EXHIBIT 10.2

INVESTOR REGISTRATION RIGHTS AGREEMENT

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of June 28,
2006, by and among TORRENT ENERGY CORPORATION a corporation organized and
existing under the laws of the state or Colorado (the “Company”) and CORNELL
CAPITAL PARTNERS, LP, a Delaware limited partnership (the “Investor”).

WHEREAS:

A.           The parties hereto have entered into an Investment Agreement (the
“Investment Agreement”) of even date herewith.

 

B.

This Agreement is a condition precedent of the Investment Agreement.

C.           To induce the Investor to execute and deliver the Investment
Agreement, the Company has agreed to provide certain registration rights under
the Securities Act of 1933, as amended, and the rules and regulations there
under (the “1933 Act”), and applicable state securities laws.

NOW, THEREFORE, in consideration of the promises and the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows:

 

1.

DEFINITIONS.

As used in this Agreement, the following terms shall have the following
meanings:

(a)   “Person” means a corporation, a limited liability company, an association,
a partnership, an organization, a business, an individual, a governmental or
political subdivision thereof or a governmental agency.

(b)   “Register,” “registered,” and “registration” refer to a registration
effected by preparing and filing one or more Registration Statements (as defined
below) in compliance with the 1933 Act and pursuant to Rule 415 under the 1933
Act or any successor rule providing for offering securities on a continuous or
delayed basis (“Rule 415”), and the declaration or ordering of effectiveness of
such Registration Statement(s) by the United States Securities and Exchange
Commission (the “SEC”).

(c)   “Registrable Securities” means the shares of Common Stock issuable to the
Investor upon conversion or redemption of the Series E Preferred Shares (the
“Series E Preferred Shares”) issued pursuant to the Investment Agreement and the
Warrant Shares as defined in the Investment Agreement.

(d)   “Registration Statement” means a registration statement under the 1933 Act
which covers the Registrable Securities.

 

 

 

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2.

REGISTRATION.

(a)   Subject to the terms and conditions of this Agreement, the Company shall
prepare and file, no later than forty five (45) days from the date hereof (the
“Scheduled Filing Deadline”), with the SEC a registration statement on Form S-1
or SB-2 (or, if the Company is then eligible, on Form S-3) under the 1933 Act
(the “Initial Registration Statement”) for the registration for the resale by
the Investor of Fifteen Million (15,000,000) shares of the Registrable
Securities. The Company shall cause the Registration Statement to remain
effective until all of the Registrable Securities have been sold.

(b)   Effectiveness of the Initial Registration Statement. The Company shall use
its best efforts (i) to have the Initial Registration Statement declared
effective by the SEC no later than one hundred sixty five (165) days from the
date hereof (the “Scheduled Effective Deadline”) and (ii) to insure that the
Initial Registration Statement and any subsequent Registration Statement remains
in effect until all of the Registrable Securities have been sold, subject to the
terms and conditions of this Agreement. It shall be an event of default
hereunder if the Initial Registration Statement is not declared effective by the
SEC within one hundred sixty five (165) days from the date hereof.

(c)   Failure to File or Obtain Effectiveness of the Registration Statement. In
the event the Registration Statement is not filed by the Scheduled Filing
Deadline or is not declared effective by the SEC on or before the Scheduled
Effective Deadline, or if after the Registration Statement has been declared
effective by the SEC, sales cannot be made pursuant to the Registration
Statement (whether because of a failure to keep the Registration Statement
effective, failure to disclose such information as is necessary for sales to be
made pursuant to the Registration Statement, failure to register sufficient
shares of Common Stock or otherwise in addition to filing a new registration
statement or post effective amendment within thirty (30) calendar days of
determining that there are insufficient shares of Common Stock registered), then
as relief for the damages to any holder of Registrable Securities by reason of
any such delay in or reduction of its ability to sell the underlying shares of
Common Stock (which remedy shall not be exclusive of any other remedies at law
or in equity), the Company will pay as liquidated damages (the “Liquidated
Damages”) to the holder, at the holder’s option, either a cash amount or shares
of the Company’s Common Stock equal to two percent (2%) of the Liquidation
Amount (as defined in the Certificate of Designation of Series E Preferred
Shares) outstanding as Liquidated Damages for each thirty (30) day period or any
part thereof after the Scheduled Filing Deadline or the Scheduled Effective
Deadline as the case may be. Any Liquidated Damages payable hereunder shall not
limit, prohibit or preclude the Investor from seeking any other remedy available
to it under contract, at law or in equity. The Company shall pay the Investor
the Liquidated Damages within three (3) business days of the Investor making
written demand.

(d)   Liquidated Damages. The Company and the Investor hereto acknowledge and
agree that the sums payable under subsection 2(c) above shall constitute
liquidated damages and not penalties and are in addition to all other rights of
the Investor, including the right to call a default. The parties further
acknowledge that (i) the amount of loss or damages likely to be incurred is
incapable or is difficult to precisely estimate, (ii) the amounts specified in
such subsections bear a reasonable relationship to, and are not plainly or
grossly disproportionate to the probable loss likely to be incurred in
connection with any failure by the

 

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Company to obtain or maintain the effectiveness of a Registration Statement,
(iii) one of the reasons for the Company and the Investor reaching an agreement
as to such amounts was the uncertainty and cost of litigation regarding the
question of actual damages, and (iv) the Company and the Investor are
sophisticated business parties and have been represented by sophisticated and
able legal counsel and negotiated this Agreement at arm’s length.

(e)   Insufficient Number of Registered Shares. In the event that the number of
registered shares is insufficient to effectuate full conversion of the Series E
Preferred Shares into Common Stock of the Company, the Company shall within
thirty (30) calendar days of the issuance of all of the Registrable Securities
(the “Subsequent Scheduled Filing Deadline”) the Company shall prepare and file
with the SEC a registration statement on Form S-1 or SB-2 (or, if the Company is
then eligible, on Form S-3) under the 1933 Act (the “Subsequent Registration
Statement”) for the registration for the resale by the Investor of the shares of
the Company’s Common Stock to be issued upon conversion of the Series E
Preferred Shares issued pursuant to the Investment Agreement an amount equal to
three (3) times the number of Shares of the Company’s Common Stock necessary to
effectuate conversions of the then outstanding and unconverted Series E
Preferred Shares. The Company shall cause the Registration Statement to remain
effective until all of the Registrable Securities have been sold. The Company
shall use its best efforts (i) to have the Registration Statement declared
effective by the SEC no later than ninety (90) days after the filing thereof
(the “Subsequent Scheduled Effective Deadline”) and (ii) to insure that the
Registration Statement and any Subsequent Registration Statement remains in
effect until all of the Registrable Securities have been sold, subject to the
terms and conditions of this Agreement. It shall be an event of default
hereunder if the Registration Statement or any Subsequent Registration Statement
is not declared effective by the SEC within ninety (90) days after filing
thereof.

 

3.

RELATED OBLIGATIONS.

(a)   The Company shall keep the Registration Statement effective pursuant to
Rule 415 at all times until the date on which the Investor shall have sold all
the Registrable Securities covered by such Registration Statement (the
“Registration Period”), which Registration Statement (including any amendments
or supplements thereto and prospectuses contained therein) shall not contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading.

(b)   The Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by such Registration Statement until such time as all of such
Registrable Securities shall have been disposed of in accordance with the
intended methods of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and supplements to a
Registration Statement which are required to be filed pursuant to this Agreement
(including pursuant to this Section 3(b)) by reason of the

 

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Company’s filing a report on Form 10-KSB, Form 10-QSB or Form 8-K or any
analogous report under the Securities Exchange Act of 1934, as amended (the
“1934 Act”), the Company shall incorporate such report by reference into the
Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the 1934 Act report is filed
which created the requirement for the Company to amend or supplement the
Registration Statement.

(c)   The Company shall furnish to the Investor whose Registrable Securities are
included in any Registration Statement, without charge, (i) at least one (1)
copy of such Registration Statement as declared effective by the SEC and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, all exhibits and each preliminary
prospectus, (ii) ten (10) copies of the final prospectus included in such
Registration Statement and all amendments and supplements thereto (or such other
number of copies as such Investor may reasonably request) and (iii) such other
documents as the Investor may reasonably request from time to time in order to
facilitate the disposition of the Registrable Securities owned by such the
Investor.

(d)   The Company shall use its best efforts to (i) register and qualify the
Registrable Securities covered by a Registration Statement under such other
securities or “blue sky” laws of such jurisdictions in the United States as the
Investor reasonably request, (ii) prepare and file in those jurisdictions, such
amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (w) make any
change to its certificate of incorporation or by-laws, (x) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process in any such
jurisdiction. The Company shall promptly notify each Investor who holds
Registrable Securities of the receipt by the Company of any notification with
respect to the suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue sky” laws of any
jurisdiction in the United States or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.

(e)   As promptly as practicable after becoming aware of such event or
development, the Company shall notify each Investor in writing of the happening
of any event as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omission to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading (provided that in no event shall such notice contain any
material, nonpublic information), and promptly prepare a supplement or amendment
to such Registration Statement to correct such untrue statement or omission, and
deliver ten (10) copies of such supplement or amendment to each Investor. The
Company shall also promptly notify each Investor in writing (i) when a
prospectus or any prospectus supplement or post-effective amendment has been
filed, and when a Registration Statement or any post-effective amendment

 

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has become effective (notification of such effectiveness shall be delivered to
each Investor by facsimile on the same day of such effectiveness), (ii) of any
request by the SEC for amendments or supplements to a Registration Statement or
related prospectus or related information, and (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.

(f)    The Company shall use its best efforts to prevent the issuance of any
stop order or other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable Securities for
sale in any jurisdiction within the United States of America and, if such an
order or suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify each Investor who holds
Registrable Securities being sold of the issuance of such order and the
resolution thereof or its receipt of actual notice of the initiation or threat
of any proceeding for such purpose.

(g)   At the reasonable request of any Investor, the Company shall furnish to
such Investor, on the date of the effectiveness of the Registration Statement
and thereafter from time to time on such dates as an Investor may reasonably
request (i) a letter, dated such date, from the Company’s independent certified
public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
and (ii) an opinion, dated as of such date, of counsel representing the Company
for purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the Investor.

(h)   Upon five (5) days prior written notice by the Investor, which notice
shall not be given more than one (1) time per calendar quarter, the Company
shall make available for inspection by (i) any Investor and (ii) one (1) firm of
accountants or other agents retained by the Investor (collectively, the
“Inspectors”) all pertinent financial and other records, and pertinent corporate
documents and properties of the Company (collectively, the “Records”), as shall
be reasonably deemed necessary by each Inspector, and cause the Company’s
officers, directors and employees to supply all information which any Inspector
may reasonably request; provided, however, that each Inspector shall agree, and
each Investor hereby agrees, to hold in strict confidence and shall not make any
disclosure (except to an Investor) or use any Record or other information which
the Company determines in good faith to be confidential, and of which
determination the Inspectors are so notified, unless (a) the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in any
Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement of which
the Inspector and the Investor have knowledge. Each Investor agrees that it
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.

(i)    The Company shall hold in confidence and not make any disclosure of
information concerning an Investor provided to the Company unless (i) disclosure
of such

 

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information is necessary to comply with federal or state securities laws, (ii)
the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning an Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.

(j)    The Company shall use its best efforts either to cause all the
Registrable Securities covered by a Registration Statement (i) to be listed on
each securities exchange on which securities of the same class or series issued
by the Company are then listed, if any, if the listing of such Registrable
Securities is then permitted under the rules of such exchange or (ii) the
inclusion for quotation on the National Association of Securities Dealers, Inc.
OTC Bulletin Board for such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this
Section 3(j).

(k)   The Company shall cooperate with the Investor who hold Registrable
Securities being offered and, to the extent applicable, to facilitate the timely
preparation and delivery of certificates (not bearing any restrictive legend)
representing the Registrable Securities to be offered pursuant to a Registration
Statement and enable such certificates to be in such denominations or amounts,
as the case may be, as the Investor may reasonably request and registered in
such names as the Investor may request.

(l)    The Company shall use its best efforts to cause the Registrable
Securities covered by the applicable Registration Statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary to consummate the disposition of such Registrable Securities.

(m) The Company shall make generally available to its security holders as soon
as practical, but not later than ninety (90) days after the close of the period
covered thereby, an earnings statement (in form complying with the provisions of
Rule 158 under the 1933 Act) covering a twelve (12) month period beginning not
later than the first day of the Company’s fiscal quarter next following the
effective date of the Registration Statement.

(n)   The Company shall otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC in connection with any registration
hereunder.

(o)   Within two (2) business days after a Registration Statement which covers
Registrable Securities is declared effective by the SEC, the Company shall
deliver, and shall cause legal counsel for the Company to deliver, to the
transfer agent for such Registrable Securities (with copies to the Investor
whose Registrable Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared effective by the
SEC in the form attached hereto as Exhibit A.

 

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(p)   The Company shall take all other reasonable actions necessary to expedite
and facilitate disposition by the Investor of Registrable Securities pursuant to
a Registration Statement.

 

4.

OBLIGATIONS OF THE INVESTOR.

The Investor agree that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until such Investor’ receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(e) or receipt of
notice that no supplement or amendment is required. Notwithstanding anything to
the contrary, the Company shall cause its transfer agent to deliver unlegended
certificates for shares of Common Stock to a transferee of an Investor in
accordance with the terms of the Investment Agreement in connection with any
sale of Registrable Securities with respect to which an Investor has entered
into a contract for sale prior to the Investor’s receipt of a notice from the
Company of the happening of any event of the kind described in Section 3(f) or
the first sentence of 3(e) and for which the Investor have not yet settled.

 

5.

EXPENSES OF REGISTRATION.

All expenses incurred in connection with registrations, filings or
qualifications pursuant to Sections 2 and 3, including, without limitation, all
registration, listing and qualifications fees, printers, legal and accounting
fees shall be paid by the Company.

 

6.

INDEMNIFICATION.

With respect to Registrable Securities which are included in a Registration
Statement under this Agreement:

(a)   To the fullest extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor, their respective general
partners, the directors, officers, partners, employees, agents, representatives
of, and each Person, if any, who controls any Investor within the meaning of the
1933 Act or the 1934 Act (each, an “Indemnified Person”), against any losses,
claims, damages, liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys’ fees, amounts paid in settlement or expenses, joint or
several (collectively, “Claims”) incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an indemnified party is or may be a party thereto (“Indemnified
Damages”), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other “blue sky” laws of any jurisdiction
in which Registrable Securities are offered (“Blue Sky Filing”), or the omission
or alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein

 

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not misleading; (ii) any untrue statement or alleged untrue statement of a
material fact contained in any final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or alleged
violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation there under relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, “Violations”). The Company shall
reimburse the Investor and each such controlling person promptly as such
expenses are incurred and are due and payable, for any legal fees or
disbursements or other reasonable expenses incurred by them in connection with
investigating or defending any such Claim. Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(a): (x) shall not apply to a Claim by an Indemnified Person arising
out of or based upon a Violation which occurs in reliance upon and in conformity
with information furnished in writing to the Company by such Indemnified Person
expressly for use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto; (y) shall not be
available to the extent such Claim is based on a failure of the Investor to
deliver or to cause to be delivered the prospectus made available by the
Company, if such prospectus was timely made available by the Company pursuant to
Section 3(c); and (z) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld. Notwithstanding anything to
the contrary herein or in any other agreement entered into between the Company
and the Investor, the Company acknowledges and agrees that it is solely
responsible and shall indemnify each Indemnified Person for the contents of any
registration statement, prospectus or other filing made with the SEC or
otherwise used in the offering of the Company’s securities (except as such
disclosure relates solely to the Investor and then only to the extent that such
disclosure conforms with information furnished in writing by the Investor to the
Company), even if the Investor or their agents as an accommodation to the
Company participate or assist in the preparation of such registration statement,
prospectus or other SEC filing. The Company shall retain its own legal counsel
to review, edit, confirm and do all things such counsel deems necessary or
desirable to such registration statement, prospectus or other SEC filing to
ensure that it does not contain an untrue statement or alleged untrue statement
of material fact or omit or alleged to omit a material fact necessary to make
the statements made therein, in light of the circumstances under which the
statements were made, not misleading. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Investor.

(b)   In connection with a Registration Statement, each Investor agrees to
severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 6(a), the Company, each
of its directors, each of its officers, employees, representatives, or agents
and each Person, if any, who controls the Company within the meaning of the 1933
Act or the 1934 Act (each an “Indemnified Party”), against any Claim or
Indemnified Damages to which any of them may become subject, under the 1933 Act,
the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or is based upon any Violation, in each case to the extent, and only to
the extent, that such

 

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Violation occurs in reliance upon and in conformity with written information
furnished to the Company by such Investor expressly for use in connection with
such Registration Statement; and, subject to Section 6(d), such Investor will
reimburse any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such Claim; provided, however, that the
indemnity agreement contained in this Section 6(b) and the agreement with
respect to contribution contained in Section 7 shall not apply to amounts paid
in settlement of any Claim if such settlement is effected without the prior
written consent of such Investor, which consent shall not be unreasonably
withheld; provided, further, however, that the Investor shall be liable under
this Section 6(b) for only that amount of a Claim or Indemnified Damages as does
not exceed the net proceeds to such Investor as a result of the sale of
Registrable Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of such Indemnified Party and shall survive the transfer of the
Registrable Securities by the Investor . Notwithstanding anything to the
contrary contained herein, the indemnification agreement contained in this
Section 6(b) with respect to any prospectus shall not inure to the benefit of
any Indemnified Party if the untrue statement or omission of material fact
contained in the prospectus was corrected and such new prospectus was delivered
to each Investor prior to such Investor’s use of the prospectus to which the
Claim relates.

(c)   Promptly after receipt by an Indemnified Person or Indemnified Party under
this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one (1) counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. The Indemnified
Party or Indemnified Person shall cooperate fully with the indemnifying party in
connection with any negotiation or defense of any such action or claim by the
indemnifying party and shall furnish to the indemnifying party all information
reasonably available to the Indemnified Party or Indemnified Person which
relates to such action or claim. The indemnifying party shall keep the
Indemnified Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect thereto. No
indemnifying party shall be liable for any settlement of any action, claim or
proceeding effected without its prior written consent; provided, however, that
the indemnifying party shall not unreasonably withhold, delay or condition its
consent. No indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in

 

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respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party under this Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

(d)   The indemnification required by this Section 6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are incurred.

(e)   The indemnity agreements contained herein shall be in addition to (i) any
cause of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law.

 

7.

CONTRIBUTION.

To the extent any indemnification by an indemnifying party is prohibited or
limited by law, the indemnifying party agrees to make the maximum contribution
with respect to any amounts for which it would otherwise be liable under Section
6 to the fullest extent permitted by law; provided, however, that: (i) no seller
of Registrable Securities guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution from
any seller of Registrable Securities who was not guilty of fraudulent
misrepresentation; and (ii) contribution by any seller of Registrable Securities
shall be limited in amount to the net amount of proceeds received by such seller
from the sale of such Registrable Securities.

 

8.

REPORTS UNDER THE 1934 ACT.

With a view to making available to the Investor the benefits of Rule 144
promulgated under the 1933 Act or any similar rule or regulation of the SEC that
may at any time permit the Investor to sell securities of the Company to the
public without registration (“Rule 144”) the Company agrees to:

(a)   make and keep public information available, as those terms are understood
and defined in Rule 144;

(b)   file with the SEC in a timely manner all reports and other documents
required of the Company under the 1933 Act and the 1934 Act so long as the
Company remains subject to such requirements and the filing of such reports and
other documents as are required by the applicable provisions of Rule 144; and

(c)   furnish to each Investor so long as such Investor owns Registrable
Securities, promptly upon request, (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the 1933 Act and
the 1934 Act, (ii) a copy of the

 

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most recent annual or quarterly report of the Company and such other reports and
documents so filed by the Company, and (iii) such other information as may be
reasonably requested to permit the Investor to sell such securities pursuant to
Rule 144 without registration.

 

9.

AMENDMENT OF INVESTOR REGISTRATION RIGHTS .

Provisions of this Agreement may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the Investor
who then hold at least two-thirds (2/3) of the Registrable Securities. Any
amendment or waiver effected in accordance with this Section 9 shall be binding
upon each Investor and the Company. No such amendment shall be effective to the
extent that it applies to fewer than all of the holders of the Registrable
Securities. No consideration shall be offered or paid to any Person to amend or
consent to a waiver or modification of any provision of any of this Agreement
unless the same consideration also is offered to all of the parties to this
Agreement.

 

10.

MISCELLANEOUS.

(a)   A Person is deemed to be a holder of Registrable Securities whenever such
Person owns or is deemed to own of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections from two (2) or
more Persons with respect to the same Registrable Securities, the Company shall
act upon the basis of instructions, notice or election received from the
registered owner of such Registrable Securities.

(b)   Any notices, consents, waivers or other communications required or
permitted to be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when delivered
personally; (ii) upon receipt, when sent by facsimile (provided confirmation of
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one (1) business day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be:

 

If to the Company, to:

Torrent Energy Corp.

 

#600, 666 Burrard Street

 

Vancouver, British Columbia

 

Canada V6C 2X8

 

Attention:         Mark Gustafson

 

Telephone:       (604) 639-3118

 

Facsimile:        (604) 688-1320

 

 

 

 

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With Copy to:

Clark Wilson LLP

 

#800, 885 W. Georgia Street

 

Vancouver, British Columbia

 

Canada V6C 3H1

 

Attention:         Bernard Pinsky

 

Telephone:       (604) 643-3153

 

Facsimile:        (604) 687-6314

 

 

If to the Investor:

Cornell Capital Partners, LP

 

101 Hudson Street, Suite 3700

 

Jersey City, NJ 07302

 

Attention:         Mark A. Angelo

 

Telephone:       (201) 985-8300

 

Facsimile:         (201) 985-8744

 

 

With Copy to:

David Gonzalez, Esq.

 

101 Hudson Street, Suite 3700

 

Jersey City, NJ 07302

 

Telephone:       (201) 985-8300

 

Facsimile:         (201) 985-1964

 

Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender’s facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by a courier or overnight courier service shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a nationally
recognized overnight delivery service in accordance with clause (i), (ii) or
(iii) above, respectively.

(c)   Failure of any party to exercise any right or remedy under this Agreement
or otherwise, or delay by a party in exercising such right or remedy, shall not
operate as a waiver thereof.

(d)   The laws of the State of New Jersey shall govern all issues concerning the
relative rights of the Company and the Investor as its stockholders. All other
questions concerning the construction, validity, enforcement and interpretation
of this Agreement shall be governed by the internal laws of the State of New
Jersey, without giving effect to any choice of law or conflict of law provision
or rule (whether of the State of New Jersey or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than the State
of New Jersey. Each party hereby irrevocably submits to the non-exclusive
jurisdiction of the Superior Courts of the State of New Jersey, sitting in
Hudson County, New Jersey and federal courts for the District of New Jersey
sitting Newark, New Jersey, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or discussed
herein, and hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of

 

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process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to such party at the address for such
notices to it under this Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof. Nothing contained
herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. If any provision of this Agreement shall be invalid or
unenforceable in any jurisdiction, such invalidity or unenforceability shall not
affect the validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of any provision of this
Agreement in any other jurisdiction. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION
OF ANY DISPUTE HEREUNDER OR IN CONNECTION HEREWITH OR ARISING OUT OF THIS
AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.

(e)   This Agreement, the Irrevocable Transfer Agent Instructions, the
Investment Agreement, the Escrow Agreement, and related documents of even date
hereof by and among the Company and the Investor constitute the entire agreement
among the parties hereto with respect to the subject matter hereof and thereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement, the
Irrevocable Transfer Agent Instructions, the Investment Agreement, the Escrow
Agreement and related documents supersede all prior agreements and
understandings among the parties hereto with respect to the subject matter
hereof and thereof.

(f)    This Agreement shall inure to the benefit of and be binding upon the
permitted successors and assigns of each of the parties hereto.

(g)   The headings in this Agreement are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.

(h)   This Agreement may be executed in identical counterparts, each of which
shall be deemed an original but all of which shall constitute one and the same
agreement. This Agreement, once executed by a party, may be delivered to the
other party hereto by facsimile transmission of a copy of this Agreement bearing
the signature of the party so delivering this Agreement.

(i)    Each party shall do and perform, or cause to be done and performed, all
such further acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as the other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.

(j)    The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent and no rules of strict
construction will be applied against any party.

(k)   This Agreement is intended for the benefit of the parties hereto and their
respective permitted successors and assigns, and is not for the benefit of, nor
may any provision hereof be enforced by, any other Person.

 

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[REMIANDER OF PAGE INTENTIONALL LEFT BLANK]

 

IN WITNESS WHEREOF, the parties have caused this Investor Registration Rights
Agreement to be duly executed as of day and year first above written.

 

 

COMPANY:

 

TORRENT ENERGY CORPORATION

 

 

 

By: __________________________________

 

Name: Mark Gustafson

 

Title:   Director

 

 

 

 

 

INVESTOR:

 

CORNELL CAPITAL PARTNERS, LP

 

By: Yorkville Advisors, LLC

 

Its: General Partner

 

 

 

By: _________________________________

 

Name: Mark Angelo

 

Its:        President and Portfolio Manager

 

 

 

 

 

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EXHIBIT A

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

 

INSERT

 

Attention:

 

 

Re:

TORRENT ENERGY CORPORATION  

 

Ladies and Gentlemen:

 

We are counsel to Torrent Energy Corporation, a corporation organized and
existing under the laws of the state of Colorado (the “Company”), and have
represented the Company in connection with that certain Investment Agreement
(the “Investment Agreement”) entered into by and among the Company and Cornell
Capital Partners, LP (the “Investor”) pursuant to which the Company issued to
the Investor shares of its Series E Preferred Shares (the “Series E Preferred
Shares”). Pursuant to the Investment Agreement, the Company also has entered
into a Investor Registration Rights Agreement with the Investor (the “Investor
Registration Rights Agreement”) pursuant to which the Company agreed, among
other things, to register the Registrable Securities (as defined in the Investor
Registration Rights Agreement) under the Securities Act of 1933, as amended (the
“1933 Act”). In connection with the Company’s obligations under the Investor
Registration Rights Agreement, on ____________ ____, the Company filed a
Registration Statement on Form ________ (File No. 333-_____________) (the
“Registration Statement”) with the Securities and Exchange SEC (the “SEC”)
relating to the Registrable Securities which names each of the Investor as a
selling stockholder there under.

In connection with the foregoing, we advise you that a member of the SEC’s staff
has advised us by telephone that the SEC has entered an order declaring the
Registration Statement effective under the 1933 Act at [ENTER TIME OF
EFFECTIVENESS] on [ENTER DATE OF EFFECTIVENESS] and we have no knowledge, after
telephonic inquiry of a member of the SEC’s staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC and the Registrable
Securities are available for resale under the 1933 Act pursuant to the
Registration Statement.

Very truly yours,

 

[COMPANY COUNSEL]

 

By:                                                                     

cc:

[LIST NAMES OF Investor]