Document:

THIS
      WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. THIS WARRANT
      AND
      THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY NOT BE SOLD,
      OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE
      REGISTRATION STATEMENT UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
      SATISFACTORY TO ADVANCE NANOTECH, INC. THAT SUCH REGISTRATION IS NOT
      REQUIRED.

    

    
      	 	
              Right
                to Purchase ____________ shares of Common Stock of

              Advance
                Nanotech, Inc. (subject to adjustment as provided

              herein)

            

    

    

    COMMON
      STOCK PURCHASE WARRANT

     

    
      	
              No. 2008-A-001

            	
              Issue
                Date: _______ ___, 2008

            

    

    

    ADVANCE
      NANOTECH, INC., a corporation organized under the laws of the State of Delaware
      (the “Company”), hereby certifies that, for value received,
      ________________________,
      _____________________________________________________________, or its assigns
      (the “Holder”), is entitled, subject to the terms set forth below, to purchase
      from the Company at any time after the Issue Date until 5:00 p.m., E.S.T on
      the
      fifth anniversary of the Issue Date (the “Expiration Date”), up to ____________
      fully paid and nonassessable shares of Common Stock at a per share purchase
      price of $_____. The afore-described purchase price per share, as adjusted
      from
      time to time as herein provided, is referred to herein as the “Purchase Price.”
The number and character of such shares of Common Stock and the Purchase Price
      are subject to adjustment as provided herein. The Company may reduce the
      Purchase Price for all (but not less than all) of the Warrants, temporarily
      or
      permanently. Capitalized terms used and not otherwise defined herein shall
      have
      the meanings set forth in that certain Subscription Agreement (the “Subscription
      Agreement”), dated as of _________ ___, 2008, entered into by the Company and
      the Holder.

    

    As
      used
      herein the following terms, unless the context otherwise requires, have the
      following respective meanings: 

     

    (a) The
      term
“Company” shall include Advance Nanotech, Inc. and any corporation which shall
      succeed or assume the obligations of Advance Nanotech, Inc. hereunder.

     

    (b) The
      term
“Common Stock” includes (a) the Company's Common Stock, $0.001 par value per
      share, as authorized on the date of the Subscription Agreement, and (b) any
      other securities into which or for which any of the securities described in
      (a)
      may be converted or exchanged pursuant to a plan of recapitalization,
      reorganization, merger, sale of assets or otherwise (including warrants to
      purchase any of the securities described in (a)).

     

    (c) The
      term
“Other Securities” refers to any stock (other than Common Stock) and other
      securities of the Company or any other person (corporate or otherwise) which
      the
      holder of this Warrant at any time shall be entitled to receive, or shall have
      received, on the exercise of this Warrant, in lieu of or in addition to Common
      Stock, or which at any time shall be issuable or shall have been issued in
      exchange for or in replacement of Common Stock or Other Securities pursuant
      to
      Section 5 or otherwise. 

     

    (d) The
      term
“Warrant Shares” shall mean the Common Stock issuable upon exercise of this
      Warrant.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1. Exercise
      of Warrant.

     

    1.1. Number
      of Shares Issuable upon Exercise.
      From
      and after the Issue Date through and including the Expiration Date, the Holder
      hereof shall be entitled to receive, upon exercise of this Warrant in whole
      in
      accordance with the terms of subsection 1.2 or upon exercise of this Warrant
      in
      part in accordance with subsection 1.3, shares of Common Stock of the Company,
      subject to adjustment as described herein.

     

    1.2. Full
      Exercise.
      This
      Warrant may be exercised in full by the Holder hereof by delivery of an original
      or facsimile copy of the form of subscription attached as Exhibit A hereto
      (the
“Subscription Form”) duly executed by such Holder, with an executed copy thereof
      delivered on the same day to the Company together with payment, in cash, by
      wire
      transfer or by certified or official bank check payable to the order of the
      Company, in the amount obtained by multiplying the number of shares of Common
      Stock for which this Warrant is then exercisable by the Purchase Price then
      in
      effect. The original Warrant is not required to be surrendered to the Company
      until it has been fully exercised. 

     

    1.3. Partial
      Exercise.
      This
      Warrant may be exercised in part (but not for a fractional share) by surrender
      of this Warrant in the manner and at the places provided in subsection 1.2
      except that the amount payable by the Holder on such partial exercise shall
      be
      the amount obtained by multiplying (a) the number of whole shares of Common
      Stock designated by the Holder in the Subscription Form by (b) the Purchase
      Price then in effect. On any such partial exercise provided the Holder has
      surrendered the original Warrant, the Company, at its expense, will forthwith
      issue and deliver to or upon the order of the Holder hereof a new Warrant of
      like tenor, in the name of the Holder hereof or as such Holder (upon payment
      by
      such Holder of any applicable transfer taxes) may request, the whole number
      of
      shares of Common Stock for which such Warrant may still be
      exercised.

     

    1.5. Company
      Acknowledgment.
      The
      Company will, at the time of the exercise of this Warrant, upon the request
      of
      the Holder hereof acknowledge in writing its continuing obligation to afford
      to
      such Holder any rights to which such Holder shall continue to be entitled after
      such exercise in accordance with the provisions of this Warrant. If the Holder
      shall fail to make any such request, such failure shall not affect the
      continuing obligation of the Company to afford to such Holder any such
      rights.

     

    1.6. Trustee
      for Warrant Holders.
      In the
      event that a bank or trust company shall have been appointed as trustee for
      the
      Holder of this Warrant pursuant to Subsection 3.2, such bank or trust company
      shall have all the powers and duties of a warrant agent (as hereinafter
      described) and shall accept, in its own name for the account of the Company
      or
      such successor person as may be entitled thereto, all amounts otherwise payable
      to the Company or such successor, as the case may be, on exercise of this
      Warrant pursuant to this Section 1.

     

    1.7 Delivery
      of
      Stock Certificates, etc. on Exercise.
      The
      Company agrees that the shares of Common Stock purchased upon exercise of this
      Warrant shall be deemed to be issued to the Holder hereof as the record owner
      of
      such shares as of the close of business on the date on which this Warrant shall
      have been surrendered and payment made for such shares as aforesaid. As soon
      as
      practicable after the exercise of this Warrant in full or in part, and in any
      event within four (4) business
      days
      thereafter (“Warrant Share Delivery Date”), the Company at its expense
      (including the payment by it of any applicable issue taxes) will cause to be
      issued in the name of and delivered to the Holder hereof, or as such Holder
      (upon payment by such Holder of any applicable transfer taxes) may direct in
      compliance with applicable securities laws, a certificate or certificates for
      the number of duly and validly issued, fully paid and non-assessable shares
      of
      Common Stock (or Other Securities) to which such Holder shall be entitled on
      such exercise, plus, in lieu of any fractional share to which such Holder would
      otherwise be entitled, one full share of Common Stock, together with any other
      stock or other securities and property (including cash, where applicable) to
      which such Holder is entitled upon such exercise pursuant to Section 1 or
      otherwise. In the event that the Company fails for any reason to effect delivery
      of the Warrant Shares by the Warrant Share Delivery Date, the Holder may revoke
      all or part of the relevant Warrant exercise by delivery of a written notice
      to
      such effect to the Company provided
      that in
      the case of such a notice the notice shall be delivered by registered mail
      or by
      recognized overnight courier service, whereupon
      the Company and the Holder shall each be restored to their respective positions
      immediately prior to the exercise of the relevant portion of this
      Warrant.

    
      
        
        

      

      
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    1.8 Limitation
      on Exercise.
      Notwithstanding the provisions of this Warrant or the Subscription Agreement,
      in
      no event (except (i) as specifically provided in this Warrant as an exception
      to
      this provision, (ii) while there is outstanding a tender offer for any or all
      of
      the shares of the Common Stock, or (iii) at the Holder’s option, on at least
      sixty-five (65) days advance written notice from the Holder) shall the Holder
      be
      entitled to exercise this Warrant, or shall the Company have the obligation
      to
      issue shares upon such exercise of all or any portion of this Warrant to the
      extent that, after such exercise the sum of (1) the number of shares of Common
      Stock beneficially owned by the Holder and its affiliates (other than shares
      of
      Common Stock which may be deemed beneficially owned through the ownership of
      the
      unexercised portion of this Warrant or other rights to purchase Common Stock
      or
      through the ownership of the unconverted portion of the Notes (as defined in
      the
      Subscription Agreement) or other convertible securities), and (2) the number
      of
      shares of Common Stock issuable upon the exercise of this Warrant with respect
      to which the determination of this proviso is being made, would result in
      beneficial ownership by the Holder and its affiliates of more than 4.99% of
      the
      outstanding shares of Common Stock (after taking into account the shares to
      be
      issued to the Holder upon such exercise). For purposes of the proviso to the
      immediately preceding sentence, beneficial ownership shall be determined in
      accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended
      (the “1934 Act”), except as otherwise provided in clause (1) of such sentence.
      The Holder, by its acceptance of this Warrant, further agrees that if the Holder
      transfers or assigns this Warrant to a party who or which would not be
      considered such an affiliate, such assignment shall be made subject to the
      transferee’s or assignee’s specific agreement to be bound by the provisions of
      this Section 1.8 as if such transferee or assignee were the original Holder
      hereof.

     

    2. Law
      Governing This Warrant.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York without regard to principles of conflicts of laws. Any action
      brought by either party against the other concerning the transactions
      contemplated by this Warrant shall be brought only in the state courts of New
      York in the County of New York or in the federal courts located in the State
      and
      County of New York. Subject to the foregoing, the parties to this Warrant hereby
      irrevocably waive any objection to jurisdiction and venue of any action
      instituted hereunder and shall not assert any defense based on lack of
      jurisdiction or venue or based upon forum
      non conveniens.
      The
      Company and Holder waive trial by jury. The prevailing party shall be entitled
      to recover from the other party its reasonable attorney's fees and costs. In
      the
      event that any provision of this Warrant or any other agreement delivered in
      connection herewith is invalid or unenforceable under any applicable statute
      or
      rule of law, then such provision shall be deemed inoperative to the extent
      that
      it may conflict therewith and shall be deemed modified to conform with such
      statute or rule of law. Any such provision which may prove invalid or
      unenforceable under any law shall not affect the validity or enforceability
      of
      any other provision of any agreement.

     

    3. Adjustment
      for Reorganization, Consolidation, Merger, etc.

     

    3.1. Reorganization,
      Consolidation, Merger, etc.
      In case
      at any time or from time to time, the Company shall (a) effect a reorganization,
      (b) consolidate with or merge into any other person or (c) to the extent not
      covered by Section 3.5, transfer all or substantially all of its properties
      or
      assets to any other person under any plan or arrangement contemplating the
      dissolution of the Company, then, in each such case, as a condition to the
      consummation of such a transaction, proper and adequate provision shall be
      made
      by the Company whereby the Holder of this Warrant, on the exercise hereof as
      provided in Section 1, at any time after the consummation of such
      reorganization, consolidation or merger or the effective date of such
      dissolution, as the case may be, shall receive, in lieu of the Common Stock
      (or
      Other Securities) issuable on such exercise prior to such consummation or such
      effective date, the stock and other securities and property (including cash)
      to
      which such Holder would have been entitled upon such consummation or in
      connection with such dissolution, as the case may be, if such Holder had so
      exercised this Warrant, immediately prior thereto, all subject to further
      adjustment thereafter as provided in this Section 3.

    
      
        
        

      

      
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    3.2. Dissolution.
      In the
      event of any dissolution of the Company following the transfer of all or
      substantially all of its properties or assets, the Company, prior to such
      dissolution, shall at its expense deliver or cause to be delivered the stock
      and
      other securities and property (including cash, where applicable) receivable
      by
      the Holder of this Warrant after the effective date of such dissolution pursuant
      to this Section 3 to a bank or trust company (a “Trustee”) having its principal
      office in New York, NY, as trustee for the Holder of this Warrant. 

     

    3.3. Continuation
      of Terms.
      Upon
      any reorganization, consolidation, merger or transfer (and any dissolution
      following any transfer) referred to in this Section 3, this Warrant shall
      continue in full force and effect and the terms hereof shall be applicable
      to
      the Other Securities and property receivable on the exercise of this Warrant
      after the consummation of such reorganization, consolidation or merger or the
      effective date of dissolution following any such transfer, as the case may
      be,
      and shall be binding upon the issuer of any Other Securities, including, in
      the
      case of any such transfer, the person acquiring all or substantially all of
      the
      properties or assets of the Company, whether or not such person shall have
      expressly assumed the terms of this Warrant as provided in Section 4. In the
      event this Warrant does not continue in full force and effect after the
      consummation of the transaction described in this Section 3, then only in such
      event will the Company's securities and property (including cash, where
      applicable) receivable by the Holder of this Warrant be delivered to the Trustee
      as contemplated by Section 3.2.

     

    3.4 Share
      Issuance.
      Until
      the Expiration Date, if the Company shall issue any Common Stock, except for
      the
      Excepted Issuances (as defined in the Subscription Agreement), prior to the
      complete exercise of this Warrant for a consideration less than the Purchase
      Price that would be in effect at the time of such issue, then, and thereafter
      successively upon each such issue, the Purchase Price shall be reduced to such
      other lower price for then outstanding Warrants. For purposes of this
      adjustment, the issuance of any security or debt instrument of the Company
      carrying the right to convert such security or debt instrument into Common
      Stock
      or of any warrant, right or option to purchase Common Stock shall result in
      an
      adjustment to the Purchase Price upon the issuance of the above-described
      security, debt instrument, warrant, right, or option if such issuance is at
      a
      price lower than the Purchase Price in effect upon such issuance and again
      at
      any time upon any subsequent issuances of shares of Common Stock upon exercise
      of such conversion or purchase rights if such issuance is at a price lower
      than
      the Purchase Price in effect upon such issuance. The reduction of the Purchase
      Price described in this Section 3.4 is subject to the provisions of, and in
      addition to the other rights of the Holder described in, the Subscription
      Agreement. The
      number of shares of Common Stock that the Holder of this Warrant shall
      thereafter, on the exercise hereof, be entitled to receive shall be adjusted
      to
      a number determined by multiplying the number of shares of Common Stock that
      would otherwise (but for the provisions of this Section 3.4) be issuable on
      such
      exercise by a fraction of which (a) the numerator is the Purchase Price that
      would otherwise (but for the provisions of this Section 3.4) be in effect,
      and
      (b) the denominator is the Purchase Price in effect on the date of such
      exercise.

     

      3.5 Adjustment
      for Spin Off.
      If, for
      any reason, prior to the exercise of this Warrant in full, the Company spins
      off
      or otherwise divests itself of a part of its business or operations or disposes
      all or substantially all of its assets in a transaction (other than Advance
      Display Technologies plc) (the “Spin Off”) in which the Company does not receive
      compensation for such business, operations or assets, but causes securities
      of
      another entity (the “Spin Off Securities”) to be issued to securityholders of
      the Company, then: 

    
      
        
        

      

      
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    (a)
      the
      Company shall cause (i) to be reserved Spin Off Securities equal to the number
      thereof which would have been issued to the Holder had all of the Holder’s
      unexercised Warrants outstanding on the record date (the “Record Date”) for
      determining the amount and number of Spin Off Securities to be issued to
      security holders of the Company (the “Outstanding Warrants”) been exercised as
      of the close of business on the Trading Day immediately before the Record Date
      (the “Reserved Spin Off Shares”), and (ii) to be issued to the Holder on the
      exercise of all or any of the Outstanding Warrants, such amount of the Reserved
      Spin Off Shares equal to (x) the Reserved Spin Off Shares multiplied by (y)
      a
      fraction, of which (I) the numerator is the number of the Outstanding Warrants
      then being exercised, and (II) the denominator is the number of Outstanding
      Warrants; and

     

    (b)
      the
      Purchase Price on the Outstanding Warrants shall be adjusted immediately after
      consummation of the Spin Off by multiplying the Purchase Price by a fraction
      (if, but only if, such fraction is less than 1.0), the numerator of which is
      the
      average per share Market Price of the Common Stock for the five (5) Trading
      Days
      immediately following the fifth Trading Day after the Record Date, and the
      denominator of which is the average per share Market Price of the Common Stock
      for the five (5) Trading Days immediately preceding the Record Date; and such
      adjusted Purchase Price shall be deemed to be the Purchase Price with respect
      to
      the Outstanding Warrants after the Record Date. As used herein, “Market Price”
means (i) the last closing bid price of the Common Stock on whichever national
      securities exchange or trading market (including, without limitation, the Nasdaq
      and the OTC Bulletin Board) is the principal trading market where the Common
      Stock is listed by the Company for trading (the “Principal Market”), as reported
      by Bloomberg, or (ii) if the Principal Market should operate on an extended
      hours basis and does not designate the closing bid price, then the last bid
      price of the Common Stock prior to the commencement of extended trading hours
      on
      the applicable date, but in no event later than 4:30:00 p.m., New York local
      time, as reported by Bloomberg, or (iii) if no last bid price is reported for
      the Common Stock by Bloomberg, the average of the bid prices, on the one hand,
      and the ask prices, on the other hand, of all market makers for such security
      as
      reported in the “pink sheets” by Pink Sheets LLC (formerly the National
      Quotation Bureau, Inc.). The applicable trading market for such calculation,
      whether it is the Principal Market or the “pink sheets”, is hereafter referred
      to as the “Trading Market”. The Company shall make all determinations pursuant
      to this paragraph in good faith. In the absence of any available public
      quotations for the Common Stock, the Board of Directors of the Company shall
      determine in good faith the fair value of the Common Stock, which determination
      shall be set forth in a certificate by the Secretary of the Company. As used
      herein, “Trading Day” means a day on which the principal Trading Market with
      respect to the Common Stock is open for the transaction of
      business.

     

    4. Extraordinary
      Events Regarding Common Stock.
      In the
      event that the Company shall (a) issue additional shares of the Common Stock
      as
      a dividend or other distribution on outstanding Common Stock, (b) subdivide
      its
      outstanding shares of Common Stock, or (c) combine its outstanding shares of
      the
      Common Stock into a smaller number of shares of the Common Stock, then, in
      each
      such event, the Purchase Price shall, simultaneously with the happening of
      such
      event, be adjusted by multiplying the then Purchase Price by a fraction, the
      numerator of which shall be the number of shares of Common Stock outstanding
      immediately prior to such event and the denominator of which shall be the number
      of shares of Common Stock outstanding immediately after such event, and the
      product so obtained shall thereafter be the Purchase Price then in effect.
      The
      Purchase Price, as so adjusted, shall be readjusted in the same manner upon
      the
      happening of any successive event or events described herein in this Section
      4.
      The number of shares of Common Stock that the Holder of this Warrant shall
      thereafter, on the exercise hereof, be entitled to receive shall be adjusted
      to
      a number determined by multiplying the number of shares of Common Stock that
      would otherwise (but for the provisions of this Section 4 be issuable on such
      exercise by a fraction of which (a) the numerator is the Purchase Price that
      would otherwise (but for the provisions of this Section 4) be in effect, and
      (b)
      the denominator is the Purchase Price in effect on the date of such
      exercise.

    
      
        
        

      

      
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    5. Certificate
      as to Adjustments.
      In each
      case of any adjustment or readjustment in the shares of Common Stock (or Other
      Securities) issuable on the exercise of this Warrant, the Company at its expense
      will promptly cause its Chief Financial Officer or other appropriate designee
      to
      compute such adjustment or readjustment in accordance with the terms of this
      Warrant and prepare a certificate setting forth such adjustment or readjustment
      and showing in detail the facts upon which such adjustment or readjustment
      is
      based, including a statement of (a) the consideration received or receivable
      by
      the Company for any additional shares of Common Stock (or Other Securities)
      issued or sold or deemed to have been issued or sold, (b) the number of shares
      of Common Stock (or Other Securities) outstanding or deemed to be outstanding,
      and (c) the Purchase Price and the number of shares of Common Stock to be
      received upon exercise of this Warrant, in effect immediately prior to such
      adjustment or readjustment and as adjusted or readjusted as provided in this
      Warrant. The Company will forthwith mail a copy of each such certificate to
      the
      Holder of this Warrant and any Warrant Agent of the Company (appointed pursuant
      to Section 11 hereof).

     

    6. Reservation
      of Stock, etc. Issuable on Exercise of Warrant; Financial
      Statements.
      The
      Company will at all times reserve and keep available, solely for issuance and
      delivery on the exercise of this Warrant, all shares of Common Stock (or Other
      Securities) from time to time issuable on the exercise of this Warrant. This
      Warrant entitles the Holder hereof to receive copies of all financial and other
      information distributed or required to be distributed to the holders of the
      Company's Common Stock. 

     

    7. Assignment;
      Exchange of Warrant.
      Subject
      to compliance with applicable securities laws, this Warrant, and the rights
      evidenced hereby, may be transferred by any registered holder hereof (a
“Transferor”); provided, however, that by acceptance of this Warrant, Holder
      agrees that it may not and will not assign any portion of this Warrant to any
      competitor of the Company that is engaged in the business of commercializing
      technology in the industry sectors of displays, homeland security and defense.
      On the surrender for exchange of this Warrant, with the Transferor's endorsement
      in the form of Exhibit B attached hereto (the “Transferor Endorsement Form”) and
      together with an opinion of counsel reasonably satisfactory to the Company
      that
      the transfer of this Warrant will be in compliance with applicable securities
      laws, the Company will issue and deliver to or on the order of the Transferor
      thereof a new Warrant or Warrants of like tenor, in the name of the Transferor
      and/or the transferee(s) specified in such Transferor Endorsement Form (each
      a
“Transferee”), calling in the aggregate on the face or faces thereof for the
      number of shares of Common Stock called for on the face or faces of this Warrant
      so surrendered by the Transferor. 

     

    8. Replacement
      of Warrant.
      On
      receipt of evidence reasonably satisfactory to the Company of the loss, theft,
      destruction or mutilation of this Warrant and, in the case of any such loss,
      theft or destruction of this Warrant, on delivery of an indemnity agreement
      or
      security reasonably satisfactory in form and amount to the Company or, in the
      case of any such mutilation, on surrender and cancellation of this Warrant,
      the
      Company at its expense, twice only, will execute and deliver, in lieu thereof,
      a
      new Warrant of like tenor.

     

    9. Registration
      Rights.
      The
      Holder of this Warrant has been granted certain registration rights by the
      Company with respect to securities which may be acquired upon exercise of this
      Warrant but not with respect to this Warrant itself. These registration rights
      are set forth in the Subscription Agreement. The terms of the Subscription
      Agreement are incorporated herein by this reference.

     

    10. RESERVED.
      

    
      
        
        

      

      
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    11. Warrant
      Agent and Transfer Agent.

     

    (a) The
      Company may, by written notice to the Holder of this Warrant, appoint an agent
      (a “Warrant Agent”) for the purpose of issuing Common Stock (or Other
      Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
      this Warrant pursuant to Section 7, and replacing this Warrant pursuant to
      Section 8, or any of the foregoing, and thereafter any such issuance, exchange
      or replacement, as the case may be, shall be made at such office by such Warrant
      Agent. 

     

    (b) The
      Company covenants and agrees that, so long as any portion of this Warrant
      remains unexercised, the Company will, upon reasonable request from the Holder,
      direct the Company’s transfer agent to provide information to the Holder
      relating to (i) the number of shares of Common Stock reserved for issuance
      upon
      conversion of the Notes and exercise of the Warrants, or (ii) the aggregate
      number of outstanding shares of Common Stock of all stockholders of the Company
      as of a current or other specified date.

     

    12. Transfer
      on the Company's Books.
      Until
      this Warrant is transferred on the books of the Company, the Company may treat
      the registered holder hereof as the absolute owner hereof for all purposes,
      notwithstanding any notice to the contrary. 

     

    13. Notices.
      All
      notices, demands, requests, consents, approvals, and other communications
      required or permitted hereunder shall be in writing and, unless otherwise
      specified herein, shall be (i) personally served, (ii) deposited in the mail,
      registered or certified, return receipt requested, postage prepaid, (iii)
      delivered by reputable air courier service with charges prepaid, or (iv)
      transmitted by hand delivery, telegram, or facsimile, addressed as set forth
      below or to such other address as such party shall have specified most recently
      by written notice. Any notice or other communication required or permitted
      to be
      given hereunder shall be deemed effective (a) upon hand delivery or delivery
      by
      facsimile, with accurate confirmation generated by the transmitting facsimile
      machine, at the address or number designated below (if delivered on a business
      day during normal business hours where such notice is to be received), or the
      first business day following such delivery (if delivered other than on a
      business day during normal business hours where such notice is to be received)
      or (b) on the second business day following the date of mailing by express
      courier service, fully prepaid, addressed to such address, or upon actual
      receipt of such mailing, whichever shall first occur. The addresses for such
      communications shall be: if to the Company, to: Advance Nanotech, Inc, 600
      Lexington Avenue, 29th
      Floor,
      New York, NY, 10022,
      Attn:
Thomas
      Finn, telecopier: 212-583-0001, with a copy by telecopier only to: Andrews
      Kurth
      LLP, 450 Lexington Avenue, New York, NY, 10017, Attn: Richard Kronthal, Esq.,
      telecopier: 212-813-8133, and (ii) if to the Holder, to the address and
      telecopier number listed on the first paragraph of this Warrant, with a copy
      by
      telecopier only to: Axiom Capital Management, Inc., 780 Third Avenue,
      43rd
      floor,
      New York, NY 10017, Attention: Mark Martino, President. 

    

    [SIGNATURE
      PAGE FOLLOWS]

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has executed this Warrant as of the date first
      written above. 

    

    
      	
              ADVANCE
                NANOTECH, INC.

            
	 	 
	
              By:

            	 
	 	
              Name:
                Thomas P. Finn

            
	 	
              Title:
                Chief Financial Officer

            

    

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    

    Exhibit
      A

    

    FORM
      OF
      SUBSCRIPTION

    (to
      be
      signed only on exercise of Warrant)

     

    TO:
      ADVANCE NANOTECH, INC.

     

    The
      undersigned, pursuant to the provisions set forth in the attached Warrant
      (No.____), hereby irrevocably elects to purchase:

    

    ___________
      shares of the Common Stock covered by such Warrant.

    

    The
      undersigned herewith makes payment of the full purchase price for such shares
      at
      the price per share provided for in such Warrant, which is $___________. Such
      payment takes the form of $__________ in lawful money of the United
      States.

    

    The
      undersigned requests that the certificates for such shares be issued in the name
      of, and delivered to _____________________________________________________
      whose
      address is
      __________________________________________________________________________________________________________________________________

    __________________________________________________________________________________________________________________________________________.

    

    The
      undersigned represents and warrants that all offers and sales by the undersigned
      of the securities issuable upon exercise of the within Warrant shall be made
      pursuant to registration of the Common Stock under the Securities Act of 1933,
      as amended (the “Securities Act”), or pursuant to an exemption from registration
      under the Securities Act.

    

    
      	
              Dated:___________________

            	
              _______________________________

              (Signature
                must conform to name of holder as

              specified
                on the face of this Warrant)

              _______________________________

              _______________________________

              (Address)

            

    

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    Exhibit
      B

    

    FORM
      OF
      TRANSFEROR ENDORSEMENT

    (To
      be
      signed only on transfer of Warrant)

     

    For
      value
      received, the undersigned hereby sells, assigns, and transfers unto the
      person(s) named below under the heading “Transferees” the right represented by
      the within Warrant to purchase the percentage and number of shares of Common
      Stock of ADVANCE NANOTECH, INC. to which the within Warrant relates specified
      under the headings “Percentage Transferred” and “Number Transferred,”
respectively, opposite the name(s) of such person(s) and appoints each such
      person Attorney to transfer its respective right on the books of ADVANCE
      NANOTECH, INC. with full power of substitution in the premises.

    

    
      	
              Transferees

            	 	
              Percentage
                Transferred

            	 	
              Number
                Transferred

            
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

    

     

    
      	
              Dated:
                ______________, ___________

               

              Signed
                in the presence of:

              _______________________________

              (Name)

               

              ACCEPTED
                AND AGREED:

              [TRANSFEREE]

              _______________________________

              (Name)

            	 	
              _______________________________

              (Signature
                must conform to name of holder as specified

              on
                the face of this Warrant)

              _______________________________

              _______________________________

              (address)

              _______________________________

              _______________________________

              (address)ADVANCE
      NANOTECH, INC. 

    DIRECTOR
      COMPENSATION AND 

    CONFIDENTIAL
      INFORMATION AGREEMENT

    

    This
      Director Compensation and Confidential Information Agreement (this “Agreement”),
      effective ________ (the “Effective
      Date”),
      is
      entered into by and between Advance Nanotech, Inc., a Delaware corporation
      (the
“Company”),
      and
      [INSERT NAME OF DIRECTOR] (the “Director”),
      residing at ________________________________________.

    

    WHEREAS,
      the
      Company seeks to attract, retain and motivate qualified directors, to enhance
      the long-term mutuality of interest between directors and stockholders, and
      to
      protect the proprietary and confidential aspects of the Company’s business, and,
      therefore, sees fit to compensate the Director as described further
      herein;

    

    WHEREAS,
      as a
      member or prospective member of the Board of Directors of the Company (the
      “Board”),
      Director has or will have access to and receive information regarding the
      Company, it products, services, and business processes and business plans and
      other confidential and proprietary information, as described further
      herein;

    

    WHEREAS,
      execution of this Agreement is a condition of Director’s election, access to
      confidential and proprietary information of the Company and compensation
      hereunder; 

    

    NOW,
      THEREFORE,
      in
      consideration of the mutual promises and covenants contained herein, and other
      good and valid consideration that is mutually acceptable to the parties, the
      receipt and sufficiency of which are hereby acknowledged, the Company and
      Director (the “Parties”)
      hereby
      agree, and, if Director is currently a member of the Board, the terms and
      conditions of Director’s election to the Board are hereby amended and restated,
      as follows:

    1. Covenants
      of Company and Director. 

    

    a. In
      reliance upon the representations and warranties of Director as set forth
      herein, the Company agrees to provide certain Confidential Information (as
      hereinafter defined) to Director in Director’s capacity as a member of the
      Board, from time to time.

    

    b. Director
      agrees, represents, and warrants to maintain the confidentiality of such
      Confidential Information (as hereinafter defined) as set forth
      herein.

    

    c. Director
      hereby affirms and agrees that the covenants contained herein are made by
      Director in consideration of Director (i) being elected to the Board; (ii)
      being
      granted access to and receiving Confidential Information (as hereinafter
      defined); and (iii) the compensation provided herein.

    

    2. Identification
      of Confidential Information.

    

    a. The
      term
“Confidential
      Information”
shall
      mean all financial, technical and other information pertaining to the business,
      plan, or operations of Company or as otherwise designated as Confidential
      Information by the Company at the time it is disclosed to Director pursuant
      to
      subparagraph 2(b) below, including all copies thereof (including, without
      limitation, all non-identical copies, regardless of origin or location),
      including but not limited to algorithms, books, brochures, pamphlets, memoranda
      (including those of telephone or oral conversations), letters, electronic mail,
      reports, charts, graphs, notes, telegrams, and records, photographic imaging,
      computer tapes and discs, and video and audio tapes, agreements, files, books,
      logs, charts, records, studies, reports, surveys, schedules, plans, maps,
      statistical information, and models which may be furnished or disclosed to
      Director by, or acquired by Director directly or indirectly from, the Company.
      Such term shall also include all memoranda, notes, reports, documents and other
      media containing Confidential Information, as well as any copies and extracts
      of
      Confidential Information and any computer-generated documents and data
      containing Confidential Information prepared by or for the benefit of
      Director.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    b. Information
      considered to be Confidential Information by the Company may be disclosed orally
      or in writing. Oral disclosures of Confidential Information shall be orally
      noted, at the time of disclosure, to comprise Confidential Information. Written
      disclosures of Confidential Information or summaries of Confidential Information
      need not be marked “Confidential” or “Secret” or contain terms of similar import
      in order to be deemed Confidential Information hereunder. All communications
      at
      all meetings of the Board, or any committee thereof, and all records of said
      communications shall be deemed Confidential Information.

    

    3. Exceptions:
      Public Information.
      For
      purposes of this Agreement, Confidential Information shall not include, and
      the
      obligations herein shall not apply to, information that: (a) is now or
      subsequently becomes generally available to the public through no fault of
      Director; (b) Director can demonstrate, by clear and convincing evidence, was
      rightfully in Director’s possession prior to disclosure to Director by Company;
      (c) Director rightfully obtains from a third party without restriction and
      without breach of this Agreement; (d) is released or approved for release by
      Company without restriction; or (e) is inherently disclosed in the use, lease,
      sale, or other distribution of any present or future product or service produced
      by, for, or under authorization of Company or in publicly available supporting
      documentation for any such product or service. 

    

    4. Director’s
      Obligations.
      

    

    a. Fiduciary
      Duties.
      Director acknowledges and agrees that he is subject to obligations to the
      Company as a member of the Board including a duty of loyalty which requires
      that
      Director exercise Director’s powers in the interests of the Company, and not in
      the Directors’ own interest or in the interest of another person (e.g.,
      family
      members). Director’s duty of loyalty also incorporates a duty to maintain the
      confidentiality of all matters involving the Company until such time as there
      has been a general public disclosure. 

    

    b. General
      Standard of Care.
      Director agrees, represents, and warrants to use reasonable care, but in all
      events at least the same degree of care that Director uses to protect Director’s
      own confidential and proprietary information of similar importance, to prevent
      the unauthorized use, disclosure, or availability of Confidential Information
      of
      the Company. Director agrees to be responsible and liable for any negligent
      or
      willful act or omission by Director resulting in an unauthorized use or
      disclosure of the Confidential Information. 

    

    c. Specific
      Obligations of Director.
      Director agrees, represents, and warrants to take precautions to avoid any
      unauthorized use or disclosure of the Confidential Information. Such precautions
      shall include but not be limited to: (i) securing writings, documents,
      electronic communications and other media containing such Confidential
      Information in a safe or locked file cabinet or the equivalent; (ii) limiting
      Director’s copying of media or materials which contain Confidential Information
      to only those copies reasonably necessary under the standard of Paragraph 5
      of
      this Agreement; (iii) preventing Director’s own distribution of such media or
      materials unless specifically authorized by Company to do so; (iv) maintaining
      a
      log of all persons, if applicable, who are given access to Confidential
      Information by Director after receiving the Company’s authorization to do so;
      and (v) maintaining a written agreement with each person, if applicable, who
      Director may give access to such Confidential Information sufficient to comply
      with the terms of this Agreement. 

    

    d. Acknowledgement.
      Director acknowledges and agrees that the confidentiality obligations contained
      in paragraph 4b and 4c above are in addition to, and not in substitution for,
      Director’s fiduciary obligations as a director of the Company described in
      paragraph 4a above. Any remedies specifically provided for in this Agreement
      for
      breach of Director’s obligations under paragraph 4b and 4c shall be cumulative
      and in addition to any other remedies available at law or in equity for breach
      of Director’s fiduciary obligations to the Company and any other provision of
      this Agreement. 

     

    
      
         

      

      
        -
          2
          -

        
          

        

      

      
         

      

    

     

    e. Notice.
      Director shall advise the Company immediately in writing in the event Director
      learns or has reason to believe any person to whom Director has allowed access
      to the Confidential Information has violated, or intends to violate, any
      provision of this Agreement.

    

    5. Limitations
      on Use and Disclosure.
      

    

    a. Authorized
      Use.
      Director
      may use the Confidential Information only in connection with and for purposes
      of
      Director’s acting as a member of the Board and as the Company, its officers and
      directors may direct.

    

    b. Authorized
      Disclosure.
      Director may disclose the Confidential Information only to persons, if
      applicable, who (i) have a “need to know” such Confidential Information in order
      to enable Director to use such Confidential Information for purposes in support
      of the Company’s products or services, and (ii) are legally bound to use and
      disclose such Confidential Information in accordance with the terms of this
      Agreement. Director may make a reasonable number of copies of materials or
      media
      containing such information as appropriate to accomplish the purpose agreed
      to
      by the Company. Director shall notify the Company in writing of any disclosures
      made pursuant to this paragraph.

    

    c. Compelled
      Disclosure.
      Director may, in addition, use or disclose Confidential Information if and
      to
      the extent: (i) required by any request or order of any government authority;
      (ii) otherwise required by law; or (iii) necessary to establish Director’s
      rights under this Agreement; provided,
      however, that in each case, Director will first notify Company of such
      requirement, permit Company to contest such requirement if reasonably
      appropriate, and cooperate with Company in limiting the scope of the proposed
      use or disclosure and/or obtaining appropriate further means for protecting
      the
      confidentiality of the Confidential Information. 

    

    6. Return
      of Confidential Information.
      

    

    a. Upon
      the
      Company’s request, at any time, Director will either return or, if requested by
      the Company, destroy all copies of any media or materials containing
      Confidential Information. Upon the Company’s request, Director agrees to certify
      that it has completed such requested action. 

    

    b. Director’s
      obligations under Sections 5 and 6 shall survive termination of Director’s
      elected term and/or term of employment, or both, for any reason or the return
      of
      Confidential Information which is the subject of this Agreement.

    

    7. Remedies
      for Non-Compliance.
      It is
      agreed that the unauthorized use or disclosure of any Confidential Information
      by Director in violation of this Agreement or failure to disclose, hold in
      trust, and assign to the Company all Director’s right, title, and interest in
      and to any and all Inventions, as defined in Section 8a will cause severe and
      irreparable injury to the Company for which there is no adequate remedy at
      law
      and that it may not be possible to measure damages for such injury with
      reasonable certainty. In the event of any violation of this Agreement, Director
      agrees that the Company shall be authorized and entitled to obtain from any
      court of competent jurisdiction preliminary and/or permanent injunctive relief,
      as well as any other relief permitted by applicable law, restraining Director
      from engaging in activities prohibited by this Agreement. Director agrees to
      waive any requirement that the Company post bond as a condition for obtaining
      any such relief. Director shall notify the Company immediately, and cooperate
      with the Company at the Company’s reasonable request, upon Director’s discovery
      of any loss or compromise of the Company’s Confidential Information.
The
      Parties expressly agree that it shall not be a defense in such an injunction
      action that the Company had previously breached this Agreement. 

     

    
      
         

      

      
        -
          3
          -

        
          

        

      

      
         

      

    

     

    8. Assignment
      of Inventions.

    

    a. Director
      agrees that Director has and will promptly make full written disclosure to
      the
      Company, will hold in trust for the sole right and benefit of the Company,
      and
      hereby assigns to the Company, or its designee, all Director’s right, title, and
      interest in and to any and all inventions, original works of authorship,
      developments, concepts, improvements, designs, discoveries, ideas, trademarks
      or
      trade secrets, whether or not patentable or registrable under copyright or
      similar laws, which Director has or may solely or jointly conceive or develop
      or
      reduce to practice, or cause to be conceived or developed or reduced to
      practice, and any patentable improvements thereto which Director may solely
      or
      jointly conceive or develop or reduce to practice, in Director’s capacity as a
      director of the Company and during or in consequence of Director’s performance
      of Director’s duties as a director of the Company (collectively referred to as
“Inventions”).
      Director further acknowledges that all original works of authorship which are
      made by Director (solely or jointly with others) in Director’s capacity as a
      director of the Company and during or in consequence of Director’s performance
      of Director’s duties as a director of the Company and which are protectible by
      copyright are “works made for hire,” as that term is defined in the United
      States Copyright Act. Director understands and agrees that the decision whether
      or not to commercialize or market any Invention developed by Director solely
      or
      jointly with others is within the Company’s sole discretion and for the
      Company’s sole benefit and that no royalty will be due to Director as a result
      of the Company’s efforts to commercialize or market any such
      Invention.

    

    b. Notwithstanding
      any provision of clause (a) of Section 8 hereof to the contrary, the Parties
      hereby agree and acknowledge that “Inventions” (as used in such clause (a))
      shall not apply to, and Company shall have no right (ownership or otherwise)
      in
      or to, any invention which is developed by Director on Director’s own time
      without using any trade secret or other intellectual property information,
      right
      or property of the Company unless the invention relates, at the time of
      conception or reduction to practice of the invention, directly to the business
      of Company, or actual or demonstrably anticipated research or development of
      the
      Company. 

    

    c. Director’s
      obligations under this Section 8 shall survive the expiration or termination
      of
      Director’s term of election or employment by the Company for any
      reason.

    

    9. Director
      Compensation and Benefits.
      

    

    a. Annual
      Retainer.
      Director shall be entitled to an annual retainer of for Director’s services in
      the amount of Twenty Thousand ($20,000.00) Dollars. This annual retainer shall
      be payable in equal quarterly cash installments in arrears commencing
      ___________, consistent with the Company's standard payroll practices for its
      directors. Director compensation shall be reviewed annually by the Board and
      set
      by the Board.

    

    b. Committee
      Chairs.
      Any
      director who is the Chairman of a committee of the Board shall be entitled
      to
      receive an additional annual retainer of $5,000 payable in equal quarterly
      cash
      installments in arrears for each year in which such director serves as a
      Chairman. 

    

    c. Bonus.
      Director shall be entitled to receive such bonuses as may be established from
      time to time by the Board.

    

    d. Meeting
      Fees.
      Director
      shall receive a fee of $2,000.00, payable in cash, for each quarterly meeting
      of
      the Board of Directors. Unless otherwise provided by the Board, no fee is
      payable with respect to attendance at any other meeting of the Board of
      Directors, including special meetings, or committee meetings. 

     

    
      
         

      

      
        -
          4
          -

        
          

        

      

      
         

      

    

     

    e. Expenses.
      Upon
      submission of appropriate invoices or vouchers, the Company shall pay or
      reimburse Director for all reasonable expenses incurred by Director in the
      performance of Director’s duties as a member of the Board, or any committee
      thereof, and in furthering the business, and in keeping with the policies,
      of
      the Company. 

    

    f. Stock
      Plans.
      As part
      of the annual retainer compensation provided in paragraph 9a above, during
      the
      Director’s term of election, Director may be included in any stock incentive,
      stock option, or stock compensation plan as the Board may determine. Such plans
      may be documented by the Board, the administrator of such a plan, if any, and
      Director from time to time. Without limiting the foregoing, upon acceptance
      of
      appointment as a director of the Company, Director shall receive a grant
      of
      100,000 shares of the Company’s common stock pursuant to the Company’s
      applicable plan, which stock shall be registered by the Company on Form S-8
      or
      other applicable registration form and shall be free trading.

     

    10. Miscellaneous.
      

    

    a. This
      Agreement will be governed by and construed in accordance with the laws of
      the
      State of Delaware, as it would apply to contracts negotiated, executed,
      delivered and performed solely in such jurisdiction. All issues and questions
      concerning the construction, validity, enforcement, and interpretation of this
      Agreement shall be governed by, and construed in accordance with, the laws
      of
      the State of Delaware, without giving effect to any choice of law or conflict
      of
      law rules or provisions (whether of the State of Delaware or any other
      jurisdiction) that would cause the application of the laws of any jurisdiction
      other than those of the State of Delaware.

    

    b. This
      Agreement states the entire agreement between the Parties concerning the subject
      matter hereof and supersedes any prior and contemporaneous agreements between
      the Parties relating thereto. No amendment, modification or waiver of this
      Agreement shall be binding or effective for any purpose unless it is made in
      a
      writing signed by the party against which enforcement of such amendment,
      modification or waiver is sought. No failure or delay by a Party hereto in
      enforcing any right, power or privilege created hereunder shall operate as
      an
      implied waiver thereof, nor shall any single or partial enforcement thereof
      preclude any other or further enforcement thereof or the enforcement of any
      other right, power or privilege. 

    

    c. The
      parties acknowledge that the terms and conditions of this Agreement and the
      existence of the discussions between them are confidential, and shall not be
      disclosed, except as provided elsewhere in this Agreement, without the written
      consent of the other party.

    

    d. This
      Agreement may not be assigned by Director. This Agreement shall inure to the
      benefit of Company, its successors, and assigns. 

    

    e. In
      the
      event that any provision of this Agreement should be held to be void, voidable,
      or unenforceable, the remaining portions hereof shall remain in full force
      and
      effect.

    

    f. The
      captions used in this Agreement are for convenience of reference only and do
      not
      constitute a part of this Agreement and shall not be deemed to limit,
      characterize or in any way affect any provision of this Agreement, and all
      provisions of this Agreement shall be enforced and construed as if no caption
      had been used in this Agreement.

    

    g. This
      Agreement is a legally binding document. Director acknowledges that Director
      has
      read and understands this Agreement, that Director has had the opportunity
      to
      consult with and obtain independent legal advice from Director’s attorneys
      concerning the terms and conditions of this Agreement, including but not limited
      to the scope and duration of this Agreement, that Director is signing this
      Agreement voluntarily and that Director intends to be bound by the Agreement
      and
      each of its terms. 

     

    
      
         

      

      
        -
          5
          -

        
          

        

      

      
         

      

    

     

    h. The
      construction and interpretation of any clause or provision of this Agreement
      shall be construed without regard to the identity of the party that prepared
      this Agreement, and no presumption shall arise as a result that this Agreement
      was prepared by one party or the other.

    

    i. In
      the
      event a dispute arises regarding this Agreement, the prevailing party shall
      be
      entitled to recover all attorneys' fees and expenses incurred. 

    

    j. Subject
      to the terms and conditions herein provided, each of the parties hereto agrees
      to use all commercially reasonable efforts to take, or cause to be taken, all
      action and to do, or cause to be done, all things necessary, proper or advisable
      to consummate and make effective as promptly as practicable the transactions
      contemplated by this Agreement, including using all commercially reasonable
      efforts to remove any legal impediment to the consummation or effectiveness
      of
      such transactions and to obtain any consents and approvals required under this
      Agreement.

    

    k. This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed an original and all of which, when taken together, constitute one and
      the
      same document. The signature of any party to any counterpart shall be deemed
      a
      signature to, and may be appended to, any other counterpart.

    

    WHEREFORE,
      the Parties have executed this Agreement.

    

    
      	
              ADVANCE
                NANOTECH, INC.

            	 	
              DIRECTOR

            
	 	 	 
	
              By:

            	 	 	 	 
	
              Title:  

            	 	 	 	
              Name:
                

            
	
              Date:

            	 	 	
              Date:  

            	 

    

    
      
         

      

      
        -
          6
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