REGISTRATION
      RIGHTS AGREEMENT

    


    REGISTRATION
      RIGHTS AGREEMENT
      (this
      "Agreement"),
      dated
      as of December 21, 2006, by and among Rancher Energy Corp., a Nevada
      corporation,
      with
      headquarters located at 999-18th
      Street,
      Suite 1740, Denver, Colorado 80202
      (the "Company"),
      and
      the undersigned buyers (each, a "Buyer",
      and
      collectively, the "Buyers").

    


    WHEREAS:

    


    A. In
      connection with the Securities Purchase Agreement by and among the parties
      hereto of even date herewith (the "Securities
      Purchase Agreement"),
      the
      Company has agreed, upon the terms and subject to the conditions set forth
      in
      the Securities Purchase Agreement, to issue and sell to each Buyer (i)
      convertible notes of the Company (the "Notes")
      which
      will, among other things, be convertible into shares of the Company's common
      stock, par value $.00001 value per share (the "Common
      Stock")
      (as
      converted, the "Conversion
      Shares")
      in
      accordance with the terms of the Notes, (ii) shares (the "Common
      Shares")
      of
      Common Stock and (iii) warrants (the "Warrants")
      which
      will be exercisable to purchase shares of Common Stock (as exercised
      collectively, the "Warrant
      Shares").

    


    B. To
      induce
      the Buyers to execute and deliver the Securities Purchase Agreement, the Company
      has agreed to provide certain registration rights under the Securities Act
      of
      1933, as amended, and the rules and regulations thereunder, or any similar
      successor statute (collectively, the "1933
      Act"),
      and
      applicable state securities laws.

    


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

    


    1. Definitions.
      

    


    Capitalized
      terms used herein and not otherwise defined herein shall have the respective
      meanings set forth in the Securities Purchase Agreement. As used in this
      Agreement, the following terms shall have the following meanings:

    


    a. "Additional
      Effectiveness Date"
      means
      the date the Additional Registration Statement is declared effective by the
      SEC.

    


    b. "Additional
      Effectiveness Deadline"
      means
      the earlier to occur of (i) the date which is five (5) days after the Company
      learns that no review of the Additional Registration Statement will be made
      by
      the staff of the SEC or that the staff has no further comments on the Additional
      Registration Statement, and (ii) the date which is one hundred and twenty (120)
      days after the Additional Filing Date (as defined below), or if there is a
      full
      review of the Additional Registration Statement by the SEC, one hundred and
      fifty (150) days after the Additional Filing Date.

    


    c. "Additional
      Filing Date"
      means
      the date on which the Additional Registration Statement (as defined below)
      is
      filed with the SEC.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    d. "Additional
      Filing Deadline"
      means
      (i) if the Stockholder Approval (as defined in the Securities Purchase
      Agreement) is not obtained by the Initial Filing Deadline and no Cutback Shares
      are required to be included in the Additional Registration Statement, the date
      five (5) days after the Stockholder Approval is obtained or (ii) if Cutback
      Shares are required to be included in the Additional Registration Statement,
      the
      date six (6) months from the Initial Filing Date.

    


    e. "Additional
      Registrable Securities"
      means,
      (i) if the Stockholder Approval is not obtained by the Initial Filing Deadline,
      (x) the Conversion Shares issuable upon conversion or redemption of the Notes
      and (y) any Warrant Shares issued or issuable upon exercise of the Warrants
      not
      previously included on a Registration Statement, (ii) any Cutback Shares not
      previously included on a Registration Statement and (iii) any share capital
      of
      the Company issued or issuable with respect to the Notes, the Conversion Shares,
      the Warrants, the Warrant Shares or Cutback Shares, as applicable, as a result
      of any stock split, stock dividend, recapitalization, exchange or similar event
      or otherwise, without regard to any limitations on conversions of Notes or
      exercises of the Warrants.

    


    f. "Additional
      Registration Statement"
      means a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering any Additional Registrable Securities.

    


    g. "Additional
      Required Registration Amount"
      means
      the sum of 130% of (i) if the Stockholder Approval is not obtained by the
      Initial Filing Deadline, (x) the number of Conversion Shares issuable pursuant
      to the Notes as of the trading day immediately preceding the applicable date
      of
      determination, and (y) the number of Warrant Shares issued and issuable pursuant
      to the Warrants as of the trading day immediately preceding the applicable
      date
      of determination not previously included on a Registration Statement and (ii)
      any Cutback Shares not previously included on a Registration Statement, all
      subject to adjustment as provided in Section 2(e), without regard to any
      limitations on conversions of the Notes or exercises of the
      Warrants.

    


    h. "Business
      Day"
      means
      any day other than Saturday, Sunday or any other day on which commercial banks
      in the City of New York or the City of Denver are authorized or required by
      law
      to remain closed.

    


    i. "Closing
      Date"
      shall
      mean the initial Closing Date, as set forth in the Securities Purchase
      Agreement.

    


    j. "Effective
      Date"
      means
      the Initial Effective Date and the Additional Effective Date, as
      applicable.

    


    k. "Effectiveness
      Deadline"
      means
      the Initial Effectiveness Deadline (as defined below) and the Additional
      Effectiveness Deadline (as defined below), as applicable.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    l. "Equity
      Conditions"
      means
      each of the following conditions on each applicable date of determination:
      (i)
      the Common
      Stock
      is
      designated for quotation on the Principal Market or any applicable Eligible
      Market (each as defined in the Securities Purchase Agreement) and shall not
      have
      been suspended from trading on such exchange or market (other than suspensions
      of not more than two (2) days and occurring prior to the applicable date of
      determination due to business announcements by the Company) nor shall delisting
      or suspension by such exchange or market been threatened or pending either
      (A)
      in writing by such exchange or market or (B) by falling below the then effective
      minimum listing maintenance requirements of such exchange or market; (ii) the
      Company shall have delivered Conversion Shares upon conversion of the Notes
      and
      Warrant Shares upon exercise of the Warrants to the holders on a timely basis
      as
      set forth in Section 2(c)(ii) of the Notes and Sections 2(a) of the Warrants;
      (iii) any applicable shares of Common
      Stock to
      be
      issued in connection with the event requiring determination may be issued in
      full without violating the rules or regulations of the exchange or market upon
      which the Company's Common Stock is then listed or quoted; (iv) the Company
      shall not have failed to timely make any payments within five (5) Business
      Days
      of when such payment is due pursuant to any Transaction Document (as defined
      in
      the Securities Purchase Agreement; (v) there shall not have occurred either
      (A)
      the public announcement of a pending, proposed or intended Fundamental
      Transaction (as defined in the Notes) which has not been abandoned, terminated
      or consummated, or (B) an
      Event
      of Default (as defined in the Notes) or (C) an event that with the passage
      of
      time or giving of notice would constitute an Event of Default; and (vi)
the
      Company otherwise shall have been in material compliance with and shall not
      have
      materially breached any provision, covenant, representation or warranty of
      any
      Transaction Document.

    


    m. "Equity
      Conditions Failure"
      means
      that on any day during the period commencing ten (10) Trading Days prior to
      the
      applicable Registration Delay Payments Payment Date through the applicable
      Registration Delay Payments Payment Date, the Equity Conditions have not been
      satisfied (or waived in writing by the applicable holder of Registrable
      Securities). 

    


    n. "Filing
      Deadline"
      means
      the Initial Filing Deadline (as defined below) and the Additional Filing
      Deadline, as applicable.

    


    o. "Initial
      Effective Date"
      means
      the date the Initial Registration Statement is declared effective by the
      SEC.

    


    p. "Initial
      Effectiveness Deadline"
      means
      the earlier to occur of (i) the date which is five (5) days after the Company
      learns that no review of the Initial Registration Statement will be made by
      the
      staff of the SEC or that the staff has no further comments on the Initial
      Registration Statement, (ii) the date which is one hundred and twenty (120)
      days
      after the Closing Date, or if there is a full review of the Initial Registration
      Statement by the SEC, one hundred and fifty (150) days after the Closing
      Date.

    


    q. "Initial
      Filing Date"
      means
      the date on which the Initial Registration Statement (as defined below) is
      filed
      with the SEC.

    


    r. "Initial
      Filing Deadline"
      means
      the date seventy-five (75) days after the Closing Date.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    s. "Initial
      Registrable Securities"
      means
      (A) if the Stockholder Approval is obtained by the Initial Filing Deadline,
      (i)
      the Conversion Shares issued or issuable upon conversion or redemption of the
      Notes, (ii) the Common Shares, (iii) the Warrant Shares issued or issuable
      upon
      exercise of the Warrants and (iv) any share capital of the Company issued or
      issuable with respect to the Common Shares, the Warrant Shares or the Warrants,
      the Conversion Shares and the Notes, as a result of any stock split, stock
      dividend, recapitalization, exchange or similar event or otherwise, without
      regard to any limitations on conversions of the Notes or exercises of the
      Warrants and (B) if the Stockholder Approval is not obtained by the Initial
      Filing Deadline, the Common Shares.

    


    t. "Initial
      Required Registration Amount"
      means
      (I) (A) if the Stockholder Approval is obtained by the Initial Filing Deadline,
      130% of the sum of (i), the number of Conversion Shares issued or issuable
      pursuant to the Notes as of the trading day immediately preceding the applicable
      date of determination, (ii) the number of Common Shares issued and (iii) the
      number of Warrant Shares issued and issuable pursuant to the Warrants as of
      the
      trading day immediately preceding the applicable date of determination, all
      subject to adjustment as provided in Section 2(e), without regard to any
      limitations on conversions of the Notes or exercises of the Warrants, and (B)
      if
      the Stockholder Approval is not obtained by the Initial Filing Deadline, the
      number of Common Shares issued or (II) such other amount as may be required
      by
      the staff of the SEC. Any shares included under clause (I) of the immediately
      preceding sentence but excluded from the definition of Initial Required
      Registration Amount because of clause (II), are referred to herein as the
      "Cutback
      Shares".

    


    u. "Initial
      Registration Statement"
      means a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering the Initial Registrable Securities.

    


    v. "Investor"
      means a
      Buyer or any transferee or assignee thereof to whom a Buyer assigns its rights
      under this Agreement and who agrees to become bound by the provisions of this
      Agreement in accordance with Section 9 and any transferee or assignee thereof
      to
      whom a transferee or assignee assigns its rights under this Agreement and who
      agrees to become bound by the provisions of this Agreement in accordance with
      Section 9.

    


    w. "Person"
      means
      an individual, a limited liability company, a partnership, a joint venture,
      a
      corporation, a trust, an unincorporated organization and a government or any
      department or agency thereof.

    


    x. "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 and the declaration or ordering of effectiveness of such Registration
      Statement(s) by the SEC.

    


    y. "Registrable
      Securities"
      means
      the Initial Registrable Securities and the Additional Registrable
      Securities.

    


    z. "Registration
      Delay Payments Conversion Price"
      means,
      with respect to any Registration Delay Payments Payment Date, that
      price which shall be the price
      computed as 90% of the arithmetic average of the Weighted Average Price (as
      defined in the Notes) of the Common Stock on each of the ten (10) consecutive
      Trading Days ending on the Trading Day immediately preceding the applicable
      Registration Delay Payments Payment Date (each, a "Registration
      Delay Payments Measuring Period").
      All
      such determinations to be appropriately adjusted for any stock split, stock
      dividend, stock combination or other similar transaction during such
      Registration Delay Payments Measuring Period.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    aa. "Registration
      Statement"
      means a
      registration statement or registration statements of the Company filed under
      the
      1933 Act covering the Registrable Securities.

    


    bb. "Required
      Holders"
      means
      the holders of at least a majority of the Registrable Securities.

    


    cc. "Rule
      415"
      means
      Rule 415 under the 1933 Act or any successor rule providing for offering
      securities on a continuous or delayed basis.

    


    dd. "SEC"
      means
      the United States Securities and Exchange Commission.

    


    2. Registration.

    


    a. Initial
      Mandatory Registration.
      The
      Company shall prepare, and, as soon as practicable, but in no event later than
      the Initial Filing Deadline, file with the SEC the Initial Registration
      Statement on Form S-3 covering the resale of all of the Initial Registrable
      Securities. In the event that Form S-3 is unavailable for such a registration,
      the Company shall use such other form as is available for such a registration
      on
      another appropriate form reasonably acceptable to the Required Holders, subject
      to the provisions of Section 2(e). The Initial Registration Statement prepared
      pursuant hereto shall register for resale at least the number of shares of
      Common Stock equal to the Initial Required Registration Amount determined as
      of
      date the Registration Statement is initially filed with the SEC. The Initial
      Registration Statement shall contain (except if otherwise directed by the
      Required Holders) the "Selling
      Stockholders"
      and
      "Plan
      of Distribution"
      sections in substantially the form attached hereto as Exhibit
      B.
      The
      Company shall use its best efforts to have the Initial Registration Statement
      declared effective by the SEC as soon as practicable, but in no event later
      than
      the Initial Effectiveness Deadline. By 9:30 am on the date following the Initial
      Effective Date,
      the
      Company shall file with the SEC in accordance with Rule 424 under the 1933
      Act
      the final prospectus to be used in connection with sales pursuant to such
      Registration Statement.

    


    b. Additional
      Mandatory Registrations.
      The
      Company shall prepare, and, as soon as practicable but in no event later than
      the Additional Filing Deadline, file with the SEC an Additional Registration
      Statement on Form S-3 covering the resale of all of the Additional Registrable
      Securities not previously registered on an Additional Registration Statement
      hereunder. To the extent the staff of the SEC does not permit the Additional
      Required Registration Amount to be registered on the Additional Registration
      Statement, which are Cutback Shares hereunder, the Company shall file Additional
      Registration Statements successively trying to register on each such Additional
      Registration Statement the maximum number of remaining Additional Registrable
      Securities until the Additional Required Registration Amount has been registered
      with the SEC. In the event that Form S-3 is unavailable for such a registration,
      the Company shall use such other form as is available for such a registration
      on
      another appropriate form reasonably acceptable to the Required Holders, subject
      to the provisions of Section 2(e). Each Additional Registration Statement
      prepared pursuant hereto shall register for resale at least that number of
      shares of Common Stock equal to the Additional Required Registration Amount
      as
      of date the Registration Statement is initially filed with the SEC. Each
      Additional Registration Statement shall contain (except if otherwise directed
      by
      the Required Holders) the "Selling
      Stockholders"
      and
      "Plan
      of Distribution"
      sections in substantially the form attached hereto as Exhibit
      B.
      The
      Company shall use its best efforts to have each Additional Registration
      Statement declared effective by the SEC as soon as practicable, but in no event
      later than the Additional Effectiveness Deadline. By 9:30 am on the date
      following the Additional Effective Date,
      the
      Company shall file with the SEC in accordance with Rule 424 under the 1933
      Act
      the final prospectus to be used in connection with sales pursuant to such
      Registration Statement.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    c. Allocation
      of Registrable Securities.
      The
      initial number of Registrable Securities included in any Registration Statement
      and any increase in the number of Registrable Securities included therein shall
      be allocated pro rata among the Investors based on the number of Registrable
      Securities held by each Investor at the time the Registration Statement covering
      such initial number of Registrable Securities or increase thereof is declared
      effective by the SEC. In the event that an Investor sells or otherwise transfers
      any of such Investor's Registrable Securities, each transferee shall be
      allocated a pro rata portion of the then remaining number of Registrable
      Securities included in such Registration Statement for such transferor. Any
      shares of Common Stock included in a Registration Statement and which remain
      allocated to any Person which ceases to hold any Registrable Securities covered
      by such Registration Statement shall be allocated to the remaining Investors,
      pro rata based on the number of Registrable Securities then held by such
      Investors which are covered by such Registration Statement. In no event shall
      the Company include any securities other than Registrable Securities on any
      Registration Statement filed with the SEC during the 12-month period following
      the Closing Date without the prior written consent of the Required Holders
      except for those shares of Common Stock and warrants to purchase shares of
      Common Stock identified on Schedule
      2(c)(i)
      attached
      hereto (which shall exclude any securities for which the Company has obtained
      waivers pursuant to Section 7(xiv) of the Securities Purchase Agreement). In
      no
      event shall the Company include any securities other than Registrable Securities
      on any Registration Statement filed with the SEC after the 12-month period
      following the Closing Date without the prior written consent of the Required
      Holders except for up to 3,500,000 shares of Common Stock issuable by the
      Company upon exercise of warrants issued by the Company to Knight Capital
      Markets, LLC, and the Company's other placement agents on the Closing Date,
      no
      more than 5,000,000 shares of Common Stock issuable by the Company upon exercise
      of warrants to be issued by the Company to the Company's secured lenders and
      those shares of Common Stock and warrants to purchase shares of Common Stock
      identified on Schedule
      2(c)(ii)
      attached
      hereto. If the SEC requires that the Company register less than the amount
      of
      shares of Common Stock originally included on any Registration Statement at
      the
      time it was filed, the Registrable Securities on such registration statement
      and
      any other securities allowed to be registered on such Registration Statement
      (as
      set forth below) shall be decreased on a pro rata basis. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    d. Legal
      Counsel.
      Subject
      to Section 5 hereof, the Required Holders shall have the right to select one
      legal counsel to review and oversee any registration pursuant to this Section
      2
      ("Legal
      Counsel"),
      which
      shall be Schulte Roth & Zabel LLP or such other counsel as thereafter
      designated by the Required Holders. The Company and Legal Counsel shall
      reasonably cooperate with each other in performing the Company's obligations
      under this Agreement.

    


    e. Ineligibility
      for Form S-3.
      In the
      event that Form S-3 is not available for the registration of the resale of
      Registrable Securities hereunder, the Company shall (i) register the resale
      of
      the Registrable Securities on another appropriate form reasonably acceptable
      to
      the Required Holders and (ii) undertake to register the Registrable Securities
      on Form S-3 as soon as such form is available, provided that the Company shall
      maintain the effectiveness of the Registration Statement then in effect until
      such time as a Registration Statement on Form S-3 covering the Registrable
      Securities has been declared effective by the SEC.

    


    f. Sufficient
      Number of Shares Registered.
      In the
      event the number of shares available under a Registration Statement filed
      pursuant to Section 2(a) is insufficient to cover all of the Registrable
      Securities required to be covered by such Registration Statement or an
      Investor's allocated portion of the Registrable Securities pursuant to Section
      2(b), the Company shall amend the applicable Registration Statement, or file
      a
      new Registration Statement (on the short form available therefor, if
      applicable), or both, so as to cover at least the Required Registration Amount
      as of the trading day immediately preceding the date of the filing of such
      amendment or new Registration Statement, in each case, as soon as practicable,
      but in any event not later than fifteen (15) days after the necessity therefor
      arises. The Company shall use its best efforts to cause such amendment and/or
      new Registration Statement to become effective as soon as practicable following
      the filing thereof. For purposes of the foregoing provision, the number of
      shares available under a Registration Statement shall be deemed "insufficient
      to
      cover all of the Registrable Securities" if at any time the number of shares
      of
      Common Stock available for resale under the Registration Statement is less
      than
      the product determined by multiplying (i) the Required Registration Amount
      as of
      such time by (ii) 0.90. The calculation set forth in the foregoing sentence
      shall be made without regard to any limitations on the conversion of the Notes
      or the exercise of the Warrants and such calculation shall assume that the
      Notes
      are then convertible into shares of Common Stock at the then prevailing
      Conversion Rate (as defined in the Notes) and that the Warrants are then
      exercisable for shares of Common Stock at the then prevailing Exercise Price
      (as
      defined in the Warrants).

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    g. Effect
      of Failure to File and Obtain and Maintain Effectiveness of Registration
      Statement.
      

    


    (a) If
      (i) a
      Registration Statement covering all of the Registrable Securities required
      to be
      covered thereby and required to be filed by the Company pursuant to this
      Agreement is (A) not filed with the SEC on or before the respective Filing
      Deadline (a "Filing
      Failure")
      or (B)
      not declared effective by the SEC on or before the respective Effectiveness
      Deadline (an "Effectiveness
      Failure")
      or
      (ii) on any day after the Effective Date sales of all of the Registrable
      Securities required to be included on such Registration Statement cannot be
      made
      (other than during an Allowable Grace Period (as defined in Section 3(r))
      pursuant to such Registration Statement or otherwise (including, without
      limitation, because of a failure to keep such Registration Statement effective,
      to disclose such information as is necessary for sales to be made pursuant
      to
      such Registration Statement, to register a sufficient number of shares of Common
      Stock or to maintain the listing of the shares of Common Stock) (a "Maintenance
      Failure")
      then,
      as liquidated damages and not as a penalty to any holder by reason of any such
      delay in or reduction of its ability to sell the underlying shares of Common
      Stock (which remedy shall be the exclusive economic remedy available with
      respect to Filing Failures, Effectiveness Failures and Maintenance Failures),
      the Company shall pay to each holder of Registrable Securities relating to
      such
      Registration Statement an amount equal to one percent (1.0%) of the aggregate
      Purchase Price (as such term is defined in the Securities Purchase Agreement)
      of
      such Investor's Registrable Securities included in such Registration Statement
      on each of the following dates: (i) the day of a Filing Failure and on every
      thirtieth day (pro rated for periods totaling less than thirty days) thereafter
      until such Filing Failure is cured; (ii) the day of an Effectiveness Failure
      and
      on every thirtieth day (pro rated for periods totaling less than thirty days)
      thereafter until such Effectiveness Failure is cured; (iii) the initial day
      of a
      Maintenance Failure and on every thirtieth day (pro rated for periods totaling
      less than thirty days) thereafter until such Maintenance Failure is cured.
      If
      all of the Cutback Shares, if any, have not been registered on a Registration
      Statement which has been declared effective by the SEC on or before the six
      (6)
      month anniversary of the Closing Date (a "Cutback
      Failure")
      then,
      as liquidated damages and not as a penalty to any holder by reason of any such
      delay in or reduction of its ability to sell any Cutback Shares (which remedy
      shall be the exclusive economic remedy available with respect to Cutback
      Failures), the Company shall pay to each holder of Cutback Shares relating
      to
      such Registration Statement an amount equal to one half of a percent (0.5%)
      of
      the aggregate Purchase Price (as such term is defined in the Securities Purchase
      Agreement) of such Investor's Cutback Shares included in such Registration
      Statement on the day of a Cutback Failure and on every thirtieth day (pro rated
      for periods totaling less than thirty days) thereafter until such Cutback
      Failure is cured. The payments to which a holder shall be entitled pursuant
      to
      this Section 2(g) are referred to herein as "Registration
      Delay Payments."
      Registration Delay Payments shall be paid on the day of the Filing Failure,
      Effectiveness Failure, Cutback Failure or the initial day of Maintenance
      Failure, as applicable, and thereafter on the earlier of (I) on the thirtieth
      day after the event or failure giving rise to the Registration Delay Payments
      are incurred and (II) the third Business Day after the event or failure giving
      rise to the Registration Delay Payments is cured. The date such Registration
      Delay Payments are due shall be referred to herein as a "Registration
      Delay Payments Payment Date."
      In the
      event the Company fails to make Registration Delay Payments in a timely manner,
      such Registration Delay Payments shall bear interest at the rate of one and
      one-half percent (1.5%) per month (prorated for partial months) until paid
      in
      full. Notwithstanding anything herein or in the Securities Purchase Agreement
      to
      the contrary, in no event shall the aggregate amount of Registration Delay
      Payments (other than Registration Delay Payments payable pursuant to events
      that
      are within the control of the Company) exceed, in the aggregate, 24% of the
      aggregate Purchase Price.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    (b) Registration
      Delay Payments shall be payable on each Registration Delay Payments Payment
      Date, to each holder of Registrable Securities relating to such Registration
      Statement, in shares of Common Stock ("Registration
      Delay Payments Shares")
      so
      long as there is no Equity Conditions Failure; provided however, that the
      Company, at its option following notice to the holder of Registrable Securities,
      may pay Registration Delay Payments on any Registration Delay Payments Payment
      Date in cash ("Cash
      Registration Delay Payments")
      or in
      a combination of Cash Registration Delay Payments and Registration Delay
      Payments Shares. The Company shall deliver a written notice (each, an
      "Registration
      Delay Payments Election Notice")
      to
      each holder of Registrable Securities relating to such Registration Statement
      on
      or prior to the Registration Delay Payments Payment Date (the date such notice
      is delivered to all of the holders, the "Registration
      Delay Payments Notice Date")
      which
      notice (i) either (A) confirms that Registration Delay Payments to be paid
      on
      such Registration Delay Payments Payment Date shall be paid entirely in
      Registration Delay Payments Shares or (B) elects to pay Registration Delay
      Payments as Cash Registration Delay Payments or a combination of Cash
      Registration Delay Payments and Registration Delay Payments Shares and specifies
      the amount of Registration Delay Payments that shall be paid as Cash
      Registration Delay Payments and the amount of Registration Delay Payments,
      if
      any, that shall be paid in Registration Delay Payments Shares and (ii) certifies
      that there is no Equity Conditions Failure. If the Equity Conditions are not
      satisfied as of the Registration Delay Payments Notice Date, then unless the
      Company has elected to pay such Registration Delay Payments as Cash Registration
      Delay Payments, the Registration Delay Payments Election Notice shall indicate
      that unless the holder waives the Equity Conditions, the Registration Delay
      Payment shall be paid as Cash Registration Delay Payments. If the Equity
      Conditions were satisfied as of the Registration Delay Payments Notice Date
      but
      the Equity Conditions are no longer satisfied at any time prior to the
      Registration Delay Payments Payment Date, the Company shall provide the holder
      a
      subsequent notice to that effect indicating that unless the holder waives the
      Equity Conditions, the Registration Delay Payments shall be paid as Cash
      Registration Delay Payments. Registration Delay Payments to be paid on an
      Registration Delay Payments Payment Date in Registration Delay Payments Shares
      shall be paid in a number of fully paid and nonassessable shares (rounded to
      the
      nearest whole share in accordance) of Common Stock equal to the quotient of
      (1)
      the amount of Registration Delay Payments payable on such Registration Delay
      Payments Payment Date less any Cash Registration Delay Payments paid and (2)
      the
      Registration Delay Payments Conversion Price in effect on the applicable
      Registration Delay Payments Payment Date. Notwithstanding the foregoing, if
      the
      Company elects to pay any Registration Delay Payments in Registration Delay
      Payment Shares and the Stockholder Approval (as defined in the Securities
      Purchase Agreement) has not been obtained by the applicable Registration Delay
      Payments Payment Date, the Company may not pay such Registration Delay Payments
      in Registration Delay Payments Shares but instead shall issue to each holder
      of
      Registrable Securities relating to such Registration Statement a convertible
      note with an original principal amount equal to the amount of such Registration
      Delay Payments in the form attached hereto as Exhibit
      A
      to the
      Securities Purchase Agreement; provided however that the conversion price of
      such convertible note shall be equal to the applicable Registration Delay
      Payments Conversion Price.

    


    3. Related
      Obligations.

    


    At
      such
      time as the Company is obligated to file a Registration Statement with the
      SEC
      pursuant to Section 2(a), 2(d) or 2(e), the Company will use its best efforts
      to
      effect the registration of the Registrable Securities in accordance with the
      intended method of disposition thereof and, pursuant thereto, the Company shall
      have the following obligations:

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    a. The
      Company shall submit to the SEC, within two (2) Business Days after the Company
      learns that no review of a particular Registration Statement will be made by
      the
      staff of the SEC or that the staff has no further comments on a particular
      Registration Statement, as the case may be, a request for acceleration of
      effectiveness of such Registration Statement to a time and date not later than
      48 hours after the submission of such request. The Company shall keep each
      Registration Statement effective pursuant to Rule 415 at all times until the
      earlier of (i) the date as of which the Investors may sell all of the
      Registrable Securities covered by such Registration Statement without
      restriction pursuant to Rule 144(k) (or any successor thereto) promulgated
      under
      the 1933 Act or (ii) the date on which the Investors shall have sold all of
      the
      Registrable Securities covered by such Registration Statement (the "Registration
      Period").
      The
      Company shall ensure that each 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 the case
      of
      prospectuses, in the 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 Company filing a
      report on Form 10-QSB, Form 10-KSB or any analogous report under the Securities
      Exchange Act of 1934, as amended (the "1934
      Act"),
      the
      Company shall have incorporated such report by reference into such 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 such Registration
      Statement.

    


    c. The
      Company shall (A) permit Legal Counsel to review and comment upon (i) a
      Registration Statement at least five (5) Business Days prior to its filing
      with
      the SEC and (ii) all amendments and supplements to all Registration Statements
      (except for Annual Reports on Form 10-KSB, and Reports on Form 10-QSB and any
      similar or successor reports) within a reasonable number of days prior to their
      filing with the SEC, and (B) not file any Registration Statement or amendment
      or
      supplement thereto in a form to which Legal Counsel reasonably objects. The
      Company shall not submit a request for acceleration of the effectiveness of
      a
      Registration Statement or any amendment or supplement thereto without the prior
      approval of Legal Counsel, which consent shall not be unreasonably withheld.
      The
      Company shall furnish to Legal Counsel, without charge, (i) copies of any
      correspondence from the SEC or the staff of the SEC to the Company or its
      representatives relating to any Registration Statement, (ii) promptly after
      the
      same is prepared and filed with the SEC, one copy of any Registration Statement
      and any amendment(s) thereto, including financial statements and schedules,
      all
      documents incorporated therein by reference, if requested by an Investor, and
      all exhibits and (iii) upon the effectiveness of any Registration Statement,
      one
      copy of the prospectus included in such Registration Statement and all
      amendments and supplements thereto. The Company shall reasonably cooperate
      with
      Legal Counsel in performing the Company's obligations pursuant to this Section
      3.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    d. The
      Company shall furnish to each Investor whose Registrable Securities are included
      in any Registration Statement, without charge, (i) promptly after the same
      is
      prepared and filed with the SEC, at least one copy of such Registration
      Statement and any amendment(s) thereto, including financial statements and
      schedules, all documents incorporated therein by reference, if requested by
      an
      Investor, all exhibits and each preliminary prospectus, (ii) upon the
      effectiveness of any Registration Statement, ten (10) copies of the 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, including copies of any preliminary or final
      prospectus, as such Investor may reasonably request from time to time in order
      to facilitate the disposition of the Registrable Securities owned by such
      Investor.

    


    e. The
      Company shall use its best efforts to (i) register and qualify, unless an
      exemption from registration and qualification applies, the resale by Investors
      of the Registrable Securities covered by a Registration Statement under such
      other securities or "blue sky" laws of all applicable jurisdictions in the
      United States, (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 (x) qualify to do business in any
      jurisdiction where it would not otherwise be required to qualify but for this
      Section 3(e), (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 Legal Counsel and 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 threatening of any proceeding for such purpose.

    


    f. The
      Company shall notify Legal Counsel and each Investor in writing of the happening
      of any event, as promptly as practicable after becoming aware of such 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 the 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, subject to Section 3(r), 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 Legal Counsel and each Investor (or such other number of copies
      as
      Legal Counsel or such Investor may reasonably request). The Company shall also
      promptly notify Legal Counsel and 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 has become
      effective (notification of such effectiveness shall be delivered to Legal
      Counsel and each Investor by facsimile on the same day of such effectiveness
      and
      by overnight mail), (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.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    g. 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 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 Legal Counsel and 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.

    


    h. If
      any
      Investor is required under applicable securities laws to be described in the
      Registration Statement as an underwriter, at the reasonable request of such
      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, addressed to the Investors,
      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
      Investors.

    


    i. Upon
      the
      request of any Investor in connection with such Investor's due diligence
      requirements, if any, the Company shall make available for inspection by (i)
      any
      Investor, (ii) Legal Counsel and (iii) one firm of accountants or other agents
      retained by the Investors (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
      to
      hold in strict confidence and shall not make any disclosure (except to an
      Investor) or use of 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 has 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. Nothing herein (or in
      any
      other confidentiality agreement between the Company and any Investor) shall
      be
      deemed to limit the Investors' ability to sell Registrable Securities in a
      manner which is otherwise consistent with applicable laws and
      regulations.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    j. 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
      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.

    


    k. The
      Company shall use its best efforts either to (i) cause all of the Registrable
      Securities covered by a Registration Statement to be listed on the Principal
      Market or 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.
      The
      Company shall pay all fees and expenses in connection with satisfying its
      obligation under this Section 3(k).

    


    l. The
      Company shall cooperate with the Investors who hold Registrable Securities
      being
      offered and, to the extent applicable, 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 Investors may reasonably request and registered in such names as
      the
      Investors may request.

    


    m. If
      requested by an Investor, the Company shall (i) as soon as practicable
      incorporate in a prospectus supplement or post-effective amendment such
      information as an Investor reasonably requests to be included therein relating
      to the sale and distribution of Registrable Securities, including, without
      limitation, information with respect to the number of Registrable Securities
      being offered or sold, the purchase price being paid therefor and any other
      terms of the offering of the Registrable Securities to be sold in such offering;
      (ii) as soon as practicable make all required filings of such prospectus
      supplement or post-effective amendment after being notified of the matters
      to be
      incorporated in such prospectus supplement or post-effective amendment; and
      (iii) as soon as practicable, supplement or make amendments to any Registration
      Statement if reasonably requested by an Investor holding any Registrable
      Securities.

    


    n. The
      Company shall use its best efforts to cause the Registrable Securities covered
      by a 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.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    o. 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, and in the
      manner provided by, the provisions of Rule 158 under the 1933 Act) covering
      a
      twelve-month period beginning not later than the first day of the Company's
      fiscal quarter next following the effective date of a Registration
      Statement.

    


    p. 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.

    


    q. Within
      two (2) Business Days after a Registration Statement which covers Registrable
      Securities is ordered 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 Investors 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.

    


    r. Notwithstanding
      anything to the contrary herein, at any time after the Effective Date, the
      Company may delay the disclosure of material, non-public information concerning
      the Company the disclosure of which at the time is not, in the good faith
      opinion of the Board of Directors of the Company and its counsel, in the best
      interest of the Company and, in the opinion of counsel to the Company, otherwise
      required (a "Grace
      Period");
      provided, that the Company shall promptly (i) notify the Investors in writing
      of
      the existence of material, non-public information giving rise to a Grace Period
      (provided that in each notice the Company will not disclose the content of
      such
      material, non-public information to the Investors) and the date on which the
      Grace Period will begin, and (ii) notify the Investors in writing of the date
      on
      which the Grace Period ends; and, provided further, that no Grace Period shall
      exceed fifteen (15) consecutive days and during any three hundred sixty five
      (365) day period such Grace Periods shall not exceed an aggregate of forty
      (40)
      days and the first day of any Grace Period must be at least five (5) trading
      days after the last day of any prior Grace Period (each, an "Allowable
      Grace Period").
      For
      purposes of determining the length of a Grace Period above, the Grace Period
      shall begin on and include the date the Investors receive the notice referred
      to
      in clause (i) and shall end on and include the later of the date the Investors
      receive the notice referred to in clause (ii) and the date referred to in such
      notice. The provisions of Section 3(g) hereof shall not be applicable during
      the
      period of any Allowable Grace Period. Upon expiration of the Grace Period,
      the
      Company shall again be bound by the first sentence of Section 3(f) with respect
      to the information giving rise thereto unless such material, non-public
      information is no longer applicable. Notwithstanding anything to the contrary,
      the Company shall cause its transfer agent to deliver unlegended shares of
      Common Stock to a transferee of an Investor in accordance with the terms of
      the
      Securities Purchase Agreement in connection with any sale of Registrable
      Securities with respect to which an Investor has entered into a contract for
      sale, and delivered a copy of the prospectus included as part of the applicable
      Registration Statement (unless an exemption from such prospectus delivery
      requirements exists), prior to the Investor's receipt of the notice of a Grace
      Period and for which the Investor has not yet settled. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    s. The
      Company shall make any filing as may be required by NASD Rule 2710 in connection
      with the offering under any Registration Statement of the applicable Registrable
      Securities and shall make any such filing concurrently with its initial filing
      of such Registration Statement with the SEC. 

    


    t. Until
      the
      twelve month anniversary of the later to occur of (i) the Initial Effective
      Date
      and (ii) the Additional Effective Date, the Company shall not enter into any
      Subsequent Placement (as defined in the Securities Purchase Agreement) where
      such Subsequent Placement provides for registration rights (including piggy-back
      registration right) to any one or more of the investors in such Subsequent
      Placement, without the prior written consent of the Required
      Holders.

    


    u. From
      the
      date hereof until the date that is ninety (90) days following the later to
      occur
      of (i) the Initial Effective Date and (ii) the Additional Effective Date, the
      Company will not, directly or indirectly, file any registration statement (other
      than on Form S-8 or the filing of any post-effective amendments filed solely
      for
      the purpose of updating financial or other information in any registration
      statement of the Company that has been declared effective by the SEC prior
      to
      the date of this Agreement) with the SEC other than the Registration Statement.
      

    


    4. Obligations
      of the Investors.

    


    a. At
      least
      five (5) Business Days prior to the first anticipated filing date of a
      Registration Statement, the Company shall notify each Investor in writing of
      the
      information the Company requires from each such Investor if such Investor elects
      to have any of such Investor's Registrable Securities included in such
      Registration Statement. It shall be a condition precedent to the obligations
      of
      the Company to complete the registration pursuant to this Agreement with respect
      to the Registrable Securities of a particular Investor that such Investor shall
      furnish to the Company such information regarding itself, the Registrable
      Securities held by it and the intended method of disposition of the Registrable
      Securities held by it as shall be reasonably required to effect the
      effectiveness of the registration of such Registrable Securities and shall
      execute such documents in connection with such registration as the Company
      may
      reasonably request. 

    


    b. Each
      Investor, by such Investor's acceptance of the Registrable Securities, agrees
      to
      cooperate with the Company as reasonably requested by the Company in connection
      with the preparation and filing of any Registration Statement hereunder, unless
      such Investor has notified the Company in writing of such Investor's election
      to
      exclude all of such Investor's Registrable Securities from such Registration
      Statement.

    


    c. Each
      Investor agrees that, upon receipt of any notice from the Company of the
      happening of any event of the kind described in Section 3(g) or the first
      sentence of 3(f), such Investor will immediately discontinue disposition of
      Registrable Securities pursuant to any Registration Statement(s) covering such
      Registrable Securities until such Investor's receipt of the copies of the
      supplemented or amended prospectus contemplated by Section 3(g) or the first
      sentence of 3(f) 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 shares of Common Stock to a transferee
      of
      an Investor in accordance with the terms of the Securities Purchase 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(g) or the first sentence of 3(f) and for which the Investor has not
      yet settled.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    d. Each
      Investor covenants and agrees that it will comply with the prospectus delivery
      requirements of the 1933 Act as applicable to it or an exemption therefrom
      in
      connection with sales of Registrable
      Securities pursuant to the Registration Statement.

    


    5. Expenses
      of Registration.

    


    All
      reasonable expenses, other than underwriting discounts and commissions, incurred
      in connection with registrations, filings or qualifications pursuant to Sections
      2 and 3, including, without limitation, all registration, listing and
      qualifications fees, printers and accounting fees, and fees and disbursements
      of
      counsel for the Company shall be paid by the Company. The Company shall also
      reimburse the Investors for the fees and disbursements of Legal Counsel in
      connection with registration, filing or qualification pursuant to Sections
      2 and
      3 of this Agreement which amount shall be limited to $20,000.

    


    6. Indemnification.

    


    In
      the
      event any Registrable Securities 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, the directors, officers, members,
      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 not misleading, (ii) any
      untrue statement or alleged untrue statement of a material fact contained in
      any
      preliminary prospectus if used prior to the effective date of such Registration
      Statement, or contained in the 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 the light of the circumstances under which
      the statements therein were made, not misleading, (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 thereunder relating to the offer or sale of the Registrable
      Securities pursuant to a Registration Statement or (iv) any violation of this
      Agreement (the matters in the foregoing clauses (i) through (iv) being,
      collectively, "Violations").
      Subject to Section 6(c), the Company shall reimburse the Indemnified Persons,
      promptly as such expenses are incurred and are due and payable, for any legal
      fees 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): (i) 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
      for such Indemnified Person expressly for use in connection with the preparation
      of the Registration Statement or any such amendment thereof or supplement
      thereto, if such prospectus was timely made available by the Company pursuant
      to
      Section 3(d) and (ii) 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, including a corrected prospectus,
      if
      such prospectus or corrected prospectus was timely made available by the Company
      pursuant to Section 3(d); and (iii) 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 or
      delayed. 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 Investors pursuant to Section
      9.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    b. In
      connection with any Registration Statement in which an Investor is
      participating, each such 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
      who signs the Registration Statement 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 are based upon any Violation, in each case
      to the extent, and only to the extent, that such 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(c), such Investor will reimburse any legal or other
      expenses reasonably incurred by an Indemnified Party 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
      or
      delayed; 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 Investors pursuant to Section 9. 

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    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 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. In the case of an Indemnified Person, legal counsel
      referred to in the immediately preceding sentence shall be selected by the
      Investors holding at least a majority in
      interest of the Registrable Securities included in the Registration Statement
      to
      which the Claim relates. 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
      reasonably 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 respect to such Claim or litigation, and such
      settlement shall not include any admission as to fault on the part of the
      Indemnified Party. 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 Person involved
      in the sale of Registrable Securities which Person is guilty of fraudulent
      misrepresentation (within the meaning of Section 11(f) of the 1933 Act) in
      connection with such sale shall be entitled to contribution from any Person
      involved in such sale 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 pursuant to such Registration
      Statement.

    


    8. Reports
      Under the 1934 Act.
      

    


    With
      a
      view to making available to the Investors the benefits of Rule 144 promulgated
      under the 1933 Act or any other similar rule or regulation of the SEC that
      may
      at any time permit the Investors 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
      is required for 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, if true, that it has
      complied with the reporting requirements of Rule 144, the 1933 Act and the
      1934
      Act, (ii) a copy of the 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 Investors to
      sell
      such securities pursuant to Rule 144 without registration.

    


    9. Assignment
      of Registration Rights.
      

    


    The
      rights under this Agreement shall be automatically assignable by the Investors
      to any transferee of all or any portion of such Investor's Registrable
      Securities if: (i) the Investor agrees in writing with the transferee or
      assignee to assign such rights, and a copy of such agreement is furnished to
      the
      Company within a reasonable time after such assignment; (ii) the Company is,
      within a reasonable time after such transfer or assignment, furnished with
      written notice of (a) the name and address of such transferee or assignee,
      and
      (b) the securities with respect to which such registration rights are being
      transferred or assigned; (iii) immediately following such transfer or assignment
      the further disposition of such securities by the transferee or assignee is
      restricted under the 1933 Act and applicable state securities laws; (iv) at
      or
      before the time the Company receives the written notice contemplated by clause
      (ii) of this sentence the transferee or assignee agrees in writing with the
      Company to be bound by all of the provisions contained herein; and (v) such
      transfer shall have been made in accordance with the applicable requirements
      of
      the Securities Purchase Agreement.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    10. Amendment
      of 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 Required
      Holders. Any amendment or waiver effected in accordance with this Section 10
      shall be binding upon each Investor and the Company. No such amendment shall
      be
      effective to the extent that it applies to less 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.

    


    11. 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 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 such record 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 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: 

    


    Rancher
      Energy Corp.

    999-18th
      Street,
      Suite 1740

    Denver,
      Colorado 80202

    Telephone:
      (303) 629-1122

    Facsimile: (720)
      904-5698

    Attention:
      John
      Works, President and CEO

    


    With
      a
      copy to: 

    


    Patton
      Boggs LLP

    1660
      Lincoln Street

    Denver,
      Colorado 80264

    Telephone:
      (303) 830-1776

    Facsimile:
      (303) 894-9239

    Attention:
      Robert Bearman, Esq. and Mark Goldschmidt, Esq.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    If
      to
      Legal Counsel:

    


    
      	  	  	
              Schulte
                Roth & Zabel LLP

            


    

    
      	  	  	
              919
                Third Avenue

            


    

    
      	  	  	
              New
                York, New York 10022

            


    

    
      	  	  	
              Telephone:
                (212) 756-2000

            


    

    
      	  	  	
              Facsimile:
                (212) 593-5955

            


    

    
      	  	  	
              Attention:
                Eleazer N. Klein, Esq.

            


    

    


    If
      to a
      Buyer, to its address and facsimile number set forth on the Schedule of Buyers
      attached hereto, with copies to such Buyer's representatives as set forth on
      the
      Schedule of Buyers, or to such other address and/or facsimile number and/or
      to
      the attention of such other Person as the recipient party has specified by
      written notice given to each other party five (5) days prior to the
      effectiveness of such change. 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. All
      questions concerning the construction, validity, enforcement and interpretation
      of this Agreement shall be governed by the internal laws of the State of New
      York, without giving effect to any choice of law or conflict of law provision
      or
      rule (whether of the State of New York or any other jurisdictions) that would
      cause the application of the laws of any jurisdictions other than the State
      of
      New York. Each party hereby irrevocably submits to the exclusive jurisdiction
      of
      the state and federal courts sitting in The City of New York, Borough of
      Manhattan, 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 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 other Transaction Documents (as defined in the Securities
      Purchase Agreement) and the instruments referenced herein and therein 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 other Transaction Documents and the instruments referenced herein
      and therein supersede all prior agreements and understandings among the parties
      hereto with respect to the subject matter hereof and thereof.

    


    f. Subject
      to the requirements of Section 9, 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 any 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. All
      consents and other determinations required to be made by the Investors pursuant
      to this Agreement shall be made, unless otherwise specified in this Agreement,
      by the Required Holders.

    


    k. 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. 

    


    l. 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.

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    m. The
      obligations of each Investor hereunder are several and not joint with the
      obligations of any other Investor, and no provision of this Agreement is
      intended to confer any obligations on any Investor vis-à-vis any other Investor.
      Nothing contained herein, and no action taken by any Investor pursuant hereto,
      shall be deemed to constitute the Investors as a partnership, an association,
      a
      joint venture or any other kind of entity, or create a presumption that the
      Investors are in any way acting in concert or as a group with respect to such
      obligations or the transactions contemplated herein.

    


    *
      * * * *
      *

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

     

    
      	 	 	 
	 	
              COMPANY:

               

              
                RANCHER
                  ENERGY CORP.

              

            
	 
 	 
 	 
 
	 	By:  	/s/
              John
              Works
	 	
              
Name:  
John
              Works
	 	
              Title:    
                President and Chief Executive
                Officer

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    IN
      WITNESS WHEREOF,
      each
      Buyer and the Company have caused their respective signature page to this
      Registration Rights Agreement to be duly executed as of the date first written
      above.

    


    
      	
              BUYERS:

            
	 
	
              _______________________

            
	 
	 
	
              By: 
                ______________________________

              Name:

              Title:

            
	 
	
              Address:

              ________________________________________

              ________________________________________

              ________________________________________

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    SCHEDULE
      OF BUYERS

    


    
      	
              Buyer

            	
              Buyer’s
                Address and

              Facsimile
                Number

            	
              Buyer’s
                Legal Representative's Address and Facsimile
                Number

            
	
              LP
                Rancher Ltd

            	 	
              Schulte
                Roth & Zabel LLP

              919
                Third Avenue

              New
                York, New York 10022

              Attention:
                Eleazer Klein, Esq.

              Facsimile:
                (212) 593-5955

              Telephone:
                (212) 756-2376

            
	
              Latigo
                Fund L.P.

            	 	
              Schulte
                Roth & Zabel LLP

              919
                Third Avenue

              New
                York, New York 10022

              Attention:
                Eleazer Klein, Esq.

              Facsimile:
                (212) 593-5955

              Telephone:
                (212) 756-2376

            
	
              Old
                Westbury Real Return Fund

            	 	 
	
              Bank
                sal. Oppenheim

            	 	 
	
              Millennium
                Global Natural Resources Fund Limited

            	 	 
	
              Millennium
                Global Natural Resources Fund Limited

            	 	 
	
              Morgan
                Stanley Co. for a/c Persistency

            	 	 
	
              Tenor
                Opportunity Master Fund Ltd.

            	 	 
	
              VR
                Global Partners L.P.

            	 	 
	
              Affaires
                Financieres SA

            	 	 
	
              Spartan
                Arbitrage Fund LP

            	 	 
	
              MMCap
                International Inc.

            	 	 
	
              NBCN
                INC. ITF Jane Day

            	 	 
	
              NBCN
                INC. ITF Purling Holdings

            	 	 
	
              NBCN
                INC. ITF Scott Paterson

            	 	 
	
              NBCN
                INC. ITF Don Hovis

            	 	 
	
              NBCN
                INC. ITF Don McFarlane

            	 	 
	
              Jana
                Piranha Master Fund LTD

            	 	 
	
              Passport
                Global Master

            	 	 
	
              Hound
                Partners Offshore Fund

            	 	 
	
              Hound
                Partners, L.P.

            	 	 
	
              Jennifer
                Wisden

            	 	 
	
              Pierce
                A Buxton

            	 	 
	
              Bobby
                Powell

            	 	 
	
              Jonathan
                G Reed

            	 	 
	
              Patrick
                Roberts 25 Ambra

            	 	 
	
              Angus
                I McIntosh

            	 	 
	
              Harris
                N E

            	 	 
	
              Mr
                Frederick Mark Tughan

            	 	 
	
              Malcolm
                Plaister

            	 	 
	
              Mr.
                M.J. Knott

            	 	 
	
              Louvre
                RE Fitzwilliam

            	 	 
	
              Legent
                Clearing, LLC

            	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              Buyer

            	
              Buyer’s
                Address and

              Facsimile
                Number

            	
              Buyer’s
                Legal Representative's Address and Facsimile
                Number

            
	
              Brewin
                Dolphin

            	 	 
	
              Abbey
                National

            	 	 
	
              Brian
                Withington

            	 	 
	
              Mrs.
                S M Wild

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              De
                Heer T. Haddad

            	 	 
	
              Hornbuckle
                Mtichell Tst

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Adrian
                Cox

            	 	 
	
              Robert
                Hughes

            	 	 
	
              Direct
                Currency Exchange PLC

            	 	 
	
              John
                Howland Jackson, Esq.

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Resolute
                Investment Holdings

            	 	 
	
              Angus
                I McIntosh

            	 	 
	
              Picon
                Consultants Ltd

            	 	 
	
              Thomas
                E Teunissen

            	 	 
	
              RBC
                Trust Company

            	 	 
	
              Mr
                A S Gould

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Jonathan
                G Reed

            	 	 
	
              Mr
                Paul Francis Owen Hollowday

            	 	 
	
              Hornbuckle
                Mtichell Tst

            	 	 
	
              Richmond
                Restaurants Limited

            	 	 
	
              Rensburg
                Sheppards Investment Manag

            	 	 
	
              Pierce
                A Buxton

            	 	 
	
              Peter
                Jonathan Battle

            	 	 
	
              R
                T
                Rivett-Carnac

            	 	 
	
              MH
                Clarke

            	 	 
	
              Ian
                Bundock, Esq.

            	 	 
	
              Tyrolese
                Trust Co Ltd G R Bird as T Tees of the ABN

            	 	 
	
              Malcolm
                John Lanyon /or Elizabeth 

            	 	 
	
              Philip
                Martin Davis

            	 	 
	
              Stuart
                Canwell

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              T
                G
                Graveney

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Paul
                Gelinas

            	 	 
	
              Thomas
                P Gelinas

            	 	 
	
              Monsieur
                Paul Turner

            	 	 
	
              CSTDN
                for Julia Curtiss Porter Inc.

            	 	 
	
              PFP
                Group Limited

            	 	 
	
              Legent
                Clearing, LLC

            	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              Buyer

            	
              Buyer’s
                Address and

              Facsimile
                Number

            	
              Buyer’s
                Legal Representative's Address and Facsimile
                Number

            
	
              Legent
                Clearing, LLC

            	 	 
	
              Griffin,
                Sean Timothy (Mr.)

            	 	 
	
              Miss
                K. R. Rankin

            	 	 
	
              Barclays
                Bank PLC

            	 	 
	
              Miss
                H Pearson

            	 	 
	
              De
                Heer T. Haddad

            	 	 
	
              Mr.
                M. Wilson

            	 	 
	
              Martin
                Evans

            	 	 
	
              Calum
                Cameron

            	 	 
	
              Mr.
                Simon Piper

            	 	 
	
              Van
                Moer Santerre ET BLD DU Souverain

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              M.
                Johannesson Johannes Ingi

            	 	 
	
              Marie
                Adelhag

            	 	 
	
              M.
                Et MME Whalley

            	 	 
	
              Mr.
                T.E.E. George

            	 	 
	
              Purbeck
                Pension 

            	 	 
	
              Direct
                Currency Exchange PLC

            	 	 
	
              P
                J
                Holland

            	 	 
	
              Monsieur
                Jean Pierre Van Den Broeck

            	 	 
	
              Thomas
                E Teunissen

            	 	 
	
              Pelttari
                Hannu

            	 	 
	
              Callow
                D J

            	 	 
	
              Mr.
                David Alan Streatfield

            	 	 
	
              De
                Heer A. Advaney

            	 	 
	
              John
                Garvey

            	 	 
	
              Mr.
                James W. E. Lewis

            	 	 
	
              IR
                Jessett

            	 	 
	
              De
                Heer M.D. Maclure

            	 	 
	
              Mrs.
                J.C. Maclure

            	 	 
	
              Cater
                Allen Bank Romford

            	 	 
	
              NJ
                & CJ Bratton

            	 	 
	
              HR
                M P Hayes

            	 	 
	
              Alliance
                Trust Pensions LTD

            	 	 
	
              The
                DirectorsMDL Manx Limited

            	 	 
	
              Gundersen
                M.

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              PPE
                LTD

            	 	 
	
              PPE
                LTD

            	 	 
	
              Phillip
                Patrick Macdonald

            	 	 
	
              Farrant

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Ronald
                A. Alder

            	 	 
	
              Mark
                Douglas Blundell Charles Schwab

            	 	 
	
              Capelin
                Financial Management

            	 	 
	
              James
                Lawsonbrown

            	 	 
	
              Robert
                Hughes

            	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	
              Buyer

            	
              Buyer’s
                Address and

              Facsimile
                Number

            	
              Buyer’s
                Legal Representative's Address and Facsimile
                Number

            
	
              Mr.
                Paul Francis Owen Hollowday

            	 	 
	
              Alliance
                Trust Pensions LTD

            	 	 
	
              Ms.
                Myra Tabor

            	 	 
	
              Mulhall
                A M

            	 	 
	
              Maypole
                Contracts LTD

            	 	 
	
              Mr.
                Rudolf Mueller

            	 	 
	
              Jennifer
                Wisden

            	 	 
	
              Resolute
                Investment Holdings

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Pierce
                A Buxton

            	 	 
	
              S.
                R. Nelson

            	 	 
	
              Carol
                M. Gregory

            	 	 
	
              Collins
                Stewart

            	 	 
	
              Staunton
                Sports, LTD

            	 	 
	
              Roy
                A. Stephenson, Esq.

            	 	 
	
              Kevin
                Mc Leod

            	 	 
	
              Matthew
                Joseph Miller

            	 	 
	
              Andrew
                C T Gomarsall, Esq.

            	 	 
	
              Ian
                M. Fletcher

            	 	 
	
              Ian
                Bundock, Esq.

            	 	 
	
              HSBC
                Private Bank (Suisse) S.A.

            	 	 
	
              Private
                Pension

            	 	 
	
              Griffin,
                Sean Timothy (Mr.)

            	 	 
	
              Jason
                Carter

            	 	 
	
              Monsieur
                Paul Turner

            	 	 
	
              David
                Clews

            	 	 
	
              Cat
                All LTD Re Cater Allen Priv Bk

            	 	 
	
              Mr.
                Michael Carlin

            	 	 
	
              Mark
                McVeigh

            	 	 
	
              P
                J
                Holland

            	 	 
	
              Robin
                Syrett, Esq.

            	 	 
	
              Monsieur
                Jean Pierre Van Den Broeck

            	 	 
	
              Hornbuckle
                Mitchell

            	 	 
	
              De
                Heer M.D. Maclure

            	 	 
	
              Wueger
                Andreas/Chiaran

            	 	 
	
              Herr
                Andreas Wueger

            	 	 
	
              Terry
                Farrow

            	 	 
	
              Richard
                Rivett-Carnac

            	 	 
	
              R
                W
                Pettitt

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Mr
                Steven Minkey

            	 	 
	
              De
                Heer T. M. Bosch

            	 	 
	
              Mr.
                L F Butler

            	 	 
	
              Adrian
                Cox

            	 	 
	
              Dr.
                Elizabeth J. Todd

            	 	 
	
              PFP
                Group Limited

            	 	 


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

    

    
      	 

              Buyer

            	
              Buyer’s
                Address and

              Facsimile
                Number

            	
              Buyer’s
                Legal Representative's Address and Facsimile
                Number

            
	
              Legent
                Clearing, LLC

            	 	 
	
              Christopher
                Sheasby

            	 	 
	
              Parasol
                FX Client A/C

            	 	 
	
              Osiris
                Tsts Re D Barker Life 1

            	 	 
	
              Hornbuckle
                Mitchell

            	 	 
	
              Mr
                Derek Capelin

            	 	 
	
              Torben
                Maersk

            	 	 
	
              PFP
                Group Limited

            	 	 
	
              Legent
                Clearing, LLC

            	 	 
	
              Hans
                F. Voegeli

            	 	 
	
              Martin
                Evans

            	 	 


    

    


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      A

    


    FORM
      OF NOTICE OF EFFECTIVENESS

    OF
      REGISTRATION STATEMENT

    


    [Transfer
      Agent]

    [Address]

    Attention:
      

    


    
      	
            	Re:	
              Rancher
                Energy Corp.

            


    

    


    Ladies
      and Gentlemen:

    


    [We
      are][I am] counsel to Rancher Energy Corp., a Nevada corporation (the
      "Company"),
      and
      have represented the Company in connection with that certain Securities Purchase
      Agreement (the "Securities
      Purchase Agreement")
      entered into by and among the Company and the buyers named therein
      (collectively, the "Holders")
      pursuant to which the Company issued to the Holders (i) senior convertible
      notes
      (the "Notes")
      convertible into the Company's common stock, par value $0.00001 per share
      (the "Common
      Stock), (ii)
      shares (the "Common
      Shares")
      of
      Common Stock and (iii) warrants exercisable for shares of Common Stock (the
      "Warrants").
      Pursuant to the Securities Purchase Agreement, the Company also has entered
      into
      a Registration Rights Agreement with the Holders (the "Registration
      Rights Agreement")
      pursuant to which the Company agreed, among other things, to register the
      Registrable Securities (as defined in the Registration Rights Agreement),
      including the Common Shares, the shares of Common Stock issuable upon conversion
      of the Notes and the shares of Common Stock issuable upon exercise of the
      Warrants, under the Securities Act of 1933, as amended (the "1933
      Act").
      In
      connection with the Company's obligations under the Registration Rights
      Agreement, on ____________ ___, 200_, the Company filed a Registration Statement
      on Form SB-2 (File No. 333-_____________) (the "Registration
      Statement")
      with
      the Securities and Exchange Commission (the "SEC")
      relating to the Registrable Securities which names each of the Holders as a
      selling stockholder thereunder.

    


    In
      connection with the foregoing, [we][I] advise you that a member of the SEC's
      staff has advised [us][me] 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][I] 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.

    


    This
      letter shall serve as our standing instruction to you that the shares of Common
      Stock are freely transferable by the Holders pursuant to the Registration
      Statement. You need not require further letters from us to effect any future
      legend-free issuance or reissuance of shares of Common Stock to the Holders
      as
      contemplated by the Company's Transfer Agent Instructions dated December __,
      2006.

    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	 	
              Very
                truly yours,

              


              [ISSUER'S
                COUNSEL]

              


              By:__________________________

            


    

     

    
      	CC:	
              [LIST
                NAMES OF HOLDERS]

            


    

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    


    EXHIBIT
      B

    


    SELLING
      STOCKHOLDERS

    


    The
      shares of Common Stock being offered by the selling stockholders are common
      stock previously issued and shares of common stock issuable upon conversion
      of
      the convertible notes and upon exercise of the warrants. For additional
      information regarding the issuance of those convertible notes and warrants,
      see
      "Private Placement of Convertible Notes Common Shares and Warrants" above.
      We
      are registering the shares of Common Stock in order to permit the selling
      stockholders to offer the shares for resale from time to time. Except for the
      ownership of the Common Shares, Convertible Notes and Warrants issued pursuant
      to the Securities Purchase Agreement, the selling stockholders have not had
      any
      material relationship with us within the past three years.

    


    The
      table
      below lists the selling stockholders and other information regarding the
      beneficial ownership of the shares of Common Stock by each of the selling
      stockholders. The second column lists the number of shares of Common Stock
      beneficially owned by each selling stockholder, based on its ownership of the
      shares of common stock previously, the convertible notes and warrants, as of
      ________, 200_, assuming conversion of all convertible notes and exercise of
      the
      warrants held by the selling stockholders on that date, without regard to any
      limitations on conversions or exercise.

    


    The
      third
      column lists the shares of Common Stock being offered by this prospectus by
      each
      selling stockholder.

    


    In
      accordance with the terms of a registration rights agreement among the Company
      and the selling stockholders, this prospectus generally covers the resale of
      at
      least 130% of the sum of (i) the number of shares of Common Stock issuable
      upon
      conversion of the convertible notes as of the trading day immediately preceding
      the date the registration statement is initially filed with the SEC, (ii) the
      shares of common stock previously issued and (iii) the number of shares of
      Common Stock issuable upon exercise of the related warrants as of the trading
      day immediately preceding the date the registration statement is initially
      filed
      with the SEC.
      Because
      the conversion price of the convertible notes and the exercise price of the
      warrants may be adjusted, the number of shares that will actually be issued
      may
      be more or less than the number of shares being offered by this prospectus.
      The
      fourth column assumes the sale of all of the shares offered by the selling
      stockholders pursuant to this prospectus.

    


    Under
      the
      terms of the convertible notes and the warrants, a selling stockholder may
      not
      convert the convertible notes or exercise the warrants to the extent such
      conversion or exercise would cause such selling stockholder, together with
      its
      affiliates, to beneficially own a number of shares of Common Stock which would
      exceed [9.99][4.99]% of our then outstanding shares of Common Stock following
      such conversion or exercise, excluding for purposes of such determination shares
      of Common Stock issuable upon conversion of the convertible notes which have
      not
      been converted and upon exercise of the warrants which have not been exercised.
      The number of shares in the second column does not reflect this limitation.
      The
      selling stockholders may sell all, some or none of their shares in this
      offering. See "Plan of Distribution."

    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    


    
      	
              Name
                of Selling Stockholder

            	 	
               

              Number
                of Shares Owned Prior to Offering

            	 	
              Maximum
                Number of Shares to be Sold Pursuant to this
                Prospectus

            	 	
              Number
                of Shares Owned After Offering

            
	 	 	 	 	 	 	 
	
              [        
]
                (1)
                

            	 	 	 	 	 	
              0

            


    

    


    (1) 

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    


    PLAN
      OF DISTRIBUTION

    


    We
      are
      registering the shares of Common Stock previously issued and the shares of
      common stock issuable upon conversion of the convertible notes and upon exercise
      of the warrants to permit the resale of these shares of Common Stock by the
      holders of the shares of common stock, the convertible notes and warrants from
      time to time after the date of this prospectus. We will not receive any of
      the
      proceeds from the sale by the selling stockholders of the shares of Common
      Stock. We will bear all fees and expenses incident to our obligation to register
      the shares of Common Stock.

    


    The
      selling stockholders may sell all or a portion of the shares of Common Stock
      beneficially owned by them and offered hereby from time to time directly or
      through one or more underwriters, broker-dealers or agents. If the shares of
      Common Stock are sold through underwriters or broker-dealers, the selling
      stockholders will be responsible for underwriting discounts or commissions
      or
      agent's commissions. The shares of Common Stock may be sold in one or more
      transactions at fixed prices, at prevailing market prices at the time of the
      sale, at varying prices determined at the time of sale, or at negotiated prices.
      These sales may be effected in transactions, which may involve crosses or block
      transactions, 

    


    
      	
            	·	
              on
                any national securities exchange or quotation service on which the
                securities may be listed or quoted at the time of
                sale;

            


    

    


    
      	
            	·	
              in
                the over-the-counter market;

            


    

    


    
      	
            	·	
              in
                transactions otherwise than on these exchanges or systems or in the
                over-the-counter market;

            


    

    


    
      	
            	·	
              through
                the writing of options, whether such options are listed on an options
                exchange or otherwise;

            


    

    


    
      	
            	·	
              ordinary
                brokerage transactions and transactions in which the broker-dealer
                solicits purchasers;

            


    

    


    
      	
            	·	
              block
                trades in which the broker-dealer will attempt to sell the shares
                as agent
                but may position and resell a portion of the block as principal to
                facilitate the transaction;

            


    

    


    
      	
            	·	
              purchases
                by a broker-dealer as principal and resale by the broker-dealer for
                its
                account;

            


    

    


    
      	
            	·	
              an
                exchange distribution in accordance with the rules of the applicable
                exchange;

            


    

    


    
      	
            	·	
              privately
                negotiated transactions;

            


    

    


    
      	
            	·	
              short
                sales;

            


    

    


    
      	
            	·	
              sales
                pursuant to Rule 144;

            


    

    


    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

       

    

    
      	
            	·	
              broker-dealers
                may agree with the selling securityholders to sell a specified number
                of
                such shares at a stipulated price per
                share;

            


    

    


    
      	
            	·	
              a
                combination of any such methods of sale;
                and

            


    

    


    
      	
            	·	
              any
                other method permitted pursuant to applicable
                law.

            


    

    


    If
      the
      selling stockholders effect such transactions by selling shares of Common Stock
      to or through underwriters, broker-dealers or agents, such underwriters,
      broker-dealers or agents may receive commissions in the form of discounts,
      concessions or commissions from the selling stockholders or commissions from
      purchasers of the shares of Common Stock for whom they may act as agent or
      to
      whom they may sell as principal (which discounts, concessions or commissions
      as
      to particular underwriters, broker-dealers or agents may be in excess of those
      customary in the types of transactions involved). In connection with sales
      of
      the shares of Common Stock or otherwise, the selling stockholders may enter
      into
      hedging transactions with broker-dealers, which may in turn engage in short
      sales of the shares of Common Stock in the course of hedging in positions they
      assume. The selling stockholders may also sell shares of Common Stock short
      and
      deliver shares of Common Stock covered by this prospectus to close out short
      positions and to return borrowed shares in connection with such short sales.
      The
      selling stockholders may also loan or pledge shares of Common Stock to
      broker-dealers that in turn may sell such shares.

    


    The
      selling stockholders may pledge or grant a security interest in some or all
      of
      the shares of common stock, convertible notes or warrants or shares of Common
      Stock owned by them and, if they default in the performance of their secured
      obligations, the pledgees or secured parties may offer and sell the shares
      of
      Common Stock from time to time pursuant to this prospectus or any amendment
      to
      this prospectus under Rule 424(b)(3) or other applicable provision of the
      Securities Act of 1933, as amended, amending, if necessary, the list of selling
      stockholders to include the pledgee, transferee or other successors in interest
      as selling stockholders under this prospectus. The selling stockholders also
      may
      transfer and donate the shares of Common Stock in other circumstances in which
      case the transferees, donees, pledgees or other successors in interest will
      be
      the selling beneficial owners for purposes of this prospectus.

    


    The
      selling stockholders and any broker-dealer participating in the distribution
      of
      the shares of Common Stock may be deemed to be "underwriters" within the meaning
      of the Securities Act, and any commission paid, or any discounts or concessions
      allowed to, any such broker-dealer may be deemed to be underwriting commissions
      or discounts under the Securities Act. At the time a particular offering of
      the
      shares of Common Stock is made, a prospectus supplement, if required, will
      be
      distributed which will set forth the aggregate amount of shares of Common Stock
      being offered and the terms of the offering, including the name or names of
      any
      broker-dealers or agents, any discounts, commissions and other terms
      constituting compensation from the selling stockholders and any discounts,
      commissions or concessions allowed or reallowed or paid to
      broker-dealers.

    


    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

       

    

    Under
      the
      securities laws of some states, the shares of Common Stock may be sold in such
      states only through registered or licensed brokers or dealers. In addition,
      in
      some states the shares of Common Stock may not be sold unless such shares have
      been registered or qualified for sale in such state or an exemption from
      registration or qualification is available and is complied with.

    


    There
      can
      be no assurance that any selling stockholder will sell any or all of the shares
      of Common Stock registered pursuant to the registration statement, of which
      this
      prospectus forms a part.

    


    The
      selling stockholders and any other person participating in such distribution
      will be subject to applicable provisions of the Securities Exchange Act of
      1934,
      as amended, and the rules and regulations thereunder, including, without
      limitation, Regulation M of the Exchange Act, which may limit the timing of
      purchases and sales of any of the shares of Common Stock by the selling
      stockholders and any other participating person. Regulation M may also restrict
      the ability of any person engaged in the distribution of the shares of Common
      Stock to engage in market-making activities with respect to the shares of Common
      Stock. All of the foregoing may affect the marketability of the shares of Common
      Stock and the ability of any person or entity to engage in market-making
      activities with respect to the shares of Common Stock.

    


    We
      will
      pay all expenses of the registration of the shares of Common Stock pursuant
      to
      the registration rights agreement, estimated to be
      $[     ] in total, including, without limitation,
      Securities and Exchange Commission filing fees and expenses of compliance with
      state securities or "blue sky" laws; provided, however, that a selling
      stockholder will pay all underwriting discounts and selling commissions, if
      any.
      We will indemnify the selling stockholders against liabilities, including some
      liabilities under the Securities Act, in accordance with the registration rights
      agreements, or the selling stockholders will be entitled to contribution. We
      may
      be indemnified by the selling stockholders against civil liabilities, including
      liabilities under the Securities Act, that may arise from any written
      information furnished to us by the selling stockholder specifically for use
      in
      this prospectus, in accordance with the related registration rights agreement,
      or we may be entitled to contribution.

    


    Once
      sold
      under the registration statement, of which this prospectus forms a part, the
      shares of Common Stock will be freely tradable in the hands of persons other
      than our affiliates.

    


    
      
        
        

      

      
        3