Document:

STOCK
PURCHASE AGREEMENT

      

      

      This Stock Purchase Agreement (this
“Agreement”) is entered into as of March 23 2009
(the “Effective
Date”), by and between YA
Global Investments, L.P. (the “Seller”), and Encompass Group Affiliates, Inc., a
Florida corporation (the “Purchaser”).

      

      

      W I T N E S S E T H:

      

      WHEREAS, pursuant to the terms of this
Agreement, Seller wishes to sell, assign and transfer to Purchaser, and
Purchaser wishes to purchase and accept the assignment and transfer of shares of
common stock, no par value (the “Common
Stock”), of the
Purchaser.

      

      NOW,
THEREFORE, in consideration
of the agreements, covenants, representations and warranties contained in this
Agreement, Seller and Purchaser agree as follows:

      

      1. Transfer of
the Shares.  Subject to the terms and
conditions of this Agreement, upon the payment of the Purchase Price (as defined
below) by the Purchaser to the Seller in accordance with Section 2 below, the
Seller hereby sells, assigns and transfers to the Purchaser, and the Purchaser
hereby purchases and accepts assignment and delivery from the Seller such number
of shares of Common Stock as set forth next to the Purchaser’s name on the
signature page attached hereto (the “Transferred
Shares”).

      

      2. Purchase
Price.  In full
consideration for the purchase and sale of the Transferred Shares, Purchaser
shall pay to Seller on the date hereof a purchase price equal to $0.0001 per
share (the “Per Share
Price”) for a total
purchase price equal to the Per Share Price multiplied by the number of
Transferred Shares as set forth next to the Purchaser’s name on the signature
page attached hereto (the “Purchase
Price”) by wire transfer of
immediately available funds to the Seller’s account set forth on Schedule I
attached hereto.

      

      3. Representations
and Warranties.

      

      (a)           The Seller hereby represents and
warrants to the Purchaser that (i) the Seller is an exempt limited partnership
duly organized, validly existing and in good standing under the laws of the
Cayman Islands, (ii) the execution and delivery by the Seller of this Agreement,
and the performance of its covenants and obligations herein, are within Seller’s
partnership powers, have been duly authorized by all necessary partnership
action of the Seller, and do not contravene the Seller’s partnership agreement
or other governing documents, (iii) this Agreement constitutes the legal, valid
and binding obligation of the Seller enforceable against the Seller in
accordance with its terms, (iv) no consent, approval or authorization from any
third party or, to the knowledge of the Seller, any governmental authority, is
required for the execution and delivery of this Agreement by the Seller or the
sale of the Transferred Shares to the Purchaser hereunder, (v) as of immediately
prior to the consummation of the purchase and sale of the Transferred Shares
pursuant to Section 1 above, the Seller is the sole record and beneficial owner
of the Transferred Shares free and clear of any and all liens,
claims,
taxes, security interests, options, warrants, purchase rights, contracts,
commitments, equities, agreements
and demands other than as
created or imposed by applicable securities laws, (vi) the Transferred Shares
have not been offered by the Seller or any agent of the Seller by means of any
form of general solicitation or general advertising (as defined in Rule 501 of
Regulation D of the Securities Act of 1933, as amended (the “Securities
Act”)), (vii) the Seller is
not and
for the past 90 days has not been, an “affiliate” of the Purchaser, as that term
is defined in Rule 144 under the Securities Act, and (viii) Seller has not taken any action
which might create a liability or obligation to pay any finders, agent or
brokers’ fees or commissions in connection with the transactions contemplated by
this Agreement for which Purchaser may become liable.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
 

      (b)           The Purchaser hereby
represents and warrants to the Seller that (i) the Purchaser is a corporation
organized under the laws of the State of Florida, (ii) this Agreement
constitutes the legal, valid and binding obligation of the Purchaser enforceable
against the Purchaser in accordance with its terms (iii) no consent, approval or
authorization from any third party or, to the knowledge of the Purchaser, any
governmental authority, is required for the execution and delivery of this
Agreement by the Purchaser or the purchase of the Transferred Shares
hereunder; and (iv) the
purchase of the Transferred Shares will not result in the Purchaser making an
unlawful distribution under the Florida Business Corporation Act, following the
purchase the Purchaser will be able to pay its debts as they become due in the
usual course of business and the Purchaser’s total assets would be
greater than the sum of its total liabilities plus the amount that would be
needed, if the corporation were to be dissolved at the time of the purchase, to
satisfy the preferential rights upon dissolution of shareholders whose
preferential rights are superior to those receiving the
distribution.

      

      4. Further
Assurances.  The
parties agree to take such reasonable steps and execute such other and further
documents as may be necessary or appropriate to cause the terms and conditions
contained herein to be carried into effect.

      

      5. Miscellaneous.  This Agreement contains the
entire understanding of the parties, supersedes all prior agreements and
understandings relating to the subject matter hereof and shall not be amended
except by a written instrument hereafter signed by all of the parties
hereto.  This Agreement may be executed in two or more counterparts
(including by facsimile or pdf), each of which shall be an original, but all of
which together shall constitute one and the same instrument.  Except
as otherwise expressly provided herein, nothing herein expressed or implied is
intended or shall be construed to confer upon or to give any individual or
entity, other than the Purchaser and the Seller, any rights or remedies under or
by reason of this Agreement. In the event that any covenant, condition, or other
provision herein contained is held to be invalid, void, or illegal by any court
of competent jurisdiction, the same shall be deemed to be severable from the
remainder of this Agreement and shall in no way affect, impair, or invalidate
any other covenant, condition, or other provision contained
herein.  The validity and construction of this Agreement shall be
governed and construed and enforced in accordance with the internal laws (other
than the choice-of-law rules that may require the application of the laws of
another jurisdiction) of the State of New York.  Each of the Seller
and the Purchaser hereby (i) waive their respective rights to a jury trial of
any claim or cause of action arising out of this Agreement and (ii) acknowledge
that such waiver is a material inducement to enter into this Agreement and that
each party has relied on such waiver in entering into this
Agreement.  No party to this Agreement shall issue any press release
or make any public announcement relating to the subject matter of this Agreement
without the consent of the other party.

       

      
        
          
          

        

        
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      6. Non-Reliance
by Seller.  Seller acknowledges that
Purchaser may possess and have access to material non-public information
regarding Purchaser.  Seller acknowledges that Purchaser is not
obligated to disclose, and will not disclose, such information to Seller, and
that such information may have a bearing on the valuation of the Transferred
Shares.  Seller is an institutional investor, experienced,
sophisticated and knowledgeable in the valuation and trading of the securities
of public and private companies, and understands the
disadvantage to which Seller is subject by reason of the disparity of
information regarding the Purchaser between Seller and
Purchaser.  Seller has reached its own investment decision and is
primarily relying on the current market factors in determining the Per Share
Price.  Seller acknowledges that Purchaser is relying on the
provisions of this Section 6 in engaging in the transactions contemplated by
this Agreement, and would not purchase the Transferred Shares in the absence of
this Section 6.  Seller represents that it will not pursue and hereby
waives any claim against Purchaser (i) based on or relating to Purchaser’s
having access to or being in possession of material non-public information
regarding itself and/or Purchaser’s non-disclosure of such information and/or
(ii) related in any way to the purchase and sale of the Transferred
Shares.

      

      7.           Release of
Purchaser

       

      (a)           As
further consideration for payment of the Purchase Price, Seller does hereby, on
behalf of Seller and its agents, representatives, attorneys, assigns, heirs,
executors and administrators (collectively, the “Seller Parties”)
RELEASE AND FOREVER DISCHARGE the Purchaser and its subsidiaries and their
respective Affiliates, parents, joint ventures, officers, directors,
shareholders, interest holders, members, managers, employees, consultants,
representatives, successors and assigns, heirs, executors and administrators
(collectively, the “Purchaser Parties”) from all
causes of action, suits, debts, claims and demands whatsoever known or unknown,
at law, in equity or otherwise, which Seller or any of the Seller Parties ever
had, now has, or hereafter may have, arising from or relating in any way to
Seller’s status as a stockholder, investor, lender or debtor of the Purchaser on
or prior to the date hereof, any agreement between Seller and the Purchaser or
any Affiliate of the Purchaser entered into prior to the date hereof, the
Seller’s purchase of any portion of the Purchaser’s capital stock prior to the
date hereof, any claims for reasonable attorneys’ fees and costs, and including,
without limitation, any claims relating to fees, penalties, liquidated damages,
and indemnification for losses, liabilities and expenses, but not including (i)
claims arising from the 200,000,000 shares of the Purchaser’s Common Stock owned
by Seller on the date hereof and (ii) claims to payments and other rights
provided to such Seller Party under this Agreement.  The release
contained in this Section 7 is effective without regard to the legal nature of
the claims raised and without regard to whether any such claims are based upon
tort, equity, or implied or express contract.  Except as specifically
provided herein, it is expressly understood and agreed that this release shall
operate as a clear and unequivocal waiver by Seller, on behalf of itself and the
Seller Parties, of any such claim whatsoever.

       

      (b)           The
Seller, on behalf of itself and the Seller Parties, agrees never to bring (or
cause or permit to be brought) any action or proceeding against the Purchaser or
any other Purchaser Party regarding the Seller’s status as stockholder,
investor, lender or debtor of the Purchaser on or prior to the date hereof,
agreements with the Purchaser or any Affiliate of the Purchaser that are
released pursuant to Section 7(a) above.  The Seller agrees that in
the event that any claim, suit or action released pursuant to paragraph 7(a)
shall be commenced by it or any of the Seller Parties against the Purchaser or
any other Purchaser Party, the release contained in Section 7(a) shall
constitute a complete defense to any such claim, suit or action so
instituted.

       

      
        
          
          

        

        
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      (c)           Seller
hereby covenants and agrees, on behalf of itself and the Seller Parties, that
neither Seller nor any of the Seller Parties will encourage any Person to file a
lawsuit, claim or complaint against the Purchaser or any other Purchaser Party
relating to the claims released pursuant to Section 7(a).  Seller
hereby covenants and agrees, on behalf of Seller and the Seller Parties, that
neither Seller nor any of the Seller Parties will assist any Person who files or
has filed a lawsuit, claim, or complaint against the Purchaser or any other
Purchaser Party relating to the claims released pursuant to paragraph 7(a)
unless Seller or any of the Seller Parties is required to render such assistance
pursuant to a lawful subpoena or other legal obligation.  If Seller or
any of the Seller Parties is served with any such legal subpoena or becomes
subject to any such legal obligation, Seller shall provide prompt written notice
to the Purchaser thereof and enclose a copy of the subpoena and any other
documents describing the legal obligation with such written notice.

       

      (d)           The
parties to this Agreement agree and acknowledge that the release of any asserted
or unasserted claims against the Purchaser and the other Purchaser Parties
pursuant to Section 7(a) are not and shall not be construed to be an admission
of any violation of any Federal, state or local statute or regulation, or of any
duty owed by the Purchaser or any of the other Purchaser Parties to the
Seller.

       

      (e)           Seller
acknowledges that there is a risk that after signing this Agreement it may
discover losses or claims that are released under this Agreement, but that are
presently unknown to it.  Seller assumes this risk and understands
that this release shall apply to any such losses and claims.  Seller
understands that this Agreement includes a full and final release covering all
known and unknown, suspected or unsuspected injuries, debts, claims or damages
which have arisen or may have arisen from any matters, acts, omissions or
dealings released in Section 7(a) above.  Seller acknowledges that by
accepting the Purchase Price and other benefits set forth in this Agreement, it
assumes and waives the risk that the facts and the law may be other than as
Seller understands them to be.

       

      (f)           Seller
certifies and acknowledges that it:

       

      (i)           has
read the terms of this Agreement and the release provided hereunder, and that
Seller understands its terms and effects, including the fact that Seller has
agreed to RELEASE AND FOREVER DISCHARGE the Purchaser and all other Purchaser
Parties from any legal action or other liability of any type related in any way
to the matters released pursuant to Section 7(a);

       

      (ii)           has
signed this Agreement voluntarily and knowingly in exchange for the
consideration described herein, which Seller acknowledges is adequate and
satisfactory to Seller; and

       

      (iii)           has
been and is hereby advised in writing to consult with an attorney prior to
signing this Agreement.

       

      

      (g)           As used in this Agreement,
“Affiliate” shall mean, with respect to any
Person, any Person directly or indirectly controlling, controlled by or under
direct or indirect common control with such Person and shall include (a) any
Person who is a director or beneficial holder of at least 10% of the then
outstanding capital stock (or partnership interests or other shares of
beneficial interest) of such Person and Family Members of any such Person, (b)
any Person of which such Person or an Affiliate (as defined in clause (a) above)
of such Person directly or indirectly, either beneficially owns at least 10% of
the then outstanding capital stock (or partnership interests or other shares of
beneficial interest) or constitutes at least a 10% equity participant, (c) any
Person of which an Affiliate (as defined in clause (a) above) of such Person is
a partner, director, officer or executive employee, and (d) in the case of a
specified Person who is an individual, Family Members of such
Person.  “Family Members” shall
mean, with respect to any individual, any Related Person or Family Trust of such
individual.  “Family Trust” shall
mean, with respect to any individual, any trust created for the benefit of one
or more of such individual’s Related Persons and controlled by such
individual.  “Related Persons”
shall mean, with respect to any individual, such individual’s parents, spouse,
children and grandchildren.  ”Person” shall mean an
individual, partnership, corporation, association, limited liability company,
trust, joint venture, unincorporated organization, and any government,
governmental department or agency or political subdivision thereof.

       

      
        
          
          

        

        
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      8.           Release of
Seller

       

      As further consideration for payment of
the Purchase Price, Purchaser does hereby, on behalf of Purchaser and
Purchaser’s agents, representatives, attorneys, assigns, heirs, executors and
administrators (“Purchaser Releasors”) RELEASE AND FOREVER DISCHARGE the Seller
and the Seller Parties from all causes of action, suits, debts, claims and
demands whatsoever known or unknown, at law, in equity or otherwise, which
Purchaser or any of the Purchaser Releasors ever had, now has, or hereafter may
have, arising from or relating in any way to Seller’s status as a stockholder,
investor, lender or debtor of the Purchaser on or prior to the date hereof, any
agreement between Seller and the Purchaser or any Purchaser Releasor entered
into prior to the date hereof, the Seller’s purchase of any portion of the
Purchaser’s capital stock prior to the date hereof, any claims for reasonable
attorneys’ fees and costs, and including, without limitation, any claims
relating to fees, penalties, liquidated damages, and indemnification for losses,
liabilities and expenses, but not including (i) claims arising from the
200,000,000 shares of the Purchaser’s Common Stock owned by Seller on the date
hereof and (ii) any rights provided to such Purchaser Releasor under this
Agreement.  The release contained in this Section 8 is effective
without regard to the legal nature of the claims raised and without regard to
whether any such claims are based upon tort, equity, or implied or express
contract.  Except as specifically provided herein, it is expressly
understood and agreed that this release shall operate as a clear and unequivocal
waiver by Purchaser, on behalf of itself and the Purchaser Releasors, of any
such claim whatsoever.

      

      

      

      [REMAINDER OF PAGE INTENTIONALLY LEFT
BLANK.]

      

         

        
          
            
            

          

          
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        IN WITNESS WHEREOF, the parties hereto
have executed this Agreement as of the date set forth above.

        

        

        SELLER:

        

        YA
Global Investments, L.P.

        By:  Yorkville
Advisors, LLC

        Its:  Investment
Manager

         

        By:   Troy
Rillo                             
             

              Troy
Rillo, Senior Managing Director

         

        

        PURCHASER:

        

        Encompass
Group Affiliates, Inc.

        

        By:   Wayne I.
Danson                             

              Name:  Wayne
I. Danson

              Title:   President
and Chief Executive Officer

         

        
          
            
              	
                      Number
      of Transferred Shares:

                    	 	
                      3,000,000,000

                    
	 
      	 	 
      
	
                      Per
      Share Price:

                    	 	
                      $0.0001

                    
	 
      	 	 
      
	
                      Purchase
      Price:

                    	 	
                      $300,000

                    

            

          

        

         

        Purchaser’s
Address:

        420 Lexington Avenue, Suite
2739

        New York, NY 10170

        Attention: Wayne I. Danson

        Facsimile:  646.277.1666

        

        
          
            
            

          

          
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        SCHEDULE I

        

        

        

        YA Global Investments,
L.P.-Wiring Instructions-

        

        
          	
                  Bank Name:

                	
                  Wachovia
      Bank

                  Downtown
      Financial Center

                  101
      Hudson Street, NJ1022

                  Jersey
      City NJ 07302

                  Telephone#
      201-226-3045

                

        

        ABA/Routing# 031 201
467

        Account#
2000031475547

        Account Name: YA Global
Investments, L.P.

        Swift code: PNBPUS33 - for
international wires

         

         

         

        
          
            
            

          

          
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        STOCK POWER

        

        

        FOR VALUE RECEIVED, YA Global
Investments, L.P., formerly known as Cornell Capital Partners, L.P., an exempt
limited partnership organized under the laws of the Cayman Islands, hereby sells, assigns and transfers
unto:

        

        

        Encompass Group Affiliates,
Inc.

        

        Three Billion (3,000,000,000) shares of
Common Stock, , no par value per share, of Encompass Group Affiliates, Inc., a
Florida corporation (the “Company”), standing
in its name on the books of the Company , and does hereby irrevocably constitute
and appoint _________________________________________ attorney to transfer the
said stock on the books of the Corporation with full power of substitution in
the premises.

      

    

     

     

     

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            
                              
                                
                                  
                                    
                                      
                                        	
                                                Dated:

                                              	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                                YA GLOBAL INVESTMENTS,
      L.P.

                                              
	 	 	 	 
	 
      	 
      	 
      	
                                                By:

                                              	
                                                Yorkville Advisors,
      LLC,

                                              
	 
      	 
      	 
      	 
      	
                                                its Investment
      Manager

                                              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	
                                                By:

                                              	 
      
	 
      	 
      	 
      	
                                                Name:

                                              	
                                                Troy J.
Rillo

                                              
	 
      	 
      	 
      	
                                                Title:

                                              	
                                                Senior Managing
      Director

                                              

                                      

                                    

                                  

                                

                              

                            

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

     

    
      
         

      

      
        8EXHIBIT 10.1

    

    SPECIFIC
TERMS OF THIS EXHIBIT HAVE BEEN OMITTED PURSUANT TO A REQUEST TO THE SECURITIES
AND EXCHANGE COMMISSION.  THE OMITTED INFORMATION HAS BEEN SEPARATELY
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.  THE OMITTED TERMS
HAVE BEEN MARKED AT THE APPROPRIATE PLACE WITH TWO ASTERISKS (**).

    

     

    ASSIGNMENT
AGREEMENT

     

    THIS
ASSIGNMENT AGREEMENT (this “Agreement”) is made effective as of March 1, 2009
(the “Effective
Date”), by and between RANCHER ENERGY CORP., a Nevada corporation (“Assignor” or
“Rancher”), and MERIT ENERGY COMPANY, LLC, a Delaware limited liability company
(“Assignee” or
“Merit”).

     

    WHEREAS,
as of the Effective Date, Assignor holds all right, title and interest, powers
and privileges in and to that certain Carbon Dioxide Sale & Purchase
Agreement dated as of February 1, 2008 by and between ExxonMobil Gas & Power
Marketing Company (a division of ExxonMobil corporation) (“Exxon”), as seller,
and Rancher Energy Corp., as buyer (the “Contract”;
capitalized terms used but not otherwise defined herein shall have the same
meanings ascribed to such terms in the Contract), which governs Exxon’s
agreement to sell, and Assignor’s agreement to purchase, certain quantities of
Carbon Dioxide;

     

    WHEREAS,
Assignor wishes to assign to Assignee, and Assignee wishes to assume, that
portion of Assignor’s right, title and interest in and to the Contract as it
relates solely to Assignor’s right to purchase from Exxon and obligations
related thereto, a Daily Contract Quantity of thirty-seven and one-half (37.5)
MMCF per day of Carbon Dioxide during the Initial
Merit Term (as hereinafter defined), (collectively, the “Assigned Interests”);
and

     

    WHEREAS,
Assignor also wishes to grant to Assignee, and Assignee wishes to receive, an
option to purchase a portion of the Carbon Dioxide to which Assignor is
otherwise entitled or obligated to purchase under the Contract.

     

    NOW,
THEREFORE, for One Hundred Dollars ($100.00) and other good and valuable
consideration including without limitation the mutual promises exchanged herein,
the receipt and sufficiency of all of which are hereby acknowledged, the parties
hereto agree as follows:

     

    
      
        	 	      
                1.

              	Term
      Assignment and Assumption:
	 	 	 
	
                 
      

              	
                (a)

              	
                As
      of the Effective Date, Assignor hereby TRANSFERS, CONVEYS, SELLS and
      ASSIGNS to Assignee all of its right, title and interest in and to the
      Assigned Interests, together with every right, privilege, and appurtenance
      relating to the Assigned Interests, free and clear of all liens and
      encumbrances arising by, through or under Assignor (the “Term
      Assignment”).  The Initial Merit Term is hereby defined as the
      period beginning on the Start-Up Date and continuing for two years
      thereafter.

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (b)

            	
              Assignor
      and Assignee agree that this Agreement shall have the effect of creating
      two (2) contracts with Exxon that are separately performable and
      separately terminable.  Assignor and Assignee agree that the
      parties shall perform under the Contract as two (2) separate and distinct
      contracts, one as between Assignee and Exxon with respect to the Assigned
      Interests (the “Merit Contract”) and one as between Assignor and Exxon
      with respect to Assignor’s remaining rights under the Contract (subject to
      Assignee’s other rights hereunder, including the Options (as defined
      herein)).  For sake of clarity, in the event Assignee terminates
      the Merit Contract in accordance with the Assumption, Assignee shall have
      no obligation to purchase any Carbon Dioxide from Assignor, but shall
      retain the Options and such other rights as may exist under this Agreement
      (including, without limitation, those rights under Section
      2(h)).

            

    

    

    
      	
               
      

            	
              (c)

            	
              During
      the Initial Merit Term, Assignee hereby affirmatively and unconditionally
      assumes all of the obligations of Assignor under or by virtue of the
      Assigned Interests arising from and after the Effective
    Date.

            

    

     

    
      	
               
      

            	
              (d)

            	
              Assignee
      hereby agrees to pay to Assignor an amount equal to (**) per MCF of Carbon
      Dioxide for which Assignee is required to pay Exxon as a result of this
      Assignment; provided, however, for the sake of clarity, this fee paid by
      Assignee to Assignor shall not apply to (i) Make-Up Volumes, (ii) volumes
      not meeting Quality Specifications, (iii) volumes for which Assignee is
      not obligated to pay Exxon under the Contract, or (iv) to the extent Merit
      terminates the Merit Contract in accordance with the
      Assumption.  Payments by Assignee shall be made to Assignor
      monthly on or before the end of the month following the month in which
      volumes were paid for by Assignee to
Exxon.

            

    

     

    
      	
               
      

            	
              (e)

            	
              Assignee
      agrees to indemnify and hold the Assignor Indemnified Parties (as defined
      below) harmless from and against any and all claims, demands and causes of
      action of any kind and all losses, damages, liabilities, costs and
      expenses of whatever nature (including court costs and reasonable
      attorneys’ fees) (collectively, “Claims”)
      arising out of, or incident to, or occurring in connection with or
      relating to the Assigned Interests during the Initial Merit Term,
      including, without limitation, any non-compliance by Assignee with the
      terms and conditions of the Contract during the Initial Merit Term, but
      only insofar as such Claims pertain to the Assigned
      Interests.  As used herein, the “Assignor Indemnified
      Parties” shall mean Assignor and its successors, permitted assigns,
      and their respective affiliates, subsidiaries, shareholders, members,
      partners, officers, directors, employees, and
  agents.

            

    

     

    
      	
               
      

            	
              (f)

            	
              Assignor
      agrees to indemnify, defend, and hold the Assignee Indemnified Parties (as
      defined below) harmless from and against any and all Claims arising out
      of, or incident to, or occurring in connection with or relating to the
      Assigned Interests prior to the Effective Date and after the expiration of
      the Initial Merit Term and any additional Merit Terms, including without
      limitation, any non-compliance by Assignor with the terms and conditions
      of the Contract prior to the Effective Date.  As used herein,
      the “Assignee
      Indemnified Parties” shall mean Assignee and its successors,
      permitted assigns, and their respective affiliates, subsidiaries,
      shareholders, members, partners, officers, directors, employees, and
      agents.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (g)

            	
              Assignor,
      Assignee and Exxon (by virtue of its consent hereto) each acknowledge and
      agree that Assignee is accepting and assuming the Assigned Interests and
      only those rights and obligations under the Contract which are essential
      to give effect to the Assigned Interests conveyed to Assignee hereby
      during the Initial Merit Term, including,
      but not limited to, Merit’s compliance with a Proportionate Share of any
      Performance Assurances and,
      except as otherwise expressly provided herein, all other rights,
      privileges, obligations and liabilities of Assignor arising under or by
      virtue of the Contract (the “Retained Exxon Agreement”) shall remain with
      Assignor and are expressly not accepted or assumed by
      Assignee.  Assignor agrees to indemnify, defend, and hold the
      Assignee Indemnified Parties harmless from and against any and all Claims
      arising out of, or incident to, or occurring in connection with or
      relating to the Retained Exxon Agreement, whether arising prior to or from
      and after the Effective Date.

            

    

     

    
      
        	 	      
                2.

              	Option
      to Purchase:
	 	 	 
	
                 
      

              	
                (a)

              	
                During
      the Initial Merit Term, Merit shall have the option, in its sole
      discretion, to purchase from Rancher an additional six and one half (6.5)
      MMCF per day of CO2 (the “First Option”).  Merit shall exercise
      the First Option by providing written notice to Rancher of the amount of
      additional CO2 it desires to purchase pursuant to its option at least
      fifteen (15) days prior to the beginning of the month in which such
      additional volumes are to be delivered.  Any election by Merit
      to purchase additional CO2 pursuant to the First Option hereunder shall be
      deemed to continue month to month until Merit provides written notice to
      Rancher of any change at least fifteen (15) days prior to the beginning of
      the calendar month in which such change is to be
  effective.

              

      

    

     

    
      	
               
      

            	
              (b)

            	
              During
      the Term of the Contract with respect
      to  the Retained Exxon Agreement, but after the Initial Merit
      Term, to the extent Rancher is not using for its own tertiary recovery
      purposes any volumes of CO2 Rancher is otherwise obligated, or able, to
      purchase from Exxon under the Contract (“Excess Volumes”), Merit shall
      have the option, in its sole discretion, to purchase from Rancher so much
      of such Excess Volumes as is elected by Merit (the “Second Option,” and,
      together with the First Option, the “Options”).  Merit shall
      make any such election to purchase such Excess Volumes monthly (each, an
      “Additional Merit Term”) by providing written notice of its election at
      least fifteen (15) days prior to the beginning of such Additional Merit
      Term.  Merit’s election for the prior month shall continue month
      to month unless Merit otherwise notifies Rancher in writing at least fifteen (15) days before the end of a
      month of a change in such election.  Such election under
      the Second Option shall include the amount of such Excess Volumes Merit
      desires to purchase.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (c)

            	
              Any
      CO2 purchased by Merit from Rancher under the Options shall be purchased
      at a price equal to (**) per MCF (the “Merit Price”).  Rancher
      shall invoice Merit monthly for any amounts owed to Rancher pursuant to an
      exercise of the Options and Merit shall remit any undisputed amounts owed
      by the later of (i) the fifteenth (15th)
      day of the month following delivery of such invoice or (ii) seven (7) days
      of receipt of such invoice by Merit.  Merit shall make payments by wire
      transfer to an account specified by Rancher.  Merit shall
      notify Rancher of any disputes within twenty (20) days of receiving such
      invoice.  All invoices provided by Rancher to Merit shall
      contain the quantities sold, the Contract Prices paid by Rancher, and any
      other information reasonably requested by Merit from time to
      time.  In the event Merit does not timely pay any undisputed
      amounts due hereunder, Merit shall be subject to the same obligations as
      would be imposed on Rancher for late payment under the Retained Exxon
      Agreement (including, without limitation, interest payments and the
      cessation of deliveries under Section 5.3 of the Exxon
      Agreement).  Except as otherwise provided in the Retained Exxon
      Agreement, failure to timely make payments by Merit shall not constitute a
      basis for the termination of the
Options.

            

    

     

    
      	
               
      

            	
              (d)

            	
              All
      CO2 purchased by Merit from Rancher under the Options shall be delivered
      by Rancher to Merit at the existing flange connection between the
      ExxonMobil Carbon Dioxide Pipeline at mile post 112 and the Merit Carbon
      Dioxide pipeline near Baroil, Fremont County, Wyoming, and will meet the
      same Quality Specifications as when acquired by Rancher under the Retained
      Exxon Agreement.

            

    

     

    
      	
               
      

            	
              (e)

            	
              In
      the event it exercises one or both of the First Option and/or Second
      Option, Merit hereby agrees to reimburse Rancher for Merit’s Proportionate
      Share of (i) any reasonable third-party expenses incurred by Rancher in
      connection with any performance obligations imposed on Rancher under the
      Retained Exxon Agreement with respect to volumes taken pursuant to the
      Options, and (ii) any additional fees charged by Exxon under the Retained
      Exxon Agreement not already included in the Contract Price with respect to
      volumes taken pursuant to the Options, and
      shall comply with its Proportionate Share of any Performance Assurances
      (provided that nothing in this Agreement shall be construed to require
      Merit to reimburse Rancher for any costs incurred by Rancher in connection
      with Rancher’s Performance Assurances). For purposes of this
      Agreement, “Merit’s Proportionate Share” shall be a percentage determined
      with respect to any applicable period by dividing the MMCF of CO2
      purchased by Merit from Rancher pursuant to the Options during such period
      by the total MMCF of CO2 purchased by Rancher under the Retained Exxon
      Agreement during such period.  Rancher shall provide written
      notice to Merit of any such expenses and Merit shall pay Rancher any
      amounts owed thereunder within thirty (30) days of its receipt of such
      notice.

            

    

     

    
      	
               
      

            	
              (f)

            	
              Merit
      shall be entitled to Merit’s Proportionate Share of any GHGRR to which
      Rancher is entitled under the Retained Exxon Agreement with respect to
      volumes purchased pursuant to the Options.  Merit agrees to be
      responsible for Merit’s Proportionate Share of any performance assurances
      required to be provided by Rancher to Exxon under the Retained Exxon
      Agreement with respect to volumes purchased pursuant to the Options.  Merit’s Proportionate Share of
      performance assurances shall be provided at the same time and in the same
      manner as required to be provided by Rancher under the Contract, so long
      as Rancher provides Merit with written notice of such requirement in
      advance of the time such performance assurance is to be provided under the
      Contract so as to reasonably allow Merit to comply with its requirements
      hereunder.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (g)

            	
              During the period that Merit is purchasing volumes
      pursuant to the Options, Rancher shall take all actions reasonably
      required to comply with the terms and conditions of the Retained Exxon
      Agreement and to otherwise maintain the Retained Exxon Agreement as a
      valid, enforceable Agreement.  In the event Rancher is, or
      anticipates it will be, unable to perform its obligations under the
      Retained Exxon Agreement during such
      period, Rancher shall immediately provide Merit with notice
      thereof, and Merit shall have the right, in its sole discretion, to
      satisfy any such obligations in order to comply with or otherwise maintain
      the Retained Exxon Agreement.  In any such event, Rancher shall
      reimburse Merit for any third party expenses incurred by Merit (less an
      amount equal to Merit’s Proportionate Share of such
    expenses).

            

    

     

    
      	
               
      

            	
              (h)

            	
              In
      an Event of Default (as hereinafter
      defined) during the period that Merit
      is purchasing CO2 volumes pursuant to the Options, Rancher shall be
      obligated, in Merit’s sole discretion but subject to Exxon's rights and
      remedies and any other terms and conditions for Exxon’s benefit only in
      the Retained Exxon Agreement (including without limitation, Exxon’s right
      to terminate under Section 5.4(d) of the Retained Exxon Agreement), to
      assign the Retained Exxon Agreement to Merit.  Merit may
      exercise its election upon written notice to Rancher and Rancher shall
      deliver such assignment within five (5) days after receipt of Merit’s
      notice.   For purposes of this Agreement, an “Event of
      Default” will be deemed to occur if Rancher:  (a) makes an
      assignment for the benefit of creditors, or transfers or assigns to a
      creditor legal or equitable title, however effected, to any asset
      comprising all or a substantial portion of Rancher’s properties (other
      than cash) which is collateral or security for a debt or guarantee
      obligation owed to such creditor; (b) files a voluntary petition in
      bankruptcy; (c) is adjudged as bankrupt or insolvent, or has entered
      against it a final order of relief in any bankruptcy or insolvency
      proceeding; (d) files a petition or answer seeking for it any
      reorganization, arrangement, composition, readjustment, liquidation,
      dissolution or similar relief under any statute, law or regulation; (e)
      files an answer or other pleading admitting or failing to contest the
      material allegations of a petition filed against it in any proceeding of
      this nature; (f) seeks, consents to or acquiesces in the appointment of a
      trustee, receiver or liquidator of it or of all or any substantial part of
      its properties; (g) within 90 days after the commencement of any
      proceeding against it seeking reorganization, arrangement, composition,
      readjustment, liquidation, dissolution or similar relief under any
      statute, law or regulation, has not had such proceeding dismissed, or if
      within 90 days after the appointment without its consent or acquiescence
      of a trustee, receiver or liquidator of it or of all or any substantial
      part of its properties, the appointment is not vacated or stayed, or
      within 90 days after the expiration of any such stay, the appointment is
      not vacated.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    
      	
               
      

            	
              (i)

            	
              Rancher
      shall not enter into any amendment to the Retained Exxon Agreement that adversely affects Merit’s rights under the
      Options without the prior written consent of Merit, which shall not be unreasonably withheld,
      conditioned or delayed. 

            

    

     

    
      	
               
      

            	
              (j)

            	
              To the extent volumes are delivered under the
      Options, this Agreement incorporates by reference the following provisions
      of the Contract substituting Rancher for “Seller” and Merit for
      “Buyer:”  Section 7.2, Royalty Reimbursement; Article 8, Taxes;
      Section 9.2, Passage of Title; Article 10, Measurement and Computation of
      Volumes; Section 11.2, Disclaimer of Certain Warranties; Section 11.3,
      Failure of Carbon Dioxide to Meet Quality Specifications; Section 11.4,
      Limitation of Liability and General Indemnities; Section 11.6, Force
      Majeure; Section 11.7, Assignment; and Section 11.18,
      Confidentiality.  To the
      extent any of the foregoing impose financial or other quantifiable
      obligations on Merit, such obligations shall only be imposed on Merit on a
      proportionate basis in accordance with Merit’s Proportionate
      Share.

            

    

     

    
      
        	 	3.	      
                Miscellaneous.

              
	 	 	 
	
                 
      

              	
                (a)

              	
                Merit
      may, in its sole discretion, file a memorandum of this Agreement in the
      county records acknowledging the existence of the Term Assignment and the
      Options.

              

      

    

     

    
      	
               
      

            	
              (b)

            	
              Each
      of the parties hereto hereby represents and warrants to the other party
      hereto that it has the capacity set forth on the signature pages hereof
      with full power and authority to bind the party on whose behalf it is
      executing this Agreement, and its authority is not inhibited by any
      private agreement or legal
proceeding.

            

    

     

    
      	
               
      

            	
              (c)

            	
              Assignor
      hereby represents and warrants to Assignee that: (a) all of the Assigned
      Interests are fully assignable, subject to
      obtaining Exxon’s consent; (b) it has not assigned, transferred,
      mortgaged, pledged or otherwise encumbered any of its right, title and
      interest in, to and under the Assigned Interests; (c) its right, title and
      interest therein is free and clear of all liens and
      encumbrances.  This Agreement is expressly conditioned on, and
      subject to those terms and conditions contained in, Exxon’s consent to
      Assignor’s assignment of the Assigned Interests, as required by the
      Contract, in substantially the form of the (i) Consent to Assignment, and
      (ii) Assumption and Ratification of Carbon Dioxide Sale and Purchase
      Agreement; Partial Interest Assignment attached hereto as Exhibit A (the
      ”Assumption”) or as otherwise provided in Article 11.7 of the
      Contract.  In the event Exxon does not consent within ninety
      (90) days of the Effective Date, this Agreement shall terminate with no
      further liability or obligation by either
party.

            

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

    

    
      	
               
      

            	
              (d)

            	
              Assignor
      shall promptly execute and deliver such further instruments of assignment,
      transfer, conveyance, endorsement, direction or authorization and other
      documents as may be necessary to effectuate the purposes of this
      Agreement.

            

    

     

    
      	
               
      

            	
              (e)

            	
              This
      Agreement is governed by Colorado law, without regard to its conflicts of
      law provisions.  This Agreement may be executed in any number of
      counterparts, each of which may be executed by any one or more of the
      parties hereto, but all of which shall constitute one and the same
      instrument, and shall be binding and effective when all parties hereto
      have executed and delivered at least one
  counterpart.

            

    

     

    
      	
               
      

            	
              (f)

            	
              The
      terms and provisions of this Agreement shall be binding upon and inure to
      the benefit of the respective parties hereto, and their respective
      successors and assigns.

            

    

     

    
      	
               
      

            	
              (g)

            	
              In
      the event of any conflict between the Contract and this Agreement, the Contract shall
  control.

            

    

     

    
      	
               
      

            	
              (h)

            	
              This
      Agreement is the complete and final agreement between the parties hereto
      and supersedes all prior negotiations and agreements, whether written or
      oral.  This Agreement may only be amended by written agreement
      signed by both parties.

            

    

     

    

    [Remainder
of this Page Intentionally Left Blank]

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

     

    IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first written above.

    
    

     

    
      
        
          
            	 	      
                    ASSIGNOR/RANCHER:

                    RANCHER
      ENERGY CORP.,

                    a
      Nevada corporation

                  
	 	 
	 	 
	 	 
	 	      
                    By:
      /s/John
      Works                            
      

                    Name:
      John
      Works                            
      

                    Title:
      President and
      CEO                    
      

                  

          

        

      

    

     

                                                                      

    

    

    

    

    
      	
              STATE
      OF COLORADO

            	
              §

            
	 
      	
              §

            
	
              COUNTY
      OF DENVER

            	
              §

            

    

    

               The
foregoing instrument was acknowledged before me by John Works, the President and
CEO of RANCHER ENERGY CORP., a Nevada corporation, on behalf of said corporation
this 17th day of
March, 2009.

    

    
      
        
          	 
      	
                  /s/Cheryl
      L. York

                
	 	      
                  Notary Public in and for the State of
      Colorado

                

      

    

    

    
      	
              (SEAL)

            	
              My
      Commission Expires: 09/24/2011

            

    

    

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          	
                  ASSIGNEE/MERIT:

                
	 
	
                  MERIT
      ENERGY COMPANY, LLC,

                
	
                  A
      DELAWARE LIMITED LIABILITY COMPANY

                
	 
      
	
                  BY:
      /S/ROBERT R.
      MATEJEK                                     
      

                
	
                  NAME:
      ROBERT R.
      MATEJEK                                  
      

                
	
                  TITLE:
      PRESIDENT                                                       
      

                

        

      

    

    

    

    

    

    
      	
              STATE
      OF TEXAS

            	
              §

            
	 
      	
              §

            
	
              COUNTY
      OF DALLAS

            	
              §

            

    

    

               The
foregoing instrument was acknowledged before me by Robert R. Matejek, the
President of MERIT ENERGY COMPANY, LLC, a Delaware limited liability company, on
behalf of said limited liability company this 16th day of
March, 2009.

    

    
      
        
          
            
              
                	 	
                        /s/Stephanie Lott

                      
	 	 
      
	 	
                        Notary Public in and for the State of
      Texas

                      
	 	 
	(SEAL)	My
      commission expires:
10/07/2012

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