Document:

FORM
      OF WARRANT AGREEMENT

    

    THESE
      SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT
      OF
      1933 OR THE LAWS OF ANY STATE. SUCH SECURITIES AND ANY SECURITIES ISSUED
      HEREUNDER MAY NOT BE SOLD OR OTHERWISE TRANSFERRED UNLESS THEY ARE REGISTERED
      UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM
      REGISTRATION IS AVAILABLE, WITH SUCH EXEMPTION TO BE ESTABLISHED BY THE HOLDER
      TO THE SATISFACTION OF THE COMPANY.

     

    
      	 	 	
               W-1

            
	[             
              ], 2006	 	
                [              
                 ] Warrants

            

    

     

    RANCHER
      ENERGY CORP.

    

    WARRANT
      CERTIFICATE

    

    This
      warrant certificate (“Warrant Certificate”) certifies that for value received
      [       ] (the “Holder”) is the owner of the number of
      warrants (“Warrants”) specified above, each of which entitles the Holder thereof
      to purchase, at any time on or before the Expiration Date (hereinafter defined),
      one fully paid and non-assessable share of Common Stock, $0.00001 par value
      (“Stock”), of Rancher Energy Corp., a Nevada corporation (the
“Company”).

    

    1. Warrant;
      Purchase Price

    

    Each
      Warrant shall entitle the Holder to purchase one share of Stock of the Company
      and the purchase price payable upon exercise of the Warrants shall initially
      be
      U.S. $0.75 per share of Stock between the date hereof and
      [     ], 2007 and U.S. $1.00 per share of Stock between
      [   ], 2007 and [     ], 2008, subject to
      adjustment as hereinafter provided (the “Purchase Price”) and subject to the
      right of the Company to redeem such Warrants for no consideration upon 30 days
      notice. The Purchase Price and number of shares of Stock issuable upon exercise
      of each Warrant are subject to adjustment as provided in Article 6.

    

    2. Exercise;
      Expiration Date

    

    2.1 The
      Warrants are exercisable, at the option of the Holder, at any time after
      issuance and at or before 5:00 p.m. Denver time on the Expiration Date, upon
      surrender of this Warrant Certificate to the Company together with a duly
      completed Notice of Exercise, in the form attached hereto as Exhibit A, and
      payment of an amount equal to the Purchase Price times the number of Warrants
      to
      be exercised. In the case of exercise of less than all the Warrants represented
      by this Warrant Certificate, the Company shall cancel the Warrant Certificate
      upon the surrender thereof and shall execute and deliver a new Warrant
      Certificate for the balance of such Warrants. 

    

    2.2 The
      term
“Expiration Date” shall mean 5:00 p.m. Denver time on [    
], 2008, or if such date shall in the State of Colorado be a holiday or a day
      on
      which banks are authorized to close, then 5:00 p.m. Denver time the next
      following date which in the State of Colorado is not a holiday in a day on
      which
      banks are authorized to close.

     

    
      
        
        

      

      
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    FORM
      OF WARRANT AGREEMENT

     

    3. Registration
      and Transfer on Company Books

    

    3.1 The
      Company shall maintain books for the registration and transfer of the Warrants
      and the registration and transfer of the shares of Stock issued upon exercise
      of
      the Warrants. The Company may appoint an agent for the purpose of maintaining
      the register referred to in this Section 3.1, issuing the Stock then issuable
      upon the exercise of this Warrant, exchanging this Warrant, replacing this
      Warrant, or any or an of the foregoing. 

    

    3.2 Prior
      to
      due presentment for registration of transfer of this Warrant Certificate, or
      the
      shares of Stock issued upon exercise of the Warrants, the Company may deem
      and
      treat the registered Holder as the absolute owner thereof.

    

    3.3 Neither
      this Warrant Certificate, nor the Warrants represented hereby, may be sold,
      assigned, pledged or otherwise transferred voluntarily by the Holder without
      the
      consent of the Company.

    

    4. Reservation
      of Shares

    

    The
      Company covenants that it will at all times reserve and keep available out
      of
      its authorized Stock, solely for the purpose of issue upon exercise of the
      Warrants, such number of shares of Stock as shall then be issuable upon the
      exercise of all outstanding Warrants. The Company covenants that all shares
      of
      Stock which shall be issuable upon exercise of the Warrants shall be duly and
      validly issued and fully paid and non-assessable and free from all taxes, liens
      and charges.

    

    5. Loss
      or Mutilation

    

    Upon
      receipt by the Company of reasonable evidence of the ownership of and the loss,
      theft, destruction or mutilation of any Warrant Certificate and, in the case
      of
      loss, theft or destruction, of indemnity reasonably satisfactory to the Company,
      or, in the case of mutilation, upon surrender and cancellation of the mutilated
      Warrant Certificate, the Company shall execute and deliver in lieu thereof
      a new
      Warrant Certificate representing an equal number of Warrants.

    

    6. Adjustment
      of Purchase Price and Number of Shares Deliverable

    

    6.1 The
      number of shares of Stock or other security purchasable upon the exercise of
      each Warrant (such shares being referred to in this Section 6 as the “Warrant
      Shares”) and the Purchase Price with respect to the Warrant Shares shall be
      subject to adjustment as follows:

    

    (a) In
      case
      the Company shall (i) declare a dividend or make a distribution on its Stock
      payable in shares of its capital stock, (ii) subdivide its outstanding shares
      of
      Stock, through stock split or otherwise, (iii) combine its outstanding shares
      of
      Stock, into a smaller number of shares of Stock, or (iv) issue by
      reclassification of its of Stock (including any reclassification in connection
      with a consolidation or merger in which the Company is the continuing
      corporation) other securities of the Company, the number and/or nature of
      Warrant Shares purchasable upon exercise of each Warrant immediately prior
      thereto shall be adjusted so that the Holder shall be entitled to receive the
      kind and number of Warrant Shares or other securities of the Company which
      he
      would have owned or have been entitled to receive after the happening of any
      of
      the events described above, had such Warrant been exercised immediately prior
      to
      the happening of such event or any record date with respect thereto. Any
      adjustment made pursuant to this paragraph (a) shall become effective
      retroactively as of the record date of such event.

     

    
      
        
        

      

      
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    FORM
      OF WARRANT AGREEMENT

     

    (b) In
      the
      event of any capital reorganization or any reclassification of the capital
      stock
      of the Company or in case of the consolidation or merger of the Company with
      another corporation (other than a consolidation or merger in which the
      outstanding shares of the Company’s Common Stock are not converted into or
      exchanged for other rights or interests), or in the case of any sale, transfer
      or other disposition to another corporation of all or substantially all the
      properties and assets of the Company, the Holder of each Warrant shall
      thereafter be entitled to purchase (and it shall be a condition to the
      consummation of any such reorganization, reclassification, consolidation,
      merger, sale, transfer or other disposition that appropriate provisions shall
      be
      made so that such Holder shall thereafter be entitled to purchase) the kind
      and
      amount of shares of stock and other securities and property (including cash)
      which the Holder would have been entitled to receive had such Warrants been
      exercised immediately prior to the effective date of such reorganization,
      reclassification, consolidation, merger, sale, transfer or other disposition;
      and in any such case appropriate adjustments shall be made in the application
      of
      the provisions of this Article 6 with respect to rights and interest thereafter
      of the Holder of the Warrants to the end that the provisions of this Article
      6
      shall thereafter be applicable, as near as reasonably may be, in relation to
      any
      shares or other property thereafter purchasable upon the exercise of the
      Warrants. The provisions of this Section 6.1(b) shall similarly apply to
      successive reorganizations, reclassifications, consolidations, mergers, sales,
      transfers or other dispositions. If the per share consideration payable to
      the
      Holder hereof for shares in connection with any such transaction is in a form
      other than cash or marketable securities, then the value of such consideration
      shall be determined in good faith by the Company’s Board of
      Directors.

    

    (c) Whenever
      the number of Warrant Shares purchasable upon the exercise of each Warrant
      is
      adjusted, as provided in this Section 6.1, the Purchase Price with respect
      to
      the Warrant Shares shall be adjusted by multiplying such Purchase Price
      immediately prior to such adjustment by a fraction, of which the numerator
      shall
      be the number of Warrant Shares purchasable upon the exercise of each Warrant
      immediately prior to such adjustment, and of which the denominator shall be
      the
      number of Warrant Shares so purchasable immediately thereafter.

    

    6.2 No
      adjustment in the number of Warrant Shares purchasable under the Warrants,
      or in
      the Purchase Price with respect to the Warrant Shares, shall be required unless
      such adjustment would require an increase or decrease of at least 1% in the
      number of Warrant Shares issuable upon the exercise of such Warrant, or in
      the
      Purchase Price thereof; provided, however, that any adjustments which by reason
      of this Section 6.2 are not required to be made shall be carried forward and
      taken into account in any subsequent adjustment. 

     

    
      
        
        

      

      
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    FORM
      OF WARRANT AGREEMENT

     

    6.3 Whenever
      the number of Warrant Shares purchasable upon the exercise of each Warrant
      or
      the Purchase Price of such Warrant Shares is adjusted, as herein provided,
      the
      Company shall mail to the Holder at the address of the Holder shown on the
      books
      of the Company, a notice of such adjustment or adjustments, prepared and signed
      by the Chief Financial Officer or Secretary of the Company, which sets forth
      the
      number of Warrant Shares purchasable upon the exercise of each Warrant and
      the
      Purchase Price of such Warrant Shares after such adjustment, a brief statement
      of the facts requiring such adjustment and the computation by which such
      adjustment was made.

    

    6.4 In
      the
      event that at any time prior to the expiration of the Warrants and prior to
      their exercise:

    

    (a) the
      Company shall declare any distribution; or

    

    (b) there
      shall be a voluntary or involuntary dissolution, liquidation, or winding up
      of
      the Company (other than in connection with a consolidation, merger, or sale
      of
      all or substantially all of its property, assets and business as an entity);
      or

    

    (c) any
      notice shall be required to be mailed to the holders of Stock pursuant to the
      Company’s Certificate of Incorporation;

    

    (each
      such event hereinafter being referred to as a “Notification Event”), the Company
      shall cause to be mailed to the Holder, not less than 10 days prior to the
      record date, if any, in connection with such Notification Event (provided,
      however, that if there is no record date, or if 10 days prior notice is
      impracticable, as soon as practicable) written notice specifying the nature
      of
      such event and the effective date of, or the date on which the books of the
      Company shall close or a record shall be taken with respect to, such event.
      Such
      notice shall also set forth facts indicating the effect of such action (to
      the
      extent such effect may be known at the date of such notice) on the Purchase
      Price and the kind and amount of the shares of stock or other securities or
      property deliverable upon exercise of the Warrants.

    

    6.5 The
      form
      of Warrant Certificate need not be changed because of any change in the Purchase
      Price, the number of Warrant Shares issuable upon the exercise of a Warrant
      or
      the number of Warrants outstanding pursuant to this Section 6, and Warrant
      Certificates issued before or after such change may state the same Purchase
      Price, the same number of Warrants, and the same number of Warrant Shares
      issuable upon exercise of Warrants as are stated in the Warrant Certificates
      theretofore issued pursuant to this Agreement. The Company may, however, at
      any
      time, in its sole discretion, make any change in the form of Warrant Certificate
      that it may deem appropriate and that does not affect the substance thereof,
      and
      any Warrant Certificates thereafter issued or countersigned, whether in exchange
      or substitution for an outstanding Warrant Certificate or otherwise, may be
      in
      the form as so changed.

     

    
      
        
        

      

      
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FORM
      OF WARRANT AGREEMENT

     

    7. Voluntary
      Adjustment by the Company

    

    The
      Company may, at its option, at any time during the term of the Warrants, reduce
      the then current Purchase Price to any amount deemed appropriate by the Board
      of
      Directors of the Company and/or extent the date of the expiration of the
      Warrants.

    

    8. Governing
      Law

    

    This
      Warrant Certificate shall be governed by and construed in accordance with the
      laws of the State of Colorado. 

    

    IN
      WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly
      executed by its officers thereunto duly authorized and its corporate seal to
      be
      affixed hereon, as of this [   ] day of [    
], 2006.

     

    
      	 	 	 
	 	RANCHER
              ENERGY
              CORP.
	 
 	 
 	 
 
	 	By:  	 
	 	
              
                

              

              Name: John Works 

              Title: CEO

            

    

     

    
      
        
        

      

      
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    FORM
      OF WARRANT AGREEMENT

    

    EXHIBIT
      A

    

    NOTICE
      OF
      EXERCISE

    

    The
      undersigned hereby irrevocably elects to exercise, pursuant to Section 2 of
      the
      Warrant Certificate accompanying this Notice of Exercise, ___________ Warrants
      of the total number of Warrants owned by the undersigned pursuant to the
      accompanying Warrant Certificate, and herewith makes payment of the Purchase
      Price of such shares in full.

     

    
      	 	 	 	Name
              of
              Holder
	 	 	 	 
	 	 	 	 
	
            	 	 	
              
Signature
	 	 	 	
               

              Address:08
      December 2006

    

    
      	
              To:

            	
              The
                holders of units (individually a “Unit
                Holder”
                and collectively the “Unit
                Holders”)
                consisting of shares (the “Shares”)
                of common stock, $.0001 par value (the “Common
                Stock”),
                and warrants (the “Warrants”)
                to purchase shares of Common Stock (the Shares and Warrants together
                are
                collectively the “Units”
                and each a “Unit”)
                of Rancher Energy Corp. (the “Company”)

            

    

     

    Dear
      Unit
      Holder:

    

    This
      letter agreement (the “Agreement”)
      sets
      forth the terms and conditions under which certain of the Unit Holders who
      participated in the Company’s Regulation S offering from approximately 10 July
      2006 through 02 November 2006 (the “Unit
      Offering”)
      agree
      to (i) waive temporarily the ability to exercise Warrants received as part
      of
      the Unit Offering, and (ii) to modify the registration rights concerning the
      Warrants and Shares received in the Unit Offering. Capitalized terms used herein
      and not defined herein shall have the meanings set forth in the Warrant
      Certificate (as defined below) or the Unit Purchase Agreement (as defined
      below).

    

    As
      you
      may be aware, the Company has entered into agreements to (i) acquire certain
      property located in Big Muddy Field (located in the Powder River Basin in
      Wyoming), and (ii) acquire working interests in Cole Creek South Field and
      South
      Glenrock B Field (both of which are located in the Powder River Basin) and
      is in
      the process of obtaining funds through one or more financings (each a
“Financing”)
      sufficient to consummate one or more acquisitions (the “Acquisitions”).

    

    The
      Company currently has 100,000,000 shares of Common Stock, $.0001 par value
      (“Common
      Stock”),
      authorized under its Articles of Incorporation, as amended (the “Articles”),
      and
      such amount of authorized shares is insufficient to accomplish the Financing(s)
      required to obtain funds sufficient to consummate the Acquisitions. The Company
      intends to amend the Articles to increase its authorized shares of Common Stock
      to 225,000,000 shares of Common Stock as promptly as practicable after the
      closing of the Financing(s).

    

    Each
      of
      the Unit Holders is a party to (i) a Warrant Certificate from the Company (the
      “Warrant
      Certificate”),
      which
      states that (A) the Unit Holder, pursuant to Section 2 thereof, may exercise
      the
      Warrants at any time prior to the Expiration Date, and (B) the Company, pursuant
      to Section 4 of the Warrant Certificate, shall keep available out of its
      authorized stock a sufficient number of shares as shall then be issuable upon
      the exercise of all outstanding Warrants, and (ii) a Unit Purchase Agreement
      with the Company (the “Unit
      Purchase Agreement”)
      which
      provides for certain registration rights, pursuant to Section 3 thereof (the
      “Registration
      Rights”),
      concerning certain securities (the “Securities”).

    

    To
      facilitate the Company’s ability to accomplish the Financing(s) and to raise
      funds sufficient to consummate the Acquisitions, the undersigned Unit Holder
      agrees to waive certain rights under the Warrant Certificate and Unit Purchase
      Agreement and enter into certain other agreements as further described below.
      

     

    
      
        

      

    

    
      Address
        999-18th
        Street, Suite 1740, Denver, Colorado 80202 USA ● Phone
        +1.303.629.1122

      Fax
        +1.720.904.5698 ● Email—johnworks@rancherenergy.com●
        Web—www.rancherenergy.com

       

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    In
      consideration of the foregoing, and for other good and valuable consideration,
      the receipt and sufficiency of which are hereby acknowledged, the undersigned
      agrees as follows:

    

    1.
      Waiver
      and Agreement.
      Each of
      the undersigned Unit Holders, severally and not jointly with the other Unit
      Holders, hereby waives certain rights and makes certain agreements as described
      as follows:

    

    (a)
      Warrant
      Exercise.
      Such
      Unit Holder (i) hereby waives its right and ability to exercise its Warrants,
      pursuant to Section 2 of the Warrant Certificate, until such time as the Company
      has amended its Articles to increase its authorized shares of Common Stock
      to at
      least 225,000,000 shares; and (ii) hereby waives its rights under Section 4
      of
      the Warrant Certificate, which requires the Company to reserve and keep
      available out of its authorized stock such number of shares of Common Stock
      as
      shall be issuable upon the exercise of all outstanding Warrants, until such
      time
      as the Company has amended its Articles to increase its authorized shares of
      Common Stock to at least 225,000,000 shares.

    

    (b)
      Registration
      Rights.
      

    

    (i)
      Each
      of the undersigned Unit Holders, severally and not jointly with the other Unit
      Holders, hereby waives, any claims against the Company for failing to register
      such Unit Holder’s Securities within the 90 day period specified in Section 3 of
      the Unit Purchase Agreement.

    

    (ii)
      Each
      of the undersigned Unit Holders hereby agrees, severally and not jointly with
      the other Unit Holders, with the Company that the Registration Rights set forth
      in the Unit Purchase Agreement are hereby terminated and superseded by the
      registration rights set forth in this subsection 1(b)(ii). The Company shall
      register (A) the shares of Common Stock issued to the Unit Holder as part of
      the
      Unit, and (B) the shares of Common Stock issued or issuable upon exercise of
      the
      Warrants issued to the Unit Holder as part of the Unit (collectively, the
“Registrable
      Securities”)
      by
      filing (unless at such time the Registrable Securities may be resold pursuant
      to
      Rule 144(k) of the Securities Act of 1933, as amended, or
      any
      other rule of similar effect) with the Securities and Exchange Commission (the
      “SEC”)
      and
      using the Company’s best efforts to cause to become effective one or more
      registration statements beginning 12 months following the closing of the
      Financing. If the SEC requires that the Company reduce the number of shares
      so
      registered, then the Registrable Securities shall be decreased pro rata with
      the
      other shares included in any such registration, based on the number of
      Registrable Securities held by the Unit Holders and the number of other
      registrable securities held by the other participants in such registration.
      Each
      of the Unit Holders acknowledges that the foregoing registration rights may
      be
      amended, or compliance by the Company with the terms thereof waived, with the
      written consent of two-thirds in interest of the undersigned Unit
      Holders.

    

    2.
      Governing
      Law.
      THIS
      AGREEMENT SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS
      AND DECISIONS OF THE STATE OF COLORADO, WITHOUT REGARD TO THE CONFLICT OF LAWS
      PROVISIONS THEREOF.

    

    3.
      Captions.
      Section
      captions and headings used in this Agreement are for convenience only, and
      shall
      not affect the construction of this Agreement.

    

    4.
      Severability. 
      Whenever
      possible, each provision of this Agreement shall be interpreted in such manner
      as to be effective and valid under applicable law, but if any provision of
      this
      Agreement shall be prohibited by or invalid under such law, such provision
      shall
      be ineffective to the extent of such prohibition or invalidity, without
      invalidating the remainder of such provision or the remaining provisions of
      this
      Agreement.

     

    
      
        
          

        

      

      
        Address
          999-18th
          Street, Suite 1740, Denver, Colorado 80202 USA ● Phone
          +1.303.629.1122

        Fax
          +1.720.904.5698 ● Email—johnworks@rancherenergy.com●
          Web—www.rancherenergy.com

      

    

     

    
      
        
        

      

      
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    5.
      Counterparts
      & Execution of Agreement.
      This
      Agreement may be executed in any number of counterparts and by the different
      parties hereto on separate counterparts, and each such counterpart shall be
      deemed to be an original, but all such counterparts shall together constitute
      one and the same agreement. The exchange of copies of this Agreement and of
      signature pages by facsimile transmission shall constitute effective execution
      and delivery of this Agreement as to the parties and may be used in lieu of
      the
      original Agreement for all purposes. Signatures of the parties transmitted
      by
      facsimile shall be deemed to be their original signatures of all
      purposes.

    

    6.
      Successors
      & Assigns.
      This
      Agreement shall be binding upon the parties hereto and their respective
      successors and assigns, and shall inure to the benefit of such parties and
      their
      respective successors and assigns.

     

    7.
      Enforceability.
      The
      parties further acknowledge and agree that the enforceability of this Agreement
      as it pertains to the undersigned Unit Holder shall not be dependent upon
      obtaining an executed Agreement from any other Unit Holder or any other holder
      of the Company’s securities. 

    

    8.
      Full
      Force & Effect.
      Except
      as specifically stated in this Agreement (i) this Agreement shall not
      limit, diminish or waive the obligations of the parties under the Warrant
      Certificate or Unit Purchase Agreement, and (ii) the parties reaffirm their
      obligations under the Warrant Certificate and Unit Purchase Agreement to which
      they are a party and agree that the Warrant Certificate and Unit Purchase
      Agreement remain in full force.

    

    9.
      Information.
      The
      Unit Holder acknowledges that it has all information needed to enter into the
      agreements and make the waivers contemplated by this Agreement and if it has
      requested any information from the Company it acknowledges receiving the
      same.

    

    [Remainder
      of Page Intentionally Left Blank]

     

    
      
        
          

        

      

      
        Address
          999-18th
          Street, Suite 1740, Denver, Colorado 80202 USA ● Phone
          +1.303.629.1122

        Fax
          +1.720.904.5698 ● Email—johnworks@rancherenergy.com●
          Web—www.rancherenergy.com

      

    

     

    
      
        
        

      

      
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    If
      you
      accept the foregoing terms, please execute in the space provided below and
      return one copy to the Company at the above fax number. 

    

    Sincerely,

    

    RANCHER
      ENERGY CORP.

    
      	 	 	 	 
	By:	 	 	 
	
              
                
Name:
                John Works

            	 	 	
            
	
              Title:
                President & Chief Executive Officer

            	 	 	
            

    

     

    AGREED
      & ACCEPTED effective as of the date set forth above:

    

    UNIT
      HOLDER:

    

    Signature
      of Individual Unit Holder: ________________________________________         

     

    Printed
      Name of Individual Unit Holder:
      _____________________________________       

    

    ______________________________________

    Printed
      Name of Entity (if applicable)

    

    By
      (Signature): _____________________________________      

    

    Name
      (printed) _____________________________________      

    

    Title:
      _______________________________        

    

    __________________________________________________

    Address

    

    __________________________________________________

    City,
      State, Postal or Zip Code, Country

     

    [Signature
      Page to Unit Holder Letter Agreement]

     

    
      
        
          

        

      

      
        Address
          999-18th
          Street, Suite 1740, Denver, Colorado 80202 USA ● Phone
          +1.303.629.1122

        Fax
          +1.720.904.5698 ● Email—johnworks@rancherenergy.com●
          Web—www.rancherenergy.com

         

      

    

    
      
        
        

      

      
        4

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