REGISTRATION
        RIGHTS **** AGREEMENT
 
 **AGREEMENT** dated
        as of June 16, 2005, between MERCATOR MOMENTUM FUND, L.P., MERCATOR MOMENTUM
        FUND III, L.P, MONARCH POINTE FUND, LTD. (collectively, the "Funds") and MERCATOR ADVISORY GROUP, LLC ("MAG") (the Funds and MAG are referred
        to
        individually as a "Holder" and collectively as the "Holders"), and M-Wave, Inc. a Delaware corporation (the " Company " ).
 
 **WHEREAS,** each
        Fund and MAG have acquired Warrants (together, the "Warrants") from the Company, pursuant to which the Holders have the right to purchase
        in
        the aggregate up to 601,450 shares of the Common Stock through the exercise
        of
        the Warrants; and
 
 **WHEREAS,** the
        Company desires to grant to the Holders the registration rights set forth
        herein
        with respect to the shares of Common Stock issuable upon exercise of the
        Warrants.
 
 **NOW,
        THEREFORE,** the
        parties hereto mutually agree as follows:
 
 1. **Registrable
        Securities.** **** As
        used herein the terms "Registrable
        Security" means each of the shares of Common Stock issued upon exercise of the Warrants
        (the "Warrant  Shares " ), provided, however, that with respect to any particular Registrable Security,
        such security shall cease to be a Registrable Security when, as of the date
        of
        determination that (a) it has been effectively registered under the Securities
        Act of 1933, as amended (the "Securities Act"), and disposed of pursuant thereto, or (b) registration under the
        Securities Act is no longer required for the immediate public distribution
        of
        such security. The term "Registrable  Securities" means any and/or all of the securities falling within the foregoing definition
        of a " Registrable
        Security." In the event of any merger, reorganization, consolidation,
        recapitalization or other change in corporate structure affecting the Common
        Stock, such adjustment shall be made in the definition of "Registrable Security"
        as is appropriate in order to prevent any dilution or enlargement of the
        rights
        granted pursuant to this Section 1.
 
 2. **Registration.**
 
 (a)          The
        Holders shall have the right to demand, on or after February 1, 2006, that
        the
        Company shall file a registration statement (the "Registration
        Statement") with the Securities and Exchange Commission (the " SEC " )
        in order to register the resale of the Registrable Securities under the
        Securities Act. The Company shall file the Registration Statement with the
        SEC
        within thirty (30) days after receipt of written demand. Once effective,
        the
        Company shall maintain the effectiveness of the Registration Statement until
        the
        earlier of (i) the date that all of the Registrable Securities have been
        sold,
        or (ii) the date that the Company receives an opinion of counsel to the Company
        that all of the Registrable Securities may be freely traded without registration
        under the Securities Act, under Rule 144 promulgated under the Securities
        Act or
        otherwise.
  
  (b)
                  The Company will
        initially include in the Registration Statement as Registrable Securities
        Six
        Hundred One Thousand Four Hundred Fifty (601,450) shares of Common
        Stock.
 
 3. **Covenants
        of the Company with Respect to Registration.**
 
 The
        Company covenants and agrees as follows:
 
 (a) The
        Company shall use best efforts to cause the Registration Statement to become
        effective with the SEC as promptly as possible and in no event more than
        90 days
        after filing the Registration Statement with the SEC. If any stop *order* shall
        be issued by the SEC in connection therewith, the Company shall use best
        efforts
        to obtain promptly the removal of such order. Following the effective date
        of
        the Registration Statement, the Company shall, upon the request of any Holder,
        forthwith supply such reasonable number of copies of the Registration Statement,
        preliminary prospectus and prospectus meeting the requirements of the Securities
        Act, and any other documents necessary or incidental to the public offering
        of
        the Registrable Securities, as shall be reasonably requested by the Holder
        to
        permit the Holder to make a public distribution of the Holder's Registrable
        Securities. The obligations of the Company hereunder with respect to the
        Holder's Registrable Securities are subject to the Holder's furnishing to
        the
        Company such appropriate information concerning the Holder, the Holder's
        Registrable Securities and the terms of the Holder's offering of such
        Registrable Securities as the Company may reasonably request in
        writing.
 
 (b) The
        Company shall pay all costs, fees and expenses in connection with the
        Registration Statement filed pursuant to Section 2 hereof including, without
        limitation, the Company's legal and accounting fees, printing expenses, and
        blue
        sky fees and expenses; provided, however, that each Holder shall be solely
        responsible for the fees of any counsel retained by the Holder in connection
        with such registration and any transfer taxes or underwriting discounts,
        commissions or fees applicable to the Registrable Securities sold by the
        Holder
        pursuant thereto.
 
 (c) The
        Company will take all actions which may be required to qualify or register
        the
        Registrable Securities included in the Registration Statement for the offer
        and
        sale under the securities or blue sky laws of such states as are reasonably
        requested by each Holder of such securities, provided that the Company shall
        not
        be obligated to execute or file any general consent to service of process
        or to
        qualify as a foreign corporation to do business under the laws of any such
        jurisdiction.
 
 (d) In
        the event that the Company fails to (i) file the Registration Statement on
        or
        before thirty (30) days after receipt of written demand (or prior to such
        written demand in the Company ' s
        sole discretion), or (ii) cause the Registration Statement to be deemed
        effective by the SEC prior to the later of 90 days after filing or May 1,
        2006,
        then the Company shall pay $1,600 for each day until such default is cured.
        The
        default payment shall be allocated among the Holders in accordance with
        instructions received from the Holders. The agreement contained in this Section
        3(d) applies solely to the Registration Statement, and not to any prior
        registration statements filed or agreed to be filed by the Company, and such
        payment shall in no way
 
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 constitute
        evidence of any actual or other damage to the Holders or any other party
        with
        respect to any such prior registration statements.
 
 4. **Additional
        Terms.**
 
 (a) The
        Company shall indemnify and hold harmless the Holders and each underwriter,
        within the meaning of the Securities Act, who may purchase from or sell for
        any
        Holder, any Registrable Securities, from and against any and all losses,
        claims,
        damages and liabilities caused by any untrue statement of a material fact
        contained in the Registration Statement, any other registration statement
        filed
        by the Company under the Securities Act with respect to the registration
        of the
        Registrable Securities, any post-effective amendment to such registration
        statements, or any prospectus included therein or caused by any omission
        to
        state therein a material fact required to be stated therein or necessary
        to make
        the statements therein not misleading, except insofar as such losses, claims,
        damages or liabilities are caused by any such untrue statement or omission
        based
        upon information furnished or required to be furnished in writing to the
        Company
        by the Holders or underwriter expressly for use therein, which indemnification
        shall include each person, if any, who controls any Holder or underwriter
        within
        the meaning of the Securities Act and each officer, director, employee and
        agent
        of each Holder and underwriter; provided, however, that the indemnification
        in
        this Section 4(a) with respect to any prospectus shall not inure to the benefit
        of any Holder or underwriter (or to the benefit of any person controlling
        any
        Holder or underwriter) on account of any such loss, claim, damage or liability
        arising from the sale of Registrable Securities by the Holder or underwriter,
        if
        a copy of a subsequent prospectus correcting the untrue statement or omission
        in
        such earlier prospectus was provided to such Holder or underwriter by the
        Company prior to the subject sale and the subsequent prospectus was not
        delivered or sent by the Holder or underwriter to the purchaser prior to
        such
        sale and provided further, that the Company shall not be obligated to so
        indemnify any Holder or any such underwriter or other person referred to
        above
        unless the Holder or underwriter or other person, as the case may be, shall
        at
        the same time indemnify the Company, its directors, each officer signing
        the
        Registration Statement and each person, if any, who controls the Company
        within
        the meaning of the Securities Act, from and against any and all losses, claims,
        damages and liabilities caused by any untrue statement of a material fact
        contained in the Registration Statement, any registration statement or any
        prospectus required to be filed or furnished by reason of this Agreement
        or
        caused by any omission to state therein a material fact required to be stated
        therein or necessary to make the statements therein not misleading, insofar
        as
        such losses, claims, damages or liabilities are caused by any untrue statement
        or omission based upon information furnished in writing to the Company by
        the
        Holder or underwriter expressly for use therein.
 
 (b) if
        for any reason the indemnification provided for in the preceding section
        is held
        by a court of competent jurisdiction to be unavailable to an indemnified
        party
        with respect to any loss, claim, damage, liability or expense referred to
        therein, then the indemnifying party, in lieu of indemnifying such indemnified
        party thereunder, shall contribute to the amount paid or payable by the
        indemnified party as a result of such loss, claim, damage or liability in
        such
        proportion as is appropriate to reflect the relative fault of the indemnified
        party and the indemnifying party, as well as any other relevant equitable
        considerations.
 
  -3-
  
 (c) Neither
        the filing of a Registration Statement by the Company pursuant to this Agreement
        nor the making of any request for prospectuses by the Holder shall impose
        upon
        any Holder any obligation to sell the Holder's Registrable
        Securities.
 
 (d) Each
        Holder, upon receipt of notice from the Company that an event has occurred
        which
        requires a Post-Effective Amendment to the Registration Statement or a
        supplement to the prospectus included therein, shall promptly discontinue
        the
        sale of Registrable Securities until the Holder receives a copy of a
        supplemented or amended prospectus from the Company, which the Company shall
        provide as soon as practicable after such notice.
 
 (e) If
        the Company fails to keep the Registration Statement refen-ed to above
        continuously effective during the requisite period, then the Company shall,
        promptly upon the request of any Holder, use best efforts to update the
        Registration Statement or file a new registration statement covering the
        Registrable Securities remaining unsold, subject to the terms and provisions
        hereof.
 
 (f) Each
        Holder agrees to provide the Company with any information or undertakings
        reasonably requested by the Company in order for the Company to include any
        appropriate information concerning the Holder in the Registration Statement
        or
        in order to promote compliance by the Company or the Holder with the Securities
        Act.
 
 (g) The
        Company agrees that it shall cause each of its directors, officers and
        shareholders owning ten percent (10%) or more of the Company's outstanding
        Common Stock to refrain from selling any shares of the Company's Common Stock
        until the Registration Statement has been declared effective.
 
 (h) Each
        Holder, on behalf of itself and its affiliates, hereby covenants and agrees
        not
        to, directly or indirectly, offer to "short sell", contract to "short sell"
        or
        otherwise "short sell" any securities of the Company, including, without
        limitation, shares of Common Stock that will be received as a result of the
        conversion of the Series A Stock or the exercise of the Warrants.
 
 5.  **Governing
        Law.** **** The
        Registrable Securities will be, if and when issued, delivered in California.
        This Agreement shall be deemed to have been made and delivered in the State
        of
        California and shall be governed as to validity, interpretation, construction,
        effect and in all other respects by the internal substantive laws of the
        State
        of California, without giving effect to the choice of law rules
        thereof.
 
 6.  **Amendment.** **** This
        Agreement may only be amended by a written instrument executed by the Company
        and the Holders.
 
 7.  **Entire
        Agreement.** **** This
        Agreement constitutes the entire agreement of the parties hereto with respect
        to
        the subject matter hereof, and supersedes all prior agreements and
        understandings of the parties, oral and written, with respect to the subject
        matter hereof.
 
 8.  **Execution
        in 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
        document.
 
  -4-
  
 9. **Notices.** **** All
        communications hereunder shall be in writing and shall be hand delivered,
        mailed
        by first-class mail, couriered by next-day air courier or by facsimile at
        the
        addresses set forth below.
 
 If
                  to the Holders,
              Mercator
                  Advisory Group, LLC
 Mercator
        Momentum Fund, L.P.
 Mercator
        Momentum Fund III, L.P.
 Monarch
        Pointe Fund, Ltd.
 *555* South
        Flower Street, Suite 4200
 Los
        Angeles, CA 90071 Attention: David Firestone
 
 With
                  a copy to
              Sheppard
                  Mullin Richter & Hampton LLP
 333
        South Hope Street
 48 th Floor
 Los
        Angeles, CA 90071-1448
 Telephone
        No.: (213) 620-1780
 Facsimile
        No.: (213) 620-1398
 Attention:
        David C. Ulich
 
 If
                  to the Company,
              M-Wave,
                  Inc.
 475
        Industrial Drive West
 Chicago,
        IlIinois 60185
 Telephone
        No.: 630-562-4751
 Facsimile
        No.: 630-562-1775
 Attention:
        Jim Mayer
 
 
 With
                  a copy to
              Freeborn
                  & Peters, LLP Suite 3000
 311
        South Wacker Drive
 Chicago,
        Illinois 60606
 Telephone
        No.: 312-360-5769
 Facsimile
        No.: 312-360-5671
 Attention:
        Carl R. Klein
 
 All
        such notices and communications shall be deemed to have been duly given:
        (i)
        when delivered by hand, if personally delivered; (ii) five business days
        after
        being deposited in the mail, postage prepaid, if mailed certified mail, return
        receipt requested; (iii) one business day after being timely delivered to
        a
        next-day air courier guaranteeing overnight delivery; (iv) the date of
        transmission if sent via facsimile to the facsimile number as set forth in
        this
        Section or the signature page hereof prior to 4:00 p.m. on a business day,
        or
        (v) the business day following the date of transmission if sent via facsimile
        at
        a facsimile number set forth in this Section or on the signature page hereof
        after 4:00 p.m. or on a date that is not a business day. Change of a party's
        address or facsimile number may be designated hereunder by giving notice
        to all
        of the other parties hereto in accordance with this Section.
 
  -5-
  10.  **Binding
        Effect; Benefits.** **** Any
        Holder may assign its rights hereunder. This Agreement shall inure to the
        benefit of, and be binding upon, the parties hereto and their respective
        heirs,
        legal representatives, successors and assigns. Nothing herein contained,
        express
        or implied, is intended to confer upon any person other than the parties
        hereto
        and their respective heirs, legal representatives and successors, any rights
        or
        remedies under or by reason of this Agreement.
 
 11.  **Headings.** **** The
        headings contained herein are for the sole purpose of convenience of reference,
        and shall not in any way limit or affect the meaning or interpretation of
        any of
        the terms or provisions of this Agreement.
 
 12.  **Severability.** **** Any
        provision of this Agreement which is held by a court of competent jurisdiction
        to be prohibited or unenforceable in any jurisdiction(s) shall be, as to
        such
        jurisdiction(s), ineffective to the extent of such prohibition or
        unenforceability without invalidating the remaining provisions of this Agreement
        or affecting the validity or enforceability of such provision in any other
        jurisdiction.
 
 13.  **Jurisdiction.** **** Each
        of the parties irrevocably agrees that any and all suits or proceedings based
        on
        or arising under this Agreement may be brought only in and shall be resolved
        in
        the federal or state courts located in the City of Los Angeles, California
        and
        consents to the jurisdiction of such courts for such purpose. Each of the
        parties irrevocably waives the defense of an inconvenient forum to the
        maintenance of such suit or proceeding in any such court. Each of the parties
        further agrees that service of process upon such party mailed by first class
        mail to the address set forth in Section 9 shall be deemed in every respect
        effective service of process upon such party in any such suit or proceeding.
        Nothing herein shall affect the right of either party to serve process in
        any
        other manner permitted by law. Each of the parties agrees that a final
        non-appealable judgment in any such suit or proceeding shall be conclusive
        and
        may be enforced in other jurisdictions by suit on such judgment or in any
        other
        lawful manner.
 
 14.  **Attorneys'
        Fees and Disbursements.** **** If
        any action at law or in equity is necessary to enforce or interpret the terms
        of
        this Agreement, the prevailing party or parties shall be entitled to receive
        from the other party or parties reasonable attorneys' fees and disbursements
        in
        addition to any other relief to which the prevailing party or parties may
        be
        entitled.
 
 [The
        balance of this page is intentionally left blank.]
  -6-
  **IN
        WITNESS WHEREOF,** this
        Agreement has been executed and delivered by the parties hereto as of the
        date
        first above written.
 
 **M-Wave,
        Inc.**
  **By:**
 
 /s/
        Jim Mayer
 
 Jim
        Mayer
  Its:
              CEO




**HOLDERS:**
 
 **MERCATOR
        MOMENTUM FUND, L.P.**
  By:
              M.A.G.
                  CAPITAL, LLC
 Its:
              General
                  Partner
 
 By:
              /s/
                  David Firestone
 Name:
                David
                    Firestone
 Its:
                Managing
                    Member
   By:
                M.A.G.
                    CAPITAL, LLC
 Its:
                General
                    Partner
 
 By:
                /s/
                    David Firestone
 Name:
                  David
                      Firestone
 Its:
                    Managing
                        Member
 **MONARCH
        POINTE FUND**
 
 By:
              /s/
                  David Firestone
 Its:
              President
 
 
 **MERCATOR
        MOMENTUM FUND III, L.P.**
 **M.A.G.
        CAPITAL, LLC**
 By:
                /s/
                    David Firestone
 Name:
                  David
                      Firestone
 Its:
                  Managing
                      Member




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