LOAN AGREEMENT
THIS
AGREEMENT,
dated
for reference the 9th
day of
June, 2006, is made
BETWEEN:
VENTURE
CAPITAL FIRST LLC,
a
company incorporated under the laws of the State of Nevada, having an office
at
Suite 3000, 000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X
0X0
(hereinafter
referred to as the “Lender”)
AND:
RANCHER
ENERGY CORP.,
a
company incorporated under the laws of the State of Nevada, having an office
at
Suite 1700, 0000 00xx
Xxxxxx,
Xxxxxx, Xxxxxxxx, XXX, 00000
(hereinafter
referred to as the “Borrower”)
WHEREAS
the
Borrower wishes to borrow and the Lender is willing to lend to the Borrower
the
sum of Five Hundred Thousand Dollars in US funds (US$500,000) on the terms
hereinafter set out.
NOW
THEREFORE THIS AGREEMENT WITNESSES
that in
consideration of the premises and the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
| 1. |
DEFINITIONS
|
Where
used in this Agreement, the following words and phrases shall have the following
meaning:
| (a) |
“Agreement”
means this Agreement and the schedules hereto, as at any time amended
or
modified and in effect;
|
| (b) |
“Charter”
means the Memorandum and Articles, the Articles and By-Laws or other
constating documents of the Borrower, as at any time amended or modified
and in effect;
|
| (c) |
“Event
of Default” means any event specified in subsection
7.1;
|
| (d) |
“Lender’s
Security” means the Note;
|
| (e) |
“Loan”
means the loan by the Lender to the Borrower established pursuant to
subsection 3.1; and
|
| (f) |
“Note”
means the non-interest bearing promissory note to be made by the Borrower
to the Lender as evidence of the Loan which shall substantially be
in the
form set out in Schedule “A”.
|
| 2. |
INTERPRETATION
|
| 2.1 |
Governing
Law
|
This
Agreement is governed by the laws of the State of Nevada and the parties attorn
to the non-exclusive jurisdiction of the courts of Nevada for the resolution
of
all disputes under this Agreement.
| 2.2 |
Severability
|
If
any
one or more of the provisions contained in this Agreement is found to be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein will not in any
way
be affected or impaired thereby.
1
| 2.3 |
Parties
in Interest
|
This
Agreement enures to the benefit of and is binding on the parties hereto and
their respective successors and permitted assigns.
| 2.4 |
Headings
and Marginal References
|
The
division of this Agreement into sections, subsections, paragraphs and
subparagraphs and the insertion of headings are for convenience of reference
only and do not affect the construction or interpretation of this
Agreement.
| 2.5 |
Currency
|
All
statements of, or references to, dollar amounts in this Agreement means lawful
currency of the United States of America.
| 3. |
THE
LOAN
|
| 3.1 |
Establishment
of the Loan
|
The
Lender agrees, on the terms and conditions set forth in this Agreement, to
lend
to the Borrower the sum of Five Hundred Thousand Dollars
($500,000).
| 3.2 |
Evidence
of Indebtedness
|
Indebtedness
of the Borrower to the Lender in respect of the Loan will be evidenced by the
Note, which will be made by the Borrower to the Lender at the time funds are
advanced, a copy of which form is attached hereto as Schedule “A”.
| 3.3 |
Repayment
of the Loan
|
The
Borrower will repay the Loan on or before December 9, 2006. The Loan will be
subject to interest payable to the Lender at maturity at a rate of Six Percent
(6%) per annum. The interest will be payable concurrently with repayment of
the
principal amount of the Loan. In the event the Loan is repaid on a date prior
to
the date of Maturity, interest will be paid on the principal amount up to the
date the Loan is repaid.
| 3.4 |
Repayment
of the Loan
|
The
Borrower may repay the Loan at any time without penalty, bonus or charges.
| 3.5 |
Conversion
into Securities
|
During
the term of the Agreement or upon maturity, the Lender will have the option
to
convert the Loan, or any portion thereof, into securities of the Company.
In
the
event the Lender wishes to convert the loan into shares, the shares will be
offered at a price per share equal to the closing price of the Company’s shares
on the XXX.XX market on the day preceding notice from the Lender of its intent
to convert the Loan, or any portion thereof, into shares of the Company, subject
only to the following:
2
In
the
event the Borrower is offering a financing opportunity to the general public,
the Lender will be granted the opportunity to convert the Loan into shares
or
units of the Borrower, whichever is being offered, at such price as is being
offered to the general investing public.
A
Notice
of Conversion is attached hereto as Schedule “B”.
| 4. |
SECURITY
FOR THE LOAN
|
| 4.1 |
Costs,
Charges and Expenses
|
The
Borrower will assume and pay all costs, charges and expenses, including
reasonable solicitors’ costs, charges and expenses on a special costs basis,
which may be incurred by the Lender in respect of this Agreement or the Lender’s
Security or which may be incurred by the Lender in respect of any proceedings
taken or things done by the Lender in connection therewith to collect, protect,
realize or enforce the Lender’s Security.
| 5. |
REPRESENTATIONS
AND WARRANTIES
|
| 5.1 |
Representations
and Warranties
|
The
Borrower represents and warrants to the Lender that:
|
(a)
|
the
Borrower is a corporation duly incorporated, validly existing and
in good
standing under the laws of the State of
Nevada;
|
|
(b)
|
the
Borrower has all requisite corporate power and authority to enter
into
this Agreement and to grant the Lender’s Security and to carry out the
obligations contemplated herein and
therein;
|
|
(c)
|
this
Agreement and the Lender’s Security have been duly and validly authorized,
executed and delivered by the Borrower and are valid obligations
of it;
and
|
|
(d)
|
no
Event of Default and no event which, with the giving of notice or
lapse of
time would become an Event of Default, has occurred or is
continuing.
|
| 5.2 |
Survival
of Representations and
Warranties
|
All
representations and warranties made herein will survive the delivery of this
Agreement to the Lender and no investigation at any time made by or on behalf
of
the Lender shall diminish in any respect whatsoever its rights to rely on those
representations and warranties. All statements contained in any certificate
or
other instrument delivered by or on behalf of the Borrower under or pursuant
to
this Agreement will constitute representations and warranties made by the
Borrower thereunder.
| 6. |
COVENANTS
OF THE BORROWER
|
The
Borrower covenants and agrees with the Lender that, at all times during the
currency of this Agreement, it will:
|
(a)
|
pay
the Loan and all other monies required to be paid to the Lender pursuant
to this Agreement in the manner set forth
herein;
|
|
(b)
|
duly
observe and perform each and every of its covenants and agreements
set
forth in this Agreement and the Lender’s
Security;
|
|
(c)
|
provide
the Lender with immediate notice of any Event of Default;
and
|
|
(d)
|
do
all things necessary to obtain and maintain the Lender’s Security in good
standing and make payment of all fees and charges in respect
thereto.
|
| 7. |
EVENT
OF DEFAULT
|
| 7.1 |
Definition
of Event of Default
|
The
Loan,
costs and any other money owing to the Lender under this Agreement will
immediately become payable upon demand by the Lender or, unless otherwise waived
in writing by the Lender, in any of the following events:
|
(a)
|
if
the Borrower defaults in any payment when due under this
Agreement;
|
|
(b)
|
if
the Borrower commits any default under any of the Lender’s Security
instruments;
|
|
(c)
|
if
the Borrower becomes insolvent or makes a general assignment for
the
benefit of its creditors, or if any order is made or an effective
resolution is passed for the winding-up, merger or amalgamation of
the
Borrower or if the Borrower is declared bankrupt or if a custodian
or
receiver be appointed for the Borrower under the applicable bankruptcy
or
insolvency legislation, or if a compromise or arrangement is proposed
by
the Borrower to its creditors or any class of its creditors, or if
a
receiver or other officer with like powers is appointed for the
Borrower;
|
3
|
(d)
|
if
the Borrower defaults in observing or performing any other covenant
or
agreement of this Agreement on its part to be observed or performed
and
such default has continued for a period of seven (7) days after notice
in
writing has been given by the Lender to the Borrower specifying the
default.
|
| 8. |
GENERAL
|
| 8.1 |
Waiver
or Modification
|
No
failure on the part of the Lender in exercising any power or right hereunder
will operate as a waiver of power or right nor will any single or partial
exercise of such right or power preclude any other right or power hereunder.
No
amendment, modification or waiver of any condition of this Agreement or consent
to any departure by the Borrower therefrom will be effective unless it is in
writing signed by the Lender. No notice to or demand on the Borrower will
entitle the Borrower to any other further notice or demand in similar or other
circumstances unless specifically provided for in this Agreement.
| 8.2 |
Time
|
Time
is
of the essence of this Agreement.
| 8.3 |
Further
Assurances
|
The
parties to this Agreement will do, execute and deliver or will cause to be
done,
executed and delivered all such further acts, documents and things as may be
reasonably required for the purpose of giving effect to this
Agreement.
| 8.4 |
Assignment
|
The
Borrower may not assign this Agreement or its interest herein or any part hereof
except with the prior written consent of the Lender.
| 9. |
NOTICES
|
| 9.1 |
Any
notice under this Agreement will be given in writing and may
be sent by
fax, telex, telegram or may be delivered or mailed by prepaid
post
addressed to the party to which notice is to be given at the
address
indicated above, or at another address designated by that party
in
writing.
|
| 9.2 |
If
notice is sent by fax, telex, telegram or is delivered, it
will be deemed
to have been given at the time of transmission or
delivery.
|
| 9.3 |
If
notice is mailed, it will be deemed to have been received
48 hours
following the date of mailing of the
notice.
|
| 9.4 |
If there is an interruption
in normal mail
service due to strike, labour unrest or other cause at or before
the time
a notice is mailed the notice will be sent by fax, telex, telegram
or will
be delivered.
|
| 10. | AMENDMENTS |
This
Agreement may be amended, waived, discharged, or terminated only by instrument
in writing signed by the party against whom enforcement of the amendment,
waiver, discharge or termination is sought.
| 11. | EXECUTION IN COUNTERPART |
This
Agreement may be signed in counterpart and each such counterpart, whether in
original or facsimile form, together shall constitute a true original and
provide satisfactory evidence that this Agreement has been duly executed by
the
parties hereto.
IN
WITNESS WHEREOF
the
Lender and the Borrower have executed and delivered this Agreement as of the
day
and year first written above.
VENTURE
CAPITAL FIRST LLC
_________________________________________________
Per: Xxxx
Xxxxxxxx, Director
_________________________________________________
Per: Xxxx Works, President
Per: Xxxx Works, President
4
SCHEDULE
“A”
to
the
Loan Agreement dated for reference the 9th
day of
June, 2006
between
Venture Capital First LLC and Rancher Energy Corp.
PROMISSORY
NOTE
Principal
Amount: US
$500,000
For
value
received, Rancher
Energy Corp. (the
"Borrower") hereby promises to pay to Venture
Capital First LLC
(the
"Lender") the principal sum of Five Hundred Thousand Dollars in US funds
(US$500,000) on the earlier of:
(i) December
9, 2006 :
(ii) any
change of control of the Borrower ("control" being defined as ownership of
or
control of direction over, directly or indirectly, 50% or more of the
outstanding voting securities of the Borrower); and
(iii) the
occurrence of an Event of Default (as defined in the Loan Agreement between
the
Borrower and the Lender dated for reference June 9, 2006),
together
with interest calculated at a rate of Six Percent (6%) per annum accruing on
the
outstanding principal amount, payable at maturity or upon repayment of the
Loan.
All payments under this promissory note will be made by cheque, bank draft
or
wire transfer (pursuant to wire transfer instructions provided by the Lender
from time to time) and delivered to the Lender. All payments made by the
Borrower will be applied first to interest and any other costs or charges owed
to the Lender, then to principal.
The
undersigned is entitled to prepay this promissory note, in whole or in part,
without notice or penalty. The undersigned waives demand and presentment for
payment, notice of non-payment, protest, notice of protest and notice of
dishonor. This promissory note will be governed by and construed in accordance
with the laws of the State of Nevada.
Dated:
June 9, 2006.
_________________________________________________
Per: Xxxx Works, President
Per: Xxxx Works, President
5
SCHEDULE
“B”
to
the
Loan Agreement dated for reference the 9th
day of
June, 2006
between
Venture Capital First LLC and Rancher Energy Corp.
CONVERSION
FORM
TO: Rancher
Energy Corp.
(Company)
The
undersigned Holder of a Loan in the amount of Five Hundred Thousand Dollars
in
US funds (US$500,000) hereby irrevocably elects to convert the said Loan (or
$
______________ principal thereof) into securities in accordance with the Terms
and Conditions of the Loan Agreement and directs that the securities issuable
and deliverable upon the conversion be issued and delivered to the address
indicated below.
| Dated: _______________________________________________________________ | ___________________________________________________________ |
| ____________________________________________________________ | (Signature of Holder) |
|
(Name
of Holder)
|
|
| ____________________________________________________________ | |
| (Address of Holder) |
6
