Exhibit 4.2


 


REGISTRATION RIGHTS AGREEMENT


 


This
Registration Rights Agreement (this “Agreement”)
is made and entered into as of
                ,
2004, by and among Grant Ventures, Inc. (the “Company”), and the investors signatory hereto (each a “Purchaser” and collectively, the “Purchasers”).


 


This
Agreement is made pursuant to the Securities Purchase Agreement, dated as of
the date hereof by and among the Company and the Purchasers (the “Purchase Agreement”).


 


The
Company and the Purchasers hereby agree as follows:


 


1.                                       Definitions.  Capitalized terms used and not otherwise
defined herein that are defined in the Purchase Agreement shall have the
meanings given such terms in the Purchase Agreement. As used in this Agreement,
the following terms shall have the following meanings:


 


“Effectiveness Date” means, with respect
to the Registration Statement required to be filed pursuant to Section 2(a),
the earlier of (a) the 150th calendar day from the Filing Date (or
the 180th day if reviewed by the Commission), and (b) the date on
which the Commission declares the effectiveness of the Registration Statement.


 


“Effectiveness Period” shall have the
meaning set forth in Section 2(a).


 


“Filing Date” means, with respect to the
Registration Statement required to be filed hereunder, the date sixty (60)
calendar days from the Closing Date.


 


“Holder” or “Holders” means the holder or holders,
as the case may be, from time to time of Registrable Securities (including any
permitted assignee).


 


“Holders’ Representative” means Duncan
Capital LLC, or any other person that has been appointed by the Holders of a
majority of the Registrable Securities to act as representative of the Holders
for purposes of this Agreement.


 


“Indemnified Party” shall have the
meaning set forth in Section 5(c).


 


“Indemnifying Party” shall have the
meaning set forth in Section 5(c).


 


“Losses” shall have the meaning set
forth in Section 5(a).


 


“Proceeding” means an action, claim,
suit, investigation or proceeding (including, without limitation, an investigation
or partial proceeding, such as a deposition), whether commenced or threatened.


 


“Prospectus” means the prospectus
included in the Registration Statement (including, without limitation, a
prospectus that includes any information previously omitted from a prospectus
filed as part of an effective registration statement in reliance upon Rule 430A
promulgated under the Securities Act), as amended or supplemented by any
prospectus


 
















 


supplement, with respect to the terms of the offering of any portion of
the Registrable Securities covered by the Registration Statement, and all other
amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.


 


“Registrable Securities” means the
Shares, the Warrant Shares and any shares of Common Stock issued or issuable
upon any stock split, dividend or other distribution, recapitalization or
similar event with respect to the foregoing or in connection with any
provisions in the Warrants.


 


“Registration Statement” means the
registration statements required to be filed hereunder, including (in each
case) the Prospectus, amendments and supplements to the registration statement
or Prospectus, including pre- and post-effective amendments, all exhibits
thereto, and all material incorporated by reference or deemed to be
incorporated by reference in the registration statement.


 


“Rule 415” means Rule 415 promulgated by
the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar Rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.


 


“Rule 424” means Rule 424 promulgated by
the Commission pursuant to the Securities Act, as such Rule may be amended from
time to time, or any similar Rule or regulation hereafter adopted by the
Commission having substantially the same effect as such Rule.


 


“Securities Act” means the Securities
Act of 1933, as amended.


 


“Trading Day” means (i) a day on which the Common Stock is traded on a Trading
Market, or (ii) if the Common Stock is not quoted on a Trading Market, a day on
which the Common Stock is quoted in the over-the-counter market as reported by
the National Quotation Bureau Incorporated (or any similar organization or
agency succeeding to its functions of reporting price); provided, that in the
event that the Common Stock is not listed or quoted as set forth in (i), and
(ii) hereof, that Trading Day shall mean a Business Day.


 


“Warrants” shall mean the Common Stock purchase warrants issued to the Purchasers
pursuant to the Purchase Agreement.


 


2.                                       Registration.


 


(a)                                  Mandatory
Registration.  No later than the
Filing Date, the Company shall prepare and file with the Commission the Registration
Statement covering the resale of all of the Registrable Securities which a
Holder has requested to be included in such Registration Statement and for
which such Holder has provided the Company with a completed Selling
Securityholder Questionnaire, which offering shall be made on a continuous
basis pursuant to Rule 415. The Registration Statement required hereunder shall
be on Form SB-2 (or other applicable form). The Registration Statement required
hereunder shall contain (except if otherwise directed by the Holders) the “Plan of Distribution” substantially in
the form attached hereto as Annex A
(which may be modified as required by the Securities Act and the rules and
regulations thereunder and to respond to comments, if any, received by the Commission).
The


 


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Company shall use its commercially reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as possible after the filing thereof and shall use its commercially
reasonable efforts to keep the Registration Statement continuously effective
under the Securities Act until the date when all Registrable Securities covered
by the Registration Statement (a) have been sold pursuant to the Registration
Statement or an exemption from the registration requirements of the Securities
Act or (b) may be sold without any volume or other restrictions pursuant to
Rule 144(k) (the “Effectiveness Period”).


 


(b)                                 Filing
Default Liquidation Damages.  If a
Registration Statement is not filed on or prior to the Filing Date, then the
Company shall pay to each Holder an amount in cash until the earlier of the
date a Registration Statement is filed and the Registrable Securities may be
sold pursuant to Rule 144(k), as liquidated damages and not as a penalty, equal
to (i) one (1%) percent of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement for the first thirty (30) days (or a pro
rata portion of one (1%) percent for any part thereof) following the Company’s
failure to file, and (ii) an additional one (1%) percent of the aggregate
purchase paid by such Holder thereunder for each thirty (30) day period
subsequent thereto (or a pro rata portion of one (1%) percent for any part thereof),
such payment(s) to be made in immediately available funds no later than five
(5) days after the first date of each 30 day period (or any part thereof), as
the case may be, during the Company’s failure to file.


 


(c)                                  Effectiveness
Default Liquidation Damages.  In
addition to any liquidated damages paid, accrued and/or to be paid pursuant to Section 2(b),
if (1) a Registration Statement is not declared effective on or prior to 150
days from the Closing Date (or 180 days if reviewed by the Commission), or (2)
if a Registration Statement has been declared effective and subsequent thereto
is not effective for any period of time until the date no Holder owns any
Registrable Securities or Warrants (an “Effectiveness
Default”), then the Company shall pay to each Holder an amount
in cash until the date a Registration Statement is declared effective (and
permits the resale of the Registrable Securities covered thereby)(or if
previously declared effective until the date the Registration Statement becomes
effective (and otherwise permits the resale of the Registrable Securities
covered thereby) again), as liquidated damages and not as a penalty, equal to
(i) one (1%) percent of the aggregate purchase price paid by such Holder
pursuant to the Purchase Agreement for the first thirty (30) days (or a pro
rata portion of one (1%) percent for any part thereof), and (ii) an additional
one (1%) percent of the aggregate purchase price paid by such Holder thereunder
for each thirty (30) day period subsequent thereto (or a pro rata portion of
one (1%) for any part thereof) until the earlier of (a) such date the
Registration Statement is declared effective (or if previously declared
effective until the date the Registration Statement becomes effective (and
otherwise permits the resale of the Registrable Securities covered thereby)
again), and (b) the Registrable Securities may be sold pursuant to Rule 144(k);
provided, however, for purposes of this
subsection (c), it shall not be considered an Effectiveness Default during
any such period in which there is a Material Development Condition (as defined
below) which is permitted pursuant to Section 6(o).  Any such payment(s) shall be made in
immediately available funds no later than five (5) days after the first day of
each 30 day period of each such Effectiveness Default.


 


(d)                                 Piggyback
Registrations Rights.


 


(i)                                     If, at any time
during the Effectiveness Period, there is not an effective Registration
Statement covering all of the Registrable Securities (other than the


 


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Registrable Securities of a Holder that failed to comply with its
obligations under Section 2(d) or Section 3(j)), and
the Company shall determine to prepare and file with the Commission 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 (each as promulgated under the Securities
Act) 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 connection with stock option or other employee benefit
plans), then the Company shall send to each Holder a written notice of such
determination and, if within ten (10) days after receipt by a Holder, the
Company shall receive a request in writing from any such Holder, the Company
shall include in such registration statement all or any part of such
Registrable Securities such Holder requests to be registered; provided, however,
that (A) if, at any time after giving written notice of its intention to
register any securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company determines
for any reason not to proceed with such registration, the Company will be
relieved of its obligation to register any Registrable Securities in connection
with such registration, and (B) in case of a determination by the Company to
delay registration of its securities, the Company will be permitted to delay
the registration of Registrable Securities for the same period as the delay in
registering such other securities, in any such case without any obligation or
liability to any Holder.  Any Holder who
elects to include Registrable Securities in a registration statement pursuant
to this Section 2(d) shall sell such Registrable Securities on the
same terms and conditions as the equity securities of the Company or others
(other than other Holders) are being sold pursuant to such registration
statement. Notwithstanding the foregoing, nothing in this Section 2(d)
shall permit the Company to file a registration statement in contravention of
the restrictions in Section 6(b).


 


(ii)                                  Notwithstanding
anything in this Section 2(d) to the contrary, with respect to any
registration described in this Section 2(d) that is an underwritten
registration of the Company’s securities for the Company’s own account, if the
managing underwriter advises the Company that the inclusion of some or all of
the Registrable Securities requested to be included in such registration would
interfere with the successful marketing (including pricing) of the equity
securities of the Company to be registered by the Company, then the number of
shares to be included in any such registration shall be included in the
following order: (A) first, the shares to be registered by the Company; and (B)
second, the Registrable Securities of the Holders requested to be included in
such registration pursuant to Section 2(d)(i), on a pro-rata basis
based on the Holders’ respective percentage ownership of the Company on a
fully-diluted basis, and (C) third, Registrable Securities of all other holders
who are entitled to include securities in such registration, on a pro-rata
basis based on such holders’ respective percentage ownership of the Company on
a fully-diluted basis.


 


(iii)                               Notwithstanding anything
in this Section 2(d) to the contrary, with respect to any
registration described in this Section 2(d) that is an underwritten
registration of the Company’s securities for the account of other holders of
such securities (“the “Demanding Holders”), if the managing underwriter
advises the Company that the inclusion of some or all of the Registrable
Securities requested to be


 


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included in such registration pursuant to clause (i) of this Section 2(d)
would interfere with the successful marketing (including pricing) of the equity
securities of the Company to be registered by the Company, then the number of
shares to be included in any such registration shall be included in the
following order: (A) first, the securities of the Demanding Holders, (B)
second, the Registrable Securities of the Holders requested to be included in such
registration pursuant to Section 2(d)(i), on a pro-rata basis based
on the Holders’ respective percentage ownership of the Company on a
fully-diluted basis, (C) third, any shares to be registered by the Company for
its own account, and (D) fourth, Registrable Securities of all other holders
who are entitled to include securities in such registration, on a pro-rata
basis based on such holders’ respective percentage ownership of the Company on
a fully-diluted basis.


 


(e)                                  Sufficient
Number of Shares Registered.In
the event the number of shares of Common Stock covered under a Registration
Statement filed pursuant to Section 2(a) or Section 2(d)
is insufficient to cover all of the Registrable Securities which such
Registration Statement is required to cover, the Company 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 at least 100% of
the Registrable Securities, in each case, as soon as practicable, but in any
event not later than ten (10) Business Days after the necessity therefor
arises. The Company shall use its commercially reasonable 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 of Common Stock covered under a Registration
Statement shall be deemed “insufficient to
cover all of the Registrable Securities” if the number of
Registrable Securities issued or issuable upon exercise of the Warrants covered
by such Registration Statement is greater than the number of shares of Common
Stock available for resale under the Registration Statement to cover shares
issued or issuable upon exercise of the Warrants.


 


(f)                                    Participation
in Underwritten Registrations.  No
Holder may participate in any underwritten registration with respect to the
Registrable Securities unless such Holder completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements,
lock-up letters and other documents reasonably required under the terms of such
underwriting agreements.


 


(g)                                 Other
Requirements.  In connection with any
Registration Statement under Section 2(a) or any registration
statement under Section 2(d), Holders whose Registrable Securities
are included therein shall provide such information and shall execute and
deliver to the Company such documents, including, but not limited to, a selling
securityholder questionnaire in customary form and substance reasonably
satisfactory to the Company, as the Company may reasonably request in order to
effect such registration pursuant to this Agreement and in accordance with
applicable securities laws.


 


3.                                       Registration
Procedures.  In connection with the
Company’s registration obligations hereunder, the Company shall:


 


(a)                                  Not
less than three (3) Trading Days prior to the filing of the Registration
Statement or any related Prospectus or any amendment or supplement thereto, (i)
furnish to the Holders’ Representative copies of all such documents
substantially in the form proposed to be


 


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filed (including documents incorporated or deemed incorporated by
reference to the extent requested by such Person) which documents will be
subject to the review of the Holders’ Representative, and (ii) subject, if
appropriate, to the execution of confidentiality agreements in form acceptable
to the Company, cause its officers and directors, counsel and independent
certified public accountants to respond to such inquiries as shall be
necessary, in the reasonable opinion of respective counsel to conduct a
reasonable investigation within the meaning of the Securities Act.


 


(b)                                 (i)
Prepare and file with the Commission such amendments, including post-effective
amendments, to the Registration Statement and the Prospectus used in connection
therewith as may be necessary to keep the Registration Statement continuously
effective as to the applicable Registrable Securities for the Effectiveness
Period; (ii) cause the related Prospectus to be amended or supplemented by any
required Prospectus supplement, and as so supplemented or amended to be filed
pursuant to Rule 424; and (iii) respond as promptly as reasonably practicable
to any comments received from the Commission with respect to the Registration
Statement or any amendment thereto and, as promptly as reasonably practicable,
upon request, provide the Holders’ Representative true and complete copies of
all correspondence from and to the Commission relating to the Registration
Statement (subject, if appropriate, to the execution of confidentiality
agreements in form acceptable to the Company).


 


(c)                                  Notify
the Holders of Registrable Securities to be sold as promptly as reasonably
possible (and, in the case of (i)(A) below, not less than three (3) Trading
Days prior to such filing) and (if requested by any such Person) confirm such
notice in writing promptly following the day (i)(A) when a Prospectus or any
Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed; (B) when the Commission notifies the Company whether
there will be a “review” of the Registration Statement and whenever the
Commission comments in writing on the Registration Statement (the Company shall
upon request provide true and complete copies thereof and all written responses
thereto to each of the Holders, subject, if appropriate, to the execution of
confidentiality agreements in form acceptable to the Company); and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority during the period of effectiveness of
the Registration Statement for amendments or supplements to the Registration
Statement or Prospectus or for additional information; (iii) of the issuance by
the Commission or any other federal or state governmental authority of any stop
order suspending the effectiveness of the Registration Statement covering any
or all of the Registrable Securities or the initiation of any Proceedings for
that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification or exemption from qualification
of any of the Registrable Securities for sale in any jurisdiction, or the
initiation or threatening of any Proceeding for such purpose; and (v) of the
occurrence of any event or passage of time that makes the financial statements
included in the Registration Statement ineligible for inclusion therein or any
statement made in the Registration Statement or Prospectus or any document
incorporated or deemed to be incorporated therein by reference untrue in any
material respect or that requires any revisions to the Registration Statement,
Prospectus or other documents so that, in the case of the Registration
Statement or the Prospectus, as the case may be, it will not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated


 


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therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.


 


(d)                                 Use
its commercially reasonable efforts to avoid the issuance of, or, if issued,
obtain the withdrawal of (i) any order suspending the effectiveness of the
Registration Statement, or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.


 


(e)                                  Promptly
deliver to each Holder no later than two (2) business days after the
Effectiveness Date, without charge, two (2) copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto (and, upon the request of the Holder such additional copies
as such Persons may reasonably request in connection with resales by the Holder
of Registrable Securities). The Company hereby consents to the use of such Prospectus
and each amendment or supplement thereto by each of the selling Holders in
connection with the offering and sale of the Registrable Securities covered by
such Prospectus and any amendment or supplement thereto, except after the
giving of any notice pursuant to Section 3(c).


 


(f)                                    Prior
to any resale of Registrable Securities by a Holder, use its commercially
reasonable efforts to register or qualify or cooperate with the selling Holders
in connection with the registration or qualification (or exemption from the
registration or qualification) of such Registrable Securities for the resale by
the Holder under the securities or Blue Sky laws of such jurisdictions within
the United States as any Holder reasonably requests in writing, to keep such
registration or qualification (or exemption therefrom) effective during the
Effectiveness Period and to do any and all other acts or things reasonably
necessary to enable the disposition in such jurisdictions of the Registrable
Securities covered by the Registration Statement; provided, however,
that the Company shall not be required to qualify generally to do business in
any jurisdiction where it is not then so qualified, subject the Company to any
material tax in any such jurisdiction where it is not then so subject or file a
general consent to service of process in any such jurisdiction.


 


(g)                                 If
requested by the Holders, cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing Registrable Securities to
be delivered to a transferee pursuant to the Registration Statement, which
certificates shall be free, to the extent permitted by the Purchase Agreement,
of all restrictive legends, and to enable such Registrable Securities to be in
such denominations and registered in such names as any such Holders may
request.


 


(h)                                 Upon
the occurrence of any event contemplated by Section 3(c)(v), as
promptly as reasonably possible, prepare a supplement or amendment, including a
post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.


 


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(i)                                     Use
its reasonable commercial efforts to comply in all material respects with all
applicable rules and regulations of the Commission relating to the registration
of the Registrable Securities pursuant to the Registration Statement or
otherwise.


 


(j)                                     The
Company shall not be required to include in any Registration Statement the
Registrable Securities of any Holder that does not complete a Selling
Shareholder Questionnaire.


 


(k)                                  The
Company shall use its commercially reasonable efforts to arrange for at least
two (2) market makers to register with the National Association of Securities
Dealers, Inc. (“NASD”) as
such with respect to such Registrable Securities. The Company shall pay all
fees and expenses in connection with satisfying its obligation under this Section 3(k).


 


(l)                                     The
Company shall make all documents, files, books, records, officers, directors
and employees of the Company reasonably available to the Holders’
Representative, one legal counsel to the Holders and one firm of accountants
retained by the Holders (collectively, the “Inspectors”), and make such other accommodations as are
reasonably necessary for the Inspectors, if any, to perform a due diligence
review of the Company; provided, however, that all such information (“Confidential Information”) will be kept
confidential and not utilized by the Inspectors except as contemplated herein
and except as required by law or court order. 
The term Confidential Information also includes any information included
in a draft Registration Statement or any related Prospectus or any amendment or
supplement hereto provided to a Holder pursuant to Section 3(a);
for the avoidance of doubt, however, as noted in Section 3(a)
above, the Company shall not furnish to Holders, without their prior approval,
any information that constitutes or might constitute material, non-public
information.  The term Confidential
Information does not include information that (a) is already in possession of
such other party (other than that which is subject to another confidentiality
agreement or unless obtained from a third party where the receiving party knows
that the third party was subject to a confidentiality agreement), (b) becomes
generally available to the public, or (c) becomes available on a non-confidential
basis from a source other than the Company unless obtained from a third party
where the receiving party knows that the third party was subject to a
confidentiality agreement.  Each Holder
agrees that it shall, upon learning that disclosure of such Confidential
Information 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 information deemed
confidential.


 


(m)                               The
Company shall hold in confidence and not make any disclosure of information
concerning any Holder provided to the Company unless (a) such information is
already in possession of the Company, (b) such information becomes available to
the Company on a non-confidential basis from a person other than such Holder
who is not known by the Company to be otherwise bound by a confidentiality or
comparable agreement with such Holder (c) disclosure of such information is
necessary to comply with federal or state securities laws, (d) the disclosure
of such information is necessary to avoid or correct a misstatement or omission
in any Registration Statement or Prospectus, (e) 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, (f) such
information has been made generally available to the public other than by
disclosure in violation of this Agreement or any other agreement to which the


 


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Company is a party, or (g) such Holder consents to the form and content
of any such disclosure (the Holders shall be deemed to consent to the inclusion
of any information provided in the Selling Shareholder Questionnaire in the
Registration Statement, any Prospectus related thereto, and any amendments or
supplements thereto). The Company agrees that it shall, upon learning that
disclosure of such information concerning any Holder is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Holder and allow such Holder, at the Holder’s
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information.


 


(n)                                 The
Company covenants that it shall file the reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder so long as the Holder owns any Registrable
Securities, but in no event longer than two (2) years; provided, however,
the Company may delay any such filing but only pursuant to Rule 12b-25 under
the Exchange Act, and the Company shall use commercially reasonable efforts to
take such further action as any Holder of Registrable Securities may reasonably
request (including without limitation, promptly obtaining any required legal
opinions from Company counsel necessary to effect the sale of Registrable Securities
under Rule 144 and paying the related fees and expenses of such counsel), all
to the extent required from time to time to enable such Holder to sell
Registrable Securities without registration under the Securities Act within the
limitation of the exemptions provided by (a) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission. Upon the request of any Holder
of Registrable Securities, the Company will deliver to such Holder a written
statement as to whether it has complied with such requirements.


 


4.                                       Registration
Expenses.  All fees and expenses
incident to the performance of or compliance with this Agreement by the Company
shall be borne by the Company whether or not any Registrable Securities are
sold pursuant to the Registration Statement, other than fees and expenses of
counsel or any other advisor retained by the Holders and discounts, fees and
commissions with respect to the sale of any Registrable Securities by the
Holders. The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the Trading Market on which the Common Stock is then listed for
trading, and (B) to effect compliance with applicable state securities or Blue
Sky laws), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing Prospectuses),
(iii) messenger, telephone and delivery expenses, (iv) fees and disbursements
of counsel for the Company, (v) Securities Act liability insurance, if the
Company so desires such insurance, and (vi) fees and expenses of all other
Persons retained by the Company in connection with the consummation of the
transactions contemplated by this Agreement. In addition, the Company shall be
responsible for all of its internal expenses incurred in connection with the
consummation of the transactions contemplated by this Agreement (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the Registrable
Securities on any securities exchange or other trading market as required
hereunder.


 


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5.                                       Indemnification


 


(a)                                  Indemnification
by the Company. The Company shall, notwithstanding any termination of this
Agreement, indemnify and hold harmless each Holder, the officers, directors,
agents and employees of each of them, each Person who controls any such Holder
(within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act) and the officers, directors, agents and employees of each
such controlling Person, to the fullest extent permitted by applicable law,
from and against any and all losses, claims, damages, liabilities, costs (including,
without limitation, reasonable attorneys’ fees) and expenses (including the
cost (including without limitation, reasonable attorneys’ fees) and expenses
relating to an Indemnified Party’s actions to enforce the provisions of this Section 5)
(collectively, “Losses”),
as incurred, to the extent arising out of or relating to any untrue or alleged
untrue statement of a material fact contained in any Registration Statement,
any Prospectus or any form of prospectus or in any amendment or supplement
thereto or in any preliminary prospectus, or arising out of or relating to any
omission or alleged omission of a material fact required to be stated therein
or necessary to make the statements therein (in the case of any Prospectus or
form of prospectus or supplement thereto, in light of the circumstances under
which they were made) not misleading, except to the extent, but only to the
extent, that (1) such untrue (or alleged untrue) statements or omissions (or
alleged omissions) are based solely upon information regarding such Holder
furnished (or in the case of an omission, not furnished) in writing to the
Company by or on behalf of such Holder expressly for use therein, or to the
extent that such information relates to such Holder or such Holder’s proposed
method of distribution of Registrable Securities and was reviewed by such
Holder expressly for use in the Registration Statement, such Prospectus or such
form of Prospectus or in any amendment or supplement thereto (it being
understood that the Holder has reviewed Annex A hereto for this purpose), (2)
in the case of an occurrence of an event of the type specified in Section 3(c)(ii)-(v),
the use by such Holder of an outdated or defective Prospectus after the Company
has notified such Holder in writing that the Prospectus is outdated or
defective and prior to the receipt by such Holder of the Advice contemplated in
Section 6(d), or (3) the failure of the Holder to deliver a
Prospectus as amended or supplemented prior to the confirmation of a sale.  The Company shall notify the Holders promptly
of the institution, threat or assertion of any Proceeding of which the Company
is aware in connection with the transactions contemplated by this Agreement.


 


(b)                                 Indemnification
by Holders. Each Holder shall, severally and not jointly, indemnify and
hold harmless the Company, its directors, officers, agents and employees, each
Person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors,
officers, agents or employees of such controlling Persons, to the fullest
extent permitted by applicable law, from and against all Losses, as incurred,
to the extent arising out of or based upon: (x) such Holder’s failure to comply
with the prospectus delivery requirements of the Securities Act or (y) any
untrue or alleged untrue statement of a material fact contained in any
Registration Statement, any Prospectus, or any form of prospectus, or in any
amendment or supplement thereto or in any preliminary prospectus, or arising
out of or relating to any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus or form of prospectus or supplement thereto, in
light of the circumstances under which they were made) not misleading (i) to
the extent, but only to the extent, that such untrue statement or omission is
contained in any information so furnished (or in the case of an omission, not
furnished) in writing by or on behalf of such Holder to the Company
specifically for inclusion in the Registration Statement or such Prospectus or
(ii) to the extent that (1) such


 


10
















 


untrue statements or omissions are based solely upon information
regarding such Holder furnished (or in the case of an omission, not furnished)
in writing to the Company by or on behalf of such Holder expressly for use
therein, or to the extent that such information relates to such Holder or such
Holder’s proposed method of distribution of Registrable Securities and was
reviewed by such Holder expressly for use in the Registration Statement (it
being understood that the Holder has reviewed Annex A hereto for this purpose),
such Prospectus or such form of Prospectus or in any amendment or supplement
thereto, or (2) in the case of an occurrence of an event of the type specified
in Section 3(c)(ii)-(v), the use by such Holder of an outdated or
defective Prospectus after the Company has notified such Holder in writing that
the Prospectus is outdated or defective and prior to the receipt by such Holder
of the Advice contemplated in Section 6(d), or (3) the failure of
the Holder to deliver a Prospectus prior to the confirmation of a sale. In no
event shall the liability of any selling Holder hereunder be greater in amount
than the gross proceeds received by the Holder with respect to the sale of its
Registrable Securities.


 


(c)                                  Conduct
of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified
Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and
the Indemnifying Party shall have the right to assume the defense thereof,
including the employment of counsel reasonably satisfactory to the Indemnified
Party and the payment of all fees and expenses incurred in connection with
defense thereof; provided, that the failure of any Indemnified Party to
give such notice shall not relieve the Indemnifying Party of its obligations or
liabilities pursuant to this Agreement, except (and only) to the extent that
such failure shall have materially prejudiced the Indemnifying Party.


 


An
Indemnified Party shall have the right to employ separate counsel in any such
Proceeding and to participate in (but not control) the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Indemnified
Party or Parties unless: (1) the Indemnifying Party has agreed in writing to
pay such fees and expenses; (2) the Indemnifying Party shall have failed to
assume the defense of such Proceeding in a timely manner and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or
(3) the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel in writing that a conflict
of interest would exist if the same counsel were to represent such Indemnified
Party and the Indemnifying Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate
counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and the reasonable fees and
expenses of one separate counsel for all Indemnified Parties in any matters
related on a factual basis shall be at the expense of the Indemnifying Party).
The Indemnifying Party shall not be liable for any settlement of any such
Proceeding affected without its written consent. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect any
settlement of any pending Proceeding in respect of which any Indemnified Party
is a party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such Proceeding.


 


All
reasonable fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with investigating or
preparing to defend such


 


11
















 


Proceeding in a manner not inconsistent with this Section) shall be
paid to the Indemnified Party, as incurred, within fifteen (15) Trading Days of
written notice thereof to the Indemnifying Party; provided, that the
Indemnified Party shall promptly reimburse the Indemnifying Party for that
portion of such fees and expenses applicable to such actions for which such
Indemnified Party is not entitled to indemnification hereunder, determined
based upon the relative faults of the parties.


 


(d)                                 Contribution.
If a claim for indemnification under Section 5(a) or Section 5(b)
is unavailable to an Indemnified Party (by reason of public policy or
otherwise), then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates
to information supplied by, such Indemnifying Party or Indemnified Party, and
the parties’ relative intent, knowledge, access to information and opportunity
to correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include,
subject to the limitations set forth in Section 5(c), any
reasonable attorneys’ or other reasonable fees or expenses incurred by such
party in connection with any Proceeding to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
in this Section was available to such party in accordance with its terms.


 


(e)                                  The
parties hereto agree that it would not be just and equitable if contribution
pursuant to Section 5(d) were determined by pro rata allocation or
by any other method of allocation that does not take into account the equitable
considerations referred to in Section 5(d).  Notwithstanding the provisions of Section 5(d),
no Holder shall be required to indemnify or contribute, in the aggregate,
pursuant to this Article 5, any amount in excess of the amount by which
the proceeds actually received by such Holder from the sale of the Registrable
Securities subject to the Proceeding exceeds the amount of any damages that
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, except in the case of
fraud by such Holder. The indemnity and contribution agreements contained in
this Section are in addition to any liability that the Indemnifying
Parties may have to the Indemnified Parties. 
No party guilty of fraudulent misrepresentation pursuant to
Section 11(f) of the Securities Act shall be entitled to contribution from
any other party.


 


6.                                       Miscellaneous.


 


(a)                                  Remedies.  In the event of a breach by the Company or by
a Holder of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement will be entitled to specific
performance of its rights under this Agreement. 
The Company and each Holder agree that monetary damages would not
provide adequate compensation for any losses incurred by reason of a breach by
it of any of the provisions of this Agreement and hereby


 


12
















 


further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.


 


(b)                                 No
Piggyback on Registrations.  Other
than those securities (including securities issuable upon exercise of warrants)
that may be issued to Holders and/or the Placement Agent and/or its
designee(s), the securities set forth on Schedule 3.1(z) of the
Purchase Agreement and such other securities as may be consented to in writing
by the Placement Agent, neither the Company nor any of its security holders may
include securities of the Company in a Registration Statement filed pursuant to
Section 2(a) hereof.  Other
than pursuant to rights granted to the Placement Agent and/or to Holders in
this Agreement, no Person has any right to cause the Company to effect a
registration under the Securities Act of any securities of the Company.


 


(c)                                  Compliance.
Each Holder covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection
with sales of Registrable Securities pursuant to the Registration Statement.


 


(d)                                 Discontinued
Disposition. Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c), such Holder will
forthwith discontinue disposition of such Registrable Securities under the
Registration Statement until such Holder’s receipt of the copies of the
supplemented Prospectus and/or amended Registration Statement or until it is
advised in writing (the “Advice”)
by the Company that the use of the applicable Prospectus may be resumed, and,
in either case, has received copies of any additional or supplemental filings
that are incorporated or deemed to be incorporated by reference in such Prospectus
or Registration Statement. The Company may provide appropriate stop orders to
enforce the provisions of this paragraph.


 


(e)                                  Amendments
and Waivers. The provisions of this Agreement, including the provisions of
this sentence, may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, unless the
same shall be in writing and signed by the Company and the Holders of at least
75% of the then outstanding Registrable Securities (assuming the exercise of
all Warrants, whether exercised or not), whereupon such amendment,
modification, supplement or waiver shall be binding on all Holders; provided,
however, that no consideration shall be offered or paid to any Holder to amend
or consent to a waiver or modification of any provision of this Agreement
unless the same consideration (on a pro-rata basis) is also offered to all of
the Holders under this Agreement.


 


(f)                                    Notices.
Any and all notices or other communications or deliveries required or permitted
to be provided hereunder shall be in writing and shall be deemed given and
effective on the earliest of (i) the Trading Day following the date of mailing,
if sent by nationally recognized overnight courier service, or (ii) upon actual
receipt by the party to whom such notice is required to be given. The address
for such notices and communications shall be delivered and addressed as set
forth in the Purchase Agreement


 


(g)                                 Successors
and Assigns. This Agreement shall inure to the benefit of and be binding
upon the successors and permitted assigns of each of the parties and shall
inure to the benefit of each Holder. Each Holder may assign their respective
rights hereunder in the manner and to the Persons as permitted under the
Purchase Agreement.


 


13
















 


(h)                                 Execution
and Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original
and, all of which taken together shall constitute one and the same Agreement.
In the event that any signature is delivered by facsimile transmission, such
signature shall create a valid binding obligation of the party executing (or on
whose behalf such signature is executed) the same with the same force and
effect as if such facsimile signature were the original thereof.


 


(i)                                     Governing
Law. This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York without regard to the conflicts of
laws principles thereof. The parties hereto hereby irrevocably agree that any
suit or proceeding arising directly and/or indirectly pursuant to or under this
Agreement, shall be brought solely in a federal or state court located in the
City, County and State of New York. By its execution hereof, the parties hereby
covenant and irrevocably submit to the in
personam jurisdiction of the federal and state courts located in the
City, County and State of New York and agree that any process in any such
action may be served upon any of them personally, or by certified mail or
registered mail upon them or their agent, return receipt requested, with the
same full force and effect as if personally served upon them in New York City.
The parties hereto waive any claim that any such jurisdiction is not a
convenient forum for any such suit or proceeding and any defense or lack of in personam jurisdiction with respect
thereto.


 


(j)                                     Cumulative
Remedies.  Subject to the first
sentence of Section 6(a), the remedies provided herein are cumulative and
not exclusive of any remedies provided by law.


 


(k)                                  Severability.
If any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, illegal, void or unenforceable,
the remainder of the terms, provisions, covenants and restrictions set forth
herein shall remain in full force and effect and shall in no way be affected,
impaired or invalidated, and the parties hereto shall use their commercially
reasonable efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may
be hereafter declared invalid, illegal, void or unenforceable.


 


(l)                                     Headings;
Section References. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning
hereof.  References to Sections mean
Sections of this Agreement unless otherwise stated.


 


(m)                               Independent
Nature of Purchasers’ Obligations and Rights. The obligations of each
Purchaser hereunder is several and not joint with the obligations of any other
Purchaser hereunder, and no Purchaser shall be responsible in any way for the
performance of the obligations of any other Purchaser hereunder.  Nothing contained herein or in any other
agreement or document delivered at any closing, and no action taken by any
Purchaser pursuant hereto or thereto, shall be deemed to constitute the
Purchasers as a partnership, an association, a joint venture or any other kind
of entity, or create a presumption that the Purchasers are in any way acting in
concert with respect to such obligations or the transactions contemplated by
this Agreement. Each Purchaser shall be entitled to independently protect and
enforce its rights, including without limitation the rights arising out of this
Agreement, and it shall not be necessary


 


14
















 


for any other Purchaser to be joined as an additional party in any
proceeding for such purpose.  Each
Purchaser represents that it has been represented by its own separate legal
counsel in its review and negotiation of this Agreement.  The Company has elected to provide all
Purchasers with the same terms and documents for the convenience of the Company
and not because it was required to do so by the Purchasers.


 


(n)                                 Assignment
of Registration Rights. The rights under this Agreement shall be
automatically assignable by any Holder to any permitted transferee of all or
any portion of Registrable Securities if: (a) such Holder 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; (b) the Company is, within a reasonable time after such transfer or
assignment, 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; and (c)  at or before the time the Company receives
the written notice contemplated by clause (b) of this sentence the transferee
or assignee agrees in writing with the Company to be bound by all of the
provisions contained herein.


 


(o)                                 Deferral Period.  With
respect to any Registration Statement filed or to be filed pursuant to
Section 2, if the Company determines that, in its good faith judgment, it
would (because of the existence of, or in reasonable anticipation of, any
acquisition or corporate reorganization or other transaction, financing
activity, stock repurchase or other material development involving the Company
or any subsidiary, or the unavailability for reasons beyond the Company’s
control of any required financial statements or other material information, or
any other event or condition material to the Company or any subsidiary) be
materially disadvantageous to the Company to proceed with such Registration
Statement or that the Company is required by applicable law, rules or
regulations not to proceed with the Registration Statement (a “Material Development Condition”), then
the Company shall, notwithstanding any other provisions of this Agreement, be
entitled, upon the giving of a written notice that a Material Development
Condition has occurred (a “Delay Notice”)
from an officer of the Company to the Placement Agent, as the representative of
the Purchasers, (i) to cause sales of Registrable Securities by the Purchasers
pursuant to such Registration Statement to cease, (ii) to cause such
Registration Statement to be withdrawn and the effectiveness of such
Registration Statement suspended, or (iii) in the event no such Registration
Statement has yet been filed or declared effective, to delay filing or
effectiveness of any such Registration Statement until, in the good faith
judgment of the Company, such Material Development Condition shall be disclosed
or no longer exists (notice of which the Company shall promptly deliver to the
Placement Agent, as the representative of the Purchasers).  Notwithstanding the foregoing provisions of
this Section 6(o), (1) in no event may such cessation or delay be for a
period of more than sixty (60) consecutive days from giving of its Delay Notice
to the Purchasers with respect to such Material Development Condition, as above
provided, or more than one hundred twenty (120) days in any twelve (12) months;
and (2) in the event a Registration Statement is filed and subsequently
withdrawn by reason of any existing or anticipated Material Development
Condition as provided above, the Company shall cause a new Registration
Statement covering the Registrable Securities to be filed with the Commission
as soon as reasonably practicable after such Material Development Condition
ceases to exist or, if sooner, as practicable after the expiration of such
sixty (60) day period.


 


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IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of
the date first written above.


 


	
   

  	
  GRANT VENTURES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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(PURCHASERS SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT)


 


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
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ANNEX A


 


Plan of Distribution


 


The
Selling Stockholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:


 


•                                          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;


 


•                                          put or call options transactions;


 


•                                          settlement of short sales;


 


•                                          broker/dealers may agree with the Selling
Stockholders 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 by applicable law.


 


The
Selling Stockholders may also sell shares under Rule 144 under the Securities
Act, if available, rather than under this prospectus.


 


Broker/dealers
engaged by the Selling Stockholders may arrange for other brokers/dealers to
participate in sales. Broker/dealers may receive commissions from the Selling
Stockholders (or, if any broker/dealer acts as agent for the purchaser of
shares, from the purchaser) in amounts to be negotiated. The Selling
Stockholders do not expect these commissions to exceed what is customary in the
types of transactions involved.


 


The
Selling Stockholders may from time to time pledge or grant a security interest
in some or all of the shares of common stock owned by them and, if they default
in the performance of their secured obligations, the donees, pledgees or
secured parties may offer and sell the shares of common stock from time to time
under this prospectus, or under an amendment to this


 
















 


prospectus under Rule 424(b)(3) or other applicable provision of the
Securities Act of 1933 amending the list of Selling Stockholders to include the
donee, pledgee, transferee or other successors in interest as Selling
Stockholders under this prospectus.


 


The
Selling Stockholders and any broker/dealers or agents that are involved in
selling the shares may be deemed to be “underwriters” within the meaning of the
Securities Act in connection with such sales. In such event, any commissions
received by such broker/dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions under the
Securities Act. The Selling Stockholders have informed the Company that it does
not have any agreement or understanding, directly or indirectly, with any
person to distribute the Common Stock.


 


At
the time a particular offering of securities is made, to the extent required, a
prospectus supplement will be distributed which will set forth the number of
securities being offered and the terms of the offering, including the purchase
price or the public offering price, the name or names of any underwriters,
dealers or agents, the purchase price paid by any underwriters for securities
purchased from the Selling Stockholders, any discounts, commissions and other
items constituting compensation from the selling security holders and any
discounts, commissions or concessions allowed or reallowed or paid to dealers.


 


Pursuant
to applicable rules and regulations under the Exchange Act, any person engaged
in the distribution of the securities offered under this prospectus may not
simultaneously engage in market activities for the shares of common stock for a
period of five business days prior to the commencement of such
distribution.  In addition, each Selling
Stockholder and any other person who participates in a distribution of the
securities will be subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including Regulation M, which may limit the
timing of purchases and may affect the marketability of the securities and the
ability of any person to engage in market activities for the shares of common
stock.


 


The
Company is required to pay all fees and expenses incident to the registration
of the shares. The Company has agreed to indemnify the Selling Stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.