Document:

Exhibit 10 (10.7) - Registration Rights Agreement dated October 4, 2006

    
      

      

    

    Exhibit
      10.7

    

      REGISTRATION
        RIGHTS AGREEMENT

       

      This
        Registration Rights Agreement (this "Agreement")
        is made
        and entered into as of October 4, 2006, by and among Welund Fund, Inc., a
        Nevada
        corporation (the "Company"),
        and
        the investors signatory hereto (each a "Investor"
        and
        collectively, the "Investors").

       

      This
        Agreement is made pursuant to the Securities Purchase Agreement, dated as
        of the
        date hereof among the Company and the Investors (the "Purchase
        Agreement").

       

      The
        Company and the Investors hereby agree as follows: 

       

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

       

      “Advice”
        has
        the
        meaning set forth in Section 6(d).

       

      “Audit
        Completion Date”
        means
        the date on which the Company and its Subsidiaries have completed its audit
        and
        have audited and unaudited financial statements as are necessary for the
        Company
        to meet its reporting obligations under rules and regulations promulgated
        by the
        Commission, including periodic reports, current reports and the proposed
        registration statement contemplated to be filed under Form SB-2.

       

      "Effective
        Date"
        means,
        as to a Registration Statement, the date on which such Registration Statement
        is
        first declared effective by the Commission.

       

      “Effectiveness
        Date”
        means
        (a) with respect to the Registration Statement required to be filed under
        Section 2(a), the earliest of: (a)(i) the 120th
        day
        following the Audit Completion Date, (ii) the 120th
        day
        following the Outside Registration Date, and (iii) the fifth Trading Day
        following the date on which the Company is notified by the Commission that
        such
        Registration Statement will not be reviewed or is no longer subject to further
        review and comments; and (b) with respect to a Registration Statement required
        to be filed under Section 2(b), the earlier of: (b)(i) the 90th
        day
        following the date on which the Company becomes eligible to utilize Form
        S-3 to
        register the resale of Common Stock, and (ii) the fifth Trading Day following
        the date on which the Company is notified by the Commission that such
        Registration Statement will not be reviewed or is no longer subject to further
        review and comments.

       

      "Effectiveness
        Period"
        has the
        meaning set forth in Section 2(a).

       

      "Exchange
        Act"
        means
        the Securities Exchange Act of 1934, as amended.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      "Filing
        Date"
        means
        (a) with respect to the Registration Statement required to be filed under
        Section 2(a), the earlier of (a)(i) the 15th
        day
        following the Audit Completion Date and (ii) the Outside Registration Date;
        and
        (b) with respect to a Registration Statement required to be filed under Section
        2(b), the 30th
        day
        following the date on which the Company becomes eligible to utilize Form
        S-3 to
        register the resale of Common Stock.

       

      "Holder"
        or
"Holders"
        means
        the holder or holders, as the case may be, from time to time of Registrable
        Securities.

       

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

       

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

       

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

       

      “New
        York Courts”
        means
        the state and federal courts sitting in the City of New York, Borough of
        Manhattan.

       

      “Outside
        Registration Date”
        means
        the six month anniversary of the Closing Date.

       

      "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 a 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 a 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:
        (i) the Shares, (ii) any shares of Common Stock issuable upon the exercise
        of
        warrants issued to any placement agent (the “Placement
        Agent Warrants”)
        as
        compensation in connection with the financing that is the subject of the
        Purchase Agreement, (iii) 4,000,000 (pre-reverse stock split) shares of Common
        Stock with piggy back registration rights held by the following: Liberty
        Associates, LLC for 2,240,000 shares; TATS, LLC 237,457 shares; Pamplona,
        Inc.
        100,000 shares; Howard S. Landa 237,457 shares; Steve Strasser 468,643 shares;
        BTG Investments LLC 247,800 shares; and Steve Kay 468,643 shares, including
        transferees of any such shares, and (iv) any securities issued or issuable
        upon
        any stock split, dividend or other distribution, recapitalization or similar
        event, or any price adjustment as a result of such stock splits, reverse
        stock
        splits or similar events with respect to any of the securities referenced
        in (i)
        - (iii) above.

       

      
        
           

        

        
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      "Registration
        Statement"
        means
        the registration statement required to be filed in accordance with Section
        2(a)
        and any additional registration statement(s) required to be filed under Section
        2(b), including (in each case) the Prospectus, amendments and supplements
        to
        such registration statements or Prospectus, including pre- and post-effective
        amendments, all exhibits thereto, and all material incorporated by reference
        or
        deemed to be incorporated by reference therein.

       

      "Rule
        144"
        means
        Rule 144 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
        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.

       

      "Shares"
        means
        the shares of Common Stock issued or issuable to the Investors pursuant to
        the
        Purchase Agreement.

       

      
        	 	
                2.

              	
                Registration.

              

      

       

      (a)    On
        or
        prior to the Filing Date, the Company shall prepare and file with the Commission
        a Registration Statement covering the resale of all Registrable Securities
        not
        already covered by an existing and effective Registration Statement for an
        offering to be made on a continuous basis pursuant to Rule 415, on Form SB-2
        (or
        on such other form appropriate for such purpose). Such Registration Statement
        shall contain (except if otherwise required pursuant to written comments
        received from the Commission upon a review of such Registration Statement)
        the
        "Plan of Distribution" attached hereto as Annex
        A.
        The
        Company shall cause such Registration Statement to be declared effective
        under
        the Securities Act as soon as possible but, in any event, no later than its
        Effectiveness Date, and shall use its reasonable best efforts to keep the
        Registration Statement continuously effective under the Securities Act until
        the
        date which is the earliest of (i) five years after its Effective Date, (ii)
        such time as all of the Registrable Securities covered by such Registration
        Statement have been publicly sold by the Holders, or (iii) such time as all
        of
        the Registrable Securities covered by such Registration Statement may be
        sold by
        the Holders pursuant to Rule 144(k) as determined by the counsel to the Company
        pursuant to a written opinion letter to such effect, addressed and acceptable
        to
        the Company's transfer agent and the affected Holders (the "Effectiveness
        Period").
        By
        9:00 a.m. (New York City time) on the Business Day following the Effective
        Date,
        the Company shall file with the Commission in accordance with Rule 424 under
        the
        Securities Act the final prospectus to be used in connection with sales pursuant
        to such Registration Statement (whether or not such filing is technically
        required under such Rule).

       

      
        
           

        

        
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      (b)    Promptly
        following any date on which the Company becomes eligible to use a registration
        statement on Form S-3 to register the Registrable Securities for resale,
        the
        Company shall file a Registration Statement on Form S-3 covering the Registrable
        Securities (or a post-effective amendment on Form S-3 to the then effective
        Registration Statement) and shall cause such Registration Statement to be
        filed by the Filing Date for such Registration Statement and declared effective
        as soon as possible thereafter, but in any event prior to the Effectiveness
        Date
        therefor. Such Registration Statement shall contain (except if otherwise
        required pursuant to written comments received from the Commission upon a
        review
        of such Registration Statement) the "Plan of Distribution" attached hereto
        as
Annex
        A.
        The
        Company shall cause such Registration Statement to be declared effective
        under
        the Securities Act as soon as possible but, in any event, by its Effectiveness
        Date, and shall use its reasonable best efforts to keep such Registration
        Statement continuously effective under the Securities Act during the entire
        Effectiveness Period. By 9:00 a.m. (New York City time) on the Business Day
        following the Effective Date of such Registration Statement, the Company
        shall
        file with the Commission in accordance with Rule 424 under the Securities
        Act
        the final prospectus to be used in connection with sales pursuant to such
        Registration Statement (whether or not such filing is technically required
        under
        such Rule).

       

      (c)     If:
        (i) a Registration Statement is not filed on or prior to its Filing Date
        (if the
        Company files a Registration Statement without furnishing the Holders with
        a
        copy of such document pursuant to Section 3(a) hereof, the Company shall
        not be
        deemed to have satisfied this clause (i)), or (ii) a Registration Statement
        is
        not declared effective by the Commission on or prior to its required
        Effectiveness Date or if by the Business Day immediately following the Effective
        Date the Company shall not have filed a “final” prospectus for the Registration
        Statement with the Commission under Rule 424(b) (whether or not such a
        prospectus is actually required by such Rule), or (iii) after its Effective
        Date, without regard for the reason thereunder or efforts therefore, such
        Registration Statement ceases for any reason to be effective and available
        to
        the Holders as to all Registrable Securities to which it is required to cover
        at
        any time prior to the expiration of its Effectiveness Period for more than
        an
        aggregate of 30 Trading Days (which need not be consecutive) (any such failure
        or breach being referred to as an "Event,"
        and for
        purposes of clauses (i) or (ii) the date on which such Event occurs, or for
        purposes of clause (iii) the date which such 30 Trading Day-period is exceeded,
        being referred to as "Event
        Date"),
        then
        in addition to any other rights the Holders may have hereunder or under
        applicable law: on each such Event Date, and on each monthly anniversary
        of each
        such Event Date (if the applicable Event shall not have been cured by such
        date)
        until the applicable Event is cured, the Company shall pay to each Holder
        an
        amount in cash, as partial liquidated damages and not as a penalty, equal
        to
        1.0% of the aggregate Investment Amount paid by such Holder for Shares pursuant
        to the Purchase Agreement; provided,
        however, that the total amount of partial liquidated damages payable by the
        Company pursuant to all Events under this Section shall be capped at an
        aggregate of 10% of the aggregate Investment Amount paid by the Investors
        under
        the Purchase Agreement. The partial liquidated damages pursuant to the terms
        hereof shall apply on a daily pro-rata basis for any portion of a month prior
        to
        the cure of an Event, except in the case of the first Event Date. In no event
        will the Company be liable for liquidated damages under this Agreement in
        excess
        of 1.0% of the aggregate Investment Amount of the Investors in any 30-day
        period. The Company will not be liable for liquidated damages under this
        Agreement with respect to any Placement Agent Warrants or any shares of Common
        Stock issuable upon exercise of the Placement Agent Warrants.

       

      
        
           

        

        
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      (d)    Each
        Holder agrees to furnish to the Company a completed Questionnaire in the
        form
        attached to this Agreement as Annex
        B
        (a
“Selling
        Holder Questionnaire”).
        The
        Company shall not be required to include the Registrable Securities of a
        Holder
        in a Registration Statement and shall not be required to pay any liquidated
        or
        other damages under Section 2(c) to any Holder who fails to furnish to the
        Company a fully completed Selling Holder Questionnaire at least two Trading
        Days
        prior to the Filing Date (subject to the requirements set forth in Section
        3(a)).

       

      
        	 	
                3.

              	
                Registration
                  Procedures.

              

      

       

      In
        connection with the Company's registration obligations hereunder, the Company
        shall:

       

      (a)    Not
        less
        than four Trading Days prior to the filing of a Registration Statement or
        any
        related Prospectus or any amendment or supplement thereto, the Company shall
        furnish to each Holder copies of the “Selling Stockholders” section of such
        document, the “Plan of Distribution” and any risk factor contained in such
        document that addresses specifically this transaction or the Selling
        Stockholders, as proposed to be filed. The Company shall not file a Registration
        Statement, any Prospectus or any amendments or supplements thereto in which
        the
“Selling Stockholder” section thereof differs from the disclosure received from
        a Holder in its Selling Holder Questionnaire (as amended or
        supplemented).

       

      (b)    (i)
        Use
        its best efforts to prepare and file with the Commission such amendments,
        including post-effective amendments, to each Registration Statement and the
        Prospectus used in connection therewith as may be necessary to keep such
        Registration Statement continuously effective as to the applicable Registrable
        Securities for its Effectiveness Period and prepare and file with the Commission
        such additional Registration Statements in order to register for resale under
        the Securities Act all of the Registrable Securities; (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; (iii)
        respond as promptly as reasonably possible to any comments received from
        the
        Commission with respect to each Registration Statement or any amendment thereto
        and, as promptly as reasonably possible provide the Holders true and complete
        copies of all correspondence from and to the Commission relating to such
        Registration Statement that would not result in the disclosure to the Holders
        of
        material and non-public information concerning the Company; and (iv) comply
        in
        all material respects with the provisions of the Securities Act and the Exchange
        Act with respect to the Registration Statements and the disposition of all
        Registrable Securities covered by each Registration Statement.

       

      
        
           

        

        
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      (c)    Use
        its
        best efforts to notify the Holders as promptly as reasonably possible (and,
        in
        the case of (i)(A) below, not less than three Trading Days prior to such
        filing
        and, in the case of (v) below, not less than three Trading Days prior to
        the
        financial statements in any Registration Statement becoming ineligible for
        inclusion therein) and (if requested by any such Person) confirm such notice
        in
        writing no later than one Trading Day following the day (i)(A) when a Prospectus
        or any Prospectus supplement or post-effective amendment to a Registration
        Statement is proposed to be filed; (B) when the Commission notifies the Company
        whether there will be a "review" of such Registration Statement and whenever
        the
        Commission comments in writing on such Registration Statement (the Company
        shall
        provide true and complete copies thereof and all written responses thereto
        to
        each of the Holders that pertain to the Holders as a Selling Stockholder
        or to
        the Plan of Distribution, but not information which the Company believes
        would
        constitute material and non-public information); and (C) with respect to
        each
        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 for amendments or supplements to a Registration Statement
        or Prospectus or for additional information; (iii) of the issuance by the
        Commission of any stop order suspending the effectiveness of a 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 a Registration Statement ineligible
        for
        inclusion therein or any statement made in such 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
        such
        Registration Statement, Prospectus or other documents so that, in the case
        of
        such 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 therein or necessary to make the statements therein,
        in light of the circumstances under which they were made, not
        misleading.

       

      (d)    Use
        its
        reasonable best efforts to avoid the issuance of, or, if issued, obtain the
        withdrawal of (i) any order suspending the effectiveness of a 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)    Furnish
        to each Holder, without charge, at least one conformed copy of each Registration
        Statement and each amendment thereto and all exhibits to the extent requested
        by
        such Person (including those previously furnished) promptly after the filing
        of
        such documents with the Commission.

       

      (f)
    Promptly
        deliver to each Holder, without charge, as many copies of each Prospectus
        or
        Prospectuses (including each form of prospectus) and each amendment or
        supplement thereto as such Persons may reasonably request. 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.

       

      (g)    Prior
        to
        any public offering of Registrable Securities, use its best efforts to register
        or qualify such Registrable Securities for offer and sale under the securities
        or Blue Sky laws of all jurisdictions within the United States, to keep each
        such registration or qualification (or exemption therefrom) effective during
        the
        Effectiveness Period and to do any and all other acts or things necessary
        or
        advisable to enable the disposition in such jurisdictions of the Registrable
        Securities covered by the Registration Statements.

       

      (h)    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 Statements, 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.

       

      
        
           

        

        
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      (i)    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 affected Registration Statements 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, no Registration Statement nor any 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.

       

      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 a Registration Statement. 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 any
        Trading Market on which the Common Stock is then listed for trading, and
        (B) in
        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 if the printing of
        prospectuses is reasonably requested by the holders of a majority of the
        Registrable Securities included in the Registration Statement), (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 as required hereunder.

       

      
        	 	
                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, investment advisors,
        partners, members 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 costs of preparation and reasonable
        attorneys' fees) and expenses (collectively, "Losses"),
        as
        incurred, 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 statements or omissions are based solely upon information regarding
        such
        Holder furnished in writing to the Company by 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 and expressly approved in writing 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
        approved Annex A hereto for this purpose) 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 an Advice or an amended or supplemented Prospectus,
        but only if and to the extent that following the receipt of the Advice or
        the
        amended or supplemented Prospectus the misstatement or omission giving rise
        to
        such Loss would have been corrected. 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.

       

      
        
           

        

        
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      (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, arising solely out of or based
        solely
        upon: (x) such Holder's failure to comply with the prospectus delivery
        requirements of the Securities Act or (y) any 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 arising solely
        out of
        or based solely upon any omission of a material fact required to be stated
        therein or necessary to make the statements therein not misleading to the
        extent, but only to the extent that, (1) such untrue statements or omissions
        are
        based solely upon information regarding such Holder furnished in writing
        to the
        Company by 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 and expressly approved
        in writing by such Holder expressly for use in the Registration Statement
        (it
        being understood that the Holder has approved 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
        an Advice or an amended or supplemented Prospectus, but only if and to the
        extent that following the receipt of the Advice or the amended or supplemented
        Prospectus the misstatement or omission giving rise to such Loss would have
        been
        corrected. In no event shall the liability of any selling Holder hereunder
        be
        greater in amount than the dollar amount of the net proceeds received by
        such
        Holder upon the sale of the Registrable Securities giving rise to such
        indemnification obligation.

       

      (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 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 it shall
        be
        finally determined by a court of competent jurisdiction (which determination
        is
        not subject to appeal or further review) that such failure shall have
        proximately and materially adversely prejudiced the Indemnifying
        Party.

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

      An
        Indemnified Party shall have the right to employ separate counsel in any
        such
        Proceeding and to participate in 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 promptly to assume
        the
        defense of such Proceeding 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 that a conflict of interest is likely to 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 such counsel shall be at the expense of the Indemnifying Party). The
        Indemnifying Party shall not be liable for any settlement of any such Proceeding
        effected without its written consent, which consent shall not be unreasonably
        withheld. 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
        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
        Proceeding in a manner not inconsistent with this Section) shall be paid
        to the
        Indemnified Party, as incurred, within ten Trading Days of written notice
        thereof to the Indemnifying Party (regardless of whether it is ultimately
        determined that an Indemnified Party is not entitled to indemnification
        hereunder; provided, that the Indemnifying Party may require such Indemnified
        Party to undertake to reimburse all such fees and expenses to the extent
        it is
        finally judicially determined that such Indemnified Party is not entitled
        to
        indemnification hereunder).

       

      (d)    Contribution.
        If a
        claim for indemnification under Section 5(a) or 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.

       

      
        
           

        

        
          9

          
            

          

        

        
           

        

      

      The
        parties hereto agree that it would not be just and equitable if contribution
        pursuant to this 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 the immediately preceding paragraph.
        Notwithstanding the provisions of this Section 5(d), no Holder shall be required
        to contribute, in the aggregate, 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.

       

      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.

       

      
        	 	
                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, including recovery of damages, 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 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.
        Except
        as and to the extent specified in Schedule
        3.1(v)
        to the
        Purchase Agreement, neither the Company nor any of its security holders (other
        than the Holders in such capacity pursuant hereto) may include securities
        of the
        Company in a Registration Statement other than the Registrable Securities,
        and
        the Company shall not during the Effectiveness Period enter into any agreement
        providing any such right to any of its security holders.

       

      (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.

       

      
        
           

        

        
          10

          
            

          

        

        
           

        

      

      (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)    Piggy-Back
        Registrations.
        If at
        any time during the Effectiveness Period there is not an effective Registration
        Statement covering all of the Registrable Securities 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 written notice of such determination and, if within
        fifteen days after receipt of such notice, any such Holder shall so request
        in
        writing, the Company shall include in such registration statement all or
        any
        part of such Registrable Securities such holder requests to be registered,
        subject to customary underwriter cutbacks applicable to all holders of
        registration rights.

       

      (f)
    Amendments
        and Waivers.
        The
        provisions of this Agreement, including the provisions of this Section 6(f),
        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 no less than a majority in interest
        of the then outstanding Registrable Securities. Notwithstanding the foregoing,
        a
        waiver or consent to depart from the provisions hereof with respect to a
        matter
        that relates exclusively to the rights of certain Holders and that does not
        directly or indirectly affect the rights of other Holders may be given by
        Holders of at least a majority of the Registrable Securities to which such
        waiver or consent relates.

       

      (g)    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 (a) the date of transmission, if such notice or communication
        is delivered via facsimile (provided the sender receives a machine-generated
        confirmation of successful transmission) at the facsimile number specified
        in
        this Section or via electronic mail, prior to 6:30 p.m. (New York City time)
        on
        a Trading Day, (b) the next Trading Day after the date of transmission of
        the
        facsimile or electronic mail, if such notice or communication is delivered
        via
        facsimile at the facsimile number specified in this Section on a day that
        is not
        a Trading Day or later than 6:30 p.m. (New York City time) on any Trading
        Day,
        (c) the Trading Day following the date of mailing, if sent by U.S. nationally
        recognized overnight courier service, or (d) upon actual receipt by the party
        to
        whom such notice is required to be given. The address for such notices and
        communications shall be as follows:

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

      
        	 	
                If
                  to the Company:

              	
                Welund
                  Fund, Inc.

              

      

      1940
        Zinfandel Drive, Suite R

      Rancho
        Cordova, California 95670

      Facsimile:
        (916) 791-0289

      Attn.:
        Steven Strasser, President

      

      
        	 	
                With
                  a copy to:

              	
                Bullivant
                  Houser Bailey PC

              

      

      1415
        L
        Street, Suite 1000

      Sacramento,
        CA 95814

      Facsimile:
        (916) 930-2501

      Attn.:
        David C. Adams, Esq.

       

      
        	 	
                If
                  to a Investor: 

              	
                To
                  the address set forth under such Investor's name on the signature
                  pages
                  hereto.

              

      

       

      If
        to any
        other Person who is then the registered Holder:

       

      To
        the
        address of such Holder as it appears in the stock transfer books of the
        Company

       

      or
        such
        other address as may be designated in writing hereafter, in the same manner,
        by
        such Person.

       

      (h)    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. The Company may not assign its rights or obligations hereunder without
        the prior written consent of each Holder. Each Holder may assign their
        respective rights hereunder in the manner and to the Persons as permitted
        under
        the Purchase Agreement.

       

      (i)
    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.

       

      (j)
    Governing
        Law.
        All
        questions concerning the construction, validity, enforcement and interpretation
        of this Agreement shall be governed by and construed and enforced in accordance
        with the internal laws of the State of New York, without regard to the
        principles of conflicts of law thereof. Each party agrees that all Proceedings
        concerning the interpretations, enforcement and defense of the transactions
        contemplated by this Agreement (whether brought against a party hereto or
        its
        respective Affiliates, employees or agents) will be commenced in the New
        York
        Courts. Each party hereto hereby irrevocably submits to the exclusive
        jurisdiction of the New York Courts 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 Proceeding, any claim that it is not personally subject to the jurisdiction
        of any New York Court, or that such Proceeding has been commenced in an improper
        or inconvenient forum. Each party hereto hereby irrevocably waives personal
        service of process and consents to process being served in any such Proceeding
        by mailing a copy thereof via registered or certified mail or overnight delivery
        (with evidence of delivery) to such party at the address in effect for 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. Each party hereto hereby irrevocably waives, to the fullest
        extent permitted by applicable law, any and all right to trial by jury in
        any
        Proceeding arising out of or relating to this Agreement or the transactions
        contemplated hereby. If either party shall commence a Proceeding to enforce
        any
        provisions of this Agreement, then the prevailing party in such Proceeding
        shall
        be reimbursed by the other party for its attorney’s fees and other costs and
        expenses incurred with the investigation, preparation and prosecution of
        such
        Proceeding.

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

      (k)    Cumulative
        Remedies.
        The
        remedies provided herein are cumulative and not exclusive of any remedies
        provided by law.

       

      (l)
    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 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.

       

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

       

      (n)    Independent
        Nature of Investors' Obligations and Rights.
        The
        obligations of each Investor under this Agreement are several and not joint
        with
        the obligations of each other Investor, and no Investor shall be responsible
        in
        any way for the performance of the obligations of any other Investor under
        this
        Agreement. Nothing contained herein or in any Transaction Document, and no
        action taken by any Investor pursuant thereto, shall be deemed to constitute
        the
        Investors as a partnership, an association, a joint venture or any other
        kind of
        entity, or create a presumption that the Investors are in any way acting
        in
        concert or as a group with respect to such obligations or the transactions
        contemplated by this Agreement or any other Transaction Document. Each Investor
        acknowledges that no other Investor will be acting as agent of such Investor
        in
        enforcing its rights under this Agreement. Each Investor 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 for any
        other Investor to be joined as an additional party in any Proceeding for
        such
        purpose. The Company acknowledges that each of the Investors has been provided
        with the same Registration Rights Agreement for the purpose of closing a
        transaction with multiple Investors and not because it was required or requested
        to do so by any Investor.

       

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        PAGES TO FOLLOW]

      

       

      

       

      

       

      

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

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

       

      
        	 	
                WELUND
                  FUND, INC.

              
	 	 	 
	 	 	 
	 	
                By:

              	
                /s/
                  Terrell W.
                  Smith                                 
                  

              
	 	 	
                Name:
                  Terrell W. Smith

              
	 	 	
                Title:
                  Vice President

              

      

      

      

      

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK

      SIGNATURE
        PAGES OF INVESTORS TO FOLLOW]

       

       

      

       

       

      

       

       

       

       

       

       

      

       

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

       

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

       

      

      
        	 	
                NAME
                  OF INVESTING ENTITY

              
	 	 
	 	
                _____________________________________________________________

              
	 	 
	 	
                By:
                  __________________________________________________________

              
	 	
                Name:

              
	 	
                Title:

              
	 	 
	 	
                ADDRESS
                  FOR NOTICE

              
	 	 
	 	
                c/o:
                   _________________________________________________________

              
	 	 
	 	
                Street:
                   _______________________________________________________

              
	 	 
	 	
                City/State/Zip:
                   _________________________________________________

              
	 	 
	 	
                Attention:
                  _____________________________________________________

              
	 	 
	 	
                Tel:
                   _________________________________________________________

              
	 	 
	 	
                Fax:
                  _________________________________________________________

              
	 	 
	 	
                Email:
                  ________________________________________________________

              

      

      

      

       

      

       

      

       

      

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      Annex
        A

       

      Plan
        of
        Distribution

       

      The
        Selling Stockholders and any of their pledgees, donees, transferees, 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 Investors;

              

      

       

      
        	
                ·

              	
                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;

              

      

       

      
        	
                ·

              	
                to
                  cover short sales made after the date that this Registration Statement
                  is
                  declared effective by the Commission;

              

      

       

      
        	
                ·

              	
                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 pursuant to 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 or discounts
        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 and discounts 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 owned by them and, if they default in the
        performance of their secured obligations, the pledgees or secured parties
        may
        offer and sell 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 pledgee, transferee or other successors in interest
        as selling stockholders under this prospectus.

       

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

      

      Upon
        the
        Company being notified in writing by a Selling Stockholder that any material
        arrangement has been entered into with a broker-dealer for the sale of Common
        Stock through a block trade, special offering, exchange distribution or
        secondary distribution or a purchase by a broker or dealer, a supplement
        to this
        prospectus will be filed, if required, pursuant to Rule 424(b) under the
        Securities Act, disclosing (i) the name of each such Selling Stockholder
        and of
        the participating broker-dealer(s), (ii) the number of shares involved, (iii)
        the price at which such the shares of Common Stock were sold, (iv)the
        commissions paid or discounts or concessions allowed to such broker-dealer(s),
        where applicable, (v) that such broker-dealer(s) did not conduct any
        investigation to verify the information set out or incorporated by reference
        in
        this prospectus, and (vi) other facts material to the transaction. In addition,
        upon the Company being notified in writing by a Selling Stockholder that
        a donee
        or pledgee intends to sell more than 500 shares of Common Stock, a supplement
        to
        this prospectus will be filed if then required in accordance with applicable
        securities law.

       

      The
        Selling Stockholders also may transfer the shares of Common Stock in other
        circumstances, in which case the transferees, pledgees or other successors
        in
        interest will be the selling beneficial owners for purposes of 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 or
        discounts under the Securities Act. Discounts, concessions, commissions and
        similar selling expenses, if any, that can be attributed to the sale of the
        securities will be paid by the Selling Stockholder and/or the purchasers.
        Each
        Selling Stockholder has represented and warranted to the Company that it
        acquired the securities subject to this registration statement in the ordinary
        course of such Selling Stockholder’s business and, at the time of its purchase
        of such securities such Selling Stockholder had no agreements or understandings,
        directly or indirectly, with any person to distribute any such securities.
        

       

      The
        Company has advised each Selling Stockholder that it may not use shares
        registered on this Registration Statement to cover short sales of Common
        Stock
        made prior to the date on which this Registration Statement shall have been
        declared effective by the Commission. If a Selling Stockholder uses this
        prospectus for any sale of the Common Stock, it will be subject to the
        prospectus delivery requirements of the Securities Act. The Selling Stockholders
        will be responsible to comply with the applicable provisions of the Securities
        Act and Exchange Act, and the rules and regulations thereunder promulgated,
        including, without limitation, Regulation M, as applicable to such Selling
        Stockholders in connection with resales of their respective shares under
        this
        Registration Statement.

       

      The
        Company is required to pay all fees and expenses incident to the registration
        of
        the shares, but the Company will not receive any proceeds from the sale of
        the
        Common Stock. The Company has agreed to indemnify the Selling Stockholders
        against certain losses, claims, damages and liabilities, including liabilities
        under the Securities Act. 

       

      
        
           

        

        
          17

          
            

          

        

        
           

        

      

      Annex
        B

       

      WELUND
        FUND, INC.

       

      Selling
        Securityholder Notice and Questionnaire

       

      The
        undersigned beneficial owner of common stock (the “Common
        Stock”),
        of
        Welund Fund, Inc., a Nevada corporation (the “Company”)
        understands that the Company has filed or intends to file with the Securities
        and Exchange Commission (the “Commission”)
        a
        Registration Statement for the registration and resale of the Registrable
        Securities, in accordance with the terms of the Registration Rights Agreement,
        dated as of September __, 2006 (the “Registration
        Rights Agreement”),
        among
        the Company and the Investors named therein. A copy of the Registration Rights
        Agreement is available from the Company upon request at the address set forth
        below. All capitalized terms used and not otherwise defined herein shall
        have
        the meanings ascribed thereto in the Registration Rights Agreement.

       

      The
        undersigned hereby provides the following information to the Company and
        represents and warrants that such information is accurate:

       

      QUESTIONNAIRE

       

      

        
          	
                  1.

                	
                  Name.

                

        

         

        
          	 	
                  (a)

                	
                  Full
                    Legal Name of Selling Securityholder

                

          	 	 	 

                  

                

        

        
          	 	
                  (b)

                	
                  Full
                    Legal Name of Registered Holder (if not the same as (a) above)
                    through
                    which Registrable Securities Listed in Item 3 below are
                    held:

                

          	 	 	 

                  

                

        

        
          	 	
                  (c)

                	
                  Full
                    Legal Name of Natural Control Person (which means a natural person
                    who
                    directly or indirectly alone or with others has power to vote
                    or dispose
                    of the securities covered by the
                    questionnaire):

                

          	 	 	 

                  

                

        

         

      

      2.
        Address for Notices to Selling Securityholder:

       

      
        	
                
 
	
                
 
	
                
 
	
                Telephone: 
                  
                  

                
Fax:

                

                Contact Person:

                

              

      

      

      
        
           

        

        
          18

          
            

          

        

        
           

        

      

      3.
        Beneficial Ownership of Registrable Securities:

      

        
          	 	 	
                  Type
                    and Principal Amount of Registrable Securities beneficially
                    owned:

                

          	 	 	 

          	 	 	
                   

                  
                    

                  

                   

                  
                    

                  

                   

                  
                    
  

                  
                  

                

        

         

      

       

      4.
        Broker-Dealer Status:

       

      
        	 	
                (a)

              	
                Are
                  you a broker-dealer?

              

      

       

      Yes
r     No
r

       

      
        	 	
                Note:

              	
                If
                  yes, the Commission’s staff has indicated that you should be identified as
                  an underwriter in the Registration
                  Statement.

              

      

       

      
        	 	
                (b)

              	
                Are
                  you an affiliate of a
                  broker-dealer?

              

      

      
         

        Yes
r     No
r

      

       

      
        	 	
                (c)

              	
                If
                  you are an affiliate of a broker-dealer, do you certify that you
                  bought
                  the Registrable Securities in the ordinary course of business,
                  and at the
                  time of the purchase of the Registrable Securities to be resold,
                  you had
                  no agreements or understandings, directly or indirectly, with any
                  person
                  to distribute the Registrable
                  Securities?

              

      

       

      
        Yes
r     No
r

      

       

      
        	 	
                Note:

              	
                If
                  no, the Commission’s staff has indicated that you should be identified as
                  an underwriter in the Registration
                  Statement.

              

      

       

      5.
        Beneficial Ownership of Other Securities of the Company Owned by the Selling
        Securityholder.

       

      Except
        as set forth below in this Item 5, the undersigned is not the beneficial
        or
        registered owner of any securities of the Company other than the Registrable
        Securities listed above in Item 3.

       

      
        	 	
                Type
                  and Amount of Other Securities beneficially owned by the Selling
                  Securityholder:

              

        	
                 

              	
                 

              

        	 	
                 

                  

                

                 

                
                  
 

                
                  

                

              

      

       

      

      
        
           

        

        
          19

          
            

          

        

        
           

        

      

      6.
        Relationships with the Company:

       

      Except
        as set forth below, neither the undersigned nor any of its affiliates, officers,
        directors or principal equity holders (owners of 5% of more of the equity
        securities of the undersigned) has held any position or office or has had
        any
        other material relationship with the Company (or its predecessors or affiliates)
        during the past three years.

       

      State
        any
        exceptions here:

       

      
        	
              	
                 

              	
                
                  
 

                  

                

              

      

       

      The
        undersigned agrees to promptly notify the Company of any inaccuracies or
        changes
        in the information provided herein that may occur subsequent to the date
        hereof
        and prior to the Effective Date for the Registration Statement.

       

      By
        signing below, the undersigned consents to the disclosure of the information
        contained herein in its answers to Items 1 through 6 and the inclusion of
        such
        information in the Registration Statement and the related prospectus. The
        undersigned understands that such information will be relied upon by the
        Company
        in connection with the preparation or amendment of the Registration Statement
        and the related prospectus.

       

      IN
        WITNESS WHEREOF the undersigned, by authority duly given, has caused this
        Notice
        and Questionnaire to be executed and delivered either in person or by its
        duly
        authorized agent.

       

      
        	
                Dated:_____________________________________

              	
                Beneficial
                  Owner:_______________________________________________

              
	 	 
	 	
                By:__________________________________________________________

              
	 	
                Name:

              
	 	
                Title:

              

      

      

      PLEASE
        FAX A COPY OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN
        THE ORIGINAL BY OVERNIGHT MAIL, TO:

      

      
        	 	
                Bullivant
                  Houser Bailey PC

              
	 	
                1415
                  L Street, Suite 1000

              
	 	
                Sacramento,
                  CA 95814

              
	 	
                Facsimile:
                  (916) 930-2501

              
	 	
                Attn.:
                  David C. Adams, Esq.

              

      

      

       

      

       

      
        20Exhibit 11 (10.8) - Roth Capital Warrant

    
      

      

    

    
      Exhibit
        10.8

       

      NEITHER
        THESE SECURITIES NOR THE SECURITIES ISSUABLE UPON EXERCISE OF THESE SECURITIES
        HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
        SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
        REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
        ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
        EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO
        AN
        AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
        REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
        SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR
        TO
        SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
        COMPANY. THESE SECURITIES AND THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
        SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT SECURED
        BY SUCH SECURITIES. 

       

      

       

      WELUND
        FUND, INC.

       

      WARRANT

       

      
        	
                Warrant
                  No. 1-2006

              	
                Original
                  Issue Date: October 4, 2006

              

      

       

      Welund
        Fund, Inc., a Nevada corporation (the "Company"),
        hereby
        certifies that, as partial compensation for placement agent services, Roth
        Capital Partners, LLC or its registered assigns (the "Holder"),
        is
        entitled to purchase from the Company up to a total of 800,000 shares of
        Common
        Stock on a post 1 for 3 reverse stock split basis (each such share, a
"Warrant
        Share"
        and all
        such shares, the "Warrant
        Shares"),
        at any
        time and from time to time from and after the Original Issue Date and through
        and including October 4, 2011 (the "Expiration
        Date"),
        and
        subject to the following terms and conditions:

       

      1.    Definitions.
        As used
        in this Warrant, the following terms shall have the respective definitions
        set
        forth in this Section 1. 

       

      "Affiliate"
        means
        any Person that, directly or indirectly through one or more intermediaries,
        controls or is controlled by or is under common control with a Person, as
        such
        terms are used in and construed under Rule 144.

       

      "Business
        Day"
        means
        any day except Saturday, Sunday and any day that is a federal legal holiday
        in
        the United States or a day on which banking institutions in the State of
        New
        York are authorized or required by law or other government action to
        close.

       

      "Common
        Stock"
        means
        the common stock of the Company, no par value per share, and any securities
        into
        which such common stock may hereafter be reclassified.

       

      "Exchange
        Act"
        means
        the Securities Exchange Act of 1934, as amended. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      "Exercise
        Price" means
        $1.15, subject to adjustment in accordance with Section 9.

       

      "Fundamental
        Transaction"
        means
        any of the following: (1) the Company effects any merger or consolidation
        of the
        Company with or into another Person, (2) the Company effects any sale of
        all or
        substantially all of its assets in one or a series of related transactions,
        (3)
        any tender offer or exchange offer (whether by the Company or another Person)
        is
        completed pursuant to which holders of Common Stock are permitted to tender
        or
        exchange their shares for other securities, cash or property, or (4) the
        Company
        effects any reclassification of the Common Stock or any compulsory share
        exchange pursuant to which the Common Stock is effectively converted into
        or
        exchanged for other securities, cash or property.

       

      “New
        York Courts”
        means
        the state and federal courts sitting in the City of New York, Borough of
        Manhattan.

       

      “Original
        Issue Date”
        means
        the Original Issue Date first set forth on the first page of this
        Warrant.

       

      "Person"
        means an
        individual or corporation, partnership, trust, incorporated or unincorporated
        association, joint venture, limited liability company, joint stock company,
        government (or an agency or subdivision thereof) or other entity of any
        kind.

       

      "Rule
        144"
        means
        Rule 144 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 (other
        than
        the OTC Bulletin Board), or (ii) if the Common Stock is not listed on a Trading
        Market (other than the OTC Bulletin Board), a day on which the Common Stock
        is
        traded in the over-the-counter market, as reported by the OTC Bulletin Board,
        or
        (iii) if the Common Stock is not quoted on any 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 prices); provided, that in the event
        that the Common Stock is not listed or quoted as set forth in (i), (ii) and
        (iii) hereof, then Trading Day shall mean a Business Day.

       

      “Trading
        Market”
        means
        whichever of the New York Stock Exchange, the American Stock Exchange, the
        NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital
        Market
        or OTC Bulletin Board on which the Common Stock is listed or quoted for trading
        on the date in question.

       

      "Warrant
        Shares" means
        the
        shares of Common Stock issuable upon exercise of this Warrant.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

      2.    Registration
        of Warrant.
        The
        Company shall register this Warrant upon records to be maintained by the
        Company
        for that purpose (the "Warrant
        Register"),
        in the
        name of the record Holder hereof from time to time. The Company may deem
        and
        treat the registered Holder of this Warrant as the absolute owner hereof
        for the
        purpose of any exercise hereof or any distribution to the Holder, and for
        all
        other purposes, absent actual notice to the contrary.

       

      3.    Registration
        of Transfers.
        This
        Warrant and the Warrant Shares may be transferred only in accordance with
        the
        Securities Act and the rules and regulations promulgated thereunder. In order
        to
        enable the Company to comply with the Securities Act and applicable state
        laws,
        the Company may require the Holder as a condition to the transfer of this
        Warrant to give customary written assurances to the Company that the transferee
        is acquiring the Warrant for its own account, with no view to the distribution
        of the same, and that any disposition of all or any portion of this Warrant
        or
        the Warrant Shares shall not be made, unless:

       

      (a)    pursuant
        to an effective registration statement under the Securities Act covering
        such
        proposed disposition and such disposition is made in accordance with such
        registration statement; or

       

      (b)    (i)
        the
        Holder has provided written notice to the Company of the proposed disposition,
        and (ii) the Holder has furnished the Company with an opinion of counsel,
        reasonably satisfactory to the Company, that such disposition will not require
        registration of such securities under the Securities Act.

       

      Upon
        satisfaction of the conditions set forth in this Section 3, the Company shall
        register the transfer of any portion of this Warrant in the Warrant Register,
        upon surrender of this Warrant, with the Form of Assignment attached hereto
        duly
        completed and signed, to the Company at its address specified herein. Upon
        any
        such registration or transfer, a new Warrant to purchase Common Stock, in
        substantially the form of this Warrant (any such new Warrant, a "New
        Warrant"),
        evidencing the portion of this Warrant so transferred shall be issued to
        the
        transferee and a New Warrant evidencing the remaining portion of this Warrant
        not so transferred, if any, shall be issued to the transferring Holder. The
        acceptance of the New Warrant by the transferee thereof shall be deemed the
        acceptance by such transferee of all of the rights and obligations of a holder
        of a Warrant. 

       

      4.    Exercise
        and Duration of Warrants.
        This
        Warrant shall be exercisable by the registered Holder at any time and from
        time
        to time on or after the Original Issue Date through and including the Expiration
        Date. At 5:30 p.m., California time on the Expiration Date, the portion of
        this
        Warrant not exercised prior thereto shall be and become void and of no value.
        The Company may not call or redeem any portion of this Warrant without the
        prior
        written consent of the affected Holder. 

       

      
        	 	
                5.

              	
                Delivery
                  of Warrant Shares.

              

      

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

      (a)    To
        effect
        exercises hereunder, the Holder shall not be required to physically surrender
        this Warrant unless the aggregate Warrant Shares represented by this Warrant
        is
        being exercised. Upon delivery of the Exercise Notice (in the form attached
        hereto) to the Company (with the attached Warrant Shares Exercise Log) at
        its
        address for notice set forth herein and upon payment of the Exercise Price
        multiplied by the number of Warrant Shares that the Holder intends to purchase
        hereunder, the Company shall promptly (but in no event later than three Trading
        Days after the Date of Exercise (as defined herein)) issue and deliver to
        the
        Holder, a certificate for the Warrant Shares issuable upon such exercise.
        The
        Company shall, upon request of the Holder and subsequent to the date on which
        a
        registration statement covering the resale of the Warrant Shares has been
        declared effective by the Commission, use its reasonable best efforts to
        deliver
        Warrant Shares hereunder electronically through the Depository Trust Corporation
        or another established clearing corporation performing similar functions,
        if
        available, provided,
        that,
        the Company may, but will not be required to change its transfer agent if
        its
        current transfer agent cannot deliver Warrant Shares electronically through
        the
        Depository Trust Corporation. A "Date
        of Exercise"
        means
        the date on which the Holder shall have delivered to the Company: (i) the
        Exercise Notice (with the Warrant Exercise Log attached to it), appropriately
        completed and duly signed and (ii) if such Holder is not utilizing the cashless
        exercise provisions set forth in this Warrant, payment of the Exercise Price
        for
        the number of Warrant Shares so indicated by the Holder to be
        purchased.

       

      (b)    If
        by the
        third Trading Day after a Date of Exercise the Company fails to deliver the
        required number of Warrant Shares in the manner required pursuant to Section
        5(a), then the Holder will have the right to rescind such exercise.

       

      (c)    If
        by the
        third Trading Day after a Date of Exercise the Company fails to deliver the
        required number of Warrant Shares in the manner required pursuant to Section
        5(a), and if after such third Trading Day and prior to the receipt of such
        Warrant Shares, the Holder purchases (in an open market transaction or
        otherwise) shares of Common Stock to deliver in satisfaction of a sale by
        the
        Holder of the Warrant Shares which the Holder anticipated receiving upon
        such
        exercise (a "Buy-In"),
        then
        the Company shall (1) pay in cash to the Holder the amount by which (x) the
        Holder's total purchase price (including brokerage commissions, if any) for
        the
        shares of Common Stock so purchased exceeds (y) the amount obtained by
        multiplying (A) the number of Warrant Shares that the Company was required
        to
        deliver to the Holder in connection with the exercise at issue by (B) the
        closing bid price of the Common Stock on the Date of Exercise and (2) at
        the
        option of the Holder, either reinstate the portion of the Warrant and equivalent
        number of Warrant Shares for which such exercise was not honored or deliver
        to
        the Holder the number of shares of Common Stock that would have been issued
        had
        the Company timely complied with its exercise and delivery obligations
        hereunder. The Holder shall provide the Company written notice indicating
        the
        amounts payable to the Holder in respect of the Buy-In. 

       

      (d)    The
        Company's obligations to issue and deliver Warrant Shares in accordance with
        the
        terms hereof are absolute and unconditional, irrespective of any action or
        inaction by the Holder to enforce the same, any waiver or consent with respect
        to any provision hereof, the recovery of any judgment against any Person
        or any
        action to enforce the same, or any setoff, counterclaim, recoupment, limitation
        or termination, or any breach or alleged breach by the Holder or any other
        Person of any obligation to the Company or any violation or alleged violation
        of
        law by the Holder or any other Person, and irrespective of any other
        circumstance which might otherwise limit such obligation of the Company to
        the
        Holder in connection with the issuance of Warrant Shares. Nothing herein
        shall
        limit a Holder's right to pursue any other remedies available to it hereunder,
        at law or in equity including, without limitation, a decree of specific
        performance and/or injunctive relief with respect to the Company's failure
        to
        timely deliver certificates representing Warrant Shares upon exercise of
        the
        Warrant as required pursuant to the terms hereof.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      6.    Charges,
        Taxes and Expenses.
        Issuance and delivery of Warrant Shares upon exercise of this Warrant shall
        be
        made without charge to the Holder for any issue or transfer tax, withholding
        tax, transfer agent fee or other incidental tax or expense in respect of
        the
        issuance of such certificates, all of which taxes and expenses shall be paid
        by
        the Company; provided, however, that the Company shall not be required to
        pay
        any tax which may be payable in respect of any transfer involved in the
        registration of any certificates for Warrant Shares or Warrants in a name
        other
        than that of the Holder. The Holder shall be responsible for all other tax
        liability that may arise as a result of holding or transferring this Warrant
        or
        receiving Warrant Shares upon exercise hereof.

       

      7.    Replacement
        of Warrant.
        If this
        Warrant is mutilated, lost, stolen or destroyed, the Company shall issue
        or
        cause to be issued in exchange and substitution for and upon cancellation
        hereof, or in lieu of and substitution for this Warrant, a New Warrant, but
        only
        upon receipt of evidence reasonably satisfactory to the Company of such loss,
        theft or destruction and customary and reasonable indemnity (which shall
        not
        include a surety bond), if requested. Applicants for a New Warrant under
        such
        circumstances shall also comply with such other reasonable regulations and
        procedures and pay such other reasonable third-party costs as the Company
        may
        prescribe. If a New Warrant is requested as a result of a mutilation of this
        Warrant, then the Holder shall deliver such mutilated Warrant to the Company
        as
        a condition precedent to the Company’s obligation to issue the New
        Warrant.

       

      8.    Reservation
        of Warrant Shares.
        The
        Company covenants that it will at all times reserve and keep available out
        of
        the aggregate of its authorized but unissued and otherwise unreserved Common
        Stock, solely for the purpose of enabling it to issue Warrant Shares upon
        exercise of this Warrant as herein provided, the number of Warrant Shares
        which
        are then issuable and deliverable upon the exercise of this entire Warrant,
        free
        from preemptive rights or any other contingent purchase rights of Persons
        other
        than the Holder (taking into account the adjustments and restrictions of
        Section
        9).
        The
        Company covenants that all Warrant Shares so issuable and deliverable shall,
        upon issuance and the payment of the applicable Exercise Price in accordance
        with the terms hereof, be duly and validly authorized, issued and fully paid
        and
        nonassessable.

       

      9.    Certain
        Adjustments.
        The
        Exercise Price and number of Warrant Shares issuable upon exercise of this
        Warrant are subject to adjustment from time to time as set forth in this
        Section
        9.

       

      (a)    Stock
        Dividends and Splits.
        If the
        Company, at any time while this Warrant is outstanding, (i) pays a stock
        dividend on its Common Stock or otherwise makes a distribution on any class
        of
        capital stock that is payable in shares of Common Stock, (ii) subdivides
        outstanding shares of Common Stock into a larger number of shares, or (iii)
        combines outstanding shares of Common Stock into a smaller number of shares,
        then in each such case the Exercise Price shall be multiplied by a fraction
        of
        which the numerator shall be the number of shares of Common Stock outstanding
        immediately before such event and of which the denominator shall be the number
        of shares of Common Stock outstanding immediately after such event. Any
        adjustment made pursuant to clause (i) of this paragraph shall become effective
        immediately after the record date for the determination of stockholders entitled
        to receive such dividend or distribution, and any adjustment pursuant to
        clause
        (ii) or (iii) of this paragraph shall become effective immediately after
        the
        effective date of such subdivision or combination.

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      (b)    Fundamental
        Transactions.
        If, at
        any time while this Warrant is outstanding there is a Fundamental Transaction,
        then the Holder shall have the right thereafter to receive, upon exercise
        of
        this Warrant, the same amount and kind of securities, cash or property as
        it
        would have been entitled to receive upon the occurrence of such Fundamental
        Transaction if it had been, immediately prior to such Fundamental Transaction,
        the holder of the number of Warrant Shares then issuable upon exercise in
        full
        of this Warrant (the "Alternate
        Consideration").
        For
        purposes of any such exercise, the determination of the Exercise Price shall
        be
        appropriately adjusted to apply to such Alternate Consideration based on
        the
        amount of Alternate Consideration issuable in respect of one share of Common
        Stock in such Fundamental Transaction, and the Company shall apportion the
        Exercise Price among the Alternate Consideration in a reasonable manner
        reflecting the relative value of any different components of the Alternate
        Consideration. If holders of Common Stock are given any choice as to the
        securities, cash or property to be received in a Fundamental Transaction,
        then
        the Holder shall be given the same choice as to the Alternate Consideration
        it
        receives upon any exercise of this Warrant following such Fundamental
        Transaction. At the Holder's option and request, any successor to the Company
        or
        surviving entity in such Fundamental Transaction shall issue to the Holder
        a new
        warrant substantially in the form of this Warrant and consistent with the
        foregoing provisions and evidencing the Holder's right to purchase the Alternate
        Consideration for the aggregate Exercise Price upon exercise thereof. The
        terms
        of any agreement pursuant to which a Fundamental Transaction is effected
        shall
        include terms requiring any such successor or surviving entity to comply
        with
        the provisions of this paragraph (b) and insuring that the Warrant (or any
        such
        replacement security) will be similarly adjusted upon any subsequent transaction
        analogous to a Fundamental Transaction. 

       

      (c)    Number
        of Warrant Shares.
        Simultaneously with any adjustment to the Exercise Price pursuant to this
        Section 9, the number of Warrant Shares that may be purchased upon exercise
        of
        this Warrant shall be increased or decreased proportionately, so that after
        such
        adjustment the aggregate Exercise Price payable hereunder for the adjusted
        number of Warrant Shares shall be the same as the aggregate Exercise Price
        in
        effect immediately prior to such adjustment.

       

      (d)    Calculations.
        All
        calculations under this Section
        9
        shall be
        made to the nearest cent or the nearest 1/100th
        of a
        share, as applicable. The number of shares of Common Stock outstanding at
        any
        given time shall not include shares owned or held by or for the account of
        the
        Company, and the disposition of any such shares shall be considered an issue
        or
        sale of Common Stock.

       

      (e)    Notice
        of Adjustments.
        Upon
        the occurrence of each adjustment pursuant to this Section
        9,
        the
        Company at its expense will promptly compute such adjustment in accordance
        with
        the terms of this Warrant and prepare a certificate setting forth such
        adjustment, including a statement of the adjusted Exercise Price and adjusted
        number or type of Warrant Shares or other securities issuable upon exercise
        of
        this Warrant (as applicable), describing the transactions giving rise to
        such
        adjustments and showing in detail the facts upon which such adjustment is
        based.
        Upon written request, the Company will promptly deliver a copy of each such
        certificate to the Holder and to the Company's Transfer Agent.

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

      (f)
    Notice
        of Corporate Events.
        If the
        Company (i) declares a dividend or any other distribution of cash, securities
        or
        other property in respect of its Common Stock, including without limitation
        any
        granting of rights or warrants to subscribe for or purchase any capital stock
        of
        the Company, (ii) authorizes or approves, enters into any agreement
        contemplating or solicits stockholder approval for any Fundamental Transaction
        or (iii) authorizes the voluntary dissolution, liquidation or winding up
        of the
        affairs of the Company, then the Company shall deliver to the Holder a notice
        describing the material terms and conditions of such transaction (but only
        to
        the extent such disclosure would not result in the dissemination of material,
        non-public information to the Holder) at least 10 calendar days prior to
        the
        applicable record or effective date on which a Person would need to hold
        Common
        Stock in order to participate in or vote with respect to such transaction,
        and
        the Company will take all steps reasonably necessary in order to insure that
        the
        Holder is given the practical opportunity to exercise this Warrant prior
        to such
        time so as to participate in or vote with respect to such transaction; provided,
        however, that the failure to deliver such notice or any defect therein shall
        not
        affect the validity of the corporate action required to be described in such
        notice.

       

      10. 
          Payment
        of Exercise Price.
        The
        Holder may pay the Exercise Price in one of the following manners:

       

      (a)    Cash
        Exercise.
        The
        Holder may deliver immediately available funds; or

       

      (b)    Cashless
        Exercise.
        The
        Holder may notify the Company in an Exercise Notice of its election to utilize
        cashless exercise, in which event the Company shall issue to the Holder the
        number of Warrant Shares determined as follows:

       

      X
        = Y
        [(A-B)/A]

       

      where:

       

      X
        = the
        number of Warrant Shares to be issued to the Holder.

       

      Y
        = the
        number of Warrant Shares with respect to which this Warrant is being
        exercised.

       

      A
        = the
        average of the closing prices for the five Trading Days immediately prior
        to
        (but not including) the Date of Exercise.

       

      B
        = the
        Exercise Price.

       

      For
        purposes of Rule 144 promulgated under the Securities Act, it is intended,
        understood and acknowledged that the Warrant Shares issued in a cashless
        exercise transaction shall be deemed to have been acquired by the Holder,
        and
        the holding period for the Warrant Shares shall be deemed to have commenced,
        on
        the date this Warrant was originally issued.

       

      11.    Limitations
        on Exercise.
        Notwithstanding anything to the contrary contained herein, the number of
        Warrant
        Shares that may be acquired by the Holder upon any exercise of this Warrant
        (or
        otherwise in respect hereof) shall be limited to the extent necessary to
        insure
        that, following such exercise (or other issuance), the total number of shares
        of
        Common Stock then beneficially owned by such Holder and its Affiliates and
        any
        other Persons whose beneficial ownership of Common Stock would be aggregated
        with the Holder's for purposes of Section 13(d) of the Exchange Act, does
        not
        exceed 9.99% of the total number of issued and outstanding shares of Common
        Stock (including for such purpose the shares of Common Stock issuable upon
        such
        exercise). For such purposes, beneficial ownership shall be determined in
        accordance with Section 13(d) of the Exchange Act and the rules and regulations
        promulgated thereunder. This provision shall not restrict the number of shares
        of Common Stock which a Holder may receive or beneficially own in order to
        determine the amount of securities or other consideration that such Holder
        may
        receive in the event of a Fundamental Transaction as contemplated in Section
        9
        of this Warrant. This restriction may not be waived.

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

      12.    No
        Fractional Shares.
        No
        fractional shares of Warrant Shares will be issued in connection with any
        exercise of this Warrant. In lieu of any fractional shares which would,
        otherwise be issuable, the Company shall pay cash equal to the product of
        such
        fraction multiplied by the closing price of one Warrant Share as reported
        by the
        applicable Trading Market on the date of exercise.

       

      13.    Notices.
        Any and
        all notices or other communications or deliveries hereunder (including, without
        limitation, any Exercise Notice) shall be in writing and shall be deemed
        given
        and effective on the earliest of (i) the date of transmission, if such notice
        or
        communication is delivered via facsimile at the facsimile number specified
        in
        this Section prior to 5:30 p.m. (California time) on a Trading Day, (ii)
        the
        next Trading Day after the date of transmission, if such notice or communication
        is delivered via facsimile at the facsimile number specified in this Section
        on
        a day that is not a Trading Day or later than 5:30 p.m. (California time)
        on any
        Trading Day, (iii) the Trading Day following the date of mailing, if sent
        by
        nationally recognized overnight courier service, or (iv) upon actual receipt
        by
        the party to whom such notice is required to be given. The addresses for
        such
        communications shall be: (i) if to the Company, to 136 East South Temple,
        Suite
        2112, Salt Lake City, Utah 84111, Attn: President, or to Facsimile No.:
 (801)
        521-6325 (or such other address as the Company shall indicate in writing
        in
        accordance with this Section), or (ii) if to the Holder, to the address or
        facsimile number appearing on the Warrant Register or such other address
        or
        facsimile number as the Holder may provide to the Company in accordance with
        this Section.

       

      14.    Warrant
        Agent.
        The
        Company shall serve as warrant agent under this Warrant. Upon 10 days' notice
        to
        the Holder, the Company may appoint a new warrant agent. Any corporation
        into
        which the Company or any new warrant agent may be merged or any corporation
        resulting from any consolidation to which the Company or any new warrant
        agent
        shall be a party or any corporation to which the Company or any new warrant
        agent transfers substantially all of its corporate trust or shareholders
        services business shall be a successor warrant agent under this Warrant without
        any further act. Any such successor warrant agent shall promptly cause notice
        of
        its succession as warrant agent to be mailed (by first class mail, postage
        prepaid) to the Holder at the Holder's last address as shown on the Warrant
        Register.

       

      
        	 	
                15.

              	
                Miscellaneous.

              

      

       

      (a)    This
        Warrant shall be binding on and inure to the benefit of the parties hereto
        and
        their respective successors and assigns. Subject to the preceding sentence,
        nothing in this Warrant shall be construed to give to any Person other than
        the
        Company and the Holder any legal or equitable right, remedy or cause of action
        under this Warrant. This Warrant may be amended only in writing signed by
        the
        Company and the Holder and their successors and assigns.

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

      (b)    All
        questions concerning the construction, validity, enforcement and interpretation
        of this Warrant shall be governed by and construed and enforced in accordance
        with the internal laws of the State of New York, without regard to the
        principles of conflicts of law thereof. Each party agrees that all legal
        proceedings concerning the interpretations, enforcement and defense of this
        Warrant and the transactions herein contemplated (“Proceedings”)
        (whether brought against a party hereto or its respective Affiliates, employees
        or agents) shall be commenced exclusively in the New York Courts. Each party
        hereto hereby irrevocably submits to the exclusive jurisdiction of the New
        York
        Courts 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 Proceeding, any claim
        that
        it is not personally subject to the jurisdiction of any New York Court, or
        that
        such Proceeding has been commenced in an improper or inconvenient forum.
        Each
        party hereto hereby irrevocably waives personal service of process and consents
        to process being served in any such Proceeding by mailing a copy thereof
        via
        registered or certified mail or overnight delivery (with evidence of delivery)
        to such party at the address in effect for notices to it under this Warrant
        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. Each party hereto
        hereby irrevocably waives, to the fullest extent permitted by applicable
        law,
        any and all right to trial by jury in any legal proceeding arising out of
        or
        relating to this Warrant or the transactions contemplated hereby. If either
        party shall commence a Proceeding to enforce any provisions of this Warrant,
        then the prevailing party in such Proceeding shall be reimbursed by the other
        party for its attorney’s fees and other costs and expenses incurred with the
        investigation, preparation and prosecution of such Proceeding.

       

      (c)    The
        headings herein are for convenience only, do not constitute a part of this
        Warrant and shall not be deemed to limit or affect any of the provisions
        hereof.

       

      (d)    In
        case
        any one or more of the provisions of this Warrant shall be invalid or
        unenforceable in any respect, the validity and enforceability of the remaining
        terms and provisions of this Warrant shall not in any way be affected or
        impaired thereby and the parties will attempt in good faith to agree upon
        a
        valid and enforceable provision which shall be a commercially reasonable
        substitute therefor, and upon so agreeing, shall incorporate such substitute
        provision in this Warrant.

       

      (e)    Prior
        to
        exercise of this Warrant, the Holder hereof shall not, by reason of by being
        a
        Holder, be entitled to any rights of a stockholder with respect to the Warrant
        Shares.

       

      [REMAINDER
        OF PAGE INTENTIONALLY LEFT BLANK,

      SIGNATURE
        PAGE FOLLOWS]

       

      

       

      

       

      

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, the Company has caused this Warrant to be duly executed
        by its
        authorized officer as of the date first indicated above.

       

      
        	 	
                WELUND
                  FUND, INC.

              
	 	 
	 	 
	 	
                By:
                  /s/
                  Howard S.
                  Landa                                                       
                  

              
	 	
                Name:
                  Howard S. Landa

              
	 	
                Title:Secretary

              

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

      EXERCISE
        NOTICE

      WELUND
        FUND, INC.

      

      WARRANT
        NO. 1-2006 

      DATED
        OCTOBER 4, 2006

      

      The
        undersigned Holder hereby irrevocably elects to purchase _____________ shares
        of
        Common Stock pursuant to the above referenced Warrant. Capitalized terms
        used
        herein and not otherwise defined have the respective meanings set forth in
        the
        Warrant.

      

      
        	
                (1)

              	
                The
                  undersigned Holder hereby exercises its right to purchase
                  _________________ Warrant Shares pursuant to the
                  Warrant.

              

      

       

      
        	
                (2)

              	
                The
                  Holder intends that payment of the Exercise Price shall be made
                  as (check
                  one):

              

      

       

      ____ “Cash
        Exercise” under Section 10

       

      ____ “Cashless
        Exercise” under Section 10

       

      
        	
                (3)

              	
                If
                  the holder has elected a Cash Exercise, the holder shall pay the
                  sum of
                  $____________ to the Company in accordance with the terms of the
                  Warrant.

              

      

       

      
        	
                (4)

              	
                Pursuant
                  to this Exercise Notice, the Company shall deliver to the holder
                  _______________ Warrant Shares in accordance with the terms of
                  the
                  Warrant.

              

      

       

      
        	
                (5)

              	
                By
                  its delivery of this Exercise Notice, the undersigned represents
                  and
                  warrants to the Company that in giving effect to the exercise evidenced
                  hereby the Holder will not beneficially own in excess of the number
                  of
                  shares of Common Stock (determined in accordance with Section 13(d)
                  of the
                  Securities Exchange Act of 1934) permitted to be owned under Section
                  11 of
                  this Warrant to which this notice
                  relates.

              

      

      

      
        	
                (6)

              	
                By
                  its delivery of this Exercise Notice, the undersigned certifies
                  to the
                  Company that the Warrant Shares are being acquired for the sole
                  account of
                  the Holder and not with a view to or for distributing or reselling
                  such
                  Warrant Shares, without prejudice, however, to such Holder’s right at all
                  times to sell or otherwise dispose of all or any part of such Warrant
                  Shares in compliance with applicable federal and state securities
                  laws.

              

      

      

      
        	
                Dated:
                  _____________, ____

              	 	
                Name
                  of Holder:

              
	 	 	
                (Print)
                  _________________________________

              
	 	 	
                By: ___________________________________

              
	 	 	
                Name:
                   ________________________________

              
	 	 	
                Title:
                  __________________________________

              
	 	 	
                (Signature
                  must conform in all respects to name of holder as specified on
                  the face of
                  the Warrant)

              

      

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Warrant
        Shares Exercise Log

       

      
        	
                Date

              	
                Number
                  of Warrant

                Shares
                  Available to be

                Exercised

              	
                Number
                  of Warrant

                Shares

                Exercised

              	
                Number
                  of Warrant

                Shares
                  Remaining to be

                Exercised

              
	
                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

                 

              	 	 	 

      

      

       

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      WELUND
        FUND, INC.

      WARRANT
        ORIGINALLY ISSUED OCTOBER 4, 2006

      WARRANT
        NO. 1-2006

       

      FORM
        OF
        ASSIGNMENT

       

      [To
        be
        completed and signed only upon transfer of Warrant]

       

      FOR
        VALUE
        RECEIVED, the undersigned hereby sells, assigns and transfers unto
        ________________________________ the right represented by the above-captioned
        Warrant to purchase ____________ shares of Common Stock to which such Warrant
        relates and appoints ________________ attorney to transfer said right on
        the
        books of the Company with full power of substitution in the
        premises.

       

      Dated: _______________,
        ____

       

      

       

      
        	 	
                _____________________________________________

              
	 	
                (Signature
                  must conform in all respects to name of holder as specified on
                  the face of
                  the Warrant)

              
	 	 
	 	 
	 	
                
                  _____________________________________________

                

              
	 	
                Address
                  of Transferee

              
	 	 
	 	 
	 	
                
                  _____________________________________________

                

              
	 	
                 

                
                  _____________________________________________

                

              

      

      

       

      In
        the
        presence of:

       

       

      
        _____________________________________________

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