Exhibit 10.6

                          REGISTRATION RIGHTS AGREEMENT


      Registration  Rights  Agreement,  dated  as of  December  31,  2004  (this
"Agreement"),  by and among Advance Nanotech,  Inc., a Colorado corporation (the
"Company"), and the Purchasers (as defined below).


                              W I T N E S S E T H :

      WHEREAS,  the Company is offering (the  "Offering")  an aggregate of up to
Seven Million (7,000,000) shares of its Common Stock, par value $0.001 per share
(the "Common  Stock") and up to Three and One-Half  Million  (3,500,000)  of its
stock purchase warrants (the "Warrants"),  each Warrant to purchase one share of
the Common Stock (each such share underlying a Warrant,  a "Warrant Share") (the
securities  offered in the Offering being sometimes  hereinafter  referred to as
(the  "Securities"),  in each case subject to an up to 10%  overallotment at the
Company's sole discretion;

      WHEREAS,  the Company  desires to issue and sell to the persons  listed on
Schedule  A,  attached  hereto  (each  a  "Purchaser,"  and  collectively,   the
"Purchasers"),  the Securities as set forth in one or more  Securities  Purchase
Agreements  entered  into or to be entered  into by and  between the Company and
each Purchaser (the "Securities Purchase Agreement");

      WHEREAS,  the Company and the Purchasers have entered or will have entered
into a Securities Purchase Agreement;

      WHEREAS,   it  is  a  condition  precedent  to  the  consummation  of  the
transactions  contemplated by the Securities Purchase Agreement that the Company
provide for the rights set forth in this Agreement; and

      WHEREAS,  certain  terms used in this  Agreement  are defined in Section 3
hereof.

      NOW, THEREFORE,  in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter contained,  and for other good and valuable
consideration,  the receipt and  sufficiency  of which are hereby  acknowledged,
intending to be legally bound, the parties hereto hereby agree as follows:

      1 Registration Rights.

      1.1  Required  Registration.  The Company  shall use its  reasonable  best
efforts to accomplish the following:

            (x) prepare and file a "Required  Registration  Statement"  (as such
term is hereafter defined) with the SEC by the date (the "Required Filing Date")
which is not more than  sixty  (60) days  after  the  first  date to occur  (the
"Commencement  Date") of the  following  dates:  the Final Closing Date (as such
term is defined in the Securities  Purchase Agreement) or the termination of the
Offering, if there is no Final Closing Date; and

            (y) cause either of the following (the  "Effectiveness  Actions") to
occur by a date (the "Required  Effectiveness  Date") which is not more than one
hundred and twenty (120) days after the Commencement  Date: (A) cause the SEC to
declare the Required Registration Statement to be effective or (B) cause the SEC
to  communicate  to  the  Company,  orally  or in  writing,  that  the  Required
Registration  Statement  will  not be  reviewed  or that the  Commission  has no
further  comments  thereupon,  whereupon  the Company  shall cause the  Required
Registration Statement to be effective.

<PAGE>

The failure of the Company to file a Required  Registration  Statement  prior to
the Required  Filing Date,  or to cause either of the  Effectiveness  Actions to
occur  prior  to the  Required  Effectiveness  Date,  shall  be  deemed  to be a
"Non-Registration  Event".  As  used  in  this  Agreement,  the  term  "Required
Registration  Statement" shall mean a registration statement on Form SB-1 or any
successor  form,  or any other form selected by the Company that is available to
it under  the  Securities  Act  which  conforms  with all  applicable  rules and
regulations,  with respect to all the Registrable Securities  beneficially owned
by the  Purchasers  following  the final Closing (as such term is defined in the
Securities Purchase Agreement) to permit the offer and re-sale from time to time
of such  Registrable  Securities in accordance  with the methods of distribution
provided by the Purchasers.

      The  Company  and the  Purchasers  agree that the  Purchasers  will suffer
damages if a Non-Registration Event occurs, and that it would not be feasible to
ascertain  the  extent  of  such  damages  with  precision.  Accordingly,  if  a
Non-Registration Event should occur, then for each thirty (30) day period during
the pendency of such  Non-Registration  Event, the Company shall deliver to each
Purchaser,  as liquidated  damages,  an amount equal to one and one-half percent
(1.5%)  of the  aggregate  Purchase  Price  (as  such  term  is  defined  in the
Securities  Purchase  Agreement)  paid by such Purchaser for Securities (as such
term is defined in the Securities Purchase  Agreement),  with such payment being
pro-rated  for any  Non-Registration  Event of less than thirty (30) days.  Each
such payment is  hereinafter  referred to as a  "Non-Registration  Event Penalty
Payment".  Notwithstanding  the  foregoing,  in no event  shall the  Company  be
obligated to pay more than one  Non-Registration  Event  Penalty  Payment to the
same  Purchaser  in respect of a  substantively  concurrent  failure to perform;
i.e., if a Non-Registration  Event Penalty Payment is accruing due to failure to
file a Required  Registration  Statement  prior to the  Required  Filing Date, a
separate  Non-Registration  Event  Penalty  Payment  shall  not  be  due  for  a
contemporaneous  failure to cause an Effectiveness  Action to occur prior to the
Required Effectiveness Date. The Company, at its sole discretion,  shall pay the
Non-Registration Event Penalty Payment in cash or in shares of its Common Stock,
provided, that the Company may not elect to pay some Purchasers in cash while it
pays others in Common  Stock.  In the event that the  Company  elects to pay the
Non-Registration  Event  Penalty  Payment to a Purchaser in shares of its Common
Stock, it shall deliver unregistered,  legended shares of its Common Stock whose
aggregate  Market Price is equal to the  Non-Registration  Event Penalty Payment
due to such Purchaser.

      The Company  shall use its  reasonable  best efforts to keep such Required
Registration  Statement  continuously  effective (the "Effective  Period") for a
period of two years after the  Required  Registration  Statement  first  becomes
effective plus whatever period of time as shall equal any period, if any, during
such one year period in which the Company  was not  current  with its  reporting
requirements  under  the  Exchange  Act.  To the  extent  that  the  Registrable
Securities  are  not  sold  under  the  Required  Registration  Statement,   the
Purchasers shall have the registration  rights as enumerated in Sections 1.3 and
1.4 of this Agreement.

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<PAGE>

      1.2 Current  Public  Information.  The Company  covenants that it will use
reasonable best efforts to file all reports required to be filed by it under the
Securities Act and the Exchange Act and the rules and regulations adopted by the
SEC thereunder, and will use reasonable best efforts to take such further action
as the Purchaser may reasonably  request,  all to the extent  required to enable
the holders of Registrable Securities to sell Registrable Securities pursuant to
Rule 144 or Rule 144A adopted by the SEC under the Securities Act or any similar
rule or regulation  hereafter  adopted by the SEC. The Company  shall,  upon the
request of a holder of Registrable  Securities  (each a "Designated  Holder" and
collectively,  the "Designated  Holders"),  deliver to such Designated  Holder a
written statement as to whether it has complied with such requirements.

      1.3 Form S-3  Registration.  If the  Company is  eligible  to use Form S-3
under the Securities Act (or any similar  successor form) and shall receive from
a Purchaser  and its  permitted  transferees  (the "S-3  Initiating  Holders") a
written  request or requests that the Company effect a registration on such Form
S-3,  including without  limitation,  pursuant to Rule 415 of the Securities Act
and any related  qualification  or compliance with respect to all or part of the
Registrable  Securities  owned by the S-3  Initiating  Holders and its permitted
transferees (provided,  that the S-3 Initiating Holders registering  Registrable
Securities in such registration  (together with all other holders of Registrable
Securities  to  be  included  in  such  registration)   propose  to  sell  their
Registrable  Securities at an aggregate price  (calculated based upon the Market
Price of the  Registrable  Securities on the date of filing of the Form S-3 with
respect to such Registrable Securities) to the public of no less than the lesser
of $6,000,000 or the remaining  Registrable  Securities),  the Company shall (i)
promptly  give  written  notice of the  proposed  registration,  and any related
qualification or compliance, to all other holders of Registrable Securities; and
(ii) as soon as practicable, use reasonable best efforts to file and effect such
registration and all such  qualifications and compliances as may be so requested
and as would  permit  or  facilitate  the sale and  distribution  of all or such
portion of the Registrable Securities as are specified in such request, together
with all or such portion of the  Registrable  Securities  of any other holder in
the group of  holders  joining  in such  request  as is  specified  in a written
request  given  within  fifteen  (15) days  after the  holder's  receipt of such
written notice from the Company. No registration requested by any S-3 Initiating
Holders pursuant to this Section 1.3 shall be deemed a registration  pursuant to
Section 1.1.

      1.4 Piggyback Registrations.

      (a) Right to Piggyback.  Whenever the Company  proposes to register any of
its  securities  under the Securities Act (other than pursuant to a registration
pursuant to Section 1.3 or a registration on Form S-4 or S-8 or any successor or
similar  forms)  and  the  registration  form to be  used  may be  used  for the
registration  of  Registrable  Securities,  whether  or not for sale for its own
account,  the Company will give prompt written notice (but in no event less than
twenty  five (25) days  before the  anticipated  filing  date) to all holders of
Registrable Securities, and such notice shall describe the proposed registration
and  distribution  and  offer  to all  holders  of  Registrable  Securities  the
opportunity to register the number of Registrable Securities as each such holder
may  request.  The Company  will include in such  registration  all  Registrable
Securities with respect to which the Company has received  written  requests for
inclusion  therein  within  fifteen (15) days after the holders'  receipt of the
Company's notice (a "Piggyback Registration").

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<PAGE>

      (b) Reasonable Efforts.  The Company shall use all reasonable best efforts
to cause the managing  underwriter or  underwriters  of a proposed  underwritten
offering  to permit the  Registrable  Securities  requested  to be included in a
Piggyback  Registration  to be included on the same terms and  conditions as any
similar  securities of the Company or any other security holder included therein
and to permit the sale or other  disposition of such  Registrable  Securities in
accordance with the intended method of distribution thereof.

      (c) Withdrawal. Any Designated Holder shall have the right to withdraw its
request  for  inclusion  of  its  Registrable  Securities  in  any  Registration
Statement  pursuant to this Section 1.4 by giving  written notice to the Company
of its  request  to  withdraw;  provided,  that in the event of such  withdrawal
(other than pursuant to Section 1.4(e) hereof, the Company shall not be required
to reimburse such holder for the fees and expenses referred to in Section 1.6(t)
hereof incurred by such holder prior to such withdrawal,  unless such withdrawal
was due to a material adverse change to the Company.  The Company may withdraw a
Piggyback Registration at any time prior to the time it becomes effective.

      (d)  Priority  in  Registrations.   If  a  Piggyback  Registration  is  an
underwritten  primary  registration  on behalf of the Company,  and the managing
underwriters  advise the  Company in writing  (with a copy to each party  hereto
requesting  registration  of Registrable  Securities)  that in their opinion the
number of Registrable  Securities  requested to be included on a secondary basis
in such  registration  exceeds  the  number  which can be sold in such  offering
without materially and adversely  affecting the marketability of such primary or
secondary  offering (the  "Company  Offering  Quantity"),  then the Company will
include in such registration securities in the following priority:

                  (i) First, the Company will include the securities the Company
            proposes to sell.

                  (ii)  Second,   the  Company  will  include  all   Registrable
            Securities requested to be included by any Designated Holder, and if
            the number of such Designated  Holders'  securities  requested to be
            included  exceeds the Company  Offering  Quantity,  then the Company
            shall include only each such requesting Designated Holders' pro rata
            share of the shares  available for  registration  by the  Purchaser,
            based on the amount of securities held by such holder.

                  (iii) Third,  the Company will include other securities of the
            Company  proposed to be included in the  registration.  (e) Cutback.
            If, as a result of the proration provisions of this Section 1.4, any
            Designated  Holders shall not be entitled to include all Registrable
            Securities in a Piggyback  Registration that such Designated Holders
            has requested to be included,  such holder may elect to withdraw his
            request to include Registrable Securities in such registration.

      1.5 Holdback Agreements.

      (a) To the extent not inconsistent with applicable law, in connection with
a public offering of securities of the Company,  upon the request of the Company
or the  underwriter,  in the  case of an  underwritten  public  offering  of the
Company's securities, each holder of Registrable Securities who owns at least 5%
of the outstanding capital stock of the Company on an "as-converted"

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<PAGE>

basis or is an officer or  director  of the  Company  will not effect any public
sale or  distribution  (other than those  included in the  registration)  of any
securities of the Company, or any securities, options or rights convertible into
or exchangeable or exercisable for such securities during the fourteen (14) days
prior to and the ninety  (90) -day  period  beginning  on such  effective  date,
unless  (in  the  case  of  an  underwritten   public   offering)  the  managing
underwriters  otherwise agree to a shorter period of time.  Notwithstanding  the
foregoing,  no Designated  Holder shall be required to enter into any such "lock
up"  agreement  unless and until all of the  Company's  executive  officers  and
directors  execute  substantially  similar "lock up"  agreements and the Company
uses commercially reasonable efforts to cause each holder of more than 5% of its
outstanding capital stock to execute substantially similar "lock up" agreements.
Neither the Company nor the underwriter shall amend,  terminate or waive a "lock
up" agreement  unless each "lock up" agreement with a Designated  Holder is also
amended or waived in a similar manner or terminated, as the case may be.

      (b) The  Company  shall  have the  right at any time to  require  that the
Designated Holders of Registrable  Securities suspend further open market offers
and sales of Registrable  Securities pursuant to a Registration  Statement filed
hereunder whenever in the reasonable  judgment of the Company after consultation
with  counsel  there is or may be in  existence a Changing  Event (as defined in
this Agreement). The Company will give the Designated Holders notice of any such
suspension  and will use all  reasonable  best efforts to minimize the length of
such suspension.

      1.6  Registration  Procedures.  Whenever any  Registrable  Securities  are
required to be  registered  pursuant  to this  Agreement,  the Company  will use
reasonable  best  efforts  to  effect  the  registration  and  the  sale of such
Registrable  Securities in accordance  with the intended  methods of disposition
thereof, and pursuant thereto the Company will as expeditiously as possible:

      (a)  prepare  and  file  with  the SEC on any  form,  if not so  otherwise
provided for, for which the Company qualifies,  as soon as practicable after the
end of the period  within which  requests for  registration  may be given to the
Company,  a  Registration  Statement  with respect to the offer and sale of such
Registrable  Securities and thereafter use reasonable best efforts to cause such
Registration  Statement  to become  effective  and  remain  effective  until the
completion of the distribution  contemplated thereby or the required time period
under this Agreement,  whichever is shorter (and before filing such Registration
Statement,  the Company will furnish to the counsel selected by the holders of a
majority of the Registrable  Securities  initiating such Registration  Statement
copies of all such documents proposed to be filed); provided,  however, that the
Company may  postpone for not more than sixty (60)  calendar  days the filing or
effectiveness of any registration  statement required pursuant to this Agreement
other than a Required  Registration  Statement  required to be filed pursuant to
Section  1.1 of this  Agreement  if the Board of  Directors,  in its good  faith
judgment, determines that such registration could reasonably be expected to have
a material adverse effect on the Company and its stockholders including, but not
limited to, any proposal or plan by the Company to engage in any  acquisition of
assets  (other  than  in  the  ordinary  course  of  business)  or  any  merger,
consolidation,  tender offer or similar transaction then under consideration (in
which event, the Designated  Holders shall be entitled to withdraw such request,
and if such request is withdrawn such registration will not count as a

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<PAGE>

registration  statement pursuant to this Agreement) by delivering written notice
to the Designated Holders who requested  inclusion of Registrable  Securities in
such  Registration  Statement of its determination to postpone such Registration
Statement;  provided,  further,  that (i) the  Company  shall not  disclose  any
information that could be deemed material  non-public  information to any holder
of Registrable  Securities included in a Registration  Statement that is subject
to such  postponement,  (ii) in no  event  may the  Company  postpone  a  filing
requested  hereunder more than twice in any twelve (12) month period;  provided,
that any two  postponements  must be at least three (3) months apart;  provided,
further, that the Company shall delay the effectiveness of any such registration
statement if the SEC rules and regulations prohibit the Company from declaring a
Registration Statement effective because its financial statements are stale at a
time when its  fiscal  year has ended or it has made an  acquisition  reportable
under Item 2 of Form 8-K or any other similar  situation until the earliest time
in which the SEC would  allow the  Company to declare a  Registration  Statement
effective  (provided that the Company shall use its  reasonable  best efforts to
cure any such situation as soon as possible so that the  Registration  Statement
can be made effective at the earliest possible time);

      (b) prepare and file with the SEC such  amendments and supplements to such
Registration Statement and the prospectus used in connection therewith as may be
necessary to keep such  Registration  Statement  effective for a period provided
for in the  applicable  Section  above,  or if not so provided,  for a period of
twelve (12) (for a registration  pursuant to Rule 415 of the Securities Act) or,
if such Registration Statement relates to an underwritten offering,  such period
as in the opinion of counsel for the  underwriters  a prospectus  is required by
law to be delivered in  connection  with sales of  Registrable  Securities by an
underwriter  or dealer or (ii) such shorter period as will terminate when all of
the securities  covered by such Registration  Statement have been disposed of in
accordance  with the intended  methods of  disposition  by the seller or sellers
thereof set forth in such  Registration  Statement  (but in any event not before
the expiration of any longer period  required under the Securities  Act), and to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such Registration  Statement until such time as all
of such securities have been disposed of in accordance with the intended methods
of disposition by the seller or sellers  thereof set forth in such  Registration
Statement.  In the event the Company  shall give any notice  pursuant to Section
1.5(b), the applicable time period mentioned in this Section 1.6(b) during which
a Registration  Statement is to remain effective shall be extended by the number
of days  during the  period  from and  including  the date of the giving of such
notice  pursuant to Section 1.5(b) to and including the date when each seller of
a  Registrable  Security  covered  by such  Registration  Statement  shall  have
received the copies of the  supplemented or amended  prospectus  contemplated by
Section 1.6(e);

      (c) furnish to each seller of  Registrable  Securities,  prior to filing a
Registration  Statement,  such number of copies of such Registration  Statement,
each  amendment  and  supplement  thereto,   the  prospectus  included  in  such
Registration  Statement  (including each preliminary  prospectus) and such other
documents  as such  seller may  reasonably  request in order to  facilitate  the
disposition of the Registrable Securities owned by such seller;

      (d)  register  or qualify  such  Registrable  Securities  under such other
securities  or blue  sky laws of such  jurisdictions  as any  seller  reasonably
requests  and do any and all  other  acts and  things  which  may be  reasonably
necessary or advisable to enable such seller to consummate  the  disposition  in
such  jurisdictions  of the Registrable  Securities  owned by such seller and to
keep each such registration or qualification (or exemption  therefrom) effective
during  the period  which the  Registration  Statement  is  required  to be kept
effective (provided, that the

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Company  will not be  required to (i)  qualify  generally  to do business in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
subparagraph,  (ii) subject itself to taxation in any such jurisdiction or (iii)
consent to general service of process in any such jurisdiction);

      (e) notify each seller of such Registrable Securities,  at any time when a
prospectus  relating  thereto is required to be delivered  under the  Securities
Act, of the  happening of any event (a  "Changing  Event") as a result of which,
the  prospectus  included  in such  Registration  Statement  contains  an untrue
statement of a material fact or omits any fact  necessary to make the statements
therein not misleading in the light of the  circumstances  under which they were
made,  and,  at the  request of any such  seller,  the  Company  will as soon as
possible prepare and furnish to such seller (a "Correction  Event") a reasonable
number of copies of a supplement  or amendment to such  prospectus  so that,  as
thereafter  delivered to the  purchasers of such  Registrable  Securities,  such
prospectus  will not contain an untrue  statement of a material  fact or omit to
state any fact  necessary to make the  statements  therein not misleading in the
light of the circumstances under which they were made;

      (f) cause all such Registrable  Securities to be listed on each securities
exchange on which similar  securities issued by the Company are then listed and,
if not so listed, to be listed on The Nasdaq Stock Market or the Nasdaq SmallCap
trading system or the Nasdaq OTC Bulletin Board;

      (g)  provide a  transfer  agent  and  registrar  for all such  Registrable
Securities not later than the effective date of such Registration Statement;

      (h)  enter  into  such  customary   agreements   (including   underwriting
agreements  in  customary  form with any  underwriter,  if any  selected  by the
Company)  and take all such other  actions as the  holders of a majority  of the
Registrable  Securities  being  sold or the  underwriters,  if  any,  reasonably
request in order to expedite or facilitate the  disposition of such  Registrable
Securities,  including  causing its officers to  participate in "road shows" and
other information  meetings  organized by an underwriter,  if any, provided that
any underwriter shall have been selected by the Company;

      (i) make available for inspection by any seller of Registrable Securities,
any underwriter  participating in any disposition  pursuant to such Registration
Statement  and any  attorney,  accountant  or other  agent  retained by any such
seller or  underwriter,  all financial and other  records,  pertinent  corporate
documents and properties of the Company,  and cause the Company's  employees and
independent  accountants to supply all information  reasonably  requested by any
such seller, underwriter,  attorney, accountant or agent in connection with such
Registration Statement;

      (j) before filing a Registration Statement or prospectus or any amendments
or  supplements  thereto,  the Company  shall  provide  counsel  selected by the
Designated  Holders  holding a  majority  of the  Registrable  Securities  being
registered in such registration ("Holders' Counsel") and any other Inspector (as
defined  below)  with an  adequate  and  appropriate  opportunity  to review and
comment on such Registration Statement and each prospectus included therein (and
each amendment or supplement  thereto) to be filed with the SEC, subject to such
documents  being under the Company's  control,  and the Company shall notify the
Holders'  Counsel and each seller of  Registrable  Securities  of any stop order
issued or threatened by the SEC;

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<PAGE>

      (k) otherwise comply with all applicable rules and regulations of the SEC,
and make available to its security holders,  as soon as reasonably  practicable,
an earnings  statement  covering the period of at least twelve months  beginning
with the  first day of the  Company's  first  full  calendar  quarter  after the
effective date of the  Registration  Statement,  which earnings  statement shall
satisfy  the  provisions  of Section  11(a) of the  Securities  Act and Rule 158
thereunder;

      (l) in the  event  of  the  issuance  of any  stop  order  suspending  the
effectiveness  of a  Registration  Statement,  or of  any  order  suspending  or
preventing the use of any related  prospectus or suspending the qualification of
any  securities  included  in  such  Registration  Statement  for  sale  in  any
jurisdiction,  the Company  will use its  reasonable  best  efforts  promptly to
obtain the withdrawal of such order;

      (m) obtain one or more comfort  letters,  dated the effective date of such
Registration  Statement  (and,  if such  registration  includes an  underwritten
offering,  dated  the date of the  closing  under the  underwriting  agreement),
signed by the Company's  independent  public  accountants  in customary form and
covering such matters of the type customarily  covered by comfort letters as the
holders of a  majority  of the  Registrable  Securities  being  sold  reasonably
request;

      (n) provide a legal opinion of the Company's  outside  counsel,  dated the
effective  date of  such  Registration  Statement  (and,  if  such  registration
includes  an  underwritten  offering,  dated the date of the  closing  under the
underwriting  agreement),  with  respect  to the  Registration  Statement,  each
amendment and supplement thereto, the prospectus included therein (including the
preliminary  prospectus) and such other documents  relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature;

      (o)  subject  to   execution   and   delivery  of  mutually   satisfactory
confidentiality agreements, make available at reasonable times for inspection by
any seller of Registrable Securities,  any managing underwriter participating in
any  disposition  of such  Registrable  Securities  pursuant  to a  Registration
Statement, Holders' Counsel and any attorney, accountant or other agent retained
by  any  managing  underwriter  (each,  an  "Inspector"  and  collectively,  the
"Inspectors"),  during normal  business hours of Company at Company's  corporate
office in New York,  New York and without  unreasonable  disruption of Company's
business  or  unreasonable  expense to Company and solely for the purpose of due
diligence with respect to the registration statement, non-confidential,  legally
disclosable,  financial and other records and pertinent  corporate  documents of
the Company  and its  subsidiaries  (collectively,  the  "Records")  as shall be
reasonably   necessary   to  enable  them  to  exercise   their  due   diligence
responsibility,   and  cause  the  Company's  and  its  subsidiaries'  officers,
directors and employees,  and the independent public accountants of the Company,
to  make  available  for  inspection,  at such  parties'  offices  during  their
respective  normal business hours and without  unreasonable  disruption of their
business  or  unreasonable  expense to Company and solely for the purpose of due
diligence with respect to the Registration  Statement all information reasonably
requested by any such Inspector in connection with such Registration Statement;

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<PAGE>

      (p)  subject  to   execution   and   delivery  of  mutually   satisfactory
confidentiality  agreements,  keep Holders' Counsel advised as to the initiation
and  progress  of any  registration  hereunder  including,  but not  limited to,
providing Holders' Counsel with all correspondence with the SEC;

      (q)  cooperate  with  each  seller  of  Registrable  Securities  and  each
underwriter  participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the NASD; and

      (r) take all other steps  reasonably  necessary to effect the registration
of the Registrable Securities contemplated hereby.

      (s)  Conditions  Precedent  to  Company's  Obligations  Pursuant  to  this
Agreement.  It shall be a condition  precedent to the  obligations of Company to
take any  action  pursuant  to this  Agreement  that each of the  holders  whose
Registrable  Securities are to be registered  pursuant to this  Agreement  shall
furnish such holder's written  agreement to be bound by the terms and conditions
of this Agreement prior to performance by Company of its obligations  under this
Agreement.  By executing and delivering this Agreement,  each holder  represents
and warrants that the information concerning, and representations and warranties
by, such holder,  including information concerning the securities of the Company
held,  beneficially  or of record,  by such  holder,  furnished  to the  Company
pursuant to the Securities  Purchase Agreement and the Purchasers  Questionnaire
delivered pursuant thereto, are true and correct as if the same were represented
and warranted on the date of any registration  statement by the Company pursuant
to this  Agreement  or any  amendment  thereto,  and each  holder  covenants  to
immediately notify the Company in writing of any change in any such information,
representation  or warranty  and to refrain  from  offering or  disposing of any
securities  pursuant to any such  registration  statement  until the Company has
reflected such change in the registration statement. By executing and delivering
this  Agreement,  each such  holder  further  agrees to furnish  any  additional
information as the Company may reasonably  request in connection with any action
to be taken by the Company  pursuant  to this  Agreement,  to pay such  holder's
expenses  which are not  required  to be paid by the  Company  pursuant  to this
Agreement.

      (t) All expenses  incident to the Company's  performance  of or compliance
with this Agreement including,  without limitation,  all registration and filing
fees payable by the Company, fees and expenses of compliance by the Company with
securities  or blue sky laws,  printing  expenses of the Company,  messenger and
delivery expenses of the Company,  and fees and disbursements of counsel for the
Company  and  all  independent  certified  public  accountants  of the  Company,
underwriters  (excluding  discounts and  commissions,  which will be paid by the
sellers of  Registrable  Securities)  and other Persons  retained by the Company
will be borne by the Company,  and the Company  will pay its  internal  expenses
(including,  without  limitation,  all salaries  and  expenses of its  Employees
performing  legal or  accounting  duties),  the  expense of any annual  audit or
quarterly review, the expense of any liability  insurance of the Company and the
expenses and fees for listing the securities to be registered on each securities
exchange on which similar securities issued by the Company are then listed or on
The Nasdaq  National  Market,  Nasdaq  SmallCap Market or the OTC Bulletin Board
trading  system.  The Company shall have no  obligation to pay any  underwriting
discounts or commissions  attributable to the sale of Registrable Securities and
any of the expenses  incurred by any holder of Registrable  Securities which are
not payable by the Company, such costs to be borne by such holder or holders,

                                       9
<PAGE>

including,  without limitation,  underwriting fees,  discounts and expenses,  if
any, applicable to any holder's Registrable  Securities;  fees and disbursements
of  counsel  or other  professionals  that any  holder  may  choose to retain in
connection  with the  registration  statement  filed pursuant to this Agreement;
selling  commissions  or stock  transfer  taxes  applicable  to the  Registrable
Securities registered on behalf of any holder; any other expenses incurred by or
on behalf of such holder in connection  with the offer and sale of such Holder's
Registrable  Securities  other than  expenses  which the  Company  is  expressly
obligated to pay pursuant to this Agreement.

      1.7 Indemnification.

      (a) The Company  agrees to  indemnify  and hold  harmless,  to the fullest
extent  permitted by law, each holder of Registrable  Securities and its general
or  limited  partners,  officers,   directors,   members,  managers,  employees,
advisors,   representatives,    agents   and   Affiliates   (collectively,   the
"Representatives")  from  and  against  any  loss,  claim,  damage,   liability,
attorney's  fees,  cost or expense and costs and expenses of  investigating  and
defending any such claim (collectively, the "Losses"), joint or several, and any
action in respect thereof to which such holder of Registrable  Securities or its
Representatives  may  become  subject  under the  Securities  Act or  otherwise,
insofar  as such  Losses  (or  actions  or  proceedings,  whether  commenced  or
threatened, in respect thereto) arise out of or are based upon (i) any untrue or
alleged  untrue  statement  of a material  fact  contained  in any  Registration
Statement,  prospectus or preliminary or summary  prospectus or any amendment or
supplement  thereto or (ii) any omission or alleged  omission to state therein a
material fact required to be stated  therein or necessary to make the statements
therein not  misleading,  and the Company  shall  reimburse  each such holder of
Registrable  Securities  and its  Representatives  for any  legal  or any  other
expenses  incurred by them in  connection  with  investigating  or  defending or
preparing  to defend  against  any such Loss,  action or  proceeding;  provided,
however,  that the  Company  shall  not be  liable  to any such  holder or other
indemnitee  in any such  case to the  extent  that any such  Loss (or  action or
proceeding,  whether commenced or threatened,  in respect thereof) arises out of
or is based upon an untrue  statement or alleged untrue statement or omission or
alleged omission,  made in such Registration  Statement,  any such prospectus or
preliminary  or summary  prospectus or any amendment or supplement  thereto,  in
reliance  upon,  and  in  conformity  with,  written  information  prepared  and
furnished  to the  Company  by  any  holder  of  Registrable  Securities  or its
Representatives  expressly  for use  therein  or by  failure  of any  holder  of
Registrable  Securities  to  deliver  a copy of the  Registration  Statement  or
prospectus  or any  amendments  or  supplements  thereto  after the  Company has
furnished  such holder of  Registrable  Securities  with a sufficient  number of
copies of the same.  In no event,  however,  shall  the  Company  be liable  for
indirect,  incidental  or  consequential  or  special  damages  of any kind.  In
connection  with an  underwritten  offering,  the Company  will  indemnify  such
underwriters,  their  officers and  directors  and each Person who controls such
underwriters  (within the meaning of the  Securities  Act) to the same extent as
provided above with respect to the indemnification of the holders of Registrable
Securities.

      (b) In connection with any Registration  Statement in which the holders of
Registrable Securities are participating pursuant to this Agreement, the holders
of  Registrable   Securities  will  furnish  to  the  Company  in  writing  such
information as the Company  reasonably  requests for use in connection  with any
such  Registration  Statement or prospectus and, to the fullest extent permitted
by law,  each such holder of  Registrable  Securities  will  indemnify  and hold
harmless the Company and its Representatives from and against any Losses,

                                       10
<PAGE>

severally  but not  jointly,  and any  action in  respect  thereof  to which the
Company and its  Representatives  may become subject under the Securities Act or
otherwise, insofar as such Losses (or actions or proceedings,  whether commenced
or  threatened,  in  respect  thereof)  arise out of or are  based  upon (i) the
purchase or sale of Registrable  Securities  during a suspension as set forth in
Section  1.5(b) after  written  receipt of notice of such  suspension,  (ii) any
untrue  or  alleged  untrue  statement  of a  material  fact  contained  in  the
Registration  Statement,  prospectus or preliminary or summary prospectus or any
amendment or supplement  thereto, or (iii) any omission or alleged omission of a
material fact required to be stated  therein or necessary to make the statements
therein not misleading,  but, with respect to clauses (ii) and (iii) above, only
to  the  extent  that  such  untrue  statement  or  omission  is  made  in  such
Registration Statement, any such prospectus or preliminary or summary prospectus
or any amendment or supplement  thereto, in reliance upon and in conformity with
written  information  prepared  and  furnished  to the Company by such holder of
Registrable Securities expressly for use therein or by failure of such holder of
Registrable  Securities  to  deliver  a copy of the  Registration  Statement  or
prospectus  or any  amendments  or  supplements  thereto  after the  Company has
furnished  such holder of  Registrable  Securities  with a sufficient  number of
copies of the same, and such holder of Registrable Securities will reimburse the
Company and each  Representative for any legal or any other expenses incurred by
them in  connection  with  investigating  or  defending  or  preparing to defend
against any such Loss, action or proceeding; provided, however, that such holder
of  Registrable  Securities  shall not be liable in any such case to the  extent
that prior to the filing of any such  Registration  Statement or  prospectus  or
amendment or  supplement  thereto,  such holder of  Registrable  Securities  has
furnished  in  writing  to the  Company  information  expressly  for use in such
Registration  Statement or prospectus  or any  amendment or  supplement  thereto
which corrected or made not misleading  information  previously furnished to the
Company.  In no event,  however,  shall  any  holder  be  liable  for  indirect,
incidental or consequential or special damages of any kind.

      (c) Promptly after receipt by any Person in respect of which indemnity may
be sought  pursuant  to  Section  1.7(a) or 1.7(b) (an  "Indemnified  Party") of
notice of any claim or the  commencement of any action,  the  Indemnified  Party
shall,  if a claim in respect  thereof is to be made against the Person  against
whom such indemnity may be sought (an "Indemnifying Party"), promptly notify the
Indemnifying  Party in writing of the claim or the  commencement of such action;
provided,  that the failure to notify the  Indemnifying  Party shall not relieve
the  Indemnifying  Party from any liability  which it may have to an Indemnified
Party  otherwise than under Section 1.7(a) or 1.7(b) except to the extent of any
actual  prejudice  resulting  therefrom.  If any such  claim or action  shall be
brought against an Indemnified Party, and it shall notify the Indemnifying Party
thereof, the Indemnifying Party shall be entitled to participate  therein,  and,
to the  extent  that it  wishes,  jointly  with  any  other  similarly  notified
Indemnifying  Party,  to assume the  defense  thereof  with  counsel  reasonably
satisfactory to the Indemnified  Party. After notice from the Indemnifying Party
to the Indemnified  Party of its election to assume the defense of such claim or
action,  the Indemnifying Party shall not be liable to the Indemnified Party for
any legal or other expenses  subsequently  incurred by the Indemnified  Party in
connection   with  the  defense   thereof   other  than   reasonable   costs  of
investigation;  provided,  that the  Indemnified  Party  shall have the right to
employ   separate   counsel  to  represent   the   Indemnified   Party  and  its
Representatives  who may be subject  to  liability  arising  out of any claim in
respect of which  indemnity may be sought by the  Indemnified  Party against the
Indemnifying  Party,  but the fees and expenses of such counsel shall be for the
account of such Indemnified Party unless (i) the Indemnifying Party and the

                                       11
<PAGE>

Indemnified Party shall have mutually agreed to the retention of such counsel or
(ii) in the written opinion of counsel to such Indemnified Party, representation
of both  parties by the same  counsel  would be  inappropriate  due to actual or
potential conflicts of interest between them, it being understood, however, that
the  Indemnifying  Party  shall not,  in  connection  with any one such claim or
action or separate but substantially similar or related claims or actions in the
same jurisdiction  arising out of the same general allegations or circumstances,
be liable for the fees and expenses of more than one separate  firm of attorneys
(together  with  appropriate  local  counsel)  at any time  for all  Indemnified
Parties.  No Indemnifying Party shall,  without the prior written consent of the
Indemnified  Party,  effect any settlement of any claim or pending or threatened
proceeding  in  respect of which the  Indemnified  Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified  Party,
unless such settlement  includes an  unconditional  release of such  Indemnified
Party from all liability  arising out of such claim or proceeding other than the
payment  of  monetary  damages  by  the  Indemnifying  Party  on  behalf  of the
Indemnified Party.  Whether or not the defense of any claim or action is assumed
by the Indemnifying  Party, such  Indemnifying  Party will not be subject to any
liability for any settlement made without its consent, which consent will not be
unreasonably withheld.

      (d) If the indemnification provided for in this Section 1.7 is unavailable
to the  Indemnified  Parties in respect of any Losses  referred to herein,  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
benefits  received  by the  Company  on the  one  hand  and the  holders  of the
Registrable  Securities  on the  other  from  the  offering  of the  Registrable
Securities,  or if such  allocation is not permitted by applicable  law, in such
proportion as is appropriate to reflect not only the relative  benefits but also
the  relative  fault  of the  Company  on the one hand  and the  holders  of the
Registrable  Securities  on the  other  in  connection  with the  statements  or
omissions which resulted in such Losses, as well as any other relevant equitable
considerations.  The  relative  fault of the Company on the one hand and of each
holder  of the  Registrable  Securities  on the  other  shall be  determined  by
reference to, among other things, whether any action taken, including any untrue
or alleged  untrue  statement  of a material  fact,  or the  omission or alleged
omission to state a material fact relates to information supplied by such party,
and  the  parties'  relative  intent,  knowledge,   access  to  information  and
opportunity to correct or prevent such statement or omission.

      The Company and the holders of the  Registrable  Securities  agree that it
would not be just and equitable if contribution  pursuant to this Section 1.7(d)
were  determined  by pro rata  allocation  or by any other method of  allocation
which does not take account of the equitable  considerations  referred to in the
immediately  preceding  paragraph.  The amount paid or payable by an Indemnified
Party  as a  result  of the  Losses  referred  to in the  immediately  preceding
paragraph  shall be deemed to  include,  subject  to the  limitations  set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in  connection  with  investigating  or  defending  any such  action  or  claim.
Notwithstanding the provisions of this Section 1.7, no holder of the Registrable
Securities shall be required to contribute any amount in excess of the amount by
which the total price at which the  Registrable  Securities  of such holder were
offered to the public  exceeds  the amount of any Losses  which such  holder has
otherwise paid by reason of such untrue or alleged untrue  statement or omission
or alleged omission.  No Person guilty of fraudulent  misrepresentation  (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to

                                       12
<PAGE>

contribution   from  any  Person   who  was  not   guilty  of  such   fraudulent
misrepresentation.  Each holder's  obligations  to  contribute  pursuant to this
Section  1.7 is several in the  proportion  that the  proceeds  of the  offering
received  by such  holder  of the  Registrable  Securities  bears  to the  total
proceeds  of  the  offering  received  by all  the  holders  of the  Registrable
Securities and not joint.

      1.8 Participation in Registrations.

      (a) No Person  may  participate  in any  registration  hereunder  which is
underwritten  unless such Person (i) agrees to sell such Person's  securities on
the basis provided in any  underwriting  arrangements  approved by the Person or
Persons  entitled  hereunder to approve such  arrangements  (including,  without
limitation,  pursuant to the terms of any  over-allotment or "green shoe" option
requested  by  the  managing  underwriter(s),  provided,  that  each  holder  of
Registrable  Securities  shall not be  required  to sell more than the number of
Registrable  Securities that such holder has requested the Company to include in
any registration) and (ii) completes and executes all questionnaires,  powers of
attorney,  indemnities,  underwriting  agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Agreement.

      (b) Each  Person  that is  participating  in any  registration  under this
Agreement  agrees  that,  upon  receipt  of any notice  from the  Company of the
happening  of any event of the kind  described  in Section  1.6(e)  above,  such
Person will forthwith discontinue the disposition of its Registrable  Securities
pursuant to the Registration Statement and all use of the Registration Statement
or any prospectus or related  document until such Person's receipt of the copies
of a supplemented  or amended  prospectus as contemplated by such Section 1.6(e)
and,  if so  directed  by the  Company,  will  deliver  to the  Company  (at the
Company's  expense)  all  copies,  other than  permanent  file  copies,  then in
holder's  possession  of such  documents  at the time of receipt of such notice.
Furthermore,  each  holder  agrees  that if such  holder  uses a  prospectus  in
connection with the offering and sale of any of the Registrable Securities,  the
holder will use only the latest version of such prospectus provided by Company.

      2 Transfers of Certain Rights.

      2.1 Transfer. The rights granted to the Purchaser under this Agreement are
non-transferable except for a transfer, without any consideration whatsoever, to
a  person  or  entity  which is an  Affiliate  of the  transferor,  and any such
transfer,  in any case,  shall be subject to the  provisions of Sections 2.2 and
2.3;  provided  that  nothing  contained  herein  shall be  deemed  to permit an
assignment,  transfer or disposition of the Registrable  Securities in violation
of the terms and conditions of the Securities Purchase Agreement,  or applicable
law.

      2.2  Transferees.  Any  permitted  transferee  to whom  rights  under this
Agreement are transferred shall, as a condition to such transfer, deliver to the
Company a written  instrument by which such transferee agrees to be bound by the
obligations  imposed upon the Purchaser  under this Agreement to the same extent
as if such transferee were a Purchaser hereunder.

      2.3 Subsequent  Transferees.  A transferee to whom rights are  transferred
pursuant  to this  Section 2 may not  again  transfer  such  rights to any other
person or entity, other than as provided in Sections 2.1 or 2.2 above.

                                       13
<PAGE>

      3 Certain  Definitions.  The  following  capitalized  terms shall have the
meanings ascribed to them below:

            "Affiliate"  means any Person that directly or indirectly  controls,
or is under  control  with,  or is  controlled  by such Person.  As used in this
definition,  "control" (including with its correlative meanings, "controlled by"
and  "under  common  control  with")  shall  mean the  possession,  directly  or
indirectly,  of the power to direct or cause the direction of the  management or
policies of a Person (whether through  ownership of securities or partnership or
other ownership interests, by contract or otherwise).

            "Closing Price" means,  with respect to the  Registrable  Securities
(a) if the shares are listed or admitted for trading on any national  securities
exchange or included in The Nasdaq National  Market or Nasdaq  SmallCap  Market,
the last reported sales price as reported on such exchange or market; (b) if the
shares  are not  listed or  admitted  for  trading  on any  national  securities
exchange or included in The Nasdaq National  Market or Nasdaq  SmallCap  Market,
the average of the last reported  closing bid and asked quotation for the shares
as  reported  on  the  National  Association  of  Securities  Dealers  Automated
Quotation System ("NASDAQ") or a similar service if NASDAQ is not reporting such
information;  (c) if the shares are not listed or  admitted  for  trading on any
national securities exchange or included in The Nasdaq National Market or Nasdaq
SmallCap  Market or quoted by NASDAQ or a similar  service,  the  average of the
last reported bid and asked quotation for the shares as quoted by a market maker
in the  shares  (or if there is more than one  market  maker,  the bid and asked
quotation shall be obtained from two market makers and the average of the lowest
bid and  highest  asked  quotation).  In the  absence  of any  available  public
quotations  for the Common Stock,  the Board and a majority of the Holders shall
determine in good faith the fair value of the Common Stock.

            "Common  Stock" means the common stock,  par value $0.001 per share,
of the Company.

            "Employees" means any current,  former, or retired employee,  office
consultant,  advisor, independent contractor,  agent, officer or director of the
Company.

            "Exchange  Act"  means  the  Securities  Exchange  Act of  1934,  as
amended, and the rules and regulations of the SEC promulgated thereunder.

            "Market Price" means, on any date of  determination,  the average of
the  daily  Closing  Price of the  Registrable  Securities  for the  immediately
preceding  five (5) on which  the  national  securities  exchanges  are open for
trading.

            "Person" means any individual,  company,  partnership,  firm,  joint
venture,  association,  joint-stock company, trust, unincorporated organization,
governmental body or other entity.

            "Registrable Securities" means, subject to the immediately following
sentence,  (i) shares of Common  Stock and the  Warrant  Shares  underlying  the
Warrants  acquired by the applicable  Purchaser from the Company in the Offering
pursuant to the  Securities  Purchase  Agreement,  and (ii) any shares of Common
Stock issued or issuable  pursuant to this  Agreement or directly or  indirectly
with  respect  to the  securities  referred  to in  clause  (i) by way of  stock
dividend  or  stock  split  or in  connection  with  a  combination  of  shares,
recapitalization, merger, consolidation or other reorganization. As to any

                                       14
<PAGE>

particular  shares of Common Stock  constituting  Registrable  Securities,  such
shares of Common  Stock will cease to be  Registrable  Securities  when they (x)
have been  effectively  registered  under the  Securities Act and disposed of in
accordance  with a Registration  Statement  covering them, (y) have been sold to
the public  pursuant to Rule 144 (or by similar  provision  under the Securities
Act), or (z) are eligible for resale under Rule 144(k) (or by similar  provision
under the  Securities  Act) without any  limitation  on the amount of securities
that may be sold under paragraph (e) thereof.

            "Registration  Statement"  means any  registration  statement of the
Company  filed  under the  Securities  Act which  covers any of the  Registrable
Securities  pursuant  to  the  provisions  of  this  Agreement,   including  the
prospectus, amendments and supplements to such registration statement, including
post-effective  amendments,  all  exhibits  and  all  material  incorporated  by
reference in such registration statement.

            "SEC" means the United States Securities and Exchange  Commission or
any other federal agency at the time administering the Securities Act.

            "Securities  Act" means the Securities Act of 1933, as amended,  and
the rules and regulations of the SEC promulgated thereunder.

      4 Miscellaneous.

            4.1  Recapitalizations,  Exchanges,  etc.  The  provisions  of  this
Agreement  shall apply to the full extent set forth  herein with  respect to (i)
the Registrable  Securities,  (ii) any and all shares of Common Stock into which
the  Registrable  Securities  are  converted,  exchanged or  substituted  in any
recapitalization  or other capital  reorganization  by the Company and (iii) any
and all  equity  securities  of the  Company or any  successor  or assign of the
Company  (whether by merger,  consolidation,  sale of assets or otherwise) which
may  be  issued  in  respect  of,  in  conversion  of,  in  exchange  for  or in
substitution of, the Registrable  Securities and shall be appropriately adjusted
for any stock dividends, splits, reverse splits, combinations, recapitalizations
and the like  occurring  after the date  hereof.  The  Company  shall  cause any
successor  or  assign  (whether  by  merger,  consolidation,  sale of  assets or
otherwise) to enter into a new registration rights agreement with the Designated
Holders on terms  substantially the same as this Agreement as a condition of any
such transaction.

            4.2 No  Inconsistent  Agreements.  The Company has not and shall not
enter into any agreement  with respect to its  securities  that is  inconsistent
with the  rights  granted  to the  Purchasers  in this  Agreement  or grant  any
additional  registration  rights to any Person or with respect to any securities
which are not Registrable  Securities  which are prior in right to or materially
inconsistent with the rights granted in this Agreement.  The Parties acknowledge
and agree that the Company has granted  registration  rights  heretofore and may
grant registration  rights hereafter,  which are or shall be pari passu with the
registration rights of the Purchasers,  and shall not be deemed to conflict with
this covenant.

            4.3 Amendments and Waivers.  The provisions of this Agreement may be
amended and the Company may take action  herein  prohibited,  or omit to perform
any act herein  required to be performed by it, if, but only if, the Company has
obtained  the  written  consent  of  holders  of at  least  a  majority  of  the
Registrable Securities then in existence.

                                       15
<PAGE>

            4.4  Severability.   Whenever  possible,   each  provision  of  this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable  law,  but if any  provision  of this  Agreement  shall be held to be
prohibited  by  or  invalid  under  applicable  law,  such  provision  shall  be
ineffective  only to the  extent  of such  prohibition  or  invalidity,  without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

            4.5  Counterparts.  This  Agreement  may be  executed in one or more
counterparts  each of  which  shall  be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

            4.6 Notices.  All notices,  requests and other communications to any
party  hereunder  shall be in  writing  (including  telecopy,  telex or  similar
writing)  and  shall  be  deemed  given  or made as of the  date  delivered,  if
delivered personally or by telecopy (provided that delivery by telecopy shall be
followed by delivery of an  additional  copy  personally,  by mail or  overnight
courier),  one day after being  delivered by overnight  courier or four business
days after being mailed by registered or certified mail (postage prepaid for the
most expeditious form of delivery,  return receipt requested), to the parties at
the following addresses (or to such other address or telex or telecopy number as
a party may have  specified by notice given to the other party  pursuant to this
provision):

             If to the Company, to:

             Advance Nanotech, Inc.
             712 Fifth Avenue, 19th Floor
             New York, New York  10019
             Attention:  Magnus Gittins
             Telephone:  (646) 723 8962
             Facsimile:  (212) 581 1922

             If to the Purchaser, to:

             The address or facsimile number of each Purchaser as recorded in
             the stockholders records of the Company.

            4.7 Governing Law. This Agreement shall be governed by and construed
in  accordance  with the laws of the  State of New York,  without  regard to the
conflicts of laws rules or provisions.

            4.8 Forum;  Service of Process. Any legal suit, action or proceeding
brought by any party or any of its affiliates  arising out of or based upon this
Agreement  shall be instituted in any federal or state court in New York County,
New York, and each party waives any objection which it may now or hereafter have
to the laying of venue or any such  proceeding,  and irrevocably  submits to the
jurisdiction of such courts in any such suit, action or proceeding.

            4.9 Captions.  The captions,  headings and arrangements used in this
Agreement  are for  convenience  only and do not in any way limit or amplify the
terms and provisions hereof.

                                       16
<PAGE>

            4.10  No  Prejudice.  The  terms  of  this  Agreement  shall  not be
construed  in favor of or against any party on account of its  participation  in
the preparation hereof.

            4.11 Words in Singular and Plural  Form.  Words used in the singular
form in this Agreement shall be deemed to import the plural,  and vice versa, as
the sense may require.

            4.12 Remedy for Breach. The Company hereby  acknowledges that in the
event of any breach or threatened breach by the Company of any of the provisions
of this  Agreement,  the  holders of the  Registrable  Securities  would have no
adequate  remedy at law and could suffer  substantial  and  irreparable  damage.
Accordingly,  the Company hereby agrees that, in such event,  the holders of the
Registrable  Securities shall be entitled,  and  notwithstanding any election by
any holder of the Registrable Securities to claim damages, to obtain a temporary
and/or permanent  injunction to restrain any such breach or threatened breach or
to obtain specific performance of any such provisions,  all without prejudice to
any and all other  remedies which any holder of the  Registrable  Securities may
have at law or in equity.

            4.13  Successors  and  Assigns;  Third  Party  Beneficiaries.   This
Agreement  and all of the  provisions  hereof shall be binding upon and inure to
the benefit of the parties  hereto,  each  subsequent  holder of the Registrable
Securities and their respective  permitted successors and assigns and executors,
administrators  and heirs.  Holders of the  Registrable  Securities are intended
third party  beneficiaries  of this Agreement and this Agreement may be enforced
by such holders.

            4.14  Entire  Agreement.   This  Agreement  sets  forth  the  entire
agreement and understanding  between the parties as to the subject matter hereof
and merges and supersedes all prior  discussions,  agreements and understandings
of any and every nature among them.


                  [Remainder of page intentionally left blank.]

                                       17
<PAGE>

      IN WITNESS  WHEREOF,  the parties  hereto  have  caused this  Registration
Rights  Agreement  to be duly  executed  as of the date and year  first  written
above.


                                          ADVANCE NANOTECH, INC.


                                          By:_________________________________
                                             Name:
                                             Title:




                                           By:_________________________________
                                           Name:    ______________
                                           Title:   Secretary

                                       18
<PAGE>

      IN WITNESS WHEREOF, the undersigned Purchaser has caused this Registration
Rights Agreement to be duly executed as of the date and year first above written
and to be bound hereby.

Shares of Common Stock and Warrants

are in:

<TABLE>
<S>                                                          <C>
                                                             Print Name of Investor

                                                             __________________ shares of Common Stock
____ individual name
                                                             _____________ Warrants


____ tenants in the entirety                                 __________________________________________
                                                             Print Name of Joint Investor
                                                             (if applicable)


____ corporation (an officer must sign)                      __________________________________________
                                                             Signature of Investor


____ partnership (all general partners must sign)            __________________________________________
                                                             Signature of Joint Investor


____ trust                                                   __________________________________________

                                                             __________________________________________
                                                             (with a copy to:)

                                                             __________________________________________

                                                             __________________________________________
                                                             Address of Investor


____ limited liability company

</TABLE>

                                       19