Exhibit 10.1 

 

 

 

The options granted under this stock option agreement have not been registered
under the Securities Act of 1933 (the “Act”) and are “restricted securities” as
that term is defined in Rule 144 under the Act. The options may not be offered
for sale, sold or otherwise transferred except pursuant to an effective
registration statement under the Act, the availability of which is to be
established to the satisfaction of the Corporation. By accepting this option,
whether as a grant from the Company or a negotiated part of an employment
package, the undersigned Optionee represents and warrants that he/she has
completed such investigation into the business, management, financial condition,
and affairs of the Company as he/she has deemed appropriate, has consulted with
such legal, financial, investment, tax, and other advisors as he/she has deemed
appropriate, and understands that neither this Option nor any of the underlying
securities are freely tradeable, and there is no assurance that the Optionee
will receive any benefit from receiving, holding, or exercising this Option.

 

 

NON-QUALIFIED STOCK OPTION AGREEMENT

 

THIS NON-QUALIFIED STOCK OPTION AGREEMENT is made as of the 3rd day of December,
2013 between Rancher Energy Corp., a Nevada corporation (the “Corporation”), and
______________ (the “Optionee”).

 

The Corporation desires, in connection with the services of the Optionee, to
provide the Optionee with an opportunity to acquire shares of its common stock
(the “Common Stock”) on favorable terms and thereby acquire or increase the
Optionee’s ownership of the Corporation’s capital stock. This option is not tied
to such person’s continuing service to the Corporation and (if vested) continues
in effect thereafter through the Term of the Option.

 

Definitions. For the purpose of this Non-Qualified Stock Option Agreement, the
following terms, when used herein, have the following meanings:

 

“Date of Grant”

December 3, 2013     “Shares” 2,500,000 shares of Common Stock, all of which
shares vest according to the Vesting Schedule set forth below:     “Exercise
Price” $0.01 per share (being the 10-day average closing price preceding the
Date of Grant), subject to adjustment as set forth in Paragraph 3.     “Vesting
Schedule” All shares vest immediately upon the Date of Grant.     “Term of the
Option” Ten (10) years from Date of Grant.     “Acceptance Date” One month from
Date of Grant (see Paragraph 17, below)

  

 

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NOW, THEREFORE, in consideration of the premises, the mutual covenants herein
set forth and other good and valuable consideration, the Corporation and the
Optionee agree as follows:

 

1. Confirmation of Grant of Option. Pursuant to a determination of the Board of
Directors of the Corporation (the “Board”) made on the Date of Grant, the
Corporation confirms that the Optionee has been irrevocably granted a
Non-Qualified Option to purchase (the “Option”) an aggregate of the total number
of shares underlying the Option on the terms and conditions herein set forth,
subject to adjustment as provided in Paragraph 8 hereof.

 

2. Vesting. All shares vest in accordance with the Vesting Schedule set forth
under “Definitions,” above.

 

3. Purchase Price.

 

(a) The purchase price of shares of Common Stock covered by the Option will be
the Exercise Price, subject to adjustment as provided in Paragraph 8 hereof.

 

(b) In addition to (and not in lieu of) the adjustment provided in Paragraph 8
hereof, the Exercise Price shall be reduced to the exercise price for any
options that may be granted by the Board to any director, officer, or employee
of the Corporation during the Adjustment Period (defined below) if such exercise
price is lower than the Exercise Price, as adjusted. The Adjustment Period is
the period that commences on the Date of Grant and ends twenty four (24) months
thereafter.

 

4. Method of Exercise and Medium and Time of Payment.

 

(a) The Option may be exercised only as to any or all whole shares of Common
Stock in increments of 100 shares. Each exercise of the Option granted
hereunder, whether in whole or in part, shall be by written notice to the
secretary of the Corporation designating the number of shares as to which the
Option is being exercised, and shall be accompanied by payment in full of the
Exercise Price for the number of shares so designated, together with any written
statements required by any applicable securities laws.

 

(b) The Exercise Price shall be paid in cash or by certified funds, or with such
other consideration as the Board may permit. In addition, in lieu of exercising
this Option in the manner specified by the foregoing sentence, the Optionee may
from time to time convert this Option, in whole or in part, into a number of
shares of Common Stock determined by dividing (a) the aggregate fair market
value of the shares of Common Stock (as determined by reference to the Company’s
publicly traded shares of Common Stock) issuable upon exercise of this Option
minus the aggregate Exercise Price of such shares of Common Stock by (b) the
fair market value of one share of Common Stock. For the purposes of clauses (a)
and (b), the “fair market value” of the Common Stock is equal to the volume
weighted average price (“VWAP”) for the ten-day period ending on the day before
notice of intent to exercise on a cashless basis is given by the Optionee. For
example, if the Optionee holds an option to acquire 400,000 shares exercisable
at a price of $1.00 per share and desires to complete a cashless exercise when
the ten-day VWAP is $2.50, the option could be exercised and the Optionee would
receive 240,000 shares (being 400,000 times $2.50 less $400,000, with the result
divided by $2.50).

 

 

 

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5. Term of Option. The term of the Option will be as stated under “Definitions,”
and the Option expires at 5:00 p.m. Eastern time on the last day of the term if
a Business Day, or the next Business Day thereafter in the state of Nevada.

 

6. No Rights As Shareholder. The Optionee will not have any rights to dividends
or any other rights of a shareholder with respect to any shares of Common Stock
subject to the Option until such shares shall have been issued to him or her (as
evidenced by the appropriate transfer agent of the Corporation) upon purchase of
such shares through exercise of the Option.

 

7. Non-transferability of Option. Without the Corporation's written consent
(which consent the Corporation may withhold in its sole discretion), the Option
may not be: assigned, transferred (except as otherwise provided herein) or
otherwise disposed of; or pledged or hypothecated in any way (whether by
operation of law or otherwise); and shall not be subject to execution,
attachment, or other process. Any assignment, transfer, pledge, hypothecation or
other disposition of the Option or any attempt to make any such levy of
execution, attachment or other process (other than as permitted hereunder) will
cause the Option to terminate immediately upon the happening of any such event,
provided, however, that any such termination of the Option under the foregoing
provisions of this Paragraph 7 will not prejudice any rights or remedies which
the Corporation may have under this Option Agreement or otherwise. Nothing
contained in this Paragraph 7 shall apply to any transfer as a result of the
Optionee’s death.

 

8. Adjustments. If there is any change in the number of shares of Common Stock
through the declaration of stock dividends, or through a recapitalization
resulting in stock splits, or combinations or exchanges of such shares, the
number of shares of Common Stock covered by the Option, and the exercise price
per share of the Option, shall be proportionately adjusted by the Board to
reflect any increase or decrease in the number of issued shares of Common Stock;
provided, however, that any fractional shares resulting from such adjustment
shall be eliminated.

 

(a) In the event of the proposed dissolution or liquidation of the Corporation,
or any corporate separation or division, including, but not limited to,
split-up, split-off or spin-off, or a merger or consolidation of the Corporation
with another corporation, the Board shall provide the Optionee not less than 45
days’ notice of the record date for such event.

 

(b) Paragraph (a) of this Section 8 shall not apply to a merger or consolidation
in which the Corporation is the surviving corporation and shares of Common Stock
are not converted into or exchanged for stock, securities of any other
corporation, cash or any other thing of value, or to a spin-off, split-up, or
split-off in which the Corporation survives, even though a substantial amount of
assets of the Corporation may have been conveyed. In the event of any
transaction contemplated in this Paragraph 8(b), the Corporation shall provide
notice of such transaction to the Optionee to the same extent such notice may be
required to be given to shareholders the Corporation.

 

 

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(c) In the event of a change in the Common Stock of the Corporation as presently
constituted, which is limited to a change of all of its authorized shares with
par value into the same number of shares with a different par value or without
par value, the shares resulting from any such change shall be deemed to be the
Common Stock within the meaning of this Option.

 

(d) To the extent that the foregoing adjustments relate to stock or securities
of the Corporation, such adjustments shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.

 

(e) Except as expressly provided in this Section 8, the Optionee shall have no
rights by reason of any subdivision or consolidation of shares of stock of any
class or the payment of any stock dividend or any other increase or decrease in
the number of shares of stock of any class or by reason of any dissolution,
liquidation, merger, or consolidation or spin-off of assets or stock of another
corporation. Except as is otherwise provided in Section 3(b) of this Agreement,
any issue by the Corporation of shares of stock of any class, or securities
convertible into shares of stock of any class, shall not affect, and no
adjustment by reason thereof shall be made with respect to, the number or price
of shares of Common Stock subject to the Option. The grant of this Option shall
not affect in any way the right or power of the Corporation to make adjustments,
reclassifications, reorganizations or changes of its capital or business
structures or to merge or to consolidate or to dissolve, liquidate or sell, or
transfer all or part of its business or assets.

 

9. Restricted Securities.

 

(a) The Optionee understands that neither the Option nor the shares of Common
Stock subject thereto and issuable upon the exercise thereof are registered
under the Securities Act of 1933, as amended, and the Corporation has not made
any undertaking to register either the Option or the shares of Common Stock
issuable upon exercise thereof under the Securities Act of 1933 except as
hereinafter expressly provided. The Optionee represents that the Option is being
acquired by him and that, if at the time of Option exercise there is no
effective registration statement, the Option may only be exercised to the extent
an exemption from registration under federal and applicable state law exists for
such exercise, and in such event the shares of Common Stock underlying the
Option will be acquired by him for investment purposes and all certificates for
the shares issued upon exercise of the Option will bear the following legend:

 

The shares represented by this Certificate have not been registered under the
Securities Act of 1933 (the “Act”), and are "restricted securities" as that term
is defined in Rule 144 under the Act. The shares may not be offered for sale,
sold or otherwise transferred except pursuant to an effective registration
statement under the Act, the availability of which is to be established to the
satisfaction of the Corporation.

 

 

 

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(b) If there is no registration statement effective with respect to the shares
underlying this Option at the time the Optionee elects to exercise this Option,
the Optionee acknowledges and agrees that he will not be permitted to exercise
this Option unless he executes a subscription agreement satisfactory to the
Corporation including the following representations and warranties together with
such other representations and warranties to establish facts as the Corporation
may deem necessary or appropriate at the time to comply with applicable
securities laws:

 

An investment in the Corporation constitutes a high degree of risk, and there
can be no assurance that the Optionee will receive any portion of his investment
returned to him at any time. By executing this understanding, the Optionee
acknowledges that he, she, or it understands the risks involved and it is
willing and able to withstand the possible complete loss of the Optionee’s
investment;

 

The Optionee understands that the future conduct of the Corporation’s business
is dependent upon a number of factors and there is no assurance that the
Corporation will be able to conduct its operations as contemplated in this
agreement or in any other information given to the Optionee.

 

The Optionee acknowledges that it has received and reviewed such information
regarding the Corporation, its management, its assets, financial condition, and
operations, as the Optionee has deemed necessary or appropriate for the purposes
of considering the exercise of this Option. Specifically, and without limitation
of the generality of the foregoing, the Optionee acknowledges that it has
reviewed the Corporation’s most recent annual report as filed with the
Securities and Exchange Commission and the reports filed subsequently. The
Optionee further represents that it has reviewed this information regarding the
Corporation, the subscription agreement including these representations and
warranties, and other information relating to the Corporation, its management,
its financial statements, its assets and operations as the Optionee has deemed
necessary with its legal, investment, tax, and financial advisors to the extent
the Optionee has deemed such consultation appropriate. The Optionee has also
consulted with such advisors with regard to the advisability of this transaction
to the extent the Optionee has deemed such consultation to be appropriate. The
Optionee acknowledges that the Corporation has advised it that it recommends
that the Optionee obtain such advice and consultation.

 

The Optionee is acquiring the securities upon exercise of the Option for its own
account and not on behalf of any other person or entity. The securities are
being acquired for investment purposes and not for resale or distribution; the
Optionee understand that there are severe limitations on its ability to resell
the securities issuable upon exercise of the Option, and that these limitations
are established in part in federal and applicable state laws regulating the
offer and sale of securities. The Optionee understands that neither the
Corporation nor any other person has any obligation to redeem or repurchase the
shares at any time. The Optionee’s present financial condition is such that it
is unlikely that it would be necessary for the Optionee to dispose of the
securities which underlie the Option in the foreseeable future.

 

 

 

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10. Notices. Each notice relating to this Agreement will be in writing and
delivered in person or by certified mail to the proper address. All notices to
the Corporation shall be addressed to it at the Corporation’s principal
executive office as set forth on the reports filed by the Corporation with the
Securities and Exchange Commission. All notices to the Optionee or other person
or persons then entitled to exercise the Option shall be addressed to the
Optionee or such other person or Persons at the Optionee's address below
specified. Anyone to whom a notice may be given under this Agreement may
designate a new address by notice to that effect.

 

11. Approval of Counsel. The exercise of the Option and the issuance and
delivery of shares of Common Stock pursuant thereto shall be subject to approval
by the Corporation's counsel of all legal matters in connection therewith,
including compliance with the requirements of the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, applicable state
securities laws, the rules and regulations thereunder, and the requirements of
any stock exchange upon which the Common Stock may then be listed. In addition,
Counsel shall approve the Optionee’s compliance with any reporting requirements
under Section 16(a) of the Securities Exchange Act of 1934, as amended, and any
tax withholding requirements on the exercise of the Options granted hereby under
the Internal Revenue Code of 1986, as amended, or any successor legislation.

 

12. Compliance with Law. The exercise of the Option and the issuance and
delivery of shares of Common Stock pursuant thereto shall be subject to
compliance by the Optionee and the Corporation with the requirements of the 1933
Act, the Securities Exchange Act of 1934, as amended, applicable state
securities laws, the rules and regulations thereunder, and the requirements of
any stock exchange upon which the Common Stock may then be listed or quotation
service through which the Common Stock might be quoted.

 

13. Benefits of Agreement. This Agreement will inure to the benefit of and be
binding upon each successor and assign of the Corporation. All obligations
imposed upon the Optionee and all rights granted to the Corporation under this
Agreement will be binding upon the Optionee's heirs, legal representatives and
successors.

 

14. Tax Matters. The Optionee agrees that the Optionee will make provision for
the payment of any and all federal, state, and local income taxes or other taxes
that may be due on the grant or the exercise of the Option and will, if required
by applicable law, make payment to the Corporation of an amount equal to the
Corporation's withholding obligation. The Optionee will consult with its tax
advisor with respect to this issue to the extent the Optionee deems such
consultation to be necessary or appropriate. If the Optionee is not a resident
of the United States, the Optionee understands that the Company may have certain
obligations for withholding under the tax laws of the United States, and the
Optionee will cooperate with the Corporation in meeting such obligation. In the
Corporation’s discretion, the Corporation may withhold shares of Common Stock
issuable upon exercise of the Option to meet the Corporation’s withholding
obligation.

 

 

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15. Section 16 Obligations. By accepting this Agreement, the Optionee accepts
the Option granted hereby and, if otherwise subject to the reporting
requirements of Section 16(a) or the liability provisions of Section 16(b) of
the 1934 Act, agrees to file all reports that may be required under the 1934 Act
and to indemnify and hold the Corporation harmless from any and all liability of
the Optionee under said Section 16(b).

 

16. Governmental and Other Regulations. The exercise of the Option and the
Corporation's obligation to sell and deliver shares upon the exercise of rights
to purchase shares is subject to all applicable federal and state laws, rules
and regulations, and to such approvals by any regulatory or governmental agency
which may, in the opinion of counsel for the Corporation, be required.

 

17. Acceptance of Option. The Options granted by this Agreement are not
effective until accepted by the Optionee. The Options granted by this Agreement
expire unless accepted by the Optionee by not later than the Acceptance Date set
forth under Definitions above. To accept the Options, the Optionee must sign
this Agreement below and return the signed agreement to the Corporation by that
date.

 

18. Cancellation of Prior Options. Any and all options that the undersigned
holds to acquire shares of the Company’s common stock issued to the undersigned
prior to the Date of Grant as defined herein be and hereby are cancelled,
terminated, and of no further force or effect.

 

IN WITNESS WHEREOF, the Corporation has caused this Agreement to be executed in
its name by its President and the Optionee has hereunto set his hand as of the
date first above written.

 

    RANCHER ENERGY CORP      By: ________________________________    Jon C.
Nicolaysen, President         ATTEST:          

A.L. (Sid) Overton, Secretary

 

   

 

 

The undersigned Optionee understands the terms of this Option Agreement and
hereby agrees to comply therewith.

    ________, 2013     Address:   Social Security #:

 

 

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