EXHIBIT 10.4
RANCHER ENERGY CORP.
MANAGEMENT RETENTION AGREEMENT
This Management Retention Agreement ("Agreement") is made and entered into
on October 27, 2009 (the "Effective Date") by and between Mathijs van Houweninge
(the "Key Person") and Rancher Energy Corp. (the "Company").
R E C I T A L S
A. Key Person is an officer, director or consultant of the Company,
and is providing valuable service to the Company, the loss of which would have
an adverse effect on the Company and its shareholders.
B. Due to Company's present financial condition and difficulty meeting
its current obligations, the Board of Directors of the Company (the "Board") is
considering reorganization of the Company pursuant to Chapter 11 of Title 11 of
the United States Code or other transactions which may result in a Change in
Control (as defined below) of the Company.
B. The Board has determined that the possibilities of a reorganization
or other Change in Control transaction and the uncertainty that they may raise,
may result in the departure or distraction of key personnel to the detriment of
the Company.
C. The Board believes it is in the best interests of the Company and
its stockholders to assure that the Company will have the continued dedication
and objectivity of the Key Person, notwithstanding the possibility, threat or
occurrence of a reorganization in bankruptcy or Change of Control of the
Company.
D. The Board believes that it is imperative to provide the Key Person
with an incentive to continue his or her service to the Company and to motivate
the Key Person to maximize the value of the Company in the event of such
occurrence for the benefit of its stockholders.
E. Certain capitalized terms used in this Agreement are defined in
Section 4 below.
The parties hereto agree as follows:
1. Term of Agreement. This Agreement shall terminate upon the earlier of
(i) one (1) year; (ii) thirty (30) days after the consummation of a Change in
Control; (iii) (30) days following the confirmation of a Reorganization Plan or
(iv) the date that all obligations of the parties hereto with respect to this
Agreement have been satisfied.
2. At-Will Employment or Consultancy Services. The Company and the Key
Person acknowledge that the Key Person's employment or consultancy to the
Company is and shall continue to be at will, as defined under applicable law,
and may be terminated by either party at any time, with or without cause or
notice.
3. Compensation Option. In consideration for entering into this Agreement,
Key Person shall receive special incentive compensation consisting of an option
to purchase 2,500,000 shares of the Company's Common Stock, $0.00001 par value
per share ("Option Shares"), exercisable at a price of $0.035 per share
("Option"). The Option shall be exercisable as to ten (10%) of the Option Shares
immediately, and as to the remaining ninety (90%) of the Option Shares upon the
earliest to occur of the following:
(i) November 1, 2010; or
(ii) the confirmation by the court of a Reorganization Plan filed with
the United States Bankruptcy Court in Colorado pursuant to Chapter 11
of the United States Bankruptcy; or
(iii)the dismissal from Chapter 11 Bankruptcy with approval of the
court; or
(iv) an event of a merger, consolidation, sale of assets or other
transaction which results in the holders of the Corporation's Common
Stock immediately before such transaction owning less than 50% of the
stock outstanding immediately before the transaction; or
(v) any other form of change of control as more fully defined in
Section 4(a) herein; or
(vi) a Voluntary Termination for Good Reason, as more fully set forth
herein.
In connection with the grant of the Option, the Company and Key Person shall
enter into a written option agreement in the form attached hereto as Exhibit A.
4. Definition of Terms. The following terms referred to in this Agreement
shall have the following meanings:
(a) Change of Control. "Change of Control" means the occurrence of any
of the following events:
(i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended) becomes
the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented
by the Company's then-outstanding voting securities who is not
already such as of the Effective Date of this Agreement; or
(ii) The consummation of the sale, exchange, lease or other
disposition by the Company of all or substantially all the
Company's assets to a person or group of related persons
(excluding any Company subsidiary), as such terms are defined or
described in Sections 3(a)(9) and 13(d)(3) of the Exchange Act,
in one transaction or a series of related transactions; or
(iii) The consummation of a merger, reorganization,
recapitalization, consolidation, or similar transaction of the
Company with any other corporation or other business entity, in
one transaction or a series of related transactions, other than a
merger, reorganization, recapitalization, consolidation or other
similar transaction which
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would result in the persons who held the voting securities of the
Company outstanding immediately prior thereto continuing to hold
voting securities that represent (either by remaining outstanding
or by being converted into voting securities of the surviving
entity or its parent) at least fifty percent (50%) of the total
voting power represented by the voting securities of the Company
or such surviving entity or its parent outstanding immediately
after such merger, reorganization, recapitalization,
consolidation or other similar transaction (excluding any voting
securities of the Company beneficially owned immediately prior
thereto by that business entity engaging in the merger,
reorganization, recapitalization, consolidation or similar
transaction with the Company or any person who is an affiliate of
such business entity immediately prior to the consummation of
such merger, reorganization, recapitalization, consolidation or
other similar transaction); or
(iv) A change in the composition of the Board occurring within a
one-year period beginning with the Effective Date of this
Agreement, as a result of which fewer than a majority of the
directors are Incumbent Directors. "Incumbent Directors" shall
mean directors who either (A) are directors of the Company as of
the Effective Date, or (B) are elected, or nominated for
election, to the Board with the affirmative votes of at least a
majority of those directors whose election or nomination was not
in connection with any transaction described in subsections (i),
(ii) or (iii) of this Section 4(c) or in connection with an
actual or threatened proxy contest relating to the election of
directors to the Board following the Effective Date of this
Agreement.
(b) Voluntary Termination for Good Reason. "Voluntary Termination for
Good Reason" means the Key Person's voluntary resignation after the
initial occurrence of any of the following: (i) a material reduction
of the Key Person's duties, title, authority or responsibilities (but
excluding a change in reporting relationships unaccompanied by a
material reduction in the Key Person's duties, title, authority or
responsibilities) relative to the Key Person's duties, title,
authority or responsibilities as in effect immediately prior to the
Change of Control or immediately prior to such reduction; (ii) a
material reduction by the Company in the Key Person's base salary or
consultancy fees as in effect immediately prior to the Change of
Control or immediately prior to such reduction; (iii) the Key Person's
relocation to a facility or working location more than thirty-five
(35) miles from the Key Person's facility or working location at such
time; (iv) a material reduction by the Company in the aggregate level
of Key Person benefits, if any, to which the Key Person was entitled
immediately prior to the Change of Control or immediately prior to
such reduction (other than a reduction that generally applies to
Company Key Persons); (v) the failure of the Company to obtain the
assumption of this Agreement by any successor contemplated in Section
6(a) below; or (vi) the material breach by the Company of this
Agreement. The Key Person must provide the Company a written notice of
the occurrence of the foregoing conditions no later than ninety (90)
days after the initial existence of such conditions. The Company may
remedy the above condition(s) during the thirty (30) day period
following the receipt of such notice from the Key Person and upon so
doing, a termination pursuant to a Voluntary Termination for Good
Reason shall be deemed not to have occurred.
(c) Reorganization Plan. "Reorganization Plan" shall mean a written
plan of reorganization filed with the United States Bankruptcy Court
in Colorado pursuant to Chapter 11 of the United States Bankruptcy
Code, which Reorganization Plan is confirmed by the court in the
proceeding.
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5. Non-Disclosure, Non-Solicitation and Other Continuing Obligations. In
consideration of any benefits the Key Person receives hereunder, the Key Person
agrees to continue to abide by the terms of the Confidentiality Agreement, if
any, and any related agreements that he or she executed in connection with his
or her employment or other position with the Company (including, but not limited
to, the confidentiality, return of confidential information and other materials,
invention assignment and non-solicitation provisions).
6. Assignment.
(a) Company's Successors. Any successor to the Company (whether
direct or indirect and whether by purchase, merger, reorganization,
recapitalization, consolidation, liquidation or otherwise) to all or
substantially all of the Company's business and/or assets shall assume the
obligations under this Agreement and agree expressly to perform the
obligations under this Agreement in the same manner and to the same extent
as the Company would be required to perform such obligations in the
absence of a succession. For all purposes under this Agreement, the term
"Company" shall include any such successor to the Company's business
and/or assets which executes and delivers the assumption agreement
described in this Section 6(a) or which becomes bound by the terms of this
Agreement by operation of law.
(b) Key Person's Successors. The terms of this Agreement and all
rights of the Key Person hereunder shall inure to the benefit of, and be
enforceable by, the Key Person's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
7. Notice.
(a) General. All notices, requests, demands and other communications
called for by this Agreement will be in writing and will be deemed given
(i) on the date of delivery if delivered personally, (ii) one (1) day
after being sent by a well-established commercial overnight service, or
(iii) four (4) days after being mailed by registered or certified mail,
return receipt requested, prepaid and addressed to the parties or their
successors at the following addresses, or at such other addresses as the
parties may later designate in writing:
If to the Company: Rancher Energy Corp.
999-18th St., Suite 3400
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
If to the Key Person: at his or her address set forth on the signature
page hereof.
(b) Notice of Termination. Any termination by the Key Person
pursuant to a Voluntary Termination for Good Reason as contemplated by
Section 3 of this Agreement shall be communicated by a notice of
termination to the other party hereto given in accordance with Section
7(a) of this Agreement. Such notice shall indicate the specific
termination provision in this Agreement relied on, shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis
for termination under the provision so indicated, and shall specify the
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termination date (which shall be not more than thirty (30) days after the
giving of such notice). The failure by the Key Person to include in the
notice any fact or circumstance which contributes to a showing of
Voluntary Termination for Good Reason shall not waive any right of the Key
Person hereunder or preclude the Key Person from asserting such fact or
circumstance in enforcing his or her rights hereunder.
8. Miscellaneous Provisions.
(a) No Duty to Mitigate. The Key Person shall not be required to
mitigate the value of any benefits contemplated by this Agreement, nor
shall any such benefits be reduced by any earnings or benefits that the
Key Person may receive from any other source.
(b) Amendment; Waiver. No provision of this Agreement shall be
modified, waived or discharged unless the modification, waiver or
discharge is agreed to in writing and signed by the Key Person and by a
representative of the Company on behalf of a majority of the Board
(excluding the Key Person, if he or she is also a Director). No waiver by
either party of any breach of, or compliance with, any condition or
provision of this Agreement by the other party shall be considered a
waiver of any other condition or provision or of the same condition or
provision at another time.
(c) Entire Agreement. This Agreement, the Option Agreement and the
agreements evidencing any other Company equity awards granted to the Key
Person represent the entire agreement and understanding between the
Company and the Key Person concerning the Key Person's arrangements with
the Company and supersede and replace any and all prior agreements and
understandings concerning the Key Person's arrangements with the Company.
(d) Choice of Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the State
of Colorado (with the exception of conflict of laws provisions).
(e) Severability. The parties hereto expressly agree and contract
that it is not the intention of any of them to violate any public policy,
statutory or common laws, rules, regulations, treaties or decisions of any
government or agency thereof. In the event that any provision hereof
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and
effect without being impaired or invalidated in any way. The invalid
portion of this Agreement shall be deemed to conform to a valid provision
most closely approximating the intent of the invalid provision, or, if
such conformity is not possible, then the invalid part shall be deemed not
to be a part of this Agreement at all.
(f) Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument.
(g) Legal Fees. To the extent permitted by law, the Company shall
pay all legal fees, costs of litigation, prejudgment interest and other
expenses incurred in good faith by the Key Person as a result of the
Company's refusal to provide the benefits to which the Key Person becomes
entitled under this Agreement; provided, however, that if the Company
prevails on all material issues of dispute in connection with such legal
action, then the Company shall not be obligated to reimburse the Key
Person for any such fees and expenses. The Key Person shall not be liable
for the Company's fees or costs related to any such litigation.
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9. Effect of Section 409A of the Code. Notwithstanding anything to the
contrary in this Agreement, if the Company determines (i) that on the date the
Key Person's employment with the Company terminates or at such other time that
the Company determines to be relevant, the Key Person is a "specified Key
Person" (as such term is defined under Section 409A) of the Company and (ii)
that any payments to be provided to the Key Person pursuant to this Agreement
are or may become subject to the additional tax under Section 409A(a)(1)(B) of
the Code or any other taxes or penalties imposed under Section 409A of the Code
("Section 409A Taxes") if provided at the time otherwise required under this
Agreement, then such payments shall be delayed until the date that is six (6)
months after date of the Key Person's "separation from service" (as such term is
defined under Section 409A of the Code) with the Company or such shorter period
that, as determined by the Company, is sufficient to avoid the imposition of
Section 409A Taxes. In addition, if any provision of this Agreement would cause
the Key Person to incur any penalty tax or interest under Section 409A of the
Code or any regulations or Treasury guidance promulgated thereunder, the Company
may reform such provision to maintain to the maximum extent practicable the
original intent of the applicable provision without violating the provisions of
Section 409A of the Code.
IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
set forth below.
RANCHER ENERGY CORP.,
a Nevada corporation
By: ____________________________
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, President
Date:___________________________
KEY PERSON
By: _______________________________________
Date
Name: Mathijs van Houweninge
Address: ▇▇▇▇▇▇▇▇▇▇▇▇ ▇
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
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