices required or permitted hereunder shall be in writing and deemed
effectively given upon personal delivery or five days after deposit in the
United States Post Office, by registered or certified mail, postage prepaid, if
to the Grantee, to the address set forth below on the records of the Company,
and if to the Company, to the Company’s principal executive offices, attention
of the Corporate Secretary or Chief Financial Officer.
   
Binding Effect
This Agreement shall be binding upon and inure to the benefit of the Company and
the Grantee and their respective heirs, executors, administrators, legal
representatives, successors and assigns, subject to the restrictions on transfer
set forth in this Agreement.
   
Pronouns
Whenever the context may require, any pronouns used in this Agreement shall
include the corresponding masculine, feminine or neuter forms, and the singular
form of nouns and pronouns shall include the plural, and vice versa.
   
Waiver
Any provision for the benefit of the Company contained in this Agreement may be
waived, either generally or in any particular instance, by the Board of
Directors of the Company.
   
Severability
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
and each other provision of this Agreement shall be severable and enforceable to
the extent permitted by law.

 
By signing the cover sheet of this Agreement, you agree to all of the terms and
conditions described above and in the Plan.
 
 
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EXHIBIT A

ASSIGNMENT SEPARATE FROM CERTIFICATE

FOR VALUE RECEIVED, _____________ (the “Grantee”) hereby sells, assigns and
transfers unto Rancher Energy Corp., a Nevada corporation (the “Company”),
_________ (__________) shares of common stock of the Company represented by
Certificate No. ___ herewith and does hereby irrevocable constitute and appoint
______________ Attorney to transfer the said stock on the books of the Company
with full power of substitution in the premises.
 

Dated:____________, 200_

_____________________
Print Name

__________________________________________
Signature

Spouse Consent (if applicable)

___________________ (Grantee's spouse) indicates by the execution of this
Assignment his or her consent to be bound by the terms herein as to his or her
interests, whether as community property or otherwise, if any, in the shares of
common stock of the Company.
 

__________________________________________
Signature

INSTRUCTIONS: PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN THE SIGNATURE LINE.
THE PURPOSE OF THIS ASSIGNMENT IS TO RETURN THE SHARES TO THE COMPANY IN THE
EVENT THE GRANTEE FORFEITS ANY SHARES AS SET FORTH IN THE AGREEMENT WITHOUT
REQUIRING ADDITIONAL SIGNATURES ON THE PART OF GRANTEE.
 
 
 

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EXHIBIT B
 
[Insert Name]
[Taxpayer Address]

_______ ___, 200_

VIA CERTIFIED MAIL

Internal Revenue Service Center
[Note - Insert IRS Center where you file your tax returns.] 

Re:
Section 83(b) Election
 
Taxpayer Name: _____________
 
Taxpayer I.D. NO. ____________

Dear Sir or Madam:

Enclosed is an election to include the value of restricted property in gross
income in the year of transfer pursuant to Section 83(b) of the Internal Revenue
Code.

Please acknowledge receipt of the election by stamping the enclosed copy of this
letter and returning it in the envelope provided.

Sincerely yours,

[Insert Name]

Enclosure

cc:
Daniel Foley, Chief Financial Officer
 
Rancher Energy Corp.

 
 
 

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ELECTION UNDER SECTION 83(b) OF
THE INTERNAL REVENUE CODE
 
The undersigned hereby makes an election pursuant to Section 83(b) of the
Internal Revenue Code with respect to the property described below and supplies
the following information in accordance with the regulations promulgated
thereunder:
 
1. The name, address and social security number of the undersigned:
 
Name: _____________________________________________________
Address: __________________________________________________
___________________________________________________
Social Security No. : __________________________________________
 
2. Description of property with respect to which the election is being made:
 
__________ shares of common stock, par value $0.0001 per share, Rancher Energy
Corp., a Nevada corporation, (the “Company”).
 
3. The date on which the property was transferred is ____________.
 
4. The taxable year to which this election relates is calendar year 20__.
 
5. Nature of restrictions to which the property is subject:
 
The shares of stock are subject to the provisions of a Restricted Stock
Agreement between the undersigned and the Company. The shares of stock are
subject to forfeiture under the terms of the Agreement.
 
6. The fair market value of the property at the time of transfer (determined
without regard to any lapse restriction) was $_______ per share, for a total of
$_________.
 
7. The amount paid by taxpayer for the property was $0.00.
 
8. A copy of this statement has been furnished to the Company.
 
Dated: ______ __, 200_
 
____________________________________
Taxpayer’s Signature
 
____________________________________
Taxpayer’s Printed Name

 
 
 

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PROCEDURES FOR MAKING ELECTION
UNDER INTERNAL REVENUE CODE SECTION 83(b)
 
 
The following procedures must be followed with respect to the attached form for
making an election under Internal Revenue Code section 83(b) in order for the
election to be effective:

1. You must file one copy of the completed election form with the IRS Service
Center where you file your federal income tax returns within 30 days after the
Grant Date of your Restricted Stock.

2. At the same time you file the election form with the IRS, you must also give
a copy of the election form to the Secretary or CFO of the Company.
 
3. You must file another copy of the election form with your federal income tax
return (generally, Form 1040) for the taxable year in which the stock is
transferred to you.
 
 
 
 

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