Silver Dragon Resources, Inc. - Registration Rights Agreement - Prepared
By TNT Filings Inc.




 



REGISTRATION RIGHTS AGREEMENT 


        Registration
Rights Agreement (the "Agreement"), dated as of November __, 2005, by and
between Silver Dragon Resources, Inc., a corporation organized under the laws of
State of Delaware, with its principal executive office at 1121 Steeles Ave.,
West, Suite 803, Toronto, Ontario, L3T 7M8 (the "Company"), and Dutchess
Private Equities Fund, L.P., a Delaware limited partnership with its principal
office at 50 Commonwealth Avenue, Suite 2, Boston, MA 02116 (the "Holder").



        Whereas,
in connection with the Investment Agreement by and between the Company and
the Investor of even date herewith (the "Investment Agreement"), the
Company has agreed to issue and sell to the Investor an indeterminate number of
shares of the Company's Common Stock, $0.0001 par value per share (the "Common
Stock"), to be purchased pursuant to the terms and subject to the conditions
set forth in the Investment Agreement; and 


        Whereas,
to induce the Investor to execute and deliver the Investment Agreement, the
Company has agreed to provide certain registration rights under the Securities
Act of 1933, as amended, and the rules and regulations thereunder, or any
similar successor statute (collectively, the "1933 Act"), and applicable
state securities laws, with respect to the shares of Common Stock issuable
pursuant to the Investment Agreement. 


        Now therefore, in
consideration of the foregoing premises and the mutual covenants contained
hereinafter and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Investor
hereby agree as follows: 


Section 1. DEFINITIONS. 


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

        "Execution Date" means the
date first written above. 

        "Investor" means Dutchess
Private Equities Fund, L.P., a Delaware limited partnership. 

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

        "Potential
Material Event" means any of the following: (i) the possession by the
Company of material information not ripe for disclosure in the Registration
Statement, which shall be evidenced by determinations in good faith by the Board
of Directors of the Company that disclosure of such information in the
Registration Statement would be detrimental to the business and affairs of the
Company, or (ii) any material engagement or activity by the Company which
would, in the good faith determination of the Board of Directors of the Company,
be adversely affected by disclosure in the Registration Statement at such time,
which determination shall be accompanied by a good faith determination by the
Board of Directors of the Company that the Registration Statement would be
materially misleading absent the inclusion of such information. 

        "Principal
Market" shall mean The American Stock Exchange, National Association of
Securities Dealer's, Inc. Over-the-Counter electronic bulletin board, the Nasdaq
National Market or The Nasdaq SmallCap Market whichever is the principal market
on which the Common Stock is listed. 

        "Register,"
"Registered," and "Registration" refer to the Registration
effected by preparing and filing one (1) or more Registration Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement(s) by the United States Securities and Exchange Commission (the
"SEC"). 

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        "Registrable
Securities" means (i) the shares of Common Stock issued or issuable
pursuant to the Investment Agreement, and (ii) any shares of capital
stock issued or issuable with respect to such shares of Common Stock, if any, as
a result of any stock split, stock dividend, recapitalization, exchange or
similar event or otherwise, which have not been (x) included in the
Registration Statement that has been declared effective by the SEC or (y)
sold under circumstances meeting all of the applicable conditions of Rule 144
(or any similar provision then in force) under the 1933 Act. 

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

        All capitalized terms used in this
Agreement and not otherwise defined herein shall have the same meaning ascribed
to them as in the Investment Agreement. 


Section 2. REGISTRATION. 


        (a) The
Company shall, within than fifteen (15) days of the Company filing its Form 10K
for 2005, file with the SEC the Registration Statement or Registration
Statements (as is necessary) on Form SB-2 (or, if such form is unavailable for
such a registration, on such other form as is available for such a
registration), covering the resale of all of the Registrable Securities, which
Registration Statement(s) shall state that, in accordance with Rule 416
promulgated under the 1933 Act, such Registration Statement also covers such
indeterminate number of additional shares of Common Stock as may become issuable
upon stock splits, stock dividends or similar transactions. The Company shall
initially register for resale 20,000,000 shares of Common Stock which would be
issuable on the date preceding the filing of the Registration Statement based on
the closing bid price of the Company's Common Stock on such date and the amount
reasonably calculated that represents Common Stock issuable to other parties as
set forth in the Investment Agreement except to the extent that the SEC requires
the share amount to be reduced as a condition of effectiveness.. 


        (b) The Company shall use
commercially reasonable efforts to have the Registration Statement(s) declared
effective by the SEC within ninety (90) calendar days after the Execution Date.



       
(c) The Company agrees not to include any other securities in the
Registration Statement covering the Registrable Securities without Investor's
prior written consent which Investor may withhold in its sole discretion.
Furthermore, the Company agrees that it will not file any other Registration
Statement for other securities, until thirty calendar days after the
Registration Statement for the Registrable Securities is declared effective by
the SEC. 


Section 3. RELATED OBLIGATIONS. 

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


        (a) The
Company shall use commercially reasonable efforts to cause such Registration
Statement relating to the Registrable Securities to become effective within
ninety (90) days after the Execution Date and shall keep such Registration
Statement effective until the earlier to occur of (i) the date on which
(A) the Investor shall have sold all the Registrable Securities; and 
(B) the Investor has no right to acquire any additional shares of Common
Stock under the Investment Agreement (the "Registration Period"). The
Registration Statement (including any amendments or supplements thereto and
prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein, in light of 


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the circumstances in which they were made, not misleading.
The Company shall use its commercially reasonable efforts to respond to all SEC
comments within seven (7) business days from receipt of such comments by the
Company. The Company shall use its commercially reasonable efforts to cause the
Registration Statement relating to the Registrable Securities to become
effective no later than five (5) business days after notice from the SEC that
the Registration Statement may be declared effective. The Investor agrees to
provide all information which it is required by law to provide to the Company,
including the intended method of disposition of the Registrable Securities, and
the Company's obligations set forth above shall be conditioned on the receipt of
such information. 


        (b) The
Company shall prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to the Registration Statement and the
prospectus used in connection with such Registration Statement, which prospectus
is to be filed pursuant to Rule 424 promulgated under the 1933 Act, as may be
necessary to keep such Registration Statement effective during the Registration
Period, and, during such period, comply with the provisions of the 1933 Act with
respect to the disposition of all Registrable Securities of the Company covered
by such Registration Statement until such time as all of such Registrable
Securities shall have been disposed of in accordance with the intended methods
of disposition by the Investor thereof as set forth in such Registration
Statement. In the event the number of shares of Common Stock covered by the
Registration Statement filed pursuant to this Agreement is at any time
insufficient to cover all of the Registrable Securities, the Company shall amend
such Registration Statement, or file a new Registration Statement (on the short
form available therefor, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable, but in any event
within thirty (30) calendar days after the necessity therefor arises (based on
the then Purchase Price of the Common Stock and other relevant factors on which
the Company reasonably elects to rely), assuming the Company has sufficient
authorized shares at that time, and if it does not, within thirty (30) calendar
days after such shares are authorized. The Company shall use commercially
reasonable efforts to cause such amendment and/or new Registration Statement to
become effective as soon as practicable following the filing thereof. 


        (c) The
Company shall make available to the Investor whose Registrable Securities are
included in any Registration Statement and its legal counsel without charge (i)
promptly after the same is prepared and filed with the SEC at least one (1)
copy of such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits, the prospectus included in such Registration
Statement (including each preliminary prospectus) and, with regards to such
Registration Statement(s), any correspondence by or on behalf of the Company to
the SEC or the staff of the SEC and any correspondence from the SEC or the staff
of the SEC to the Company or its representatives; (ii) upon the
effectiveness of any Registration Statement, the Company shall make available
copies of the prospectus, via EDGAR, included in such Registration Statement and
all amendments and supplements thereto; and (iii) such other documents,
including copies of any preliminary or final prospectus, as the Investor may
reasonably request from time to time in order to facilitate the disposition of
the Registrable Securities. 


        (d) The
Company shall use commercially reasonable efforts to (i) register and
qualify the Registrable Securities covered by the Registration Statement under
such other securities or "blue sky" laws of such states in the United States as
the Investor 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 (x) qualify to do business in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d), or (y)
subject itself to general taxation in any such jurisdiction. The Company shall
promptly notify each Investor who holds Registrable Securities of the receipt by
the Company of any notification with respect to the suspension of the
registration or qualification of any of the Registrable Securities for sale
under the securities or "blue sky" laws of any jurisdiction in the United States
or its receipt of actual notice of the initiation or threatening of any
proceeding for such purpose. 

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        (e) As
promptly as practicable after becoming aware of such event, the Company shall
notify Investor in writing of the happening of any event as a result of which
the prospectus included in the Registration Statement, as then in effect,
includes an untrue statement of a material fact or omission to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading
("Registration Default") and use all diligent efforts to promptly prepare a
supplement or amendment to such Registration Statement and take any other
necessary steps to cure the Registration Default, (which, if such Registration
Statement is on Form S-3, may consist of a document to be filed by the Company
with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the 1934 Act (as
defined below) and to be incorporated by reference in the prospectus) to correct
such untrue statement or omission, and make available copies of such supplement
or amendment to each Investor. The Company shall also promptly notify Investor
(i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when the Registration Statement or any
post-effective amendment has become effective (the Company will prepare
notification of such effectiveness which shall be delivered to the Investor on
the same day of such effectiveness and by overnight mail), additionally, the
Company will promptly provide to the Investor, a copy of the effectiveness order
prepared by the SEC once it is received by the Company; (ii) of any
request by the SEC for amendments or supplements to the Registration Statement
or related prospectus or related information, (iii) of the Company's
reasonable determination that a post-effective amendment to the Registration
Statement would be appropriate, (iv) in the event the Registration
Statement is no longer effective, or (v) if Registration Statement is
stale as a result of the Company's failure to timely file its financials or
otherwise. The Company acknowledges that its failure to cure the Registration
Default within ten (10) business days will cause the Investor to suffer damages
in an amount that will be difficult to ascertain. Accordingly, the parties agree
that it is appropriate to include a provision for liquidated damages. The
parties acknowledge and agree that the liquidated damages provision set forth in
this section represents the parties' good faith effort to quantify such damages
and, as such, agree that the form and amount of such liquidated damages are
reasonable and will not constitute a penalty. It is the intention of the parties
that interest payable under any of the terms of this Agreement shall not exceed
the maximum amount permitted under any applicable law. If a law, which applies
to this Agreement which sets the maximum interest amount, is finally interpreted
so that the interest in connection with this Agreement exceeds the permitted
limits, then: (1) any such interest shall be reduced by the amount
necessary to reduce the interest to the permitted limit; and (2) any sums
already collected (if any) from the Company which exceed the permitted limits
will be refunded to the Company. The Investor may choose to make this refund by
reducing the amount that the Company owes under this Agreement or by making a
direct payment to the Company. If a refund reduces the amount that the Company
owes the Investor, the reduction will be treated as a partial payment. In case
any provision of this Agreement is held by a court of competent jurisdiction to
be excessive in scope or otherwise invalid or unenforceable, such provision
shall be adjusted rather than voided, if possible, so that it is enforceable to
the maximum extent possible, and the validity and enforceability of the
remaining provisions of this Agreement will not in any way be affected or
impaired thereby. 


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


        (g) The
Company shall permit the Investor and one (1) legal counsel, designated by the
Investor, to review and comment upon the Registration Statement and all
amendments and supplements thereto at the Investor's expense at least one (1)
calendar day prior to their filing with the SEC. 

        However, any
postponement of a filing of a Registration Statement or any postponement of a
request for acceleration or any postponement of the effective date or
effectiveness of a Registration Statement by written request of the Investor
(collectively, the "Investor's Delay") shall not act to trigger any penalty of
any kind, or any cash amount due or any in-kind amount due the Investor from the


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Company under any and all agreements of any nature or kind
between the Company and the Investor. The event(s) of an Investor's Delay shall
act to suspend all obligations of any kind or nature of the Company under any
and all agreements of any nature or kind between the Company and the Investor. .



        (h) At the
request of the Investor, the Company shall cause to be furnished to Investor, on
the date of the effectiveness of the Registration Statement, a legal opinion, in
form and substance reasonably acceptable to Investor's counsel, dated as of such
date, of counsel representing the Company for purposes of such Registration
Statement. 


        (i) The
Company shall hold in confidence and not make any disclosure of information
concerning the Investor provided to the Company unless (i) disclosure of
such information is necessary to comply with federal or state securities laws,
(ii) the disclosure of such information is necessary to avoid or correct
a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available
to the public other than by disclosure in violation of this Agreement or any
other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning a Investor is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to such Investor and allow such Investor, at the Investor's
expense, to undertake appropriate action to prevent disclosure of, or to obtain
a protective order for, such information. 


        (j) The
Company shall use commercially reasonable efforts to maintain designation and
quotation of all the Registrable Securities covered by any Registration
Statement on the Principal Market. If, despite the Company's commercially
reasonable efforts, the Company is unsuccessful in satisfying the preceding
sentence, it shall use commercially reasonable efforts to cause all the
Registrable Securities covered by any Registration Statement to be listed on
each other national securities exchange and automated quotation system, if any,
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange or system. The Company shall pay all fees and
expenses in connection with satisfying its obligation under this Section 3(j).



        (k) The
Company shall cooperate with the Investor to facilitate the prompt preparation
and delivery of certificates representing the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the Investor may
reasonably request (and after any sales of such Registrable Securities by the
Investor, such certificates not bearing any restrictive legend). 


        (l) The Company shall provide
a transfer agent for all the Registrable Securities not later than the effective
date of the first Registration Statement filed pursuant hereto. 


        (m) If
requested by the Investor, the Company shall (i) as soon as reasonably
practical incorporate in a prospectus supplement or post-effective amendment
such information as such Investor reasonably determines should be included
therein relating to the sale and distribution of Registrable Securities,
including, without limitation, information with respect to the offering of the
Registrable Securities to be sold in such offering; (ii) make all
required filings of such prospectus supplement or post-effective amendment as
soon as reasonably possible after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and 
(iii) supplement or make amendments to any Registration Statement if
reasonably requested by such Investor. 


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


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


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        (p) Within one
(1) business day after the Registration Statement which includes Registrable
Securities is declared effective by the SEC, the Company shall deliver to the
transfer agent for such Registrable Securities, with copies to the Investor,
confirmation that such Registration Statement has been declared effective by the
SEC. 


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


Section 4. OBLIGATIONS OF THE INVESTOR. 

        (a) At least
five (5) calendar days prior to the first anticipated filing date of the
Registration Statement the Company shall notify the Investor in writing of the
information the Company requires from Investor if Investor elects to have any of
the Registrable Securities included in such Registration Statement. It shall be
a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable
Securities of the Investor and Investor shall furnish in writing 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
reasonably be 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. Investor covenants and agrees that, in
connection with any sale of Registrable Securities by it pursuant to the
Registration Statement, it shall comply with the "Plan of Distribution" section
of the current prospectus relating to such Registration Statement. 


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


        (c) The
Investor agrees that, upon receipt of written notice from the Company of the
happening of any event of the kind described in Section 3(f) or the first
sentence of 3(e), such Investor will immediately discontinue disposition of
Registrable Securities pursuant to any Registration Statement(s) covering such
Registrable Securities until Investor's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3(f) or the first
sentence of 3(e) 


Section 5. EXPENSES OF REGISTRATION. 

        All expenses,
other than underwriting discounts and commissions and other than as set forth in
the Investment Agreement, incurred in connection with registrations including
comments, filings or qualifications pursuant to Sections 2 and 3, including,
without limitation, all registration, listing and qualifications fees, printing
and accounting fees, and fees and disbursements of counsel for the Company shall
be paid by the Company. 


Section 6. INDEMNIFICATION. 

        In the event any Registrable
Securities are included in the Registration Statement under this Agreement: 
(a) To the fullest extent permitted by law, the Company will, and hereby
does, indemnify, hold harmless and defend Investor who holds Registrable
Securities, the directors, officers, partners, employees, counsel, agents,
representatives of, and each Person, if any, who controls, any Investor 

6 




within the meaning of the 1933 Act or the Securities Exchange
Act of 1934, as amended (the "1934 Act") (each, an "Indemnified Person"),
against any losses, claims, damages, liabilities, judgments, fines, penalties,
charges, costs, reasonable attorneys' fees, amounts paid in settlement or
expenses, joint or several (collectively, "Claims"), incurred in
investigating, preparing or defending any action, claim, suit, inquiry,
proceeding, investigation or appeal taken from the foregoing by or before any
court or governmental, administrative or other regulatory agency, body or the
SEC, whether pending or threatened, whether or not an indemnified party is or
may be a party thereto ("Indemnified Damages"), to which any of them may
become subject insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon: 
(i) any untrue statement or alleged untrue statement of a material fact in
the Registration Statement or any post-effective amendment thereto or in any
filing made in connection with the qualification of the offering under the
securities or other "blue sky" laws of any jurisdiction in which the Investor
has requested in writing that the Company register or qualify the Shares ("Blue
Sky Filing"), or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which the statements therein were made, not
misleading, (ii) any untrue statement or alleged untrue statement of a
material fact contained in the final prospectus (as amended or supplemented, if
the Company files any amendment thereof or supplement thereto with the SEC) or
the omission or alleged omission to state therein any material fact necessary to
make the statements made therein, in light of the circumstances under which the
statements therein were made, not misleading, or (iii) any violation or
alleged violation by the Company of the 1933 Act, the 1934 Act, any other law,
including, without limitation, any state securities law, or any rule or
regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to the Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). Subject to
the restrictions set forth in Section 6(c) the Company shall reimburse the
Investor and each such controlling 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): (i)
shall not apply to a Claim arising out of or based upon a Violation which is due
to the inclusion in the Registration Statement of the information furnished to
the Company by any Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto; (ii) shall not be available to the extent such Claim
is based on (a) a failure of the Investor to deliver or to cause to be
delivered the prospectus made available by the Company or (b) the
Indemnified Person's use of an incorrect prospectus despite being promptly
advised in advance by the Company in writing not to use such incorrect
prospectus; (iii) any claims based on the manner of sale of the
Registrable Securities by the Investor or of the Investor's failure to register
as a dealer under applicable securities laws; (iv) any omission of the
Investor to notify the Company of any material fact that should be stated in the
Registration Statement or prospectus relating to the Investor or the manner of
sale; and (v) any 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. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the resale of the Registrable Securities by
the Investor pursuant to the Registration Statement. 

        (b) In
connection with any Registration Statement in which Investor is participating,
Investor agrees to severally and jointly indemnify, hold harmless and defend, to
the same extent and in the same manner as is set forth in Section 6(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act and the Company's agents (collectively and together
with an Indemnified Person, an "Indemnified Party"), against any Claim or
Indemnified Damages to which any of them may become subject, under the 1933 Act,
the 1934 Act or otherwise, insofar as such Claim or Indemnified Damages arise
out of or are based upon any Violation, in each case to the extent, and only to
the extent, that such Violation is due to the inclusion in the Registration
Statement of the written information furnished to the Company by such Investor
expressly for use in connection with such Registration Statement; and, subject
to Section 6(c), such Investor will reimburse any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such Claim; provided, however, that the indemnity agreement contained in
this Section 6(b) and the agreement with respect to 

7 




contribution contained in Section 7 shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Investor, which consent shall not be
unreasonably withheld; provided, further, however, that the Investor shall be
liable under this Section 6(b) for only that amount of a Claim or Indemnified
Damages as does not exceed the net proceeds to such Investor as a result of the
sale of Registrable Securities pursuant to such Registration Statement. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of such Indemnified Party and shall survive the resale of
the Registrable Securities by the Investor pursuant to the Registration
Statement. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus were corrected on a timely basis in the prospectus, as
then amended or supplemented. This indemnification provision shall apply
separately to each Investor and liability hereunder shall not be joint and
several. 


       
(c) Promptly after receipt by an Indemnified Person or Indemnified Party
under this Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a Claim, such
Indemnified Person or Indemnified Party shall, if a Claim in respect thereof is
to be made against any indemnifying party under this Section 6, deliver to the
indemnifying party a written notice of the commencement thereof, and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the Indemnified Person or
Indemnified Party, the representation by counsel of the Indemnified Person or
Indemnified Party and the indemnifying party would be inappropriate due to
actual or potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel in such
proceeding. The indemnifying party shall pay for only one (1) separate legal
counsel for the Indemnified Persons or the Indemnified Parties, as applicable,
and such counsel shall be selected by the Investor, if the Investor is entitled
to indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person which relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person fully appraised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its written consent, provided, however, that the indemnifying party shall not
unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the consent of the Indemnified Party or Indemnified Person,
consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim. Following indemnification
as provided for hereunder, the indemnifying party shall be surrogated to all
rights of the Indemnified Party or Indemnified Person with respect to all third
parties, firms or corporations relating to the matter for which indemnification
has been made. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action shall not
relieve such indemnifying party of any liability to the Indemnified Person or
Indemnified Party under this Section 6, except to the extent that the
indemnifying party is prejudiced in its ability to defend such action. 


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


Section 7. CONTRIBUTION. 


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



Section 8. REPORTS UNDER THE 1934 ACT. 


        With a view to
making available to the Investor the benefits of Rule 144 promulgated under the
1933 Act or any other similar rule or regulation of the SEC that may at any time
permit the Investor to sell securities of the Company to the public without
registration ("Rule 144"), provided that the Investor holds any
Registrable Securities are eligible for resale under Rule 144 (k), the Company
agrees to: 


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



        (b) file with
the SEC in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company remains
subject to such requirements (it being understood that nothing herein shall
limit the Company's obligations under Section 5(c) of the Investment Agreement)
and the filing of such reports and other documents is required for the
applicable provisions of Rule 144; and 


        (c) furnish to
the Investor, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably
requested to permit the Investor to sell such securities pursuant to Rule 144
without registration. 


Section 9. NO ASSIGNMENT OF REGISTRATION RIGHTS. 


        The rights under this Agreement
shall not be assignable. 


Section 10. AMENDMENT OF REGISTRATION RIGHTS. 


        Provisions of this Agreement may
be amended only with the written consent of the Company and Investor. 


Section 11. MISCELLANEOUS. 

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

9 





  If to the Company: 

  
    Silver Dragon Resources, Inc. 

    1121 Steeles Ave. West 

    Suite 803 

    Toronto, Ontario, L3T 7M8 

    Telephone: (416) 661-4989 

    Facsimile: (416) 661-9510 

  

  If to the Investor: 

  
    Dutchess Private Equities Fund, LP 

    50 Commonwealth Ave, Suite 2 

    Boston, MA 02116 

    Telephone: 617-301-4700 

    Facsimile: 617-249-0947 

  



        Each party shall provide five (5)
business days prior notice to the other party of any change in address, phone
number or facsimile number. 


        (b) 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.



        (c) The laws
of the Commonwealth of Massachusetts shall govern all issues arising from or
related to this Agreement without regard to the principles of conflict of laws.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state
and federal courts sitting in the City of Boston, County of Suffolk, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. Each party hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to such
party at the address for such notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice
thereof. Nothing contained herein shall be deemed to limit in any way any right
to serve process in any manner permitted by law. If any provision of this
Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity
or unenforceability shall not affect the validity or enforceability of the
remainder of this Agreement in that jurisdiction or the validity or
enforceability of any provision of this Agreement in any other jurisdiction. 


        (d) This
Agreement and the Transaction Documents 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. 


        (e) This Agreement and the
Transaction Documents supersede all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof and thereof. 


        (f) The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof. Whenever required by the context
of this Agreement, the singular shall include the plural and masculine shall
include the feminine. This Agreement shall not be construed as if it had been
prepared by one of the parties, but rather as if all the parties had prepared
the same. 


        (g) This Agreement may be
executed in two or more identical counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same agreement. This
Agreement, 

10 




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. 


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


Section 12. DISPUTES SUBJECT TO ARBITRATION GOVERNED BY MASSACHUSETTS LAW



        All disputes
arising under this agreement shall be governed by and interpreted in accordance
with the laws of the Commonwealth of Massachusetts, without regard to principles
of conflict of laws. The parties to this agreement will submit all disputes
arising under this agreement to arbitration in Boston, Massachusetts before a
single arbitrator of the American Arbitration Association ("AAA"). The
arbitrator shall be selected by application of the rules of the AAA, or by
mutual agreement of the parties, except that such arbitrator shall be an
attorney admitted to practice law in the Commonwealth of Massachusetts. No party
to this agreement will challenge the jurisdiction or venue provisions as
provided in this section. 


Section 13. WAIVER OF JURY TRIAL. 


AS A MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO
THIS WARRANT, THE PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE
OTHER DOCUMENTS ASSOCIATED WITH THIS TRANSACTION. 


* * * 


11 




SIGNATURE PAGE OF REGISTRATION RIGHTS AGREEMENT



Your signature on this Signature Page
evidences your agreement to be bound by the terms and conditions of the
Investment Agreement and the Registration Rights Agreement as of the date first
written above. 

The undersigned signatory hereby certifies
that he has read and understands the Registration Rights Agreement, and the
representations made by the undersigned in this Registration Rights Agreement
are true and accurate, and agrees to be bound by its terms. 


  	DUTCHESS PRIVATE EQUITIES FUND, L.P.,
	BY ITS GENERAL PARTNER,
	DUTCHESS CAPITAL MANAGEMENT, LLC
	 
	 
	By: ___________________________
	       Douglas H.
      Leighton, Managing Member





SILVER DRAGON RESOURCES, INC. 


By:


        ______________________________ 

         Marc Hazout, Chief Executive
Officer 


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