<PAGE>

                                                                    EXHIBIT 10.4

                          REGISTRATION RIGHTS AGREEMENT

         This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of
September 5, 2003, is made by and among Daugherty Resources, Inc., a corporation
organized under the laws of British Columbia, Canada (the "COMPANY"), and the
undersigned (together with their affiliates, the "INITIAL INVESTORS").

                                   BACKGROUND

         A. In connection with that certain Securities Purchase Agreement of
even date herewith by and among the Company and the Initial Investors (the
"SECURITIES PURCHASE AGREEMENT"), the Company has agreed, upon the terms and
subject to the conditions contained therein, to issue and sell to the Initial
Investors (i) convertible promissory notes (collectively, including any PIK
Notes (as such term is defined in such convertible promissory notes) issued in
respect thereof, the "NOTES") that are convertible into shares of the Company's
common stock, no par value per share (the "COMMON STOCK"), and (ii) warrants
(the "WARRANTS") to acquire shares of Common Stock. The shares of Common Stock
issuable upon conversion or redemption of or otherwise pursuant to the Notes are
referred to herein as the "CONVERSION SHARES" and the shares of Common Stock
issuable upon exercise of or otherwise pursuant to the Warrants are referred to
herein as the "WARRANT SHARES."

         B. To induce the Initial Investors to execute and deliver the
Securities Purchase Agreement, and to consummate the transactions contemplated
thereby, 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 "SECURITIES 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 the
Initial Investors, intending to be legally bound, hereby agree as follows:

1.       DEFINITIONS.

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

                  (i)      "INVESTOR" means the Initial Investors and any
transferees or assignees who agree to become bound by the provisions of this
Agreement in accordance with Section 9 hereof.

                  (ii)     "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing a Registration Statement or
Statements in compliance with the Securities Act and pursuant to Rule 415 under
the Securities Act or any successor rule providing for offering securities on a
continuous basis ("RULE 415"), and the declaration or ordering of

<PAGE>

effectiveness of such Registration Statement by the United States Securities and
Exchange Commission (the "SEC").

                  (iii)    "REGISTRABLE SECURITIES" means (a) the Conversion
Shares, (b) the Warrant Shares, and (c) any shares of capital stock issued or
issuable, from time to time, as a distribution on or in exchange for or
otherwise with respect to any of the foregoing (including the Notes (which shall
include, without limitation, Conversion Shares underlying PIK Notes) and the
Warrants), whether as default payments, on account of anti-dilution or other
adjustments or otherwise.

                  (iv)     "REGISTRATION STATEMENT" means a registration
statement of the Company under the Securities Act.

         (b)      Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Securities Purchase
Agreement.

2.       REGISTRATION.

         (a)      Mandatory Registration. The Company shall prepare promptly and
file with the SEC as soon as practicable, but in no event later than the
thirtieth (30th) day following the date hereof (the "FILING DATE"), a
Registration Statement on Form S-3 (or, if Form S-3 is not then available, on
such form of Registration Statement as is then available to effect a
registration of all of the Registrable Securities, subject to the consent of the
Initial Investors) covering the resale of 120% of the Registrable Securities.
The Registration Statement filed hereunder, to the extent allowable under the
Securities Act and the Rules promulgated thereunder (including Rule 416), shall
state that such Registration Statement also covers such indeterminate number of
additional shares of Common Stock as may become issuable upon conversion of the
Notes and exercise of the Warrants to prevent dilution resulting from stock
splits, stock dividends or similar transactions. The Registrable Securities
included on the Registration Statement shall be allocated among the Investors as
set forth in Section 11(k) hereof. The Registration Statement (and each
amendment or supplement thereto, and each request for acceleration of
effectiveness thereof) shall be provided to (and subject to the approval of) the
Initial Investors and their counsel prior to its filing or other submission.

         (b)      Payments by the Company. The Company shall use its best
efforts to cause the Registration Statement required to be filed pursuant to
Section 2(a) hereof to become effective as soon as practicable, but in no event
later than the sixtieth (60th) day following the date hereof. At the time of
effectiveness, the Company shall ensure that such Registration Statement covers
at least 120% of the Registrable Securities issuable upon full conversion of the
Notes (without giving effect to any limitations on conversion contained in the
Notes) and exercise of the Warrants (without giving effect to any limitations on
exercise contained in the Warrants), including, if necessary, by filing an
amendment prior to the effective date of the Registration Statement to increase
the number of Registrable Securities covered thereby. If (i) (A) the
Registration Statement required to be filed pursuant to Section 2(a) hereof is
not filed with the SEC prior to the Filing Date or declared effective by the SEC
on or before the one hundred twentieth (120th) day following the date hereof
(the "REGISTRATION DEADLINE") or (B) any Registration Statement required to be
filed pursuant to Section 3(b) hereof is not declared

                                        2
<PAGE>

effective by the SEC on or before the sixtieth (60th) day following the
applicable Registration Trigger Date (as defined in Section 3(b) below), or (ii)
if, after any such Registration Statement has been declared effective by the
SEC, sales of any of the Registrable Securities required to be covered by such
Registration Statement (including any Registrable Securities required to be
registered pursuant to Section 3(b) hereof) cannot be made pursuant to such
Registration Statement (by reason of a stop order or the Company's failure to
update the Registration Statement or for any other reason outside the control of
the Investors) or (iii) the Common Stock is not listed or included for quotation
on the Nasdaq SmallCap Market (the "SMALLCAP MARKET"), the Nasdaq National
Market (the "NATIONAL MARKET"), the New York Stock Exchange (the "NYSE") or the
American Stock Exchange (the "AMEX") at any time after the Registration Deadline
hereunder, then the Company will make payments to each Investor in such amounts
and at such times as shall be determined pursuant to this Section 2(b) as
partial relief for the damages to the Investors by reason of any such delay in
or reduction of their ability to sell the Registrable Securities (which remedy
shall not be exclusive of any other remedies available at law or in equity). The
Company shall pay to each Investor an amount equal to the product of (i) the
aggregate principal balance of the Notes then outstanding (including, for this
purpose, the principal balance of any Notes that have been converted into
Conversion Shares then held by such Investor as if such Notes had not been so
converted), multiplied by (ii) (A) ten thousandths (.010), for each 30 day
period (or portion thereof) up to the one hundred eightieth (180th) day, and (B)
fifteen thousandths (.015), for each 30 day period (or portion thereof) from and
after the one hundred eightieth (180th) day, (w) after the Filing Date and prior
to the date the Registration Statement is filed with the SEC pursuant to Section
2(a), (x) after the Registration Deadline and prior to the date the Registration
Statement filed pursuant to Section 2(a) is declared effective by the SEC, (y)
after the sixtieth (60th) day following a Registration Trigger Date and prior to
the date the Registration Statement filed pursuant to Section 3(b) hereof is
declared effective by the SEC, and (z) during which sales of any Registrable
Securities cannot be made pursuant to any such Registration Statement after the
Registration Statement has been declared effective or the Common Stock is not
listed or included for quotation on the SmallCap Market, the National Market,
NYSE or AMEX; provided, however, that, for purpose of calculating the payment
amount owed to any given Investor, there shall be excluded from each such period
any delays which are solely attributable to changes required by such Investor in
the Registration Statement with respect to information relating to such
Investor, including, without limitation, changes to the plan of distribution
(other than any corrections of Company mistakes with respect to information
previously provided by such Investor). All such amounts required to be paid
hereunder shall be paid in cash within five days after the end of each period
that gives rise to such obligation, provided that, if any such period extends
for more than thirty (30) days, interim payments shall be made for each such 30
day period.

         (c)      Piggy-Back Registrations. If, at any time prior to the
expiration of the Registration Period (as defined in Section 3(a) below), there
is not effective and available for use by the Investors a Registration Statement
covering the resale of at least 120% of the Registrable Securities then issued
or issuable upon full conversion of the Notes and exercise of the Warrants
(without giving effect to any limitations on conversion or exercise contained
therein) and the Company shall file with the SEC a Registration Statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities (other than on Form S-4 or Form
S-8 or their then equivalents relating to equity securities to be issued solely
in connection with any acquisition of any entity or business or equity
securities issuable in

                                        3
<PAGE>

connection with stock option or other employee benefit plans), the Company shall
send to each Investor written notice of such filing, and if, within 15 days
after the date of such notice, such Investor shall so request in writing, the
Company shall include in such Registration Statement all or any part of any
Registrable Securities not then covered by an effective Registration Statement
available for use by the Investors that such Investor requests to be registered.
Notwithstanding the foregoing, in the event that, in connection with any
underwritten public offering, the managing underwriter(s) thereof shall impose a
limitation on the number of shares of Common Stock which may be included in the
Registration Statement because, in such underwriter(s)' judgment, marketing or
other factors dictate such limitation is necessary to facilitate public
distribution, then the Company shall be obligated to include in such
Registration Statement only such limited portion of the Registrable Securities
with respect to which such Investor has requested inclusion hereunder as the
underwriter shall permit; provided, however, that (i) the Company shall not
exclude any Registrable Securities unless the Company has first excluded all
outstanding securities, the holders of which are not contractually entitled to
inclusion of such securities in such Registration Statement or are not
contractually entitled to pro rata inclusion with the Registrable Securities,
(ii) after giving effect to the immediately preceding proviso, any such
exclusion of Registrable Securities shall be made pro rata among the Investors
seeking to include Registrable Securities and the holders of other securities
having the contractual right to inclusion of their securities in such
Registration Statement by reason of demand registration rights, in proportion to
the number of Registrable Securities or other securities, as applicable, sought
to be included by each such Investor or other holder, and (iii) no such
reduction shall reduce the amount of Registrable Securities included in the
registration below twenty-five (25%) of the total amount of securities included
in such registration. No right to registration of Registrable Securities under
this Section 2(c) shall be construed to limit any registration required under
Section 2(a) hereof. If an offering in connection with which an Investor is
entitled to registration under this Section 2(c) is an underwritten offering,
then each Investor whose Registrable Securities are included in such
Registration Statement shall, unless otherwise agreed by the Company, offer and
sell such Registrable Securities in an underwritten offering using the same
underwriter or underwriters and, subject to the provisions of this Agreement, on
the same terms and conditions as other shares of Common Stock included in such
underwritten offering.

         (d)      Eligibility for Form S-3. The Company represents and warrants
that it meets the requirements for the use of Form S-3 for registration of the
sale by the Initial Investors and any other Investor of the Registrable
Securities and the Company shall file all reports and statements required to be
filed by the Company with the SEC in a timely manner so as to thereafter
maintain such eligibility for the use of Form S-3.

3.       OBLIGATIONS OF THE COMPANY.

         In connection with the registration of the Registrable Securities, the
Company shall have the following obligations:

         (a)      The Company shall respond promptly to any and all comments
made by the staff of the SEC to any Registration Statement required to be filed
hereunder, and shall submit to the SEC, before the close of business on the
business day immediately following the business day on which the Company learns
(either by telephone or in writing) that no review of such Registration
Statement will be made by the SEC or that the staff of the SEC has no further
comments on such

                                        4
<PAGE>

Registration Statement, as the case may be, a request for acceleration of the
effectiveness of such Registration Statement to a time and date as soon as
practicable. The Company shall keep such Registration Statement effective
pursuant to Rule 415 at all times until such date as is the earlier of (i) the
date on which all of the Registrable Securities have been sold and (ii) the date
on which all of the Registrable Securities may be immediately sold to the public
without registration or restriction pursuant to Rule 144(k) under the Securities
Act or any successor provision (the "REGISTRATION PERIOD"), which Registration
Statement (including any amendments or supplements thereto and prospectuses
contained therein and all documents incorporated by reference therein) (A) shall
comply in all material respects with the requirements of the Securities Act and
the rules and regulations of the SEC promulgated thereunder and (B) 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 not
misleading. The financial statements of the Company included in any such
Registration Statement or incorporated by reference therein (x) shall comply as
to form in all material respects with the applicable accounting requirements and
the published rules and regulations of the SEC applicable with respect thereto,
(y) shall be prepared in accordance with U.S. generally accepted accounting
principles, consistently applied during the periods involved (except as may be
otherwise indicated in such financial statements or the notes thereto or, in the
case of unaudited interim statements, to the extent they may not include
footnotes or may be condensed on summary statements) and (z) fairly present in
all material respects the consolidated financial position of the Company and its
consolidated subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to immaterial year-end adjustments).

         (b)      The Company shall (i) prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to any
Registration Statement required to be filed hereunder and the prospectus used in
connection with any such Registration Statement as may be necessary to keep such
Registration Statement effective at all times during the Registration Period,
and (ii) during the Registration Period, comply with the provisions of the
Securities Act with respect to the disposition of all Registrable Securities of
the Company covered by any such Registration Statement until such time as all of
such Registrable Securities 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 event the number of shares available under a
Registration Statement filed pursuant to this Agreement is, for any three (3)
consecutive trading days (the last of such three (3) trading days being the
"REGISTRATION TRIGGER DATE"), insufficient to cover 120% of the Registrable
Securities then issued or issuable (without giving effect to any limitations on
conversion or exercise contained in the Notes or the Warrants), the Company
shall provide each Investor written notice of such Registration Trigger Date
within three business days thereafter and shall amend the Registration
Statement, or file a new Registration Statement (on the short form available
therefor, if applicable), or both, so as to cover 120% of the Registrable
Securities then issued or issuable (without giving effect to any limitations on
conversion or exercise contained in the Notes or the Warrants) as of the
Registration Trigger Date, in each case, as soon as practicable, but in any
event within 15 days after the Registration Trigger Date. The Company shall
cause such amendment(s) and/or new Registration Statement(s) to become effective
as soon as practicable following the filing thereof.

                                        5
<PAGE>

         (c)      The Company shall furnish to each Investor whose Registrable
Securities are included in a Registration Statement and such Investor's legal
counsel (i) promptly after the same is prepared and publicly distributed, filed
with the SEC or received by the Company, as applicable, one copy of the
Registration Statement and any amendment thereto, each preliminary prospectus
and prospectus and each amendment or supplement thereto, and, in the case of the
Registration Statement required to be filed pursuant to Section 2(a), each
letter written by or on behalf of the Company to the SEC or the staff of the SEC
(including, without limitation, any request to accelerate the effectiveness of
the Registration Statement or amendment thereto), and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
the Registration Statement (other than any portion thereof that contains
information for which the Company has sought confidential treatment), (ii) on
the date of effectiveness of the Registration Statement or any amendment
thereto, a notice stating that the Registration Statement or amendment has been
declared effective, and (iii) such number of copies of a prospectus, including a
preliminary prospectus, all amendments and supplements thereto and all such
other documents as such Investor may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Investor.

         (d)      The Company shall use its best efforts to (i) register and
qualify the Registrable Securities covered by any Registration Statement under
such other securities or "blue sky" laws of such jurisdictions in the United
States as each Investor who holds Registrable Securities being offered
reasonably requests, (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 (A) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3(d), (B) subject itself to general taxation in any such
jurisdiction, (C) file a general consent to service of process in any such
jurisdiction, (D) provide any undertakings that cause the Company undue expense
or burden, or (E) make any change in its Certificate of Incorporation, Bylaws or
other organizational documents, which in each case the Board of Directors of the
Company determines to be contrary to the best interests of the Company and its
stockholders.

         (e)      As promptly as practicable after becoming aware of such event,
the Company shall (i) notify each Investor by telephone and facsimile of the
happening of any event, as a result of which the prospectus included in any
Registration Statement that includes Registrable Securities, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and (ii) promptly prepare a supplement or amendment to such
Registration Statement to correct such untrue statement or omission, and deliver
such number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request.

         (f)      The Company shall use its best efforts (i) to prevent the
issuance of any stop order or other suspension of effectiveness of any
Registration Statement that includes Registrable Securities, and, if such an
order is issued, to obtain the withdrawal of such order at the earliest

                                        6
<PAGE>

practicable moment (including in each case by amending or supplementing such
Registration Statement), and (ii) to notify each Investor who holds Registrable
Securities being sold (or, in the event of an underwritten offering, the
managing underwriters) of the issuance of such order and the resolution thereof
(and if such Registration Statement is supplemented or amended, deliver such
number of copies of such supplement or amendment to each Investor as such
Investor may reasonably request).

         (g)      The Company shall permit a single firm of counsel designated
by the Initial Investors to review any Registration Statement required to be
filed hereunder and all amendments and supplements thereto a reasonable period
of time prior to its filing with the SEC, and not file any document in a form to
which such counsel reasonably objects.

         (h)      The Company shall make generally available to its security
holders as soon as practicable, but in no event later than 90 days after the
close of the period covered thereby, an earnings statement (in form complying
with the provisions of Rule 158 under the Securities 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 the Registration Statement.
The Company will be deemed to have complied with its obligations under this
Section 3(h) upon the Company's filing, on an appropriate form, the appropriate
report of the Company as required by the Securities Exchange Act of 1934, as
amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, the "EXCHANGE ACT").

         (i)      The Company shall hold in confidence and not make any
disclosure of information concerning an Investor provided to the Company unless
(i) disclosure of such 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 that
includes such Investor's Registrable Securities, (iii) the release of such
information is ordered pursuant to a subpoena or other order from a court or
governmental body of competent jurisdiction, (iv) such information has been made
generally available to the public other than by disclosure in violation of this
or any other agreement, or (v) such Investor consents to the form and content of
any such disclosure. The Company shall, upon learning that disclosure of any
information concerning an Investor is sought in or by a court or governmental
body of competent jurisdiction or through other means, give prompt notice to
such Investor prior to making such disclosure, and cooperate with the Investor,
at the Investor's expense, in taking appropriate action to prevent disclosure
of, or to obtain a protective order for, such information.

         (j)      The Company shall use its best efforts to promptly cause all
of the Registrable Securities covered by any Registration Statement to be listed
or designated for quotation on the SmallCap Market, the National Market, the
NYSE, the AMEX or any other national securities exchange or automated quotation
system and on each additional national securities exchange or automated
quotation system on which securities of the same class or series issued by the
Company are then listed or quoted, if any, if the listing or quotation of such
Registrable Securities is then permitted under the rules of such exchange or
automated quotation system, and in any event, without limiting the generality of
the foregoing, to arrange for or maintain at least two market makers to register
with the National Association of Securities Dealers, Inc. (the "NASD") as such
with respect to the Registrable Securities.

                                        7
<PAGE>

         (k)      The Company shall provide a transfer agent and registrar,
which may be a single entity, for the Registrable Securities not later than the
effective date of the Registration Statement required to be filed pursuant to
Section 2(a) hereof.

         (l)      The Company shall cooperate with any Investor who holds
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to any Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, and
registered in such names, as such Investor or the managing underwriter or
underwriters, if any, may reasonably request. Without limiting the generality of
the foregoing, within three business days after any Registration Statement that
includes Registrable Securities is declared effective by the SEC, the Company
shall cause legal counsel selected by the Company to deliver to the transfer
agent for the Registrable Securities (with copies to any Investor whose
Registrable Securities are included in such Registration Statement), an opinion
of such counsel in the form attached hereto as Exhibit A.

         (m)      At the request of any Investor, the Company shall prepare and
file with the SEC such amendments (including post-effective amendments) and
supplements to any Registration Statement required to be filed hereunder and the
prospectus used in connection with such Registration Statement as may be
necessary in order to change the plan of distribution set forth in such
Registration Statement.

         (n)      The Company shall comply with all applicable laws related to a
Registration Statement and offering and sale of securities and all applicable
rules and regulations of governmental authorities in connection therewith
(including, without limitation, the Securities Act and the Exchange Act and the
rules and regulations thereunder promulgated by the SEC.)

         (o)      From and after the date of this Agreement, the Company shall
not, and shall not agree to, allow the holders of any securities of the Company
to include any of their securities which are not Registrable Securities in the
Registration Statement required to be filed pursuant to Section 2(a) or 3(b)
hereof without the consent of the holders of a majority in interest of the
Registrable Securities.

         (p)      The Company shall make available for inspection by (i) each
Investor, (ii) any underwriter participating in any disposition pursuant to any
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Investors, and (iv) one firm of attorneys
retained by all such underwriters (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 to enable such Inspector to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which any Inspector may reasonably request
for purposes of such due diligence; provided, however, that each Inspector shall
hold in confidence and shall not make any disclosure (except to an Investor) 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, (B) the

                                        8
<PAGE>

release of such Records is ordered pursuant to a subpoena or other 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. Nothing herein shall be
deemed to limit any Investor's ability to sell Registrable Securities in a
manner that is otherwise consistent with applicable laws and regulations.

         (q)      In the case of an underwritten public offering, at the request
of any Investor, the Company shall furnish, on the date of effectiveness of the
Registration Statement (i) an opinion, dated as of such date, from counsel
representing the Company addressed to any such Investor and in form, scope and
substance as is customarily given in an underwritten public offering and (ii) 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 underwriters, if any, and any such Investor.

4.       OBLIGATIONS OF THE INVESTORS.

         In connection with the registration of the Registrable Securities, each
Investor shall have the following obligations:

         (a)      It shall be a condition precedent to the obligations of the
Company to effect 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 registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least five
trading days prior to the first anticipated filing date of the Registration
Statement, the Company shall notify each Investor of the information the Company
requires from each such Investor.

         (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 required to be filed 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)      Upon receipt of any notice from the Company of the happening
of any event of the kind described in Section 3(e) or 3(f) with respect to any
Registration Statement including Registrable Securities, each Investor shall
immediately discontinue disposition of Registrable Securities pursuant to such
Registration Statement until such Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Sections 3(e) and 3(f), as
applicable, and, if so directed by the Company, such Investor shall deliver to
the Company (at the expense of the Company) or destroy (and deliver to the
Company a certificate of destruction) all copies in such Investor's possession
of the prospectus covering such Registrable Securities current at the time of
receipt of such notice. Notwithstanding the foregoing or anything to the
contrary in this Agreement, but subject to compliance with applicable laws, the
Company shall cause the transfer agent for the Registrable Securities to deliver
unlegended shares of Common Stock to a

                                        9
<PAGE>

transferee of an Investor in accordance with the terms of the Notes and
Warrants, as applicable, in connection with any sale of Registrable Securities
with respect to which any such Investor has entered into a contract for sale
prior to receipt of such notice and for which any such Investor has not yet
settled.

         (d)      No Investor may participate in any underwritten distribution
hereunder unless such Investor (i) agrees to sell such Investor's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5 below, and (iv) complies with all applicable laws
in connection therewith. Notwithstanding anything in this Section 4(d) to the
contrary, this Section 4(d) is not intended to limit any Investor's rights under
Sections 2(a) or 3(b) hereof.

5.       EXPENSES OF REGISTRATION.

         All expenses (other than underwriting discounts and commissions)
incurred by the Company or the Investors in connection with registrations,
filings or qualifications pursuant to Sections 2 and 3 above (including, without
limitation, all registration, listing and qualification fees, printers and
accounting fees, the fees and disbursements of counsel for the Company and up to
$10,000 of the fees and disbursements of one counsel selected by the Investors)
shall be borne by the Company. In addition, the Company shall pay each
Investor's costs and expenses (including legal fees) incurred in connection with
the enforcement of the rights of such Investor hereunder.

6.       INDEMNIFICATION.

         In the event any Registrable Securities are included in a Registration
Statement under this Agreement:

         (a)      To the extent permitted by law, the Company shall indemnify,
hold harmless and defend (i) each Investor who holds such Registrable
Securities, and (ii) the directors, officers, partners, members, employees and
agents of each such Investor and each person, if any, who controls each such
Investor within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act (each, an "INVESTOR INDEMNIFIED PERSON"), against any joint or
several losses, claims, damages, liabilities or expenses (collectively, together
with actions, proceedings or inquiries by any regulatory or self-regulatory
organization, whether commenced or threatened, in respect thereof, "CLAIMS") to
which any of them may become subject insofar as such Claims arise out of or are
based upon: (A) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading, (B) 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

                                       10
<PAGE>

material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading, or
(C) any violation or alleged violation by the Company of the Securities Act, the
Exchange Act or any other law (including, without limitation, any state
securities law), rule or regulation relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (A) through (C),
collectively, "VIOLATIONS"). Subject to the restrictions set forth in Section
6(c) with respect to the number of legal counsel, the Company shall reimburse
each Investor and each other Investor Indemnified Person, promptly as such
expenses are incurred and are due and payable, for any reasonable 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): (x) shall
not apply to a Claim 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 Investor Indemnified Person expressly for use in the
Registration Statement or any such amendment thereof or supplement thereto; (y)
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; and (z) with respect to any preliminary
prospectus, shall not inure to the benefit of any Investor Indemnified Person if
the untrue statement or omission of material fact contained in the preliminary
prospectus was corrected on a timely basis in the prospectus, as then amended or
supplemented, if such corrected prospectus was timely made available by the
Company pursuant to Section 3(c) hereof, and the Investor Indemnified Person was
promptly advised in writing not to use the incorrect prospectus prior to the use
giving rise to a Violation and such Investor Indemnified Person, notwithstanding
such advice, used it. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of the Investor Indemnified
Person and shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9 hereof.

         (b)      In connection with any Registration Statement in which an
Investor is participating, (i) each such Investor shall, severally and not
jointly, indemnify, hold harmless and defend, to the same extent and in the same
manner set forth in Section 6(a), the Company, each of its directors, each of
its officers who signs the Registration Statement, its employees and each
person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and any other stockholder
selling securities pursuant to the Registration Statement or any of its
directors or officers or any person who controls such stockholder within the
meaning of the Securities Act or the Exchange Act (each, a "COMPANY INDEMNIFIED
PERSON"), against any Claims to which any of them may become subject insofar as
such Claims 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 (ii)
subject to the restrictions set forth in Section 6(c), such Investor shall
reimburse the Company 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; provided, however, that the indemnification obligations contained in this
Section 6(b) 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; and provided, further, that the
Investor shall be liable under this Agreement (including this Section 6(b) and
Section 7) for only that amount as does not exceed the net proceeds actually
received by such Investor as a result of

                                       11
<PAGE>

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 Company Indemnified Person and shall survive the
transfer of the Registrable Securities by the Investor pursuant to Section 9
hereof. Notwithstanding anything to the contrary contained herein, the
indemnification obligations contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Company Indemnified
Person if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.

         (c)      Promptly after receipt by any party entitled to
indemnification under this Section 6 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a Claim in
respect thereof is to 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 party;
provided, however, that such indemnifying party shall not be entitled to assume
such defense and an indemnified party shall have the right to retain its own
counsel with the fees and expenses 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 party and the indemnifying
party would be inappropriate due to actual or potential conflicts of interest
between such indemnified party and any other party represented by such counsel
in such proceeding or the actual or potential defendants in, or targets of, any
such action include both the indemnified party and the indemnifying party and
any such indemnified party reasonably determines that there may be legal
defenses available to such indemnified party that are in conflict with those
available to such indemnifying party. The indemnifying party shall pay for only
one separate legal counsel for the indemnified parties, and such legal counsel
shall be selected by Investors holding a majority in interest of the Registrable
Securities included in the Registration Statement to which the Claim relates (if
the parties entitled to indemnification hereunder are Investor Indemnified
Persons) or by the Company (if the parties entitled to indemnification hereunder
are Company Indemnified Persons). 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 party under this Section 6, except to the extent that the
indemnifying party is actually prejudiced in its ability to defend such action.
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 such expense, loss, damage or liability is incurred and is due and
payable.

7.       CONTRIBUTION.

         To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party shall 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 as is appropriate to
reflect the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, with respect to the Violation giving rise
to the applicable Claim; provided, however, that (a) no contribution shall be
made under circumstances where the maker would not have been liable for
indemnification under the fault standards set forth in

                                       12
<PAGE>

Section 6, (b) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any seller of Registrable Securities who was not guilty of
such fraudulent misrepresentation, and (c) contribution (together with any
indemnification or other obligations under this Agreement) by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities.

8.       REPORTS UNDER THE EXCHANGE ACT.

         With a view to making available to the Investors the benefits of Rule
144 promulgated under the Securities 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)      file with the SEC in a timely manner and make and keep
available all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements and the filing and availability of such reports and other
documents is required for the applicable provisions of Rule 144; and

         (b)      furnish to each Investor so long as such Investor holds Notes,
Warrants or Registrable Securities, promptly upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
Rule 144, the Securities Act and the Exchange 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 such Investor to sell such securities under Rule
144 without registration.

9.       ASSIGNMENT OF REGISTRATION RIGHTS.

         The rights of the Investors hereunder, including the right to have the
Company register Registrable Securities pursuant to this Agreement, shall be
automatically assignable by each Investor to any transferee of all or any
portion of the Notes, Warrants or Registrable Securities if: (a) 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 after such assignment, (b)
the Company is furnished with written notice of (i) the name and address of such
transferee or assignee, and (ii) the securities with respect to which such
registration rights are being transferred or assigned, (c) following such
transfer or assignment, the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act and applicable
state securities laws, (d) the transferee or assignee agrees in writing for the
benefit of the Company to be bound by all of the provisions contained herein,
and (e) such transfer shall have been made in accordance with the applicable
requirements of the Securities Purchase Agreement, the Notes and the Warrants,
as applicable. In addition, and notwithstanding anything to the contrary
contained in this Agreement, the Securities Purchase Agreement, the Notes or the
Warrants, the Securities (as defined in the Securities Purchase Agreement) may
be pledged, and all rights of the Investor under this Agreement or any other
agreement or document related to the transactions contemplated hereby may be
assigned, without further consent of the Company, to a bona fide pledgee in
connection with an Investor's margin or brokerage account.

                                       13
<PAGE>

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 written consent of the Company, each
of the Initial Investors (to the extent such Initial Investor or its affiliates
still owns Notes, Warrants or Registrable Securities) and the Investor(s) who
hold a majority in interest of the Registrable Securities or, in the case of a
waiver, with the written consent of the party charged with the enforcement of
any such provision; provided, however, that (a) no amendment hereto which
restricts the ability of an Investor to elect not to participate in an
underwritten offering shall be effective against any Investor which does not
consent in writing to such amendment; (b) no consideration shall be paid to an
Investor by the Company in connection with an amendment hereto unless each
Investor similarly affected by such amendment receives a pro rata amount of
consideration from the Company; and (c) unless an Investor otherwise agrees,
each amendment hereto must similarly affect each Investor. Any amendment or
waiver effected in accordance with this Section 10 shall be binding upon each
Investor and the Company.

11.      MISCELLANEOUS.

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

         (b)      Any notices required or permitted to be given under the terms
of this Agreement shall be sent by certified or registered mail (return receipt
requested) or delivered personally, by responsible overnight carrier or by
confirmed facsimile, and shall be effective five days after being placed in the
mail, if mailed, or upon receipt or refusal of receipt, if delivered personally
or by responsible overnight carrier or confirmed facsimile, in each case
addressed to a party. The initial addresses for such communications shall be as
follows, and each party shall provide notice to the other parties of any change
in such party's address:

                  (i)      If to the Company:

                           Daugherty Resources, Inc.
                           120 Prosperous Place, Suite 201
                           Lexington, Kentucky  40509
                           Telephone: (859) 263-3948
                           Facsimile: (859) 263-4228
                           Attention: William Daugherty, President

                           with a copy simultaneously transmitted by like means
                                    (which transmittal shall not constitute
                                    notice hereunder) to:

                           Stahl & Zelmanovitz
                           767 Third Avenue, Suite 1401

                                       14
<PAGE>

                           New York, New York  10017
                           Telephone: (212) 826-6435
                           Facsimile: (212) 826-6402
                           Attention: Douglas Stahl, Esq.

                  (ii)     If to any Investor, to such address as such Investor
shall have provided in writing to the Company.

         (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)      This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in the State of Delaware. The Company irrevocably consents
to the jurisdiction of the United States federal courts and the state courts
located in the County of New Castle, State of Delaware in any suit or proceeding
based on or arising under this Agreement and irrevocably agrees that all claims
in respect of such suit or proceeding may be determined in such courts. The
Company irrevocably waives the defense of an inconvenient forum to the
maintenance of such suit or proceeding in such forum. The Company further agrees
that service of process upon the Company, mailed by first class mail shall be
deemed in every respect effective service of process upon the Company in any
such suit or proceeding. Nothing herein shall affect any Investor's right to
serve process in any other manner permitted by law. The Company agrees that a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.

         (e)      This Agreement and the other Transaction Documents (including
any schedules and exhibits hereto and thereto) 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 and the other
Transaction Documents 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 hereof, this
Agreement shall inure to the benefit of and be binding upon the 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 two or more 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,

                                       15
<PAGE>

instruments and documents, as the other party may reasonably request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.

         (j)      Unless other expressly provided herein, all consents,
approvals and other determinations to be made by the Investors pursuant to this
Agreement shall be made by the Investors holding a majority in interest of the
Registrable Securities (determined as if all Notes and Warrants then outstanding
had been converted into or exercised for Registrable Securities) held by all
Investors.

         (k)      The initial number of Registrable Securities included on any
Registration Statement filed pursuant to Section 2(a) or 3(b), and each increase
to the number of Registrable Securities included thereon, shall be allocated pro
rata among the Investors based on the number of Registrable Securities held by
each Investor at the time of such establishment or increase, as the case may be.
In the event an Investor shall sell or otherwise transfer any of such holder's
Registrable Securities, each transferee shall be allocated a pro rata portion of
the number of Registrable Securities included on a Registration Statement for
such transferor. Any shares of Common Stock included on a Registration Statement
and which remain allocated to any person or entity which does not hold any
Registrable Securities shall be allocated to the remaining Investors, pro rata
based on the number of shares of Registrable Securities then held by such
Investors. For the avoidance of doubt, the number of Registrable Securities held
by any Investor shall be determined as if all Notes and Warrants then
outstanding were converted into or exercised for Registrable Securities.

         (l)      Each party to this Agreement has participated in the
negotiation and drafting of this Agreement. As such, the language used herein
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party to this Agreement.

         (m)      For purposes of this Agreement, the term "business day" means
any day other than a Saturday or Sunday or a day on which banking institutions
in the State of New York are authorized or obligated by law, regulation or
executive order to close, and the term "trading day" means any day on which the
SmallCap Market or, if the Common Stock is not then traded on the SmallCap
Market, the principal national securities exchange, automated quotation system
or other trading market where the Common Stock is then listed, quoted or traded,
is open for trading.

                  [REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]

                                       16
<PAGE>

         IN WITNESS WHEREOF, the undersigned Initial Investor and the Company
have caused this Agreement to be duly executed as of the date first above
written.

DAUGHERTY RESOURCES, INC.

By: ________________________________
Name:
Title:

INITIAL INVESTOR:

____________________________________________
     (Print or Type Name of Purchaser)
By: ________________________________
Name:
Title:

                [SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

<PAGE>

                                                                       EXHIBIT A

[Date]

[Transfer Agent]

RE: DAUGHERTY RESOURCES, INC.

Ladies and Gentlemen:

We are counsel to Daugherty Resources, Inc., a corporation organized under the
laws of [British Columbia, Canada/the State of Delaware] (the "COMPANY"), and we
understand that [Name of Investor] (the "HOLDER") has purchased from the Company
(i) convertible promissory notes that are convertible, directly or indirectly,
into shares of the Company's common stock, no par value per share (the "COMMON
STOCK"), and (ii) warrants to acquire shares of Common Stock. Pursuant to a
Registration Rights Agreement, dated as of September 5, 2003, by and among the
Company and the signatories thereto (the "REGISTRATION RIGHTS AGREEMENT"), the
Company agreed with the Holder, among other things, to register the Registrable
Securities (as that term is defined in the Registration Rights Agreement) under
the Securities Act of 1933, as amended (the "SECURITIES ACT"), upon the terms
provided in the Registration Rights Agreement. In connection with the Company's
obligations under the Registration Rights Agreement, on _________________, ____,
the Company filed a Registration Statement on Form S-___ (File No. 333-
_____________) (the "REGISTRATION STATEMENT") with the Securities and Exchange
Commission (the "SEC") relating to the Registrable Securities, which names the
Holder as a selling stockholder thereunder. The Registration Statement was
declared effective by the SEC on _____________, ____.

In connection with the foregoing, we advise you that a member of the SEC's staff
has advised us by telephone that the SEC has entered into an order declaring the
Registration Statement effective under the Securities Act at [time of
effectiveness] on [date of effectiveness], and we have no knowledge, after
telephonic inquiry of a member of the SEC's staff, that any stop order
suspending its effectiveness has been issued or that any proceedings for that
purpose are pending before, or threatened by, the SEC.

Based on the foregoing, we are of the opinion that the Registrable Securities
are available for resale under the Securities Act pursuant to the Registration
Statement.

Very truly yours,

STAHL & ZELMANOVITZ

cc: [Name of Investor]