EXHIBIT 10.11

                          REGISTRATION RIGHTS AGREEMENT

         Registration  Rights  Agreement,  dated as of  February  14, 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
One Million,  Seven Hundred Thousand (1,700,000) shares of its Common Stock, par
value  $0.001 per share  (the  "Common  Stock")  and up to Eight  Hundred  Fifty
Thousand (850,000) 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.

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

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"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.

                  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

<PAGE>

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").

                  (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.

<PAGE>

                  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"  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
         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

<PAGE>

         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  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;

<PAGE>

                  (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;

                  (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

<PAGE>

         (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;

                  (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,  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.

<PAGE>

                  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,  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

<PAGE>

         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 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

<PAGE>

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
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.

<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 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.

<PAGE>

"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.

                  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):

<PAGE>

                           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.

                  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.]

<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

         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>
<CAPTION>
                                                             Print Name of Investor

<S>                                                          <C>
                                                                                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>