Document:

Exhibit
      10.1

    

    PURCHASE
      AND SALE AGREEMENT

    

    This
      Purchase and Sale Agreement (“Agreement”)
      is made
      and entered into by and between Constance N. Knight, an individual resident
      of
      Colorado (“Seller”),
      and
      True North Energy Corp., a Nevada corporation (“Buyer”).
      

    

    WHEREAS,
      Seller
      owns certain oil and gas interests and properties located in the North West
      Colorado, with the geographic area more particularly described in the
      highlighted area set forth on the diagram on Exhibit
      “A”
      attached
      hereto (the “Area
      of Mutual Interest”);

    

    WHEREAS,
      Seller
      desires to sell, sell,
      assign, transfer, and convey and Buyer desires to purchase and pay for
      the
      oil and
      gas interests, the properties and the developed geologic concepts subject
      to the terms and conditions of this Agreement;

    

    NOWTHERFORE,
      the
      parties to this Agreement agree as follows:

    

    1.    Establishment
      of Area of Mutual Interest. The
      parties to this Agreement hereby agree to the establishment of the Area of
      Mutual Interest (“AMI”). Seller currently owns the leases set forth on
Exhibit
      “B”
      within
      the AMI (the “Existing
      Leases”).
      Buyer
      may acquire additional interests within the AMI, (the “After
      Acquired Interests”).
      For
      purposes of this Agreement, the term “After Acquired Interest” shall mean
      Buyer’s acquisition of any interest, real or personal, tangible or intangible,
      direct or indirect, whether such interest is owned outright by Buyer,
      beneficially, through another affiliated entity, joint venture or through a
      participation agreement within the AMI. Such “After Acquired Interests” may
      consist of leasehold interests, fee simple interests, joint ventures,
      participation agreements, or other similar arrangements. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      2.    Sale
        and Purchase of the Properties.
        Subject
        to the terms and conditions herein set forth, Seller agrees to sell, assign,
        convey and deliver to Buyer and Buyer agrees to purchase and acquire from
        Seller
        at the Closing (defined in Article 13, below) but effective as of 12:01 a.m.,
        Central Daylight Time, on June 1, 2007 (the “Effective
        Date”),
        all of
        Seller's right, title and
        interest in each property set forth on Exhibit
        “B”
        together
        with all other interest, if any, owned by Seller, in, to and under the Units,
        Wells, Leases, Rights of Way and Easements and all contracts relating thereto;
        and as of the Closing Date, all of Seller’s right, title and interest in any
        equipment located on or appurtenant to a Lease and used exclusively in
        connection with the operation of a Well, as well as all personal property,
        technical, geological, seismic and other geophysical data (all of the Existing
        Leases set forth on Exhibit
        “B”
        as well
        as the other interest and equipment referenced in this paragraph are
        collectively referred to as the “Properties”).
        It is
        expressly understood that the Properties include all oil and gas leases
        affecting lands and minerals owned by Seller in whole or in part located
        in the
        Area of Mutual Interest along with all producing and non-producing wells
        located
        thereon as well all oil and gas wells and disposal wells together with any
        surface and down hole equipment, well files for each well, tank batteries,
        heater treaters, compressors, flow lines, pipelines and other equipment used
        in
        the transportation or treatment of oil and gas, all pipe and other equipment,
        materials or supplies owned by Seller. 

       

    

    3.    Purchase
      Price and Transfer of Title.
      

     

    3.1
      The
      purchase price for the Properties is Sixty Dollars ($60.00) per acre, together
      with an overriding royalty, (collectively referred to as the “Purchase
      Price”)
      to be
      paid as follows:

     

    3.1.1 Cash
      Consideration:
      Twenty
      Dollars ($20.00) per acre in cash, for a total of Three hundred forty-five
      thousand, four hundred seventy-six and eighty cents ($345,476.80) paid to Seller
      by wire transfer at Closing (the “Cash
      Consideration”);

    

    3.1.2 Stock
      Consideration:
      Buyer
      restricted stock valued at the market close on the date of the execution of
      this
      Agreement, less a thirty-five percent (35%) discount and exchanged at a rate
      of
      Forty Dollars ($40.00) per acre (the “Stock
      Consideration”)
      as
      more fully described below; and,

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      3.1.3 Overriding
        Royalty:
        An
        Overriding Royalty Interest (“ORRI”)
        on the
8/8ths mineral
        interest of both the Existing Leases and the After Acquired Interests in
        accordance with the sliding scale set forth on Exhibit
        “C”
        attached
        hereto and incorporated herein on all Interests
        acquired by Buyer within the AMI as further defined in Section 1 hereinabove
        .
        If Buyer acquires a property by lease or purchase that is located within
        the AMI
        and that property is producing commercial quantities of oil and/or gas (a
        “Producing Property”), Buyer shall be permitted to recoup its Acquisition Costs
        prior to paying the ORRI to Seller. For purposes of this Section 3.1.3, the
        term
“Acquisition Costs” means the Purchase Price of the Producing Property,
        including broker commissions, title insurance and closing costs incurred
        by
        Buyer in connection with the acquisition of a Producing Property. In addition,
        the term Acquisition Costs shall include the Acquisition Costs of any other
        property located within the AMI that is acquired as part of the same transaction
        as the purchase of the Producing Property. In the event Buyer acquires a
        Producing Property located within the AMI and a non-producing property that
        is
        located outside of the AMI as part of the same transaction, Buyer shall not
        be
        entitled to recoup the Acquisition Costs of the non-producing property unless
        a
        separate agreement is negotiated with Seller.

       

    

    4.    Payment
      of Cash Consideration.
      The
      Cash Consideration shall be paid in full by wire transfer at Closing. The Cash
      Consideration shall be reduced by the amount of the funds advanced pursuant
      to
      the terms of the Promissory Note and Letter of Intent, together with any accrued
      interest. The Letter of Intent and Promissory Note are attached hereto and
      incorporated herein as Exhibit
      “D”.
      The
      Promissory Note shall be marked “Paid in Full” at Closing and returned to Seller
      at Closing.

     

    5.    Payment
      of Stock Consideration.
      The
      amount of the Stock Consideration shall be determined as follows:

    

    (a).        
      Valuation
      of the Buyer Stock.
      The
      price per share of the Buyer’s stock shall be determined (the “Valuation”)
      as of
      the market close on the date of the execution of this Agreement.

    

    (b).        
      Discount
      of Buyer Stock.
      The
      Valuation shall be reduced by the thirty-five percent (35%) discount to
      determine the price per share for the Stock Consideration (the “Contract
      Price”).
      The
      Buyer’s stock shall be issued to Seller based upon the Contract Price at Forty
      Dollars ($40.00) per acre.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    (c).        
      Example.
      Assuming the market close on the date of execution of this Agreement is Two
      dollars ($2.00) per share, the Contract Price would be One Dollar and thirty
      cents ($1.30) per share. For 17,273.4 acres at Forty Dollars ($40.00) per acre,
      the amount of the stock Seller would acquire is Six hundred ninety thousand,
      nine hundred fifty-three and sixty cents ($690,953.60) at One Dollar and thirty
      cents ($1.30) per share, or 531,503 shares.

    

    6.            
      Payment
      of ORRI.
      Upon
      acquisition of an After Acquired Interest within the AMI, Buyer will convey
      to
      Seller an ORRI in the After Acquired Interest. Such conveyance will be
      substantially in the form set forth on Exhibit
      “C” and Exhibit “F”.
      The
      royalty interests conveyed to shall: 

    

    
      	 	
              6.1

            	
              provide
                that Seller not bear gathering, transportation, processing, treatment
                and
                other costs of marketing production from the Properties, unless agreed
                to
                in writing by Seller; and

            

    

     

    
      	 	
              6.2

            	
               Buyer
                will take such additional steps as necessary to reflect the conveyance
                in
                the records of the Federal Bureau of Land
                Management.

            

    

    

    7.    Timing
      for Initiation of Development. Buyer
      shall have four years from the date of the execution of this Agreement to
      undertake development of the AMI. For purposes of this Agreement, the term
      “development of the AMI”
      means
      that Buyer, its affiliates or assigns have undertaken an operation to spudd
      a
      well, re-complete an existing well or deepen an existing well within the AMI
      within the first four years following date of the execution of this Agreement.
      If Buyer has not undertaken development of the AMI within four years of the
      execution of the Purchase Agreement, the Leases will revert to
      Seller.

    

    8.    Representations
      and Warranties of Seller.
      Seller
      represents and warrants to Buyer that:

    

    8.1         
      Authority.
      Seller
      has full power and authority to enter into this Agreement and to perform her
      obligations under this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

           
      8.2          Enforceability.
      This
      Agreement has been duly executed and delivered on behalf of Seller and
      constitutes the legal, valid and binding obligation of Seller enforceable in
      accordance with its terms. At the Closing, all documents required hereunder
      to
      be executed and delivered by Seller shall be duly authorized, executed and
      delivered and shall constitute legal, valid and binding obligations of Seller
      enforceable in accordance with their respective terms.

    

    8.3         
      Contracts.
      To
      the
      best of Seller’s knowledge after reasonable inquiry, all leases, operating
      agreements, production sales contracts, farmout agreements and other contracts
      or agreements respecting the Properties can be found of record in Moffat County,
      Colorado.  

    

    8.4         
      Litigation
      and Claims.
      To the
      best of Seller’s knowledge after reasonable inquiry, there are no claims,
      demands, filings, causes of action, administrative proceedings, lawsuits or
      other litigation pending or threatened that could now or hereafter materially
      and adversely affect Buyer’s ownership, operation or value of any of the
      Properties. 

    

    8.5         
      Warranty
      of Title. Seller
      shall warrant title to and defend title to the Properties conveyed to Buyer
      against every person whomsoever lawfully claiming title to the Properties,
      or
      any part thereof by, through or under Seller, but not otherwise.

    

    8.6         
      Access.
      Seller
      warrants that there is open access to the Properties on a year round basis,
      subject to any restrictions imposed by the State of Colorado or the Federal
      Bureau of Land Management.

     

    8.7         
      Restrictions.
      Seller
      warrants that there are no restrictions on the Properties as to the number
      of
      wells that can be drilled per acre, subject to any restrictions imposed by
      the
      State of Colorado or the Federal Bureau of Land Management.

     

    8.8         
      Occupancy.
      Seller
      warrants that to the best of Seller’s knowledge, there are no occupancy issues
      on the Properties such that Buyer could not freely drill due to housing or
      other
      development in the area.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    9.    Representations
      and Warranties of Buyer.
      Buyer
      represents and warrants to Seller that:

    

    9.1         
      Organization.
      Buyer
      is
      a Nevada corporation duly organized, validly existing and in good standing
      under
      the laws of the State of Nevada and is qualified to do business in and in good
      standing under the laws of the state where the Properties are located.

    

    9.2         
      Authority.
      Buyer
      has full power and authority and has taken all requisite action, corporate
      or
      otherwise, to authorize it to carry on its business as currently conducted,
      to
      enter into this Agreement, to purchase the Properties on the terms described
      in
      this Agreement and to perform its other obligations under this
      Agreement.

    

    9.3         
      Enforceability.
      This
      Agreement has been duly executed and delivered on behalf of Buyer, and
      constitutes the legal, valid and binding obligation of Buyer enforceable in
      accordance with its terms. At the Closing, all documents required hereunder
      to
      be executed and delivered by Buyer shall be duly authorized, executed and
      delivered and shall constitute legal, valid and binding obligations of Buyer
      enforceable in accordance with their respective terms.

    

    9.4         
      Due
      Diligence.
      Buyer
      represents that it has performed, or will perform before Closing, sufficient
      review and due diligence with respect to the Properties, including, without
      limitation, reviewing well data and other files and performing all on-site
      and
      other necessary evaluations, assessments and other tasks relating to the
      Properties, so as to enable Buyer to acquire the Properties under the terms
      of
      this Agreement.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.   Covenants
      of Seller.

    

    10.1        Conduct
      of Business Pending Closing.
      Seller
      covenants that from the Effective Date to the Closing Date, except (a) as
      provided herein, (b) as required by any obligation, agreement, lease, contract,
      or instrument referred to in any exhibit hereto, or (c) as otherwise consented
      to in writing by Buyer, Seller:

    

    10.1.1 (a)
      has
      not acted in any manner with respect to the Properties other than in the normal,
      usual and customary manner, consistent with prior practice; (b) has not disposed
      of, encumber or relinquish any of the Properties (other than relinquishments
      resulting from the expiration of leases that Seller has no right or option
      to
      renew); (c) has not waived, compromised or settled any material right or claim
      with respect to any of the Properties; or (d) has conducted capital or workover
      projects with respect to the Seller’s net interest in the Properties in excess
      of $100,000.00 per month.

    

    10.1.2 
      has used
      her best efforts to preserve relationships with all third parties having
      business dealings with respect to the Properties.

    

    10.1.3 has
      cooperated with Buyer in the notification of all applicable governmental
      regulatory authorities of the transactions contemplated hereby and has
      cooperated with Buyer in obtaining the issuance by each such authority of such
      permits, licenses and authorizations as may be necessary for Buyer to own and
      operate the Properties following the consummation of the transactions
      contemplated by this Agreement.

    

    10.2        Release
      of Geologic and Geophysical Information. Prior
      to
      Closing, Buyer  
      has been
      allowed at its own expense to review and copy geologic and geophysical
      information, maps, and data in Seller’s files attributable to the Properties to
      the extent Seller may disclose to Buyer such materials without violating any
      confidentiality agreements or licenses. Buyer agrees that it will obtain and
      use
      such materials at its own risk and expense. Buyer shall have the right to all
      of
      the original information in Seller’s possession which pertains in any way to the
      properties.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    10.3        Covenants
      of Seller.
      Seller
      shall cause all the representations and warranties of Seller contained in this
      Agreement to be true and correct in all material respects on and as of the
      Closing Date. To the extent the conditions precedent to the obligations of
      Buyer
      are within the control of Seller, Seller shall cause such conditions to be
      satisfied on or prior to the Closing Date and, to the extent the conditions
      precedent to the obligations of Buyer are not within the control of Seller,
      Seller shall use commercially reasonable efforts to cause such conditions to
      be
      satisfied on or prior to the Closing Date. All of Seller’s representations and
      warranties shall remain in full force and effect until the first anniversary
      of
      the Closing.

    

    11.   Covenants
      of Buyer.
      Buyer
      shall cause all the representations and warranties of Buyer contained in this
      Agreement to be true and correct on and as of the Closing Date. To the extent
      the conditions precedent to the obligations of Seller are within the control
      of
      Buyer, Buyer shall cause such conditions to be satisfied on or prior to the
      Closing Date and, to the extent the conditions precedent to the obligations
      of
      Seller are not within the control of Buyer, Buyer shall use commercially
      reasonable efforts to cause such conditions to be satisfied on or prior to
      the
      Closing Date.

    

    12.   Conditions
      Precedent to the Obligations of Seller.
      The
      obligations of Seller to be performed at Closing are subject to the fulfillment
      (or waiver by Seller in her sole discretion) before or at Closing, of each
      of
      the following conditions:

    

    12.1        Representations
      and Warranties.
      The
      representations and warranties by Buyer set forth in this Agreement shall be
      true and correct in all material respects at and as of the Closing as though
      made at and as of the Closing; and Buyer shall have performed and complied
      with,
      in all material respects, all covenants and agreements required to be performed
      and satisfied by Buyer at or prior to the Closing. 

    

    12.2        No
      Litigation.
      There
      are no suits, actions or other proceedings pending or threatened to enjoin
      the
      consummation of the transactions contemplated by this Agreement or seeking
      substantial damages against Seller in connection therewith.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    12.3        Approvals.
      All
      known
      approvals required to be obtained for the assignment of the Properties to Buyer
      have been obtained or waived or have expired without being exercised, except
      for
      those approvals which are customarily obtained after Closing. 

    

    12.4        Closing
      Obligations.
      Buyer
      shall contemporaneously perform its Closing obligations under Section
      12.

    

    13.   Conditions
      Precedent to the Obligations of Buyer.
      The
      obligations of Buyer to be performed at Closing are subject to the fulfillment
      (or waiver by Buyer in its sole discretion) before or at Closing, of each of
      the
      following conditions:

    

    13.1        Representations
      and Warranties.
      The
      representations and warranties by Seller set forth in this Agreement are true
      and correct in all material respects at and as of the Closing as though made
      at
      and as of the Closing; and Seller has performed and complied with, in all
      material respects, all covenants and agreements required to be performed and
      satisfied by Seller at Closing.

    

    13.2        No
      Litigation.
      There
      are no suits, actions or other proceedings pending or threatened to enjoin
      the
      consummation of the transactions contemplated by this Agreement or seeking
      substantial damages against Buyer in connection therewith.

    

    13.3        Consents.
      All
      known approvals required to be obtained for the assignment of the Properties
      to
      Buyer have been obtained or waived or have expired without being exercised,
      except for those approvals which are customarily obtained after Closing.

    

    13.4        Closing
      Obligations.
      Seller
      has performed its Closing obligations under Section 13.

    

    13.5        Due
      Diligence.
      Buyer is
      completely satisfied with the results of its due diligence, in its own
      discretion.

    

    13.6        Diminution
      in Value.
      There
      has been no material devaluation of the Properties, for any reason, in Buyer’s
      sole discretion.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    13.7        Title Defects.
      There
      are no outstanding Title Defects in the sole opinion of Buyer.

    

    13.8        Hazards.
      There
      are no outstanding Environmental Defects on the Properties, in the sole opinion
      of the Buyer.

    

    14.   Title
      Matters.

    

    14.1        Title
      Adjustment.
      On the
      Properties as identified on Exhibit
      “B”
      there
      shall not exist at Closing or at the time of the transfer of title from Seller
      to Buyer, any uncured lien, mortgage, pledge, claim, judgment or other charge
      which would cloud the title to the Properties. With
      respect to each Title Defect that is not cured on or before the Closing, the
      Purchase Price shall be reduced. If Buyer and Seller cannot agree on an
      adjustment in the Purchase Price resulting from a Title Defect, then Buyer
      shall
      have the option to immediately terminate this Agreement without any liability
      to
      the Buyer.

    

    14.1.1 The
      term
"Title
      Defect,"
      as used
      herein, shall mean, with respect to Seller’s interest in the Properties any
      lien, mortgage, pledge, claim, judgment, charge, option, defect, requirement
      for
      consent to assignment and other encumbrance which would apply to the transaction
      contemplated hereby, other than Permitted Encumbrances.

    

    14.1.2 The
      term
"Permitted
      Encumbrance,"
      as used
      herein, shall mean:

    

    (a)          
      Division
      orders and sales contracts terminable without penalty upon no more than 90
      days
      notice to the Buyer;

    

    (b)          
      Preferential
      rights to purchase and required third party consents to assignment and similar
      agreements with respect to which waivers or consents are obtained from the
      appropriate parties, or the appropriate time period for asserting any such
      right
      has expired without an exercise of the right;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    (c)          
      Materialman's,
      mechanic's, repairman's, employee's, contractor's, operator's, tax, and other
      similar liens or charges arising in the ordinary course of business for
      obligations that are not delinquent or that will be paid and discharged in
      the
      ordinary course of business or if delinquent, that are being contested in good
      faith by appropriate action of which Buyer is notified in writing before
      Closing;

    

    (d)   All
      rights to consent by required notices to, filings with, or other actions by
      governmental entities in connection with the sale or conveyance of oil and
      gas
      leases or interests therein if they are routinely obtained subsequent to the
      sale or conveyance;

    

    (e)   Easements,
      rights-of-way, servitudes, permits, surface leases and other rights in respect
      of surface operations that do not materially interfere with the oil and gas
      operations to be conducted on any well or lease;

    

    (f)    All
      operating agreements, unit agreements, unit operating agreements, pooling
      agreements and pooling designations affecting the Properties that are either
      of
      record in Seller's chain of title or reflected or referenced in Seller's files;
      

    

    (g)   Conventional
      rights of reassignment prior to release or surrender requiring notice to the
      holders of the rights;

    

    (h)   All
      rights reserved to or vested in any governmental, statutory or public authority
      to control or regulate any of the Properties in any manner, and all applicable
      laws, rules and orders of governmental authority;

    

    (i)    Any
      Title
      Defect Buyer may have expressly waived in writing.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

           
      14.2    Preferential
      Purchase Rights and
      Consents to Assign.
      Seller
      shall insure that all preferential purchase rights and consents to
      assign arising
      in connection with the assignment of the Properties to Buyer shall have been
      waived or obtained or shall have expired before or by the time of
      Closing; except those which are customarily obtained or received after Closing;
      provided, however, that if notice of the transaction contemplated herein has
      been given to a party or parties entitled to a preferential purchase right
      with
      respect thereto, but the time during which any such party or parties has to
      exercise such right has not expired, such shall not be considered as a Title
      Defect and the Property or Properties subject to such right shall be conveyed
      to
      Buyer at the Closing. In the event that any such preferential purchase right
      is
      timely exercised, Seller shall notify Buyer thereof, whereupon Buyer shall
      assign the Property or Properties affected thereby to the party or parties
      exercising such preferential purchase right with the consideration therefore
      to
      be paid directly to Buyer. 

    

    15.   Suspense
      Funds Held by Seller.
      At
      Closing, Seller will convey and Buyer agrees to receive all suspense funds,
      if
      any, held by Seller as of the Effective Date for the benefit of royalty,
      overriding royalty interest and working interest owners attributable to the
      Properties, the amount of such funds to be adjusted with respect to suspense
      funds received and disbursed by Seller from and after the Effective Date. At
      such time that the suspense fund is conveyed to Buyer, Buyer shall assume all
      past, present and future liability associated with such funds, but only as
      to
      the suspense funds actually transferred, and not to any liability resulting
      from
      Seller's failure to pay or retain any amounts prior to the Effective Date in
      addition to the suspense funds so transferred. All past, present and future
      liability associated with such funds shall be assumed by Buyer and Buyer agrees
      to protect, defend, indemnify and hold Seller and its employees harmless from
      and against any and all costs, expenses, claims, demands, and causes of action
      of every kind and character (including attorneys' fees and court costs) arising
      out of, incident to, or in connection therewith. Seller will provide Buyer
      a
      detailed schedule of any suspense funds held by Seller prior to
      Closing.

    

    16.   Closing.

    

    16.1     The
      Closing.
      The sale
      and purchase of the Properties pursuant to this Agreement shall be consummated
      on or before June 15, 2007, (the “Closing”)
      at the
      offices of True North Energy Corp., 1400 Woodloch Forest Dr., Suite 530, The
      Woodlands, Texas 77380, or at another location agreed to by the
      parties.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    16.2        
      Closing
      Obligations.
      At the
      Closing, the following events shall occur, each event under the control of
      one
      party hereto being a condition precedent to the events under the control of
      the
      other party, and each event being deemed to have occurred simultaneously with
      the other events:

    

     16.2.1
      Seller shall execute and deliver or cause to have executed and delivered to
      Buyer one or more instruments of assignment, in substantially the form of the
      Assignments set forth as Exhibit
      “D”
      hereto.
      Buyer and Seller agree to execute or cause to have executed all other forms
      necessary to affect the transfer of title to all of the Properties.

    

     16.2.2
      Buyer shall have wired the Cash Consideration to the account specified by Seller
      and shall have delivered the Stock Consideration to Seller.

     

    
      
        16.3        
          Buyer shall have executed the Overriding Royalty Interest
          Agreement.

         

      

    

    17.   Assumption
      of Certain Obligations.
      Buyer
      shall assume all costs and liabilities and discharge all obligations of Seller
      under all leases, operating agreements, production sales contracts, farmout
      agreements and other contracts or agreements relating to the Properties or
      relating to the ownership or operation of the Properties from and after the
      Closing Date.

    

    18.   Casualty
      Loss.
      At
      Closing, Seller shall provide Buyer a written statement representing there
      has
      been no Casualty Loss as to the Properties. "Casualty Loss" shall mean, with
      respect to all or any material portion of a Property, any destruction by fire,
      blowout or other casualty (above or below the ground), any major producing
      wells
      that cease to produce due to downhole technical problems and production can
      not
      be restored, or any taking, or pending or threatened taking, in condemnation
      or
      under the right to eminent domain of any Property or portion thereof occurring
      between the time this Agreement is executed and the Closing Date. If any
      Casualty Loss occurs, Buyer shall have the option not to Close.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    19.   Environmental
      Matters. 

    

    19.1        
      Buyer
      shall have the right, or the right to cause an environmental consultant
      (“Buyer's
      Environmental Consultant”),
      to
      conduct an environmental review of the Properties prior to Closing
      (“Buyer's
      Environmental Review”).
      The
      cost and expense of Buyer's Environmental Review, if any, shall be borne solely
      by Buyer. 

    

    19.2        
      If
      Buyer
      or Buyer's Environmental Consultant, if applicable, discovers any Environmental
      Defect (as herein defined) prior to Closing, Buyer shall notify Seller of such
      Environmental Defect. To be effective, such notice (an “Environmental
      Defect Notice”)
      must
      (i) be in writing; (ii) be received by Seller prior to Closing;
      (iii) describe the Environmental Defect in reasonable detail, and
      (iv) set forth Buyer's good faith estimate of the Environmental Defect
      Value. Upon the receipt of such effective notice from Buyer, Seller shall have
      the option, but not the obligation, to attempt to cure such Environmental Defect
      at any time prior to the Closing, at the sole cost and expense of
      Seller.

     

    19.3         As
      used
      in this Section:

     

    19.3.1 “Environmental
      Defect”
shall
      mean, with respect to any given Property, a violation of environmental laws
      in effect as of the date hereof in the jurisdiction in which such Property
      is
      located, an obligation under environmental laws to undertake within a reasonable
      period of time after Closing any corrective action at the Property, or any
      Environmental Liability arising from or attributable to any condition, event,
      circumstance, activity, practice, incident, action, or omission existing or
      occurring prior to the Closing Date, or the use, release, storage, treatment,
      transportation, or disposal of hazardous materials prior to the Closing Date,
      regarding which an Environmental Defect Notice has been timely and otherwise
      validly delivered.

     

    19.3.2 “Environmental
      Defect Value”
shall
      mean, (i) the value of the estimated costs and expenses to correct such
      Environmental Defect, consistent with environmental laws, or (ii) the value
      of the amount of Environmental Liabilities believed will be incurred or required
      to be paid by with respect thereto. 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    19.4        
      Notwithstanding
      anything to the contrary contained in this Agreement: (i) if the aggregate
      of the Title Defect Amounts and Environmental Defect Values is
      less
      than or equal to
      $50,000.00, then no adjustment of the Purchase Price shall be made therefore,
      and (ii) if the aggregate of the Title Defect Amounts and Environmental
      Defect Values is greater than $50,000.00, then the Purchase Price shall be
      adjusted downward by the amount of the aggregate of such Title Defect Amounts
      and Environmental Defect Values. If Buyer and Seller cannot agree on an
      adjustment in the Purchase Price resulting from an Environmental Defect, then
      Buyer shall have the option to immediately terminate this Agreement without
      any
      liability to the Buyer.

     

    20.   Termination
      and Remedies.
      Without
      limiting any other legal or equitable remedies available to either party, if
      the
      Closing has not occurred on or prior to June 15,
      2007,
      either
      party may terminate this Agreement upon written notice.

    

    21.   Further
      Assurances.
      After
      the
      Closing, Seller and Buyer shall execute, acknowledge and deliver, or cause
      to be
      executed, acknowledged and delivered, such instruments and take such other
      action as may be reasonably necessary or advisable to carry out their
      obligations under this Agreement and under any exhibit, document, certificate
      or
      other instrument delivered pursuant hereto. Seller shall use its best efforts
      to
      obtain all approvals and consents required by or necessary for the transactions
      contemplated by this Agreement that are customarily obtained after Closing,
      provided that Seller shall not be required to expend any funds to obtain such
      approvals and consents.

    

    22.   Records.
      At
      Closing Seller
      shall
      deliver to Buyer, at Seller's address, or at such other place as any of same
      may
      be kept, the originals of all the Data, except that Seller may
      retain:

    

    22.1.        copies
      of
      all the Data which relate to the Properties, and 

    

    22.2        
      copies
      of
      accounting Data,

    

    Seller
      shall make all files, data and information available to Buyer during normal
      business hours for a period of three (3) years after Closing.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    23.   Notices.
      All
      notices required or permitted under this Agreement shall be in writing and
      shall
      be delivered personally, by certified U.S. Mail or by fax as
      follows:

    

    
      	
              Seller:
                

            	
              Constance
                N. Knight

            
	 	
              1800
                Washington Avenue

            
	 	
              Golden,
                Colorado 80401

            
	 	
              Telephone:
                720-530-1387

            
	 	
              Attention:
                Ms. Connie N. Knight

            
	 	 
	
              Buyer:
                

            	
              True
                North Energy Corp.

            
	 	
              1400
                Woodloch Forest Dr., Suite 530

            
	 	
              The
                Woodlands, Texas 77380

            
	 	
              Telephone:
                281-733-8186

            
	 	
              Fax:
                832-553-7244

            
	 	
              Attention:
                Mr. John Folnovic

            

    

    

    or
      to
      such other place within the United States of America as either Seller or Buyer
      may designate as to themselves by written notice to the other. All notices
      given
      by personal delivery or mail shall be deemed received upon the date of actual
      receipt at the appropriate address. Notice given by fax shall be effective
      upon
      actual receipt if received prior to 5:00 p.m. during normal business days or
      at
      the beginning of the next business day after receipt if received after 5:00
      p.m.
      All notices by fax shall be confirmed promptly after transmission, by certified
      mail or personal delivery.

    

    24.   Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Colorado without regard to principles of conflicts of laws that would
      direct the application of the laws of another jurisdiction.

    

    25.   Assignment.
      This
      Agreement shall be binding upon and shall inure to the benefit of the successors
      and assigns of the parties hereto.

    

    26.   Entire
      Agreement; Amendments; Waivers.
      This
      Agreement constitutes the entire agreement between the parties hereto with
      respect to the subject matter hereof, superseding all prior negotiations,
      discussions, agreements and understandings, whether oral or written, relating
      to
      such subject matter. This Agreement may not be amended and no rights hereunder
      may be waived except by a written document signed by the party to be charged
      with such amendment or waiver. No waiver of any of the provisions of this
      Agreement shall be deemed or shall constitute a waiver of any other provisions
      hereto (whether or not similar) nor shall such waiver constitute a continuing
      waiver unless otherwise expressly provided.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    27.   Headings.
      The
      headings of the articles and sections of this Agreement and any listing of
      its
      contents are for guidance and convenience of reference only and shall not limit
      or otherwise affect any of the terms or provisions of this Agreement. Where
      the
      context so admits, words importing the singular number only shall include the
      plural, and likewise words importing a gender shall include any other
      gender.

    

    28.   Expenses,
      Fees and Taxes.
      Each
      of
      the parties hereto shall pay its own fees and expenses incident to the
      negotiation and preparation of this Agreement and consummation of the
      transactions contemplated hereby, including broker fees. Buyer shall be
      responsible for the cost of all fees for the recording of transfer documents.
      All other costs shall be borne by the party incurring them. Notwithstanding
      anything to the contrary herein, it is acknowledged and agreed by and between
      Seller and Buyer that the Purchase Price excludes any sales taxes or other
      taxes
      in connection with the sale of property pursuant to this Agreement. If a
      determination is ever made that a sales tax or other transfer tax applies,
      Buyer
      shall be liable for such tax as well as any applicable conveyance, transfer
      and
      recording fees, and real estate transfer stamps or taxes imposed on any transfer
      of property pursuant to this Agreement. Buyer shall release, defend, indemnify
      and hold harmless Seller with respect to the payment of any of such taxes,
      including any interest or penalties assessed thereon.

    

    29.   Laws
      and Regulations.
      From and
      after the Closing, until such time that the terms of the Note has been satisfied
      and the transfer of title to the Properties has taken place, Buyer and Seller
      shall comply with all applicable laws, ordinances, rules and regulations and
      shall properly obtain and maintain all permits required by public authorities
      with regard to the Properties, and shall provide and maintain with all
      applicable regulatory agencies all required bonds.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    30.   Public
      Announcements. Unless
      otherwise agreed to by the parties, until the Closing, neither party hereto
      shall make any press release or other public announcement regarding the
      existence of this Agreement, the contents hereof or the transactions
      contemplated hereby without the prior written consent of the other party except
      as required by applicable law or the applicable rules or regulations of any
      governmental body or stock exchange.

    

    31.   Not
      to be Construed Against Drafter. The
      parties acknowledge that they have had an adequate opportunity to review each
      and every provision contained in this Agreement and to submit the same to legal
      counsel for review and comment. Based on the foregoing, the parties agree that
      the rule of construction that a contract be construed against the drafter,
      if
      any, shall not be applied in the interpretation and construction of this
      Agreement.

    

    32.   Miscellaneous.

    

    32.1        
      Brokers.
      Any
      broker, finder or investment banker who may be entitled to brokerage, finder’s
      or other fee or commission in connection with the transactions contemplated
      by
      this Agreement based upon arrangements made by or on behalf of Seller or its
      affiliates will be compensated by the Seller. Seller agrees to save, defend,
      indemnify and hold Buyer harmless in regard to any such obligation to a
      broker.

     

    32.2        
      General.
      Each
      of
      the Parties will use its commercially reasonable efforts to take all action
      and
      to do all things necessary, proper, or advisable in order to consummate and
      make
      effective the transactions contemplated by this Agreement.

     

    32.3        
      Full
      Access. Seller
      will permit, and the Seller will cause Buyer to permit, representatives of
      the
      Buyer to have full access at all reasonable times and upon reasonable notice,
      and in a manner so as not to interfere with the normal business operations
      of
      Buyer and the performance of the Seller's duties under this Agreement, to all
      premises, properties, personnel, books, records (including Tax records),
      contracts, and documents of or pertaining to the Properties.

    

    32.4        
      Sales
      and Use Taxes. Seller
      will be responsible for the payment of any and all sales or use Taxes (if any)
      that may be incurred by Seller in connection with this transaction.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    32.5        
      Severability.
      If any
      term or other provision of this Agreement is held invalid, illegal or incapable
      of being enforce by any rule of law or public policy, all other conditions
      and
      provisions of this Agreement will nevertheless remain in full force and effect
      so long as the economic or legal substance of the transactions contemplated
      hereby is not affected in any manner materially adverse to any party. Upon
      such
      determination that any term or other provision is invalid, illegal or incapable
      of being enforced, the parties hereto will negotiate in good faith to modify
      this Agreement so as to effect the original intent of the parties as closely
      as
      possible in a mutually acceptable manner in order that the transactions
      contemplated hereby be consummated as originally contemplated to the greatest
      extent possible.

     

    32.6        
      No
      Third-Party Beneficiaries.
      This
      Agreement is for the sole benefit of the parties hereto and their permitted
      assigns and nothing herein, express or implied, is intended to or will confer
      upon any other person or entity any legal or equitable right, benefit or remedy
      of any nature whatsoever under or by reason of this Agreement, except for the
      indemnification rights contained herein.

     

    32.7        
      Amendment;
      Waiver.
      This
      Agreement may not be amended or modified except by an instrument in writing
      signed by both parties. Waiver of any term or condition of this Agreement will
      only be effective if in writing and will not be construed as a waiver of any
      subsequent breach or waiver of the same term or condition, or a waiver of any
      other term or condition of this Agreement.

     

    32.8        
      Counterparts.
      This
      Agreement may be executed in one or more counterparts, and by the different
      parties hereto in separate counterparts, each of which when executed will be
      deemed to be an original but all of which taken together will constitute one
      and
      the same agreement.

     

    32.9        
      Restriction
      on Disclosure of Agreement Terms.
      Neither
      party shall publicly disclose or announce the subject matter of this Agreement,
      other than to such party's employees, directors or advisors with a need to
      know
      such information, without the other party's prior consent; provided however,
      that notwithstanding the foregoing, a party may make such disclosures regarding
      this Agreement, as it determines with the advice of its legal counsel, are
      required under applicable laws and regulations or orders, decrees, inquiries
      or
      subpoenas of any court or governmental body, and in that case such party will
      give the other party prior notice of its intention to make such disclosure
      pursuant to this provision.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    32.10       Time
      of Essence.
      With
      regard to all dates and time periods set forth or referred to in this Agreement,
      time is of the essence.

    

    32.11       Exhibits.
      The
      following Exhibits are incorporated herein and are a part hereof.

    

    
      	
              Exhibit
                A -  
                Area
                of Mutual Interest

            
	 
	
              Exhibit
                B -     Leases

            
	 
	
              Exhibit
                C -    
                Sliding Scale for Royalties

            
	 	 	 
	
              33.

            	
              Exhibit
                D -

            	
              Letter
                of Intent/Promissory Note

            
	
              34.

            	 	 
	
              35.

            	
              Exhibit
                E -

            	
              Confidentiality
                and Non-Competition Agreement

            
	 	 	 
	
              Exhibit
                F -     Form
                of Overriding Royalty Interest

            

    

     

    EXECUTED
      this 21st
      day of
      June, 2007.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 	 	
                 SELLER

              
	 	 	 
	 	
                CONSTANCE
                  N. KNIGHT

              
	 
 	 
 	 
 
	 	By:  	/s/ Constance
                N. Knight 
	 	
                
Constance
                N. Knight
	 	 

      

      
        	 	 	 
	 	
                BUYER

              
	 	 
	 	True
                North
                Energy Corp.
	 
 	 
 	 
 
	 	By:  	/s/ John
                Folnovic
	 	
                
John
                Folnovic
	 	President
                and
                Chief Executive OfficerGrant
      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.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    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.

              

      

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

    

     

    
      	
              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.

            

    

     

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

     

    
      	
              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,
                

            

    

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

     

    
      
        	
                 

              	
                (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. 

              

      

    

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

     

    
      	
              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.

            

    

     

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

     

    
      	
              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.

     

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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.

              

      

    

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    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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