UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
AMENDMENT #3
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [_]
Filed by a Party other than the Registrant [X]
Check the appropriate box:
[X] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
RANCHER ENERGY CORP.
(Name of Registrant as Specified in Its Charter)
ANDREI STYTSENKO, SILVIA SOLTAN, VLADIMIR VASKEVICH, MATHIJS VAN HOUWENINGE
A.L. "SID" OVERTON, AND JEFFREY B. BENNETT
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
Dear Rancher Energy Shareholder:
We are the group of concerned shareholders, SSVVOB, referred to in the
Rancher Energy proxy that you might have received. We organized ourselves in the
last 70 days, being very displeased with the current Board of Rancher. We have
requested an annual shareholders' meeting to address our concerns and to allow
us to present our own candidates for directors. As a result, we received your
name and address through Rancher. We have filed the attached Proxy Solicitation
with the Securities and Exchange Commission, and we ask that you read and
consider it carefully, as opposed to the Company's Proxy, which you should also
receive. We need your votes for our director candidates and ask you to vote for
us on the YELLOW PROXY. We disagree with the direction of the Company and
believe the current Board is unable to preserve value for the shareholders. As
you know, the share price has fallen from over $3.00 to $0.02 per share.
Two years ago, shareholders invested $84 million in Rancher and its CO2
project. All our expectations were that development would soon start. We believe
Rancher potentially could recover a lot of oil, but sadly, the current
management has not been able to increase oil production. At the same time, money
has been spent on high management salaries, director compensation, and high
office expenses. Additionally, the current management and Board lost major
opportunities to attract senior debt or capital and entered into some burdensome
contracts with the company at risk of failure.
If the SSVVOB candidates are elected, we plan to cut staff, Board fees,
and office expenses first. Next, we intend to try to increase production to
further help Rancher's cash flow. At the same time, we intend to try to
renegotiate some of the burdensome contracts which current management has put in
place. If we are able to remove some of the contractual problems, we believe we
can raise the money to pay off the current short term debt.
This is not a quick and easy task. We believe Rancher is close to total
failure, and there is no guarantee we can succeed. We believe new faces with new
ideas can succeed in turning things around. This is a long term project, but we
believe the oil is there. If we are able to turn the current problems around, we
can again focus on bringing the CO2 to the property and reach for production
goals.
We need your support to elect the SSVVOB candidates as directors as
opposed to retaining the current directors and management.
Two things need to be done to support the SSVVOB candidates as
directors:
1. Carefully VOTE upon and RETURN the YELLOW PROXY in the enclosed
envelope.
2. Immediately, notify your broker, in writing, that you are going to
vote your own shares by written proxy and ask for written confirmation
from him.
If you have any questions, please e-mail Sid Overton at
Sidoverton@oalaw.net. We believe we will win with your support.
Thank you for your support.
Yours truly,
Sid Overton
For SSVVOB Group
Andrei Stytsenko
Silvia Soltan
Vladimir Vaskevich
Mathijs van Houweninge
Jeffrey B. Bennett
2
VOTING METHODS
THE ACCOMPANYING PROXY STATEMENT DESCRIBES IMPORTANT ISSUES AFFECTING
RANCHER ENERGY CORP. ("RANCHER"). IF YOU ARE A STOCKHOLDER OF RECORD, YOU HAVE
THE RIGHT TO VOTE YOUR SHARES. TO VOTE:
BY MAIL
A. MARK YOUR SELECTIONS ON THE ENCLOSED YELLOW PROXY CARD.
B. DATE AND SIGN YOUR NAME EXACTLY AS IT APPEARS ON YOUR YELLOW
PROXY CARD.
C. MAIL THE YELLOW PROXY CARD IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
IF YOUR SHARES ARE HELD IN THE NAME OF A BANK, BROKER, OR OTHER HOLDER
OF RECORD, YOU WILL RECEIVE INSTRUCTIONS FROM THE HOLDER OF RECORD THAT YOU MUST
FOLLOW IN ORDER FOR YOUR SHARES TO BE VOTED.
YOUR VOTE IS IMPORTANT. THANK YOU FOR VOTING.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
_________, 2009.
THE PROXY MATERIALS FOR THIS ANNUAL
MEETING ARE AVAILABLE OVER THE INTERNET AT WWW.SSVVOBGROUP.COM
3
2009 ANNUAL MEETING OF SHAREHOLDERS
OF
RANCHER ENERGY CORP.
(PRELIMINARY)
PROXY STATEMENT
OF
STYTSENKO, SOLTAN, VASKEVICH, VAN HOUWENINGE, A.L. "SID" OVERTON,
JEFFREY B. BENNETT ("SSVVOB")
THIS SOLICITATION IS BEING MADE BY SSVVOB AND NOT ON BEHALF OF THE BOARD OF
DIRECTORS OF THE COMPANY.
NOTICE OF AVAILABILITY OF PROXY MATERIALS VIA INTERNET
SSVVOB has made available the Proxy materials at Www.ssvvobgroup.com. Interested
parties may download the materials from that website.
1. GENERAL INFORMATION
All SSVVOB group members constitute shareholders of Rancher Energy Corp. or are
business acquaintances of shareholders of Rancher, who are dissatisfied with the
direction, progress, and financial position of the Company and believe that a
Board of Directors change and management change may be in the best interests of
the shareholders of the Company.
SSVVOB made this solicitation, because it believes the Company could be better
managed, in SSVVOB'S opinion. Additionally, SSVVOB is highly concerned that
during the three year tenure of the current directors and management, the share
price has fallen from over $3.00 per share to under $0.02 per share.
SSVVOB believes the directors and management are taking excessive compensation
in cash and stock from a Company that is in a dire financial situation, and the
Company continues to lease offices which are expensive considering the financial
position of the Company.
SSVVOB believes the existing Board of Directors and management have negotiated
contracts with burdensome terms with Anadarko Petroleum and Gas Rock Capital
which impair the Company and jeopardize its survival at this time.
The SSVVOB opposition slate of directors is determined to replace the CEO and
possibly all of the top management. The SSVVOB new directors would intend to cut
other expenses such as office expense and to not pay the directors other than
expense reimbursement for some time and to pay the new CEO significantly less
than the current amount being paid.
4
SSVVOB believes that the current management has lost credibility with industry
partners and potential capital sources, because it has been unable to perform on
its contractual obligations with Anadarko Petroleum, has been unable to get the
tertiary recovery process in the oil field underway, has been unable to raise
any further equity capital since 2007, and has continued a pattern of operating
losses without increasing revenues, which makes capital sources, who might
otherwise be interested in funding, unwilling to trust current management to be
able to turn around the performance of the Company. SSVVOB candidates have
talked to capital sources and have received such expressions of disinterest in
funding under the current financial and management situation. SSVVOB believes
that new faces at the negotiating table can achieve solutions and SSVVOB intends
to aggressively seek new capital. Finally, if SSVVOB can resolve some of the
business issues created by current management, which includes a defaulted
contract to acquire CO2 from Anadarko Petroleum, SSVVOB believes it can raise
the money to pay off the short term debt from capital sources, which are
currently unwilling to risk any new capital without certain debt and contractual
liability issues being resolved. SSVOB candidates would intend to negotiate a
settlement of the Anadarko contract and to achieve a new capital infusion to pay
off the Gas Rock Capital loan, which is due in the near term and which is
secured by the Company's oil field assets. Of course, there is no assurance that
SSVVOB candidates will be successful in any of these efforts if elected as Board
members.
BACKGROUND OF CONTACT WITH RANCHER BY SSVVOB GROUP
On December 31, 2008, the Company received a letter from an attorney
representing seven stockholders of the Company, including Andrei Stytsenko and
Vladimir Vaskevich, both members of the ssvvob group, stating that the directors
had acted negligently and contrary to their fiduciary duties. The letter
threatened a lawsuit against the Company and each member of the board of
directors, individually and demanded, among other things, that each of the
directors and executive officers; (i) resign their positions as directors and
executive officers, and (ii) call a stockholders meeting to elect Andrei
Stytsenko as the sole member of the Company's board of directors.
Jon Nicolaysen originally assembled the ssvvob group but has now withdrawn from
the group due to suggestions that he may have inadvertently and unintentionally
violated proxy rules of the sec. Jon Nicolaysen requested and was given a
shareholder list on February 11, 2009. On May 5, 2009, Jon Nicolaysen sent a fax
to Rancher requesting a shareholders meeting. Rancher sent back an e-mail
acknowledging the request. On May 6, 2009, Rancher sent an informal
acknowledgment of the request in which it agreed to discuss holding a
shareholders meeting at the next Board of Directors meeting.
On May 8, 2009, Rancher contacted Jon Nicolaysen by e-mail and suggested a
meeting between the Rancher Board and a representative of the SSVVOB group. On
May 12, 2009, Rancher notified Nicolaysen that Mark Worthey would be the Board
contact. On May 12, 2009, Jon Nicolaysen e-mailed John Works (president of
Rancher) and requested a discussion with the Rancher Board and requested
information about the renewal of the Gas Rock Capital loan.
5
On May 13, 2009, Mark Worthey, representing Rancher, and Jon Nicolaysen, then of
the SSVVOB group talked about holding a shareholders meeting, changing
management, and wanting to have new directors nominated by shareholders. On May
4, 2009, Nicolaysen sent a second request for a shareholders meeting to Rancher
and asking for a shareholder meeting to be held to vote upon shareholder
nominees to the Board. On May 21, 2009, Rancher's attorneys, a current Rancher
Board member, Mr. Worthey, Nicolaysen, and SSVVOB'S attorneys had a conference
call. A request for a combined proxy for the shareholders meeting was made by
SSVVOB, including Rancher nominees and shareholder nominees. Rancher said the
Board would discuss and respond. A discussion was had about whether the meeting
would be an annual meeting or a special meeting of shareholders, about a record
date, and about a future contact date.
On May 26, 2009, an e-mail was sent to a Rancher Board member, Mark Worthey, by
Nicolaysen, asking for status of response. The e-mail addressed Rancher's
attorney's cooperation on shareholder voting issues. It also discussed possible
litigation if fair treatment was not given to dissatisfied shareholders
regarding vote tabulation, and shareholder lists, again requesting a combined
proxy. On May 27, a Rancher Board member sent an e-mail to schedule a call to
discuss matters.
On May 27, Mark Worthey, a Rancher Board member, and Jon Nicolaysen discussed,
by telephone, shareholder meeting issues and the possibility of a combined
proxy. The call ended with both parties agreeing to be helpful if and when
problems arose in future discussions.
On May 28, 2009, Rancher's attorneys, a Rancher Board member, Worthy,
Nicolaysen, and the SSVVOB attorney held a conference call. They discussed the
holding of a shareholders meeting, voting, and the proxy. A tentative record
date of May 31, 2009 and a tentative shareholders meeting date of July 24, 2009
were discussed. Nicolaysen, again, requested a combined proxy slate.
On June 1, 2009, Nicolaysen requested, in person, from Rancher a shareholders
list. On June 2, 2009, SSVVOB'S attorney sent an e-mail to Rancher's attorneys
regarding a combined slate on the proxy. On June 3, 2009, an e-mail and a letter
from Rancher's attorneys to SSVVOB'S attorney denying a combined slate on the
proxy, was received.
From May 10 to June 14, 2009, Nicolaysen recruited five of the SSVVOB Board
candidates by telephone calls to each. The sixth candidate was contacted by
phone on or about June 16, 2009.
On June 5, 2009, Rancher's attorney e-mailed SSVVOB'S attorney firming up plans
for the shareholders meeting with the date, time, place, and record date. The
condition for obtaining the voter and NOBO lists from Rancher was in an
Affidavit as to the use and confidentiality signed by Nicolaysen regarding the
shareholder and NOBO lists.
6
Rancher, through its Board, determined that it would not accept or support any
of the candidates proposed by shareholders, nor would it list them in its Proxy
Statement for the next Annual Meeting. Accordingly, Mr. Nicolaysen and others
listed herein determined to propose an alternative slate of director candidates
to stand for election pursuant to Section 14 of the Securities Exchange Act of
1934. As noted in the opening paragraph of this background discussion, Mr.
Nicolaysen has withdrawn from the director candidate slate and group
participation.
REASON FOR THIS PROXY
In June 2009, the Board of Directors of Rancher Energy Corp. (the "Rancher")
rejected a proposal by SSVVOB to be listed as candidates for election as
directors in the Company's Proxy Statement. SSVVOB is therefore seeking proxies
from Rancher shareholders to vote to install six new directors nominated by
SSVVOB. Rancher failed to comply with Nevada laws and its own bylaws by failing
to hold an annual meeting within 18 months.
The Annual Meeting will be held at the principal office of Patton Boggs, LLP
which is located at 1801 California Street, Suite 4900, Denver, Colorado 80202
in ______________, 2009. We intend to ensure that shareholders are notified of
the date of the Annual Meeting promptly after the date is set by the Company.
SSVVOB is soliciting your proxy to vote at the annual meeting of the
shareholders, at which SSVVOB will vote your proxy in favor of, the election of
six SSVVOB candidates to fill six board positions (Andrei Stytsenko, Silvia
Soltan, Vladimir Vaskevich, Mathijs Van Houweninge, A.l. "Sid" Overton and
Jeffrey B. Bennett). If holders of a majority of the shares of common stock of
the company submit proxies in favor of these candidates at the annual meeting,
the SSVVOB candidates will be elected as six of the directors at the annual
meeting. If the holders of less than fifty percent of Rancher's common stock
sign and return the enclosed proxies, then the current directors, who are the
Company's nominees, will LIKELY be retained in office until the next annual
meeting, which may not occur until Summer or fall of 2010.
We are mailing each registered shareholder a copy of this Proxy Statement on or
about ____________________, 2009, and you can obtain the Proxy Statement, and
any other relevant documents, for free at the SEC's web site or from SSVVOB by
calling us at 701-223-1911.
7
2. THE SSVVOB CANDIDATES
SSVVOB proposes to fill six positions on the board of directors with its
candidates, JAndrei Stytsenko, Silvia Soltan, Vladimir Vaskevich, Mathijs van
Houweninge, A.L. "Sid" Overton and Jeffrey B. Bennett.
If holders of less than a majority of Rancher's common stock sign and return the
written consent, then SSVVOB may vote the executed proxies as directed at the
Annual Meeting but may not be successful electing the SSVVOB slate of directors.
The SSVVOB candidates have furnished the following information regarding their
principal occupations and certain other matters. Each of the SSVVOB candidates
has consented to be named herein and to serve as a director if elected.
ANDREI STYTSENKO, 44, DIRECTOR CANDIDATE
In 1996, he received a degree in Petroleum Engineering from Ivano-Frankivsk
(Ukraine) Technical Oil & Gas University. From March 2008 to present, he's been
retired. From May 2006 - March 2008, Mr. Stytsenko was with Ensign Drilling in
Calgary, Alberta. From February 2004 until mid-May 2006, Mr. Stytsenko served as
founder, President, Principal Executive Officer, Treasurer, Principal Financial
Officer, and Director of Metalex Resources, Inc., which changed its name to
Rancher Energy Corp. in May 2006. From January 2000 until February 2004, Mr.
Stytsenko was the secretary and a Director of Aberdene Mines Limited. From 1985
to 1996, Mr. Stytsenko was the managing supervisor for Ivano Frankovski Drilling
Company, located in North Russia. Mr. Stytsenko's responsibilities included
drilling holes up to 13,000 feet in depth for the exploration of oil and gas.
From 1997 until 1998, Mr. Stytsenko was field supervisor for Booker Gold
Exploration located in Vancouver, British Columbia. Mr. Stytsenko's
responsibilities included core loding, assaying and mapping.
Mr. Stytsenko was recruited by Jon Nicolaysen, because of his prior executive
and director experience, knowledge of the mineral property of the Company, and
willingness to serve and use his contacts to attempt to bring new capital and
management to Rancher.
SILVIA SOLTAN, 30, DIRECTOR CANDIDATE
In 2001, Ms. Soltan received her BS of Arts and Science from the University of
Toronto. From January 2002 until February 2005, Ms. Soltan has worked in
Executive Customer Relations at IBM Canada Ltd. From December 2007 to the
present, she has been President of Aden Solutions, Inc.
VLADIMIR VASKEVICH, 31, DIRECTOR CANDIDATE
In 2005, Mr. Vaskevich received a diploma from the Sauder School of Business,
UBC in Canada. From 2001 - 2006, Mr. Vaskevich was the President of Operations
and a director of Centre City Health Recovery, Inc. From 2007 to the present, he
has been President of Riverdale Mining, Inc.
MATHIJS VAN HOUWENINGE, 43, DIRECTOR CANDIDATE
Mr. van Houweninge studied Cognitive Artificial Intelligence at the University
of Utrecht, The Netherlands. In 1998, he attended the Young Managers Programme
at Insead Business School in Paris. In addition to being self-employed since
1992, Mr. van Houweninge was the founder and CEO of "Effective," a Dutch
software and consultancy firm, from 1992 - 2002. From September 2007 to April
2008, Mr. van Houweninge was an associate at Advisor Falcon Capital in London.
From May 2008 to December 2008, he was a Partner at Falcon Capital in London.
He currently serves as a Director of the following companies and organizations:
Nieuwe Regentesseschool, a Dutch primary school (Utrecht, November 2004,
non-profit); Blackwater Midstream Corp., a midstream gas storage facility (New
Orleans, May 2008, listed); Cybercity 3D, a 3D modeling and marketing company
(El Segundo, February 2008, non-listed); SkyPostal Networks, Inc., an air
courier services company (Miami, April 2008, listed); IonIP bv, a network and
business intelligence technology firm (Amsterdam, June 2008, non-listed); and
Skillcity, an ICT support organization (Utrecht, August 2008, non-profit).
8
A.L. SID OVERTON, 68, DIRECTOR CANDIDATE
In 1964, Mr. Overton received his B.A. from the University of North Dakota. In
1966, he earned his L.L.B. from the University of North Dakota School of Law,
and in 1969, he earned his J.D. from the University of North Dakota School of
Law. Since 1998, Mr. Overton has worked as a lawyer for Overton & Associates,
LLC.
JEFFREY B. BENNETT, 54, DIRECTOR CANDIDATE
Mr. Bennett obtained a Bachelor's of Arts from Western State College of Colorado
in 1979, majoring in Biology. Mr. Bennett has been a co-owner/partner in TCF
Services, Inc. From 2005 to present and a co-owner/partner in Flame Energy, Inc.
from May 2005 to present. He was Vice President of Operations of NQL Energy
Services in Alberta, Canada from June 2003 through 2005. He was employed by
Black Max Downhole Tools, Inc. From May 2001 through 2003, as a Region Manager.
From 2000 to 2001, Mr. Bennett was operations manager for the western United
States for Sharewell, Inc.
SSVVOB candidates beneficially own the following number of shares of Rancher
common stock:
BENEFICIAL OWNERSHIP OF RANCHER SHARES
NAME NUMBER NATURE PERCENTAGE(1)
- --------------------------------------------------------------------------------
Andrei Stytsenko 125,500(4) Indirect --
17 Olimpia Court
St. Albert, Alberta
Canada T8T 6P4
Silvia Soltan 0 -- --
Aden Solutions, Inc.
70 Chapman Road
Toronto, Ontario
Canada M9P 1E7
Vladimir Vaskevich 11,200 Indirect (2) less than 1%
Riverdale Mining, Inc.
20 Carl Crescent
Toronto, Ontario
Canada M1W 3R2
Mathijs van Houweninge 1,200,000(3) Direct 1%
Schoolstraat 6
3581 PS Utrecht
Netherlands
A.L. Sid Overton 0 -- --
Overton & Associates, LLC
6950 E. Belleview Ave., St. 202
Greenwood Village, CO 80111
Jeffrey B. Bennett
230 West 14th Street 3,000 Direct less than 1%
Casper, WY 82601
All candidates as a group 1,339,700 1.3%
(1) Percentages are based on an aggregate 119,516,723 shares issued and
outstanding as of June 2, 2009.
(2) Mr. Vaskevich beneficially owns 10,000 shares of Rancher through 6160638
Canada, Inc. and beneficially owns 1,200 shares of Rancher through Metro
Assessment.
(3) Mr. van Houweninge owns 600,000 shares and 600,000 warrants exercisable at
$0.75.
(4) Held in the name of his spouse, Oksana Guyemon.
9
There are no material proceedings in which any of the SSVVOB candidates are a
party adverse to Rancher or material proceedings in which the candidates have an
interest adverse to Rancher. Except for Andrei Stytsenko, founder, former
President and a director of Metalex Resources, Inc. (which changed its name to
Rancher) from February 2004 (inception) through mid-May 2006, none of the
candidates have previously been employed or engaged as an independent contractor
by Rancher nor as an officer or director of Rancher. There are no arrangements
or understandings between any of the candidates and any other party pursuant to
which any candidate was or is to be selected as a director or candidate, nor are
there any such arrangements within Item 5(b)(1)(viii) of Schedule 14A.
3. NOMINATION AND QUORUM REQUIREMENTS; VOTING PROCEDURES
Election of the SSVVOB candidates to Rancher's Board of Directors under the
terms contemplated by this proxy statement requires (1) the holding of the
Annual Meeting, which Rancher has indicated by its filed Proxy Statement may be
held in August or September 2009, and (2) the election of the SSVVOB candidates
by affirmative vote of a majority of the votes cast by the shareholders at the
Annual Meeting. The presence in person or by proxy of holders of at least a
majority of Rancher shares entitled to vote at the Annual Meeting will
constitute a quorum.
In order to have a quorum to transact business at the Annual Meeting, at least a
majority of the total number of issued and outstanding shares of common stock
must be present at the Annual Meeting, in person or by proxy. If there are not
sufficient votes for a quorum or to approve any proposal or elect Directors at
the time of the Annual Meeting, the Board of Directors may postpone or adjourn
the Annual Meeting in order to permit the further solicitation of proxies. At
any postponed or adjourned meeting, proxies received pursuant to this proxy
statement will be voted in the same manner described in this proxy statement
with respect to the original meeting. Under the rules applicable to
broker-dealers, the proposal for the election of a director is considered to be
a routine matter upon which brokerage firms may vote in their discretion on
behalf of their clients if such clients have not furnished voting instructions.
A "broker non-vote" occurs when a broker's customer does not provide the broker
with voting instructions on non-routine matters for shares owned by the customer
but held in the name of the broker. For such non-routine matters, the broker
cannot vote either way and reports the number of such shares as "non-votes."
Shares constituting broker non-votes are not counted or deemed to be present or
represented for the purpose of determining whether stockholders have approved a
matter, but they are counted as present for the purpose of determining a quorum
at the Annual Meeting.
Based on publicly available information, SSVVOB believes that Rancher common
stock is the only class of voting shares of Rancher and that all outstanding
shares will be entitled to vote at the Annual Meeting. Each share will be
entitled to one vote. The accompanying proxy will be voted in accordance with
the shareholder's instructions on such proxy. Each shareholder may join with
SSVVOB in the election of the six SSVVOB candidates, or the shareholder may
withhold its vote by failing to return the enclosed proxy. We do not anticipate
that any other business will be conducted at the Annual Meeting, but if Rancher
properly brings additional business before the Annual Meeting or any adjournment
or postponement thereof, we will have no authority to act on those other matters
for you under this proxy.
10
SSVVOB URGES SHAREHOLDERS TO SIGN THE ENCLOSED YELLOW PROXIES AND RETURN THEM
PROMPTLY. SSVVOB ALSO URGES YOU TO VOTE FOR ELECTION OF THE SSVVOB CANDIDATES TO
BRING NEW BOARD MEMBERS WITH BOARD EXPERIENCE AND PERSPECTIVES TO THE BOARD TO
CUT EXPENSES, TO RENEGOTIATE DEBT, AND TO BRING NEW MANAGEMENT. IF NO DIRECTION
IS GIVEN AND YOU RETURN THE SIGNED PROXY TO US, IT WILL BE VOTED FOR THE
ELECTION OF THE SSVVOB CANDIDATES. SHARES NOT VOTED, AND SHARES VOTED TO ABSTAIN
FROM THE VOTE WILL NOT BE TAKEN INTO ACCOUNT IN DETERMINING THE OUTCOME OF THE
ELECTION OF DIRECTORS, SO LONG AS A QUORUM IS PRESENT.
According to Rancher's Preliminary 14A filed on JULY 21, 2009, there were
119,516,723 shares of Rancher common stock outstanding as of June 2, 2009. Based
upon SSVVOB'S review of publicly available EDGAR filings, to SSVVOB'S knowledge,
the shareholders set forth below beneficially owned as of June 2, 2009, more
than five percent of the outstanding shares of Rancher common stock and the
executive officers and directors of Rancher beneficially owned as of June 2,
2009, the number of shares of Rancher common stock set forth below. We have no
means to determine if, between then and the date of this proxy statement, any
shares have been purchased or sold by the individuals identified in the table
below, except from any public filings.
DIRECTORS, OFFICERS, AND 5% BENEFICIAL OWNERS
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF SHARES PERCENT OF
BENEFICIALLY OWNED COMMON STOCK
(1)(2) OUTSTANDING(3)
- --------------------------------------------------------------------------------
John H. Works, 3,350,000 2.8%
Director, President, CEO, CFO,
Secretary, and Treasurer (4)
999-18th Street, Suite 3400
Denver, Colorado 80202
William A. Anderson, 1,078,106 less than 1%
Director (5)
999-18th Street, Suite 3400
Denver, Colorado 80202
Joseph P. McCoy 1,199,577 1%
Director (6)
999-18th Street, Suite 3400
Denver, Colorado 80202
Patrick M. Murray, 761,345 less than 1%
Director (7)
999-18th Street, Suite 3400
Denver, Colorado 80202
11
Myron (Mickey) M. Sheinfeld, Director (8) 761,345 less than 1%
999-18th Street, Suite 3400
Denver, Colorado 80202
Mark A. Worthey, 872,183 less than 1%
Director (9)
999-18th Street, Suite 3400
Denver, Colorado 80202
Richard E. Kurtenbach, 150,000 less than 1%
Chief Accounting Officer (10)
999-18th Street, Suite 3400
Denver, Colorado 80202
ALL EXECUTIVE OFFICERS AS A GROUP 8,172,556 6.8%
(7 PERSONS)
Hound Partners LLC, Hound Performance, LLC, 13,228,463 11.07%
Jonathan Auerbach (11)
101 Park Avenue, 48th Floor
New York, NY 10178
Hound Partners, LP, (12) 7,349,072 6.15%
101 Park Avenue, 48th Floor
New York, NY 10178
Hound Partners Offshore Fund, LP (13) 8,456,057 7.07%
101 Park Avenue, 48th Floor
New York, NY 10178
Persistency, Persistency Capital, LLC, 10,227,781 8.56%
Andrew Morris (14)
c/o 1270 Avenue of the Americas, Suite 2100
New York, NY 10020
The Bessemer Group, Incorporated, Bessemer 11,329,358 9.48%
Trust Company, N.A., Bessemer Investments
Management, LLC, Old Westbury Real Return
Fund (15)
Sergei Stetsenko (16) 8,896,000 7.44%
Paradeplatz 4
Zurich 8001 Switzerland
12
(1) Under SEC Rule 13d-3, a beneficial owner of a security includes any person
who, directly or indirectly, through any contract, arrangement, understanding,
relationship, or otherwise has or shares: (i) voting power, which includes the
power to vote, or to direct the voting of shares; and (ii) investment power,
which includes the power to dispose or direct the disposition of shares. Certain
shares may be deemed to be beneficially owned by more than one person (if, for
example, persons share the power to vote or the power to dispose of the shares).
In addition, shares are deemed to be beneficially owned by a person if the
person has the right to acquire the shares (for example, upon exercise of an
option) within 60 days of the date as of which the information is provided. In
computing the percentage ownership of any person, the amount of shares
outstanding is deemed to include the amount of shares beneficially owned by such
person (and only such person) by reason of these acquisition rights. As a
result, the percentage of outstanding shares of any person as shown in this
table does not necessarily reflect the person's actual ownership or voting power
with respect to the number of shares of common stock actually outstanding on the
date of this Proxy Statement.
(2) Except as indicated in the footnotes below, each person has sole voting and
dispositive power over the shares indicated.
(3) Percentages are based on an aggregate 119,516,723 shares issued and
outstanding as of June 2, 2009.
(4) Of this total, Mr. Works does not claim beneficial ownership or control of
75,000 shares, which have been previously gifted by Mr. Works to a family
member. Mr. Works also has beneficial ownership and control over 25,000 shares
of common stock that are held by The David Works Family Trust of which he is the
trustee and 175,000 shares that are held by trusts for the benefit of his minor
children of which he is the trustee.
(5) Includes options held by Mr. Anderson to purchase 4,000 shares of Common
Stock for $1.02 per share that will expire on April 20, 2017. 100,000 shares
held directly by Mr. Anderson are subject to the right of forfeiture and vested
20% (or 20,000 shares) upon grant and 20% on each one year anniversary
thereafter. Mr. Anderson also has beneficial ownership and control over 10,000
shares of common stock held by Anderson Securities Corp.
(6) Includes options held by Mr. McCoy to purchase 4,000 shares of Common Stock
for $1.02 per share that will expire on April 20, 2017. 100,000 shares held by
Mr. McCoy are subject to the right of forfeiture and vested 20% (or 20,000
shares) upon grant and 20% on each one year anniversary thereafter.
(7) Includes options held by Mr. Murray to purchase 4,000 shares of Common Stock
for $1.02 per share that will expire on April 20, 2017. 100,000 shares held by
Mr. Murray are subject to the right of forfeiture and vested 20% (or 20,000
shares) upon grant and 20% on each one year anniversary thereafter.
13
(8) Includes options held by Mr. Sheinfeld to purchase 4,000 shares of Common
Stock for $1.02 per share that will expire on April 20, 2017. 100,000 shares
held by Mr. Sheinfeld are subject to the right of forfeiture and vested 20% (or
20,000 shares) upon grant and 20% on each one year anniversary thereafter.
(9) Includes options held by Mr. Worthey to purchase 10,000 shares of Common
Stock for $1.63 per share that will expire on February 16, 2012. 100,000 shares
held by Mr. Worthey are subject to the right of forfeiture and vested 20% (or
20,000 shares) upon grant and 20% on each one year anniversary thereafter.
(10) Mr. Kurtenbach has options to purchase 450,000 shares of common stock at an
exercise price of $0.45 per share, which vest 33-1/3% on August 27, 2008,
33-1/3% on August 27, 2009, and 33-1/3% on August 27, 2010. These options expire
on August 27, 2012.
(11) Jonathan Auerbach, as managing member of Hound Performance, LLC, the
general partner for both Hound Partners, LP and Hound Partners Offshore Fund LP,
has voting power and investment control over shares of stock owned by Hound
Partners LP and Hound Partners Offshore Fund LP. Information obtained from a
Schedule 13G filed February 13, 2009.
(12) Jonathan Auerbach, as managing member of Hound Performance, LLC, the
general partner for both Hound Partners, LP and Hound Partners Offshore Fund LP,
has voting power and investment control over shares of stock owned by Hound
Partners LP and Hound Partners Offshore Fund LP. Includes Warrant to purchase
1,326,400 shares of common stock at an exercise price of $1.50 per share and
expire March 30, 2012. Information obtained from a Schedule 13G filed February
13, 2009.
(13) Jonathan Auerbach, as managing member of Hound Performance, LLC, the
general partner for both Hound Partners, LP and Hound Partners Offshore Fund LP,
has voting power and investment control over shares of stock owned by Hound
Partners LP and Hound Partners Offshore Fund LP. Includes Warrant to purchase
1,340,266 shares of common stock at an exercise price of $1.50 per share and
expire March 30, 2012. Information obtained from a Schedule 13G filed February
13, 2009.
(14) Includes warrants to purchase 3,333,333 shares of common stock at an
exercise price of $1.50 per share and expire March 30, 2012. Information
obtained from a Schedule 13G filed February 13, 2009.
(15) Information obtained from a Schedule 13D filed April 7, 2008.
(16) Information obtained from a Schedule 13D filed February 5, 2009.
14
4. VOTING YOUR SHARES AND REVOCABILITY OF PROXY
You may vote on the proxy even if you have previously voted a proxy provided to
you by Rancher. You may change your vote after you have submitted a proxy - only
your latest dated proxy counts. Execution and delivery of a proxy by a record
holder of shares will be presumed to be a proxy with respect to all shares held
by such record holder on the record date of the Annual Meeting unless the proxy
specifies otherwise. Only holders of record as of the record date of the Annual
Meeting will be entitled to vote. If you are a shareholder of record at the
close of business on the record date, you will retain your voting rights for the
Annual Meeting even if you sell your shares after the record date. Accordingly,
it is important that you grant a proxy to vote the shares held by you on the
record date, even if you sell your shares after the record date.
If you are a registered shareholder (those whose shares are owned in their name
and not in "street name") and attend the meeting, you may deliver your completed
YELLOW proxy card in person. "Street name" shareholders should follow the voting
instructions on the proxy form received from the institution that holds their
shares.
If your shares are held in street name, and you do not provide instructions as
to how your shares are to be voted in the election, your broker or other nominee
may not be able to vote your shares in the election of directions, and your
shares may not be voted for any of the nominees. We urge you to provide
instructions to your broker or nominee so that your votes may be counted on this
important matter. You should vote your shares by following the instructions
provided on the voting instruction card that you receive from your broker.
You may receive proxy solicitation materials from Rancher, including a Rancher
proxy statement and proxy card. The candidates urge you not to sign or return
any proxy card sent to you by Rancher. If you have previously voted using the
Rancher proxy card, you have every right to change your vote by executing the
YELLOW proxy card. Only the latest dated proxy you submit will be counted.
Your proxy to vote at the Annual Meeting is revocable, and you may revoke your
proxy at any time prior to its exercise by attending the Annual Meeting and
voting in person (although attendance at the Annual Meeting will not in and of
itself constitute revocation of a proxy), by giving oral notice of revocation of
your proxy at the Annual Meeting, or by delivering a written notice of
revocation or a duly executed proxy relating to the matters to be considered at
the Annual Meeting and bearing a date later than the date on your signed proxy
to the Secretary of Rancher at 999 18th Street, Suite 3400, Denver, Colorado
80202.
Unless revoked in the manner set forth above, your proxy to demand the Annual
Meeting will be submitted by SSVVOB in connection with its demand for the Annual
Meeting. Your proxy for the election of Directors nominated by SSVVOB at the
Annual Meeting will be voted at the Annual Meeting in accordance with your
instructions. In the absence of such instructions, your proxy will be voted for
election of the SSVVOB candidates.
15
PLEASE REVIEW VOTING INSTRUCTIONS ON THE ATTACHED YELLOW PROXIES. YOUR VOTE IS
IMPORTANT. WE URGE YOU TO JOIN WITH SSVVOB IN ITS VOTE FOR TO ELECT THE SSVVOB
CANDIDATES TO THE BOARD OF DIRECTORS BY SIGNING, DATING, AND RETURNING THE
ENCLOSED YELLOW PROXIES TODAY, BECAUSE SSVVOB BELIEVES THAT IT IS IN THE BEST
FINANCIAL INTEREST OF THE SHAREHOLDERS TO CHANGE THE BOARD AND MANAGEMENT.
If you have any questions about the voting of shares, please call A.l. Sid
Overton At 303-779-5900.
5. SOLICITATION OF PROXIES
Proxies will be solicited by mail, telephone, facsimile, e-mail, or in person.
Information regarding executive officers, employees, and other representatives
of SSVVOB who may solicit proxies or assist in the solicitation of proxies is
set forth in the table below. We have not retained the services of anyone to
assist in obtaining proxies from brokers and nominees of stockholders. The
estimated cost of copying and mailing services is approximately $9,000 plus
out-of-pocket expenses. Proxies may also be solicited in person, by telephone or
electronically by the SSVVOB candidates who will not receive any additional
compensation for such solicitation. The entire expense of soliciting proxies for
SSVVOB Director Candidates for the Annual Meeting is being borne by SSVVOB.
SSVVOB will not seek reimbursement for such expenses from Rancher. Costs of this
solicitation of proxies are expected to be approximately $30,000, primarily in
legal, solicitation, and mailing costs. Total incurred to date in furtherance of
or in connection with the solicitation of proxies is approximately $10,000.
SSVVOB candidates beneficially own the following number of shares of Rancher
common stock:
BENEFICIAL OWNERSHIP OF RANCHER SHARES
NAME NUMBER NATURE PERCENTAGE(1)
- ----------------------------------------------------------------------------
Andrei Stytsenko 125,500(4) Indirect less than 1%
Silvia Soltan 0 -- --
Vladimir Vaskevich 11,200 Indirect(2) less than 1%
Mathijs van Houweninge 1,200,000(3) Direct 1%
A.L. Sid Overton 0 -- --
Jeffrey B. Bennett 3,000 Direct less than 1%
All candidates as a group 1,339,700 1.3%
(1) Percentages are based on an aggregate 119,516,723 shares issued and
outstanding as of June 2, 2009.
(2) Mr. Vaskevich beneficially owns 10,000 shares of Rancher through 6160638
Canada, Inc. and beneficially owns 1,200 shares of Rancher through Metro
Assessment.
(3) Mr. van Houweninge owns 600,000 shares and 600,000 warrants exercisable at
$0.75.
(4) Held in name of spouse, Oksana Guyemon.
See the table below for list of potential solicitors and their holdings of
Rancher's common stock.
The table above under Section 2, entitled "SSVVOB Candidates," sets forth the
name and present principal occupation or employment of the individuals known
collectively as SSVVOB who may solicit proxies and who are the SSVVOB Candidates
for director. The business address of each such person is shown. A.L. "SID"
Overton and Jeffrey B. Bennett are Citizens of the United States. Andrei
Stytsenko, Silvia Soltan, and Vladimir Vaskevich are citizens of Canada. Mathijs
van Houweninge is a citizen of The Netherlands.
To the extent the matters to be acted upon at the Annual Meeting may have an
effect on the future business of Rancher, the individuals identified in the
table may be deemed to have an interest in such matters as a result of their
ownership of shares of Rancher's common stock.
16
The SSVVOB candidates identified in the table in Section 2 and in the above
table collectively own the beneficial interests as shown in the table.
Therefore, if the solicitation of proxies is successful, such persons will
receive indirect benefits from any subsequent director compensation allowed or
approved.
6. SHAREHOLDER PROPOSALS FOR THE ANNUAL MEETING
Under Article I, Section 3 of Rancher's Bylaws, only those matters that are
described in the notice of the Annual Meeting may be considered at the Annual
Meeting. SSVVOB does not intend to request the conduct of any business at the
Annual Meeting other than the election of the SSVVOB candidates. It is possible,
however, that Rancher or other shareholders may request or demand the inclusion
of additional agenda items, in which case additional matters may be described in
the notice of the Annual Meeting.
Under Article I, Section 3 of Rancher's Bylaws, the date of the Annual Meeting
must be no earlier than 10 days and no later than 90 days after the date of the
notice of the Annual Meeting.
7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None of the SSVVOB candidates, their immediate family members, any corporation
or organization of which any of the candidates is an executive officer or
partner, or is directly or indirectly the beneficial owner of 10 percent or more
of any class of equity securities, or any trust or other estate in which any of
the candidates has a substantial beneficial interest or serves as a trustee or
in a similar capacity, has been indebted to Rancher or its subsidiaries at any
time.
None of the relationships regarding the SSVVOB candidates described under Item
404(b) of Regulation S-K exists or has existed, there are no relationships
involving any of the SSVVOB candidates that would have required disclosure under
Item 402(j) of Regulation S-K had the SSVVOB candidates been directors of
Rancher.
8. COMPENSATION OF DIRECTORS
The following table was filed in the Proxy Statement of Rancher filed by the
Company with the SEC on June 10, 2009.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Name and Principal Fiscal Year Salary Bonus Option All Other Total
Position Awards (A) Compensation (B)
- -------------------------------------------------------------------------------------------------------------------
John H. Works 2009(F) $225,000 --- --- $9,000 $234,000
President, CEO, and CFO 2008 $225,000 $22,500 --- $9,000 $256,500
(C)
Richard E. Kurtenbach 2009(F) $175,000 --- --- $7,000 $182,000
Chief Accounting 2008 $105,449 $17,500 $94,756 $599 $218,304
Officer (D)
Andrew Casazza 2009(F) $13,333 --- --- $14,621 $27,954
COO (E) 2008 $160,000 $16,000 --- $6,400 $182,400
- -------------------
(A) The amount in this column reflects the total grant date fair value for
financial statement reporting purposes for awards granted in the fiscal year
ended March 31, 2008, in accordance with FAS 123(R). Please refer to Note 7 of
the Notes to Financial Statements of our audited financial statements for the
fiscal year ended March 31, 2008, which begin on page F-18, for a discussion of
the assumptions made in the valuation of the stock option awards.
(B) For Mr. Works and Mr. Kurtenbach, Other Compensation represents
contributions to their respective 401(k) accounts. For Mr. Casazza, Other
Compensation represents contributions to his 401(k) account and payment for
accrued but unused vacation as of his termination.
(C) Mr. Works also served as a member of our Board of Directors for no
additional compensation.
(D) Mr. Kurtenbach was appointed our Chief Accounting Officer on August 3, 2007.
(E) Mr. Casazza resigned from his position as our Chief Operating Officer
effective April 30, 2008.
(F) All amounts reflected for the fiscal year ended March 31, 2009 are
unaudited.
17
On June 10, 2009, Rancher filed the following information regarding Employment
Agreements.
EMPLOYMENT AGREEMENTS; POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
EMPLOYMENT AGREEMENTS
Rancher entered into an employment agreement with John H. Works, dated June 1,
2006, pursuant to which he agreed to become Rancher's President, Chief Executive
Officer, and a member of our Board of Directors. The term of Mr. Works'
agreement is two years, beginning May 15, 2006. The agreement shall
automatically be renewed for two year terms unless prior to the commencement of
the additional term: (i) either party gives thirty days' written notice of such
party's desire to terminate the agreement or (ii) the parties cannot agree to
mutually acceptable terms for the additional term. Rancher amended Mr. Works'
employment agreement on March 14, 2007 pursuant to which Rancher pays him an
annual salary of $225,000 per year. Under Mr. Works' agreement as amended,
Rancher reimburses him for out-of-pocket expenses incurred by him up to $10,000
per month and pays him an automobile allowance of $400 per month. In conjunction
with his employment and as an incentive to become our President and Chief
Executive Officer, Rancher granted to Mr. Works, under his employment agreement,
an option to purchase 4,000,000 shares of Rancher's common stock at a price of
$0.00001 per share. The options vested 1,000,000 shares upon grant and vested
250,000 shares quarterly thereafter, beginning June 1, 2006 through May 31,
2009. As of May 31, 2009, all of Mr. Works' options to purchase 4,000,000 shares
of Rancher's common stock have been exercised.
On August 3, 2007, Rancher entered into an employment agreement with Richard E.
Kurtenbach to become its Chief Accounting Officer. Pursuant to the employment
agreement, Mr. Kurtenbach will receive a base salary of $175,000 and a year end
bonus to be determined by its Board of Directors. Mr. Kurtenbach began his
employment with Rancher on August 27, 2007 and he was granted on that date an
option to purchase 450,000 shares of Rancher's common stock at an exercise price
of $0.45 per share. The options vests annually over a three-year period from the
date of grant, and will be exercisable for a term of five years, subject to
early termination of Mr. Kurtenbach's employment with Rancher. In addition, Mr.
Kurtenbach is entitled to the coverage or benefits under any and all employee
benefit plans maintained by Rancher.
On October 6, 2006, Rancher promoted Andrew Casazza to Chief Operating Officer
effective October 3, 2006. In connection with this promotion, on October 23,
2006, Rancher entered into a three-year employment agreement ending on October
31, 2009 with Mr. Casazza for his employment as its Chief Operating Officer.
Under Mr. Casazza's employment agreement, Mr. Casazza was entitled to receive a
base salary of $100,000, which was subsequently increased on March 14, 2007 to
$160,000 per year. Mr. Casazza was eligible to receive a discretionary bonus for
each calendar year during the term and is entitled to the coverage or benefits
under any and all employee benefit plans maintained by Rancher. On October 2,
2006, Rancher granted Mr. Casazza an option to purchase 750,000 shares of its
common stock at an exercise price of $1.75 per share. Mr. Casazza's option
vested 25% on the date of grant and was to vest 25% on each anniversary date
thereafter. Mr. Casazza resigned his position as Rancher's Chief Operating
Officer effective April 30, 2008.
18
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
Under Mr. Works' employment agreement, if Mr. Works' employment is terminated by
Rancher for cause, Rancher is obligated to pay Mr. Works, within 30 days after
the date of his termination, a lump sum payment in the amount equal to the sum
of the accrued but unpaid base salary through the date of termination plus any
unpaid approved expenses. If Mr. Works' employment is terminated by Rancher
without cause, it is obligated to pay Mr. Works, within 30 days after the date
of his termination, a lump sum payment an amount equal to the sum of three
months base salary plus any unpaid approved expenses.
If Rancher terminates the employment of Mr. Kurtenbach for cause, Rancher is
obligated to pay him no later than ten days following the date of termination, a
lump sum equal to Mr. Kurtenbach's accrued base salary through the date of
termination, and any and all accrued vacation pay, and accrued benefits through
the date of termination. If Rancher terminates the employment of Mr. Kurtenbach
without cause or if he resigns for good reason, Mr. Kurtenbach is entitled to
receive (i) his base salary accrued through the date of termination, (ii) any
and all accrued vacation and accrued benefits through the date of termination
and (iii) his base salary at the rate in effect on the date of notice of
termination for a period of six months thereafter.
The following table describes and quantifies certain compensation that would
become payable under the existing employment agreements with Rancher's executive
officers if their employment had been terminated on March 31, 2009 by Rancher
without cause, or by Mr. Works or Mr. Kurtenbach for good reason given each of
their compensation and service levels as of such date and, if applicable, based
on Rancher's closing stock price on that date:
BY BY OFFICER
COMPANY FOR
WITHOUT GOOD
CAUSE REASON
- ----------------------------------------------------------------------------
Mr. Works $56,250 --
Mr. Kurtenbach $87,500 $87,500
In their 14A Proxy Statement filed on June 10, 2009, Rancher filed the following
information regarding Outstanding Equity Awards.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END TABLE
The following table sets forth certain information regarding stock options held
by the named executive officers as of March 31, 2009. All amounts are unaudited.
OPTION AWARDS
NUMBER OF SECURITIES NUMBER OF SECURITIES OPTION EXERCISE OPTION
UNDERLYING UNDERLYING PRICE EXPIRATION DATE
UNEXERCISED OPTIONS UNEXERCISED OPTIONS
(#) (#)(A)
NAME EXERCISABLE UNEXERCISABLE
- -------------------------------------------------------------------------------------------------------------
John H. Works 250,000 250,000 $0.00001 None
Richard E. Kurtenbach 150,000 300,000 $0.45 8/27/12
(A) Mr. Works' options vested 250,000 shares quarterly for each quarter ended
from August 31, 2006 through May 31, 2009. Mr. Kurtenbach's options vest 150,000
shares annually from August 27, 2008 through August 27, 2010.
DIRECTOR COMPENSATION
According to the Preliminary 14A Proxy Statement filed by Rancher on June 10,
2009, the non-employee Directors of Rancher for the last fiscal year, which
ended March 31, 2009, were compensated using a mix of compensation, including:
an annual retainer paid in shares of common stock, meeting fees and committee
chair fees. Directors who are Rancher's employees receive no additional
compensation for serving on the Board of Directors.
19
CASH COMPENSATION AND EQUITY COMPENSATION
According to the Preliminary 14A Proxy Statement filed by Rancher on June 10,
2009, all non-employee Directors receive $45,000 annual compensation, which is
paid quarterly in shares of Rancher's common stock and is priced at the fair
market value at the end of each fiscal quarter represented by the closing price
on the last trading day of the quarter. Each non-employee Director also receives
$6,000 per year, plus reasonable out of pocket expenses, to attend Board of
Directors meetings. If a non-employee Director is a member of a committee, he or
she receives $4,000 per year for committee meetings. A committee chairman
receives $6,000 per year, except an audit committee chairman receives $10,000
per year. Meeting payments are made quarterly and a Director may receive stock
in lieu of cash under the 2006 Stock Incentive Plan, which will be computed
using the ratio of $1.50 of Rancher's common stock for each $1.00 to be paid in
cash to the Director. In addition to the above compensation, each non-employee
director received in conjunction with his joining the Board of Directors a stock
grant of 100,000 shares of Rancher's common stock that vests 20% (20,000 shares)
on the date of grant with vesting 20% per year thereafter.
The following tables and footnotes were filed in Rancher's Preliminary 14A Proxy
Statement.
The following table contains information pertaining to the compensation of our
non-employee Directors during the fiscal year ended March 31, 2009. All amounts
are unaudited.
NAME FEES EARNED OR STOCK AWARDS OPTION ALL OTHER TOTAL
PAID IN CASH (A) AWARDS COMPENSATION
- --------------------------------------------------------------------------------------------------------------------
William A. Anderson $-- $49,500 -- -- $49,500
Joseph P. McCoy $-- $56,250 -- -- $56,250
Patrick M. Murray $12,000 $33,750 -- -- $45,750
Myron M. Sheinfeld $12,000 $33,750 -- -- $45,750
Mark A. Worthey $3,500 $44,250 -- -- $47,750
(A) Stock Awards compensation reflects the grant date fair value as measured in
accordance with FAS 123(R). During the fiscal year ended March 31, 2009, each
director received the following shares of common stock during the last fiscal
year as fees for his service on our Board of Directors and committees (as the
case may be): Mr. Anderson received 797,840 shares; Mr. McCoy received 906,638
shares; Mr. Murray received 543,982 shares; Mr. Sheinfeld received 543,982
shares; and Mr. Worthey received 595,917 shares.
The following table contains information pertaining to the compensation of our
non-employee Directors during the year ended March 31, 2008.
NAME FEES EARNED OR STOCK AWARDS OPTION ALL OTHER TOTAL
PAID IN CASH (A) AWARDS COMPENSATION
- -------------------------------------------------------------------------------------------------------------------
William A. Anderson $-- $66,000 $6,227 $102,000 $174,227
Joseph P. McCoy $-- $75,000 $6,227 $102,000 $183,227
Patrick M. Murray $16,000 $45,000 $6,227 $102,000 $169,227
Myron M. Sheinfeld $16,000 $45,000 $6,227 $102,000 $169,227
Mark A. Worthey -- $66,000 -- $109,000 $175,000
(A) Stock Awards compensation reflects the grant date fair value as measured in
accordance with FAS 123(R). During the fiscal year that ended March 31, 2008, we
granted each director 100,000 shares of restricted stock in conjunction with his
joining the Board of Directors that vested 20% on the date of grant and vests
20% per anniversary date thereafter. In addition to the foregoing restricted
stock grant, each director received the following shares of common stock during
the last fiscal year as fees for his service on our Board of Directors and
committees (as the case may be): Mr. Anderson received 166,266 shares; Mr.,
McCoy received 188,939 shares; Mr. Murray received 113,363 shares; Mr. Sheinfeld
received 113,363 shares; and Mr. Worthey received 166,266 shares.
20
(B) Option Award compensation reflects the total grant date fair value as
measured in accordance with FAS 123(R). On April 20, 2007, we granted Mr.
Anderson, Mr. McCoy, Mr. Murray and Mr. Sheinfeld 10,000 stock options each,
with an exercise price per share of $1.02, the fair market value of our common
stock on the date of grant. The options vest 20% per year on each of the first
five anniversary dates of the grant date and are exercisable for a ten-year
term. Please refer to Note 7 of the Notes to Financial Statements of our audited
financial statements on Form 10-K for the fiscal year ended March 31, 2008,
which begin on page F-18, for a discussion of the assumptions made in the
valuation of the stock option awards.
(C) This compensation is for stock awards for director appointment fees and
reflects the grant date fair value as measured in accordance with FAS 123(R).
During the fiscal year that ended March 31, 2008, we granted each director
100,000 shares of restricted stock in conjunction with his joining the Board of
Directors that vested 20% on the date of grant and vests 20% per anniversary
date thereafter.
On June 10, 2009, Rancher filed the following information and table regarding
its Equity Compensation Plan in a Preliminary 14A Proxy Statement.
EQUITY COMPENSATION PLAN INFORMATION
The following table sets forth information as of March 31, 2009, with respect to
compensation plans (including individual compensation arrangements) under which
equity securities of the Company that are authorized for issuance, aggregated as
follows (all amounts are unaudited):
NUMBER OF SECURITIES
REMAINING AVAILABLE
FOR FUTURE ISSUANCE
UNDER EQUITY
WEIGHTED-AVERAGE COMPENSATION PLANS
NUMBER OF SECURITIES TO EXERCISE PRICE OF (EXCLUDING SECURITIES
BE ISSUED UPON EXERCISE OUTSTANDING REFLECTED IN COLUMN
OF OUTSTANDING OPTIONS, OPTIONS, WARRANTS (A)) (C)
PLAN CATEGORY WARRANTS AND RIGHTS (A) AND RIGHTS (B)
- --------------------------------------------------------------------------------------------------------------------
Equity compensation plans approved by 576,000 $0.61 9,424,000
security holders
Equity compensation plans not approved by 500,000 $0.00001 -0-
security holders
Total 1,076,000 $0.32 9,424,000
PRINCIPAL ACCOUNTANT FEES AND SERVICES
On June 10, 2009, Rancher filed the following information and table regarding
its Equity Compensation Plan in a Preliminary 14A Proxy Statement.
AUDITORS
Currently, Rancher has selected Hein & Associates LLP ("Hein") as its
independent registered public accounting firm for the fiscal years ended March
31, 2009 and 2010. During the two most recent fiscal years and subsequent
interim period prior to its selection as independent accountants, Hein had not
been consulted by Rancher on any of the matters referenced in Regulation S-K
Item 304(a)(2)(i) or (ii).
A representative of Hein is not expected to be present at the Annual Meeting.
AUDITOR'S FEES
The following table describes fees for professional audit services rendered by
Hein, Rancher's principal accountant, for the audit of Rancher's annual
financial statements for the years ended March 31, 2009, March 31, 2008 and
March 31, 2007 and fees billed for other services rendered by Hein during the
2009, 2008 and 2007 fiscal years. (Fiscal 2009 amounts represent total fees
including actual fees incurred and estimates of fees to be incurred to complete
the described work.)
21
TYPE OF FEE FISCAL 2009 FISCAL 2008 FISCAL 2007
- ----------------------------------------------------------------------------
Audit Fees (1) $113,000 $171,413 $293,295
Audit - Related Fees (2) 7,000 36,733 40,740
Tax Fees (3) 10,000 21,210 1,660
All Other Fees - - -
Total $130,000 $229,356 $335,695
1. Audit Fees include the aggregate fees incurred by Rancher for professional
services rendered by Hein for the audit of Rancher's annual financial
statements, review of financial statements included in our Forms 10-Q and 1933
Act filings for the 2009, 2008 and 2007 fiscal years
2. Audit - Related Fees include the aggregate fees incurred by Rancher for
professional services rendered by Hein for their audit of the pre-predecessor
revenue and expenses, review of proxy and S-1 Registration Statement and SEC
comment letters.
3. Tax Fees include the aggregate fees incurred by Rancher for professional
services rendered by Hein for tax compliance and tax planning for the 2009, 2008
and 2007 fiscal years.
DIRECTOR FEES
If elected, SSVVOB candidates shall receive a reduced director fee from the
current rates. Moreover, the SSVVOB candidates intend to discontinue the payment
of director fees at the rates paid to the existing directors. Each candidate's
beneficial ownership of Rancher shares are set forth in Table II in Section 2
above. Each of the SSVVOB candidates, if elected, will be indemnified for
service as a director to the same extent indemnification is provided to other
directors under Rancher's governing documents. Also, upon election, the SSVVOB
candidates intend to be covered by Rancher's officer and director liability
insurance. The SSVVOB candidates, if elected, may consider and adopt a new
director compensation arrangement, although at reduced rates from present rates,
which could be in the form of an option or stock.
None of the SSVVOB candidates has received any material cash compensation, cash
bonuses, deferred compensation, compensation pursuant to plans, or other
material compensation, from, or in respect of, services rendered on behalf of
Rancher, or is subject to any arrangement described in Item 402 of Regulation
S-K under the Securities Act of 1933 (Regulation S-K).There is no other material
arrangement pursuant to which any SSVVOB candidate was compensated for services
during Rancher's last fiscal year.
22
9. OTHER MATTERS
SSVVOB is not aware of any other substantive matter to be considered at the
Annual Meeting. However, if any other matter comes before the Annual Meeting,
SSVVOB will vote the proxies only for the matters contained in the Proxy form
and consistent with federal proxy rules. The information concerning Rancher
contained in this proxy statement has been taken from, or is based upon,
publicly available information. Although SSVVOB does not have any information
that would indicate information contained in this proxy statement that has been
taken from such documents is inaccurate or incomplete, SSVVOB has no way to
verify or assess the reliability, accuracy, or completeness of such information.
To date, SSVVOB has had only limited access to the books and records of Rancher.
If we are unsuccessful in our solicitation of proxies, we will continue to do
what we can to advocate appropriate changes in Rancher's management and
direction, but we do not plan on making any further proxy solicitations or other
attempts to gain control of Rancher.
10. YOUR ACTION REQUIRED
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the Annual Meeting, no
matter how many shares you own, please give SSVVOB your proxy to vote for the
election of the SSVVOB candidates by taking the following two steps:
1. SIGN THE ENCLOSED YELLOW PROXY TO VOTE FOR THE ELECTION OF THE SIX SSVVOB
CANDIDATES TO FILL THE SIX POSITIONS ON THE BOARD.
2. MAIL THE SIGNED YELLOW PROXIES TODAY IN THE ENVELOPE PROVIDED. (No Postage is
required if mailed in the United States.
23
APPENDIX A
INFORMATION CONCERNING PARTICIPANTS IN THE SOLICITATION OF
PROXIES BY RANCHER ENERGY CORP.
UNDER THE APPLICABLE SEC RULES, RANCHER AND ITS EMPLOYEES, DIRECTORS AND
NOMINEES FOR DIRECTOR ARE DEEMED "PARTICIPANTS" WITH RESPECT TO THE SOLICITATION
OF PROXIES IN CONNECTION WITH THE ANNUAL MEETING. CERTAIN INFORMATION ABOUT
THESE PARTICIPANTS, OTHER THAN THE COMPANY, IS PRESENTED BELOW.
INFORMATION REGARDING OWNERSHIP OF RANCHER SECURITIES BY PARTICIPANTS
THE PRINCIPAL OCCUPATIONS OF CANDIDATES WHO ARE CONSIDERED "PARTICIPANTS" IN OUR
SOLICITATION ARE SET FORTH UNDER THE SECTION ABOVE TITLED "PROPOSAL ONE:
ELECTION OF DIRECTORS" OF THIS PROXY STATEMENT. THE NAME, BUSINESS ADDRESS AND
NUMBER OF SHARES OF OUR COMMON STOCK HELD BY RANCHER'S NAMED EXECUTIVE OFFICERS
AND DIRECTORS AS OF JUNE 2, 2009 IS SET FORTH UNDER THE "BENEFICIAL OWNERSHIP OF
CERTAIN SHAREHOLDERS" SECTION OF THIS PROXY STATEMENT.
OTHER THAN AS SET FORTH IN THIS APPENDIX A OR THE PROXY STATEMENT, NONE OF THE
PARTICIPANTS OR THEIR ASSOCIATES (I) BENEFICIALLY OWNS, DIRECTLY OR INDIRECTLY,
ANY SHARES OR OTHER SECURITIES OF RANCHER OR ANY OF OUR SUBSIDIARIES OR (II) HAS
ANY SUBSTANTIAL INTEREST, DIRECT OR INDIRECT, BY SECURITY HOLDINGS OR OTHERWISE,
IN ANY MATTER TO BE ACTED UPON AT THE ANNUAL MEETING. TO THE BEST OF OUR
KNOWLEDGE, NONE OF THE PARTICIPANTS HAS BEEN WITHIN THE PAST YEAR A PARTY TO ANY
CONTRACT, ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON WITH RESPECT TO ANY OF
OUR SECURITIES, INCLUDING, BUT NOT LIMITED TO, JOINT VENTURES, LOAN OR OPTION
ARRANGEMENTS, PUTS OR CALLS, GUARANTEES AGAINST LOSS OR GUARANTEES OF PROFIT,
DIVISION OF LOSSES OR PROFITS OR THE GIVING OR WITHHOLDING OF PROXIES.
OTHER THAN AS SET FORTH IN THIS APPENDIX A OR THE PROXY STATEMENT, NONE OF THE
PARTICIPANTS LISTED HEREIN OR ANY OF THEIR ASSOCIATES HAVE OR WILL HAVE (I) ANY
ARRANGEMENTS OR UNDERSTANDINGS WITH ANY PERSON WITH RESPECT TO ANY FUTURE
EMPLOYMENT BY RANCHER OR WITH RESPECT TO ANY FUTURE TRANSACTIONS TO WHICH
RANCHER WILL OR MAY BE A PARTY OR (II) A DIRECT OR INDIRECT MATERIAL INTEREST IN
ANY TRANSACTION OR SERIES OF SIMILAR TRANSACTIONS SINCE THE BEGINNING OF THE
LAST FISCAL YEAR OR ANY CURRENTLY PROPOSED TRANSACTIONS, OR SERIES OF SIMILAR
TRANSACTIONS, TO WHICH RANCHER OR ANY OF OUR SUBSIDIARIES WAS OR IS TO BE A
PARTY IN WHICH THE AMOUNT INVOLVED EXCEEDS $120,000.
24
RECENT TRADING HISTORY IN THE COMPANY'S SECURITIES BY PARTICIPANTS
THE FOLLOWING TABLE SETS FORTH ALL TRANSACTIONS INVOLVING SHARES OF RANCHER'S
COMMON STOCK BY THE DIRECTOR CANDIDATES BETWEEN JULY ___________, 2007 AND
JULY ___ , 2009. NO PART OF THE PURCHASE PRICE OR MARKET VALUE OF ANY OF THE
SHARES SPECIFIED BELOW IS REPRESENTED BY FUNDS BORROWED OR OTHERWISE OBTAINED
FOR THE PURPOSE OF ACQUIRING OR HOLDING SUCH SECURITIES.
- ------------------------------------------------------------------------------------------------------------
NAME DATE NUMBER OF SHARES NUMBER OF SHARES PRICE PER SHARE
GRANTED OR PURCHASED SOLD OR GIFTED
- ------------------------------------------------------------------------------------------------------------
125,500
ANDREI STYTSENKO(1) 12/2008 (PURCHASE) -0- $0.04
- ------------------------------------------------------------------------------------------------------------
(1) MR. STYTSENKO'S SHARES WERE ACQUIRED BY HIS SPOUSE, OKSANA GUYEMON.
25
(PRELIMINARY COPY)
PROXY FOR DIRECTOR CANDIDATES AT
ANNUAL MEETING OF SHAREHOLDERS OF RANCHER ENERGY CORP.
The undersigned hereby appoints A.L. "Sid" Overton with full power of
substitution, as proxies of the undersigned to vote at the Annual Meeting of
Rancher Energy Corp. for Andrei Stytsenko, Silvia Soltan, Vladimir Vaskevich,
Mathijs van Houweninge, A.L. "Sid" Overton and Jeffrey B. Bennett as director
candidates at the Annual Meeting of the shareholders of Rancher Energy Corp., a
Nevada corporation ("Rancher") in opposition to six of the Rancher nominees, to
be held at 2:00 pm (Mountain Daylight Time) on ______, 2009, at Patton Boggs
LLP, 1801 California Street, Suite 4900, Denver, Colorado 80202, or any
adjournments thereof, to vote the shares of common stock of the Company standing
in the name of the undersigned on the books of the Company, or such shares of
common stock of the Company as the undersigned may otherwise be entitled to vote
on the record date for the Annual Meeting with all powers the undersigned would
possess if personally present at the Annual Meeting, with respect to the matters
set forth below as to the election of Directors only and described in the Notice
of the Annual Meeting of Stockholders, dated ________, 2009, and the
accompanying proxy.
THIS PROXY IS BEING SOLICITED ON BEHALF OF SSVVOB, AND NOT ON BEHALF OF THE
COMPANY'S BOARD OF DIRECTORS. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE JOINED
WITH OTHER PROXIES TO VOTE IN FAVOR OF ANDREI STYTSENKO, SILVIA SOLTAN, VLADIMIR
VASKEVICH, MATHIIJS VAN HOUWENINGE, A.L. "SID" OVERTON AND JEFFREY B. BENNETT AS
DIRECTOR CANDIDATES AT THE ANNUAL MEETING OF THE SHAREHOLDERS OF THE COMPANY.
The undersigned hereby acknowledges receipt of the Proxy Statement dated
___________, 2009 of SSVVOB relating to the Annual Meeting of Rancher Energy
Corp.
DIRECTOR CANDIDATES:
- -------------------
FOR ALL
1. ANDREI STYTSENKO FOR ALL WITHHOLD ALL EXCEPT
2. SILVIA SOLTAN [ ] [ ] [ ]
3. VLADMIR VASKEVICH
4. MATHIJS VAN HOUWENINGE TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE(S), MARK "FOR ALL
5. A.L. "SID" OVERTON EXCEPT" AND WRITE THE NUMBER(S) TO THE LEFT OF THE NAME(S) ON THE LINE BELOW.
6. JEFFREY B. BENNETT ____________________________________________________
----------------------------------------------------------------
PLEASE DATE AND SIGN THIS PROXY EXACTLY AS YOUR NAME APPEARS ON YOUR
CERTIFICATE. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN
SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE
FULL TITLE AS SUCH AND SUBMIT POWERS OF ATTORNEY OR OTHER APPROPRIATE DOCUMENT.
IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER
AUTHORIZED OFFICER. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY
AUTHORIZED PERSON.
Number of shares owned ________________
________________________________________ ___________________________________
Signature of Stockholder 2nd Signature if held jointly
Printed name: __________________________ Printed name: ____________________
Address: ______________________________
Dated: ______________________, 2009
IMPORTANT: If shares are jointly owned, both owners should sign. If signing as
attorney, executor, administrator, trustee, guardian or other person signing in
a representative capacity, please give your full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.