Document:

THIS
      WARRANT, AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT, HAVE
      NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
      ACT”),
      OR
      UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR.
      OTHERWISE DISPOSED OF UNLESS (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
      UNDER THE SECURITIES ACT AND SUCH LAWS, OR (2) AN EXEMPTION FROM REGISTRATION
      UNDER THE SECURITIES ACT AND SUCH LAWS IS AVAILABLE AND THE COMPANY HAS RECEIVED
      EITHER AN OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY
      TO
      THE COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION
      WITH
      SUCH DISPOSITION OR OTHER EVIDENCE THAT IS SATISFACTORY TO THE COMPANY, WHICH
      EVIDENCE ESTABLISHES THAT ANY SUCH DISPOSITION WILL NOT VIOLATE THE SECURITIES
      ACT, SUCH LAWS OR. ANY RULE OR REGULATION PROMULGATED THEREUNDER.

     

    Warrant
      No.
      _________

     

    Warrant
      to Purchase

     

    6,666,666
      Shares of Common Stock

     

    of
      Advance Nanotech, Inc.

     

    dated
      August 14, 2006

     

    Exercisable
      on or before

     

    5:00
      P.M., Eastern Standard Time, August 14, 2011

     

    FOR
      VALUE RECEIVED,
      Advance
      Nanotech, Inc.,
      a
      corporation organized and existing under the laws of the State of Delaware
      (the
“Company”),
      promises to issue in the name of, and sell and deliver to Jano Holdings Limited
      or its registered assigns (in each case, the “Holder”),
      a
      certificate or certificates for an aggregate of Six Million Six Hundred Thousand
      Six Hundred Sixty Six (6,666,666) shares (the “Warrant
      Shares”)
      of the
      Company’s common stock upon compliance with the terms of this warrant (the
“Warrant”)
      and
      payment therefor of the exercise price of $1.25 per share of common stock (the
      “Exercise
      Price”
or
      the
“Warrant
      Share Price”).
      The
      number of Warrant Shares and the Exercise Price shall be adjusted from time
      to
      time as set forth below. This Warrant shall be exercisable upon execution and
      at
      any time prior to 5:00 p.m., Eastern Standard Time, on August 14, 2011 (the
      “Exercise
      Period”)
      and
      shall be void thereafter. This Warrant is issued on August 14, 2006 (the
“Date
      of Issuance”).
      This
      Warrant is also subject to the following terms and conditions.

     

    1.  EXERCISE
      OF WARRANT.

     

    (a)  General
      Method of Exercise.
      This
      Warrant may be exercised in whole or in part at any time during the Exercise
      Period by delivery to the Company’s principal office (or such other office as
      the Company may designate by written notice to the Holder), not later than
      two
      (2) business days before the date on which this Warrant is to be exercised
      (the
“Exercise
      Date”),
      of
      all of the following:

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (i)  a
      Form of
      Exercise Notice (the “Form
      of Exercise”)
      annexed hereto, duly executed by the Holder and setting forth (A) the Exercise
      Date, (B) the number of Warrant Shares as to which this Warrant is to be
      exercised on the Exercise Date;

     

    (ii)  either
      cash, a certified or official bank check payable to the Company in funds
      immediately available on the Exercise Date or a wire transfer for the account
      of
      the Company, in an amount equal to the Exercise Price multiplied by the number
      of Warrant Shares of the Company’s common stock as to which this Warrant is to
      be exercised on the Exercise Date; and

     

    (iii)  this
      Warrant.

     

    (b)  Issuance
      of Certificates and New Warrant.
      Within
      a reasonable time not in excess of twenty (20) days after the Exercise Date,
      the
      Company shall deliver to the Holder:

     

    (i)  a
      certificate for the number of shares of the Company’s common stock such Holder
      elected to purchase on the Exercise Date; or

     

    (ii)  if
      this
      Warrant was not exercised in full, a new Warrant of like tenor in the name
      of
      the Holder evidencing the right to purchase the number of Warrant Shares as
      to
      which this Warrant has not been exercised, both of which shall be delivered
      to
      the Holder at the address designated in the Form of Exercise. Any new Warrant
      shall be dated with this Warrant’s original issue date.

     

    Any
      certificates so delivered shall be in such denominations as may be requested
      by
      the Holder hereof, shall be registered in the name of such Holder and shall
      bear
      a restrictive legend if not registered.

     

    Certain
      Definitions.

     

    (i)  As
      used
      herein, “Market
      Price”
means,
      with respect to any applicable security as of any applicable date, (i) the
      last
      closing trade price of such security on whichever national securities exchange
      or trading market (including, without limitation, the Nasdaq and the OTC
      Bulletin Board) is the principal trading market where such security 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 trade price, then the
      last trade price of such security 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 trade price is
      reported for such security 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 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.

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    (ii)  As
      used
      herein, “Trading
      Day”
means
      a
      day on which the Trading Market with respect to the Common Stock is open for
      the
      transaction of business.

     

    2.  ADJUSTMENTS.

     

    (a)  If
      the
      Company is recapitalized through the subdivision or combination of its
      outstanding shares of common stock into a larger or smaller number of shares,
      the number of Warrant Shares shall be increased or reduced, as of the record
      date for such recapitalization, in the same proportion as the increase or
      decrease in the outstanding shares of common stock, and the Exercise Price
      shall
      be adjusted so that the aggregate amount payable for the purchase of all of
      the
      Warrant Shares issuable hereunder immediately after the record date for such
      recapitalization shall equal the aggregate amount so payable immediately before
      such record date.

     

    (b)  If
      the
      Company declares a dividend or distribution on common stock payable in common
      stock or securities convertible into common stock, the number of shares of
      common stock for which this Warrant may be exercised shall be increased, as
      of
      the record date for determining which holders of common stock shall be entitled
      to receive such dividend, in proportion to the increase in the number of
      outstanding shares (and shares of common stock issuable upon conversion of
      all
      such securities convertible into common stock) of common stock as a result
      of
      such dividend or distribution, and the Exercise Price shall be adjusted so
      that
      the aggregate amount payable for the purchase of all the Warrant Shares issuable
      hereunder immediately after the record date for such dividend or distribution
      shall equal the aggregate amount so payable immediately before such record
      date.

     

    (c)  Whenever
      the number of Warrant Shares purchasable upon the exercise of the Warrant or
      the
      Exercise Price of the Warrant Shares is adjusted as provided herein, the Company
      shall mail to the Holder a notice of such adjustment or adjustments, prepared
      and signed by the Chief Executive Officer, Chief Financial Officer or Secretary
      of the Company, which sets forth the number of Warrant Shares purchasable upon
      the exercise of the Warrant and the Exercise Price of such Warrant Shares after
      such adjustment, a brief statement of the facts requiring such adjustment,
      and
      the computation by which such adjustment was made. Upon an adjustment described
      herein, the Company may elect to issue a new Warrant reflecting such adjustment,
      and if the Company so elects, the Holder will return this Warrant to the Company
      in exchange for such new Warrant.

     

    (d)  The
      provisions of this Section a are for the purpose of, and shall be interpreted
      to
      the effect that, upon any exercise of this Warrant, the Holder shall be entitled
      to receive the same amount and kind of securities and other property that it
      would have been entitled to receive as the owner at all times subsequent to
      the
      date hereof of the number of shares of common stock issuable upon conversion
      of
      the Warrant Shares purchased upon any such exercise.

     

    (e)  Except
      as
      required pursuant to Sections 2(i) or 2(j) hereof or as otherwise provided
      in
      this Warrant, it is agreed and understood that no adjustments shall be made
      hereunder solely as a result of the issuance by the Company of (i) common stock
      issued pursuant to any future public or private issuance of stock, or (ii)
      common stock issued upon the exercise of warrants or options and other
      convertible securities granted by the Company.

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    (f)  No
      adjustment of the Exercise Price shall be made in an amount of less than 1%
      of
      the Exercise Price in effect at the time such adjustment is otherwise required
      to be made, but any such lesser adjustment shall be carried forward and shall
      be
      made at the time and together with the next subsequent adjustment which,
      together with any adjustments so carried forward, shall amount to not less
      than
      1% of such Exercise Price.

     

    (g)  Irrespective
      of any adjustment or change in the Exercise Price, or the number of shares
      of
      common stock actually purchasable under each Warrant of like tenor, the Warrants
      theretofore and thereafter issued may continue to express the Exercise Price
      per
      Share and the number of Warrant Shares purchasable thereunder as the Exercise
      Price per Share and the number of Warrant Shares purchasable were expressed
      on
      the Warrants when initially issued.

     

    (h)  The
      Company and the Holder of this Warrant agree that in the event that there is
      a
      Change in Control of the Company, from and after that date all references to
      the
      Company shall automatically be deemed to mean the Change in Control Party,
      all
      references to Warrant Shares shall mean shares of common stock of the Change
      in
      Control Party, and this Warrant automatically converts into Warrants to purchase
      the common stock of the Change in Control Party provided, that in any such
      event
      this Warrant shall entitle the Warrant holder to acquire the same percentage
      of
      the shares of the Change in Control Party as the holder of the Warrant, prior
      to
      such the Change in Control, was entitled to acquire, in respect of the shares
      of
      common stock of the Company prior to the Change in Control, but in no event,
      notwithstanding any action by the Company (or any Change in Control Party)
      or
      its shareholders shall the number of Warrant Shares which may be acquired by
      the
      holder of this Warrant upon exercise of the same be less than 6,666,666 shares
      of common stock of the applicable entity without the express prior written
      consent of the holder of this Warrant to this Warrant being exercisable to
      acquire a lesser number of shares of common stock of the applicable entity.
      This
      provision shall apply equally to any Change in Control (and the applicable
      Change in Control Party) and to any subsequent Change in Control with respect
      to
      any Change in Control Party or any subsequent Change in Control Party. For
      purposes of this Warrant, a “Change in Control” shall mean (a) a merger ,
      consolidation or any other combination of the Company (other than a merger,
      consolidation or combination of a wholly-owned subsidiary of the Company or
      any
      other person or entity with respect to which Jano Holdings Limited or its
      registered assignees shall have given prior approval in writing) with any entity
      or person, (b) the sale of all or substantially all of the assets of the
      Company, or (c) the purchase by a single entity or group, as defined in Section
      13(d) of the Securities Exchange Act of 1934, as amended, of more than 25%
      of
      the voting stock of the Company in a single transaction or a series of related
      transactions, whether directly or indirectly, and whether through a transaction
      with the Company, its shareholders or otherwise. The term “Change in Control
      Party” shall mean the person or entity (a) with which-the Company merged,
      consolidated or was combined; (b) which acquired all or substantially all of
      the
      assets of-the Company, or (c) acquired more than 25% of the voting stock of
      the
      Company in a single transaction or a series of related transactions as described
      above, in any such case in the applicable Change in Control transaction or
      transactions.

     

    (i)  If
      the
      Company shall issue any Additional Shares of Common Stock after the date hereof
      (excluding any such issuance for which an adjustment is made under the foregoing
      subsection (a)), for no consideration or for a consideration per share less
      than
      the Warrant Share Price in effect on the date of and immediately prior to such
      issue, then in such event, the Warrant Share Price shall be reduced,
      concurrently with such issue, to a price equal to the quotient obtained by
      dividing:

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    (A)  an
      amount
      equal to (x) the total number of shares of Common Stock outstanding immediately
      prior to such issuance or sale multiplied by the Warrant Share Price in effect
      immediately prior to such issuance or sale, plus (y) the aggregate consideration
      (before deduction of transaction expenses or commission or underwriting
      discounts or allowances in connection therewith) received or deemed to be
      received by the Company, if any, upon such issuance or sale, by

     

    (B)  the
      total
      number of shares of Common Stock outstanding immediately after such issuance
      or
      sale.

     

    (j)  If
      the
      Company, at any time or from time to time after the Date of Issuance, shall
      issue any options, warrants or other rights to purchase Common Stock
      (collectively, “Options”) or securities that, by their terms, directly or
      indirectly, are convertible into or exchangeable for shares of Common Stock
      (“Convertible
      Securities”)
      (in
      each case other than
      those
      securities excluded, pursuant to Section 2 (1), from the definition of
“Additional Shares of Common Stock”) or shall fix a record date for the
      determination of holders of any class of securities entitled to receive any
      such
      Options or Convertible Securities, in each case other than
      those
      securities excluded, pursuant to Section 2 (1), from the definition of
“Additional Shares of Common Stock”, then the maximum number of shares of Common
      Stock (as set forth in the instrument relating thereto without regard to any
      provision contained therein for a subsequent adjustment of such number) issuable
      upon the exercise of such Options or, in the case of Convertible Securities
      and
      Options therefor, the conversion or exchange of such Convertible Securities,
      shall be deemed to be Additional Shares of Common Stock issued as of the time
      of
      such issue or, in case such a record date shall have been fixed, as of the
      close
      of business on such record date, provided that in any such case in which
      Additional Shares of Common Stock are deemed to be issued pursuant to this
      Section 2 (j):

     

    (i)  no
      further adjustment in the Warrant Share Price shall be made upon the subsequent
      issue of Convertible Securities or shares of Common Stock upon the exercise
      of
      such Options or conversion or exchange of such Convertible Securities and,
      upon
      the expiration of any such Option without exercise or the termination of any
      such right to convert or exchange such Convertible Securities without such
      conversion or exchange, the Warrant Share Price then in effect hereunder shall
      forthwith be increased to the Warrant Share Price which would have been in
      effect at the time of such expiration or termination had such Option or
      Convertible Securities, to the extent outstanding immediately prior to such
      expiration or termination, never been issued, and the Common Stock issuable
      thereunder shall no longer be deemed to be outstanding;

     

    (ii)  if
      such
      Options or Convertible Securities by their terms provide, with the passage
      of
      time or otherwise, for any increase in the consideration payable to the Company,
      or decrease in the number of shares of Common Stock issuable, upon the exercise,
      conversion or exchange thereof, the Warrant Share Price computed upon the
      original issue thereof (or upon the occurrence of a record date with respect
      thereto), and any subsequent adjustments based thereon, shall, upon any such
      increase or decrease becoming effective, be recomputed to reflect such increase
      or decrease insofar as it affects such Options or the rights of conversion
      or
      exchange under such Convertible Securities, provided that no readjustment
      pursuant to this clause (ii) shall have the effect of increasing the Warrant
      Share Price to an amount which exceeds the lower of (A) the Warrant Share Price
      on the original adjustment date, or (B) the Warrant Share Price that would
      have
      resulted from any issuance of Additional Shares of Common Stock between the
      original adjustment date and such readjustment date;

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    (iii)  if
      such
      Options or Convertible Securities by their terms provide, with the passage
      of
      time or otherwise, for any decrease in the consideration payable to the Company,
      or increase in the number of shares of Common Stock issuable, upon the exercise,
      conversion or exchange thereof, the Warrant Share Price computed upon the
      original issue thereof (or upon the occurrence of a record date with respect
      thereto), and any subsequent adjustments based thereon, shall, upon any such
      decrease or increase becoming effective, be recomputed to reflect such decrease
      or increase insofar as it affects such Options or the rights of conversion
      or
      exchange under such Convertible Securities, provided that no readjustment
      pursuant to this clause (iii) shall have the effect of decreasing the Warrant
      Share Price to an amount which exceeds the lower of (A) the Warrant Share Price
      on the original adjustment date, or (B) the Warrant Share Price that would
      have
      resulted from any issuance of Additional Shares of Common Stock between the
      original adjustment date and such readjustment date; and

     

    (iv)  if
      such
      Options or Convertible Securities cover shares which are excluded from the
      definition of Additional Shares of Common Stock by Section 2.1(a), then this
      Section 2.1(d) shall not apply to those underlying shares.

     

    (k)  For
      purposes of Subsections 2 (i) and 2 (j), the consideration received by the
      Company for the issue of any Additional Shares of Common Stock shall be computed
      as follows:

     

    (A)  Cash
      and Property:
      Such
      consideration shall:

     

    	(1)  	
            insofar
              as it consists of cash, be computed at the aggregate of cash received
              by
              the Company, excluding amounts paid or payable for accrued interest
              or
              accrued dividends;

          

     

    	(2)  	
            insofar
              as it consists of property other than cash, be computed at the fair
              market
              value thereof at the time of such issue, as determined in good faith
              by
              the Board; and

          

     

    in
      the
      event Additional Shares of Common Stock are issued together with other shares
      or
      securities or other assets of the Company for consideration which covers both,
      be the proportion of such consideration so received, computed as provided in
      clauses (1) and (2) above, as determined in good faith by the
      Board.

     

    (B)  Options
      and Convertible Securities. The consideration per share received by the Company
      for Additional Shares of Common Stock deemed to have been issued pursuant to
      Subsection 2 (j), relating to Options and Convertible Securities, shall be
      determined by dividing

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

    	(1)  	
            the
              total amount, if any, received or receivable by the Company as
              consideration for the issue of such Options or Convertible Securities,
              plus the minimum aggregate amount of additional consideration (as set
              forth in the instruments relating thereto, without regard to any provision
              contained therein for a subsequent adjustment of such consideration)
              payable to the Company upon the exercise of such Options or the conversion
              or exchange of such Convertible Securities, or in the case of Options
              for
              Convertible Securities, the exercise of such Options for Convertible
              Securities and the conversion or exchange of such Convertible Securities,
              by

          

     

    	(2)  	
            the
              maximum number of shares of Common Stock (as set forth in the instruments
              relating thereto, without regard to any provision contained therein
              for a
              subsequent adjustment of such number) issuable upon the exercise of
              such
              Options or the conversion or exchange of such Convertible
              Securities.

          

     

    In
      the
      event that at any time, as a result of an adjustment made pursuant to this
      Section 2, the Holder of this Warrant thereafter shall become entitled to
      receive any shares of the Company, other than Common Stock, thereafter the
      number of such other shares so receivable upon exercise of this Warrant shall
      be
      subject to adjustment from time to time in a manner and on terms as nearly
      equivalent as practicable to the provisions with respect to the Common Stock
      contained herein.

     

    (l)  The
      term
“Additional Shares of Common Stock” includes all shares of Common Stock issued
      by the Company after the Date of Issuance, other than:

     

    (i)  Shares
      of
      Common Stock (subject to appropriate adjustment for any stock dividend, stock
      split, combination or other similar recapitalization affecting such shares)
      issuable or issued without breach or default under the Amended and Restated
      Senior Secured Grid Note made by the Company to Jano Holdings Limited and dated
      August __, 2006 to the Company’s employees, directors or consultants pursuant to
      a stock option plan or restricted stock plan or other compensation plan approved
      by the Board; 

     

    (ii)  Shares
      of
      Common Stock issued or issuable pursuant to securities outstanding at the Date
      of Issuance or agreements to issue such securities or underlying shares of
      Common Stock which agreements are outstanding at the Date of
      Issuance;

     

    (iii)  Shares
      of
      Common Stock issuable upon exercise of options or warrants, or upon conversion
      of convertible securities or other rights, outstanding as of the Date of
      Issuance, as well as options and warrants and shares of Common Stock issued
      or
      issuable upon exercise of options or warrants issued upon commercially
      reasonable terms to placement agents or to underwriters on a “best efforts”
basis in connection with the sale by the Company of the Company’s Common Stock;
      and

     

    (iv)  Securities
      and options, warrants and rights to purchase securities issued upon commercially
      reasonable terms (a) to financial institutions or lessors in connections with
      commercial credit agreements, equipment financings or similar transactions
      or
      (b) to other corporations, persons or entities in connection with acquisitions,
      mergers or similar business combinations, partnership arrangements, strategic
      alliances, licensing arrangements or similar non-capital raising transactions
      approved, in the case of either (a) or (b), by the Company’s Board of Directors
      provided, that in no event shall such securities and options, warrants and
      rights directly or indirectly permit or result in the issuance of shares of
      Common Stock (or securities directly or indirectly exercisable to acquire,
      or
      convertible into or exchangeable for the same) constituting more than 33% of
      the
      outstanding Common Stock, on a fully diluted basis, as of the Date of
      Issuance.

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

    (m)  In
      the
      event that at any time, as a result of an adjustment made pursuant to this
      Section 2, the Holder of this Warrant thereafter shall become entitled to
      receive any shares of the Company, other than Common Stock, thereafter the
      number of such other shares so receivable upon exercise of this Warrant shall
      be
      subject to adjustment from time to time in a manner and on terms as nearly
      equivalent as practicable to the provisions with respect to the Common Stock
      contained herein.

     

    (n)  If
      the
      Company takes any action affecting its shares of Common Stock after the Date
      of
      Issuance that would be covered by Section 2 but for the manner in which such
      action is taken or structured, which would in any way diminish the value of
      this
      Warrant, then the Warrant Share Price and the number of shares of common stock
      for which this Warrant may be exercised shall be adjusted in such manner as
      the
      Board shall in good faith determine to be equitable under the circumstances.
      If
      an adjustment of the Warrant Share Price pursuant to Section 2(i) or 2(j) shall
      be insufficient to maintain on an equitable basis for the holder of the Warrant
      the proportionate interest of the Warrant holder and the benefit of the bargain
      intended with respect to the Warrant (such as would likely occur, by way of
      example only, if the Warrant Share Price were to be required to be adjusted
      to
      $0.01 per share or less in accordance with the formulae set forth in this
      Warrant), then the number of shares of common stock for which this Warrant
      may
      be exercised shall also be adjusted in such manner as the Board shall in good
      faith determine to be equitable under the circumstances to maintain the
      proportionate interest of the Warrant holder and the benefit of the bargain
      intended by the parties.

     

    3.  COVENANTS
      OF THE COMPANY.
      The
      Company hereby covenants and agrees that, prior to the expiration of this
      Warrant by exercise or by its term:

     

    (a)  The
      Company will not by amendment of its Articles of Incorporation or through
      reorganization, consolidation, merger, dissolution or sale of assets, or by
      any
      other voluntary act or deed, avoid or seek to avoid the observance or
      performance of any of the covenants, stipulations or conditions to be observed
      or performed hereunder by the Company, but will at all times in good faith
      assist, insofar as it is able, in the carrying out of all provisions of this
      Warrant and in the taking of all other actions that may be necessary to protect
      the rights of the Holder hereunder.

     

    (b)  The
      Company shall at all times reserve and keep available, out of its authorized
      and
      unissued capital stock, such numbers of shares of common stock as shall, from
      time to time, be sufficient for the exercise of the Warrants.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

    (c)  All
      Warrant Shares that may be issued upon the exercise of the rights represented
      by
      this Warrant will, upon issuance, be validly issued, fully paid and
      non-assessable, and free from all taxes, liens and charges with respect to
      the
      issue thereof (other than taxes in respect of any transfer contemporaneously
      with such issue).

     

    4.  COMPLIANCE
      WITH LAWS.
      If, at
      the time of the surrender of this Warrant in connection with any exercise,
      transfer, or exchange of this Warrant, this Warrant or the Warrant Shares are
      not registered under both the Securities Act and applicable state securities
      laws, the Company may require, as a condition of allowing such exercise,
      transfer or exchange, a representation by the Holder that the transferee of
      this
      Warrant, in whole or in part, or any Warrant Shares, is an “accredited investor”
as defined in Rule 501(a) promulgated under the Securities Act.

     

    5.  TRANSFER
      AND EXCHANGE.

     

    (a)  Transfer.
      This
      Warrant is not transferable without the Company’s prior written consent. Upon
      receipt of such consent, this Warrant is transferable on the books of the
      Company at its principal office by the registered Holder hereof only upon
      surrender of this Warrant properly endorsed. The Company shall issue and deliver
      to the transferee a new Warrant or Warrants representing the Warrant so
      transferred. Upon any partial transfer, the Company will issue and deliver
      to
      the Holder a new Warrant or Warrants with respect to the Warrants not so
      transferred. Until due presentment for registration of transfer on the books
      of
      the Company, the Company may treat the registered Holder hereof as the owner
      and
      Holder hereof for all purposes, and the Company shall not be affected by any
      notice to the contrary.

     

    (b)  Exchange.
      This
      Warrant, at any time prior to the exercise hereof, upon presentation and
      surrender to the Company may be exchanged, along with other Warrants of like
      tenor registered in the name of the same Holder, for another Warrant or other
      Warrants of like tenor in the name of such Holder exercisable for the same
      aggregate number of Warrant Shares as the Warrant or Warrants
      surrendered.

     

    6.  LOSS,
      THEFT, DESTRUCTION OR MUTILATION.
      In case
      this Warrant shall become mutilated or defaced or be destroyed, lost or stolen,
      the Company shall execute and deliver a new Warrant in exchange for and upon
      surrender and cancellation of such mutilated or defaced Warrant or in lieu
      of
      and substitution for such Warrant so destroyed, lost or stolen, upon the Holder
      of such Warrant filing with the Company such evidence satisfactory to it that
      such Warrant has been so mutilated, defaced, destroyed, lost or stolen and
      of
      the ownership thereof by the Holder; provided,
      however,
      that
      the Company shall be entitled, as a condition to the execution and delivery
      of
      such new Warrant, to demand indemnity satisfactory to it and payment of expenses
      and charges incurred in connection with the delivery of such new Warrant. All
      Warrants so surrendered to the Company shall be canceled.

     

    7.  NO
      RIGHTS AS SHAREHOLDER.
      This
      Warrant shall not entitle the Holder to any rights as a stockholder of the
      Company, either at law or in equity. The rights of the Holder are limited to
      those expressed in this Warrant and are not enforceable against the Company
      except to the extent set forth herein.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

    8.  RECORD
      OWNER.
      At the
      time of the surrender of this Warrant, together with the Form of Exercise
      properly executed and payment of the Exercise Price, the person exercising
      this
      Warrant shall be deemed to be the holder of record of the shares of common
      stock
      deliverable upon such exercise, in whole or in part, notwithstanding that the
      stock transfer books of the Company shall then be closed or that certificates
      representing such shares of common stock shall not then be actually delivered
      to
      such person.

     

    9.  FRACTIONAL
      SHARES.
      The
      Company shall not issue any fractional Warrant Shares or scrip representing
      fractional Warrant Shares upon the exercise of this Warrant. With respect to
      any
      fraction of a share called for on such exercise, the Holder may elect to
      receive, and the Company shall pay to the Holder, an amount in cash equal to
      such fraction multiplied by the Exercise Price. In the alternative, the Holder
      may elect to remit to the Company an amount in cash equal to the difference
      between such fraction and one, multiplied by the Exercise Price, and the Company
      will issue the Holder one share of common stock in addition to the number of
      whole Warrant Shares required by the exercise of the Warrant.

     

    10.  MAILING
      OF NOTICES.
      All
      notices and other communications required hereunder shall be sent by registered
      or certified mail, (return receipt requested) or delivered personally or by
      courier or by confirmed telecopy, and shall be effective five (5) days after
      being placed in the mail, if mailed, or upon receipt or refusal of receipt,
      if
      delivered personally or by courier, or by confirmed telecopy, in each case
      addressed to a party. The addresses for such communications shall
      be:

     

    If
      to the
      Company:

     

    Attention:
      Chief Financial Officer 

     

    Advance
      Nanotech, Inc. 

     

    600
      Lexington Avenue - 29th Floor

     

    New
      York,
      NY, 10022

     

    Or
      such
      other addresses as the Company furnishes by notice to the Holder in accordance
      with this Section 10

     

    If
      to the
      Holder, at such address as such Holder shall have provided in writing to the
      Company, or at such other address as such Holder furnishes by notice given
      in
      accordance with this Section 10.

     

    11.  PIGGYBACK
      REGISTRATION.
      If the
      Company determines, in its discretion, to register any of its securities under
      the Act, either for its own account or the account of a security holder on
      a
      form in which the shares underlying the Warrants may be included, other than
      (i)
      a registration relating to employee benefit plans, (ii) a registration relating
      to a Rule 145 of the Act or similar transaction, or (iii) a registration on
      any
      form that does not include substantially the same information as could be
      required to be included in a registration statement covering the sale of the
      shares underlying the Warrants, the Company will include in such registration
      (and any related qualification under blue sky laws or other compliance), and
      in
      any underwriting involved therein, all of the shares underlying the
      Warrants.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

    12.  NO
      REGISTRATION UNDER THE SECURITIES ACT.
      Because
      this Warrant has not been registered under the Securities Act, it and all
      replacement Warrants and the Warrant Shares shall bear the following
      legend:

     

    THIS
      WARRANT, AND THE SECURITIES ISSUABLE UPON THE EXERCISE OF THIS WARRANT, HAVE
      NOT
      BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY
      STATE
      SECURITIES LAWS AND MAY NOT BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED
      OF UNLESS (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
      SECURITIES ACT AND SUCH LAWS, OR (2) AN EXEMPTION FROM REGISTRATION UNDER THE
      SECURITIES ACT AND SUCH LAWS IS AVAILABLE AND THE COMPANY HAS RECEIVED EITHER
      AN
      OPINION OF COUNSEL, IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE
      COMPANY, TO THE EFFECT THAT REGISTRATION IS NOT REQUIRED IN CONNECTION WITH
      THE
      DISPOSITION OR SUCH OTHER EVIDENCE THAT IS SATISFACTORY TO THE COMPANY, WHICH
      EVIDENCE ESTABLISHES THAT ANY SUCH DISPOSITION WILL NOT VIOLATE THE SECURITIES
      ACT, SUCH LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.

     

    13.  GOVERNING
      LAW; JURISDICTION.
      This
      Warrant shall be governed by and construed in accordance with the laws of the
      State of New York applicable to contracts made and to be performed in the State
      of New York. Each of the Company and the Holder irrevocably consents to the
      jurisdiction of the United States federal courts and state courts located in
      the
      State of New York in any suit or proceeding based on or arising under this
      Warrant.

     

    14.  ENTIRE
      AGREEMENT.
      The
      Company and the Holder of this Warrant hereby represent and warrant that this
      Warrant is intended to and does contain and embody all of the understandings
      and
      agreements, both written and oral, of the parties hereto with respect to the
      subject matter of this Warrant, and that there exists no oral agreement or
      understanding, express or implied, whereby the absolute, final and unconditional
      character and nature of this Warrant shall be in any way invalidated, empowered
      or affected.

     

    15.  AMENDMENT;
      NO WAIVERS.
      Any
      provision of this Warrant may be amended or waived only if such amendment or
      waiver is in writing and signed, in the case of an amendment, by the Company
      and
      the Holder or, in the case of a waiver, by the party against whom the waiver
      is
      to be effective. No failure or delay by either party in exercising any right,
      power or privilege hereunder shall operate as a waiver thereof nor shall any
      single or partial exercise thereof preclude any other or further exercise
      thereof or the exercise of any other right, power or privilege. The rights
      and
      remedies herein provided shall be cumulative and not exclusive of any rights
      or
      remedies provided by law.

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

    16.  HEADINGS.
      The
      headings and captions in this Warrant are included for convenience of reference
      only and shall be ignored in the construction and interpretation
      thereof.

     

    IN
      WITNESS WHEREOF,
      the
      Company, by its duly authorized officer, has executed this Warrant on this
      ___
      day of August, 2006.

     

    
      	 	 	 
	 	
              ADVANCE
                NANOTECH, INC.

              a
                Delaware corporation

            
	 
 	 
 	 
 
	Date: 	By:  	 
	 	
              
Name:
	 	Title:

    

     

     

    
      
         

      

      
        -12-

        
          

        

      

      
         

      

    

    FORM
      OF EXERCISE NOTICE

     

    To:
       Advance
      Nanotech Inc. 

    600
      Lexington Avenue - 29th Floor 

    New
      York,
      NY, 10022

     

    Pursuant
      to the terms of the attached Warrant, the undersigned hereby irrevocably
      exercises the right to purchase ___________________shares of the common stock
      of
      Advance Nanotech, Inc., a corporation organized under the laws of the State
      of
      Delaware (the “Company”),
      and
      tenders herewith payment of the Exercise Price in full, in the amount of
      $____________, in cash, by certified or official bank check or by wire transfer
      for the account of the Company in either case in accordance with the provisions
      contained within the attached Warrant.

     

    The
      undersigned agrees not to offer, sell, transfer or otherwise dispose of any
      common stock obtained on exercise of the Warrant, except under circumstances
      that will not result in a violation of the Securities Act of 1933, as amended,
      or any state securities laws.

     

    

    
      

        
          	
                  Exercise
                    Date:_____________________________

                	
                  _____________________________

                
	 	
                  Signature
                    of Holder

                   

                
	 	
                  _____________________________

                
	 	
                  Name
                    of Holder (Print) Address:

                  Address:

                
	 	
                   

                  _____________________________

                   

                
	 	
                  _____________________________

                   

                
	 	
                  _____________________________

                   

                

        

      

    

    

    
      
         

      

      
        -13-Unassociated Document

    

     

    ESCROW
      AGREEMENT

     

    THIS
      ESCROW AGREEMENT
      (this
“Agreement”)
      is
      made and entered into as of August 9, 2006 by INTREPID
      TECHNOLOGY & RESOURCES, INC.,
      an Idaho
      corporation (the “Company”);
      CORNELL
      CAPITAL PARTNERS, LP,
      a
      Delaware limited partnership (the “Investor”);
      and
ANSLOW
      & JACLIN, LLP
      (the
“Escrow
      Agent”).

     

     

    BACKGROUND

     

    WHEREAS,
      the
      Company and the Investor have entered into an Standby Equity Distribution
      Agreement (the “Standby
      Equity Distribution Agreement”)
      dated
      as of March 10, 2005, pursuant to which the Investor will purchase the
      Company’s Common Stock, par value US$0.005 per share (the “Common
      Stock”),
      at a
      price per share equal to the Purchase Price, as that term is defined in the
      Standby Equity Distribution Agreement, for an aggregate price of up to Twenty
      Five Million U.S. Dollars ($25,000,000). The Standby Equity Distribution
      Agreement provides that on each Advance Date the Investor, as that term is
      defined in the Standby Equity Distribution Agreement, shall deposit the Advance
      pursuant to the Advance Notice in a segregated escrow account to be held by
      Escrow Agent and the Company shall deposit shares of the Company’s Common Stock,
      which shall be purchased by the Investor as set forth in the Standby Equity
      Distribution Agreement, with the Escrow Agent, in order to effectuate a
      disbursement to the Company of the Advance by the Escrow Agent and a
      disbursement to the Investor of the shares of the Company’s Common Stock by
      Escrow Agent at a closing to be held as set forth in the Standby Equity
      Distribution Agreement (the “Closing”).

     

    WHEREAS,
      Escrow
      Agent has agreed to accept, hold, and disburse the funds and the shares of
      the
      Company’s Common Stock deposited with it in accordance with the terms of this
      Agreement.

     

    WHEREAS,
      in
      order to establish the escrow of funds and shares to effect the provisions
      of
      the Standby Equity Distribution Agreement, the parties hereto have entered
      into
      this Agreement.

     

    NOW
      THEREFORE,
      in
      consideration of the foregoing, it is hereby agreed as follows:

     

    1. Definitions.
      The
      following terms shall have the following meanings when used herein:

     

    a. “Escrow
      Funds”
shall
      mean the Advance funds deposited with the Escrow Agent pursuant to this
      Agreement.

     

    b. “Joint
      Written Direction” shall
      mean a written direction
      executed by the Investor and the Company directing Escrow Agent to disburse
      all
      or a portion of the Escrow Funds or to take or refrain from taking any action
      pursuant to this Agreement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

     

    c. “Common
      Stock Joint Written Direction”
shall
      mean a written direction
      executed by the Investor and the Company directing Investor’s Counsel to
      disburse all or a portion of the shares of the Company’s Common Stock or to
      refrain from taking any action pursuant to this Agreement.

     

    2. Appointment
      of and Acceptance by Escrow Agent.

     

    a. The
      Investor and the Company hereby appoint Escrow Agent to serve as Escrow Agent
      hereunder. Escrow Agent hereby accepts such appointment and, upon receipt by
      wire transfer of the Escrow Funds in accordance with Section 3 below, agrees
      to
      hold, invest and disburse the Escrow Funds in accordance with this
      Agreement.

     

    b. The
      Investor and the Company hereby appoint the Escrow Agent to serve as the holder
      of the shares of the Company’s Common Stock which shall be purchased by the
      Investor. The Escrow Agent hereby accepts such appointment and, upon receipt
      via
      D.W.A.C or the certificates representing of the shares of the Company’s Common
      Stock in accordance with Section 3 below, agrees to hold and disburse the shares
      of the Company’s Common Stock in accordance with this Agreement.

     

    

     

    3. Creation
      of Escrow Account/Common Stock Account.

     

    a. On
      or
      prior to the date of this Agreement the Escrow Agent shall establish an escrow
      account for the deposit of the Escrow Funds entitled as follows: Intrepid
      Technology & Resources, Inc./Cornell Capital Partners, LP. The Investor will
      wire funds to the account of the Escrow Agent as follows:

     

    
      	
              Bank:

            	
              Wachovia,
                N.A. of New Jersey

            
	
              Routing
                #:

            	
              031201467

            
	
              Account
                #:

            	
              2000013292968

            
	
              Name
                on Account:

            	
              Anslow
                & Jaclin Attorney Trust Account

            
	
              Name
                on Sub-Account:

            	
              Intrepid
                Technology & Resources, Inc./Cornell Capital Partners, LP Escrow
                account

            

    

    

    b. On
      or
      prior to the date of this Agreement the Escrow Agent shall establish an account
      for the D.W.A.C. of the shares of Common Stock. The Company will D.W.A.C. shares
      of the Company’s Common Stock to the account of the Escrow Agent as
      follows:

     

    
      	
              Brokerage
                Firm:

            	
              Sloan
                Securities Corp.

            
	
              Clearing
                House:

            	
              Fiserv

            
	
              Account
                #:

            	
              56887298

            
	
              DTC
                #:

            	
              0632

            
	
              Name
                on Account:

            	
              David
                Gonzalez Escrow Account

            

    

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    

    4. Deposits
      into the Escrow Account.
      The
      Investor agrees that it shall promptly deliver all monies for the payment of the
      Common Stock to the Escrow Agent for deposit in the Escrow Account.

     

    5. Disbursements
      from the Escrow Account.

     

    a. At
      such
      time as Escrow Agent has collected and deposited instruments of payment in
      the
      total amount of the Advance and has received such Common Stock via D.W.A.C
      from
      the Company which are to be issued to the Investor pursuant to the Standby
      Equity Distribution Agreement, the Escrow Agent shall notify the Company and
      the
      Investor. The Escrow Agent will continue to hold such funds until the Investor
      and Company execute and deliver a Joint Written Direction directing the Escrow
      Agent to disburse the Escrow Funds pursuant to Joint Written Direction at which
      time the Escrow Agent shall wire the Escrow Funds to the Company. In disbursing
      such funds, Escrow Agent is authorized to rely upon such Joint Written Direction
      from Company and may accept any signatory from the Company listed on the
      signature page to this Agreement and any signature from the Investor that Escrow
      Agent already has on file. Simultaneous with delivery of the executed Joint
      Written Direction to the Escrow Agent the Investor and Company shall execute
      and
      deliver a Common Stock Joint Written Direction to the Escrow Agent directing
      the
      Escrow Agent to release via D.W.A.C to the Investor the shares of the Company’s
      Common Stock. In releasing such shares of Common Stock the Escrow Agent is
      authorized to rely upon such Common Stock Joint Written Direction from Company
      and may accept any signatory from the Company listed on the signature page
      to
      this Agreement and any signature from the Escrow Agent has on file.

     

    In
      the
      event the Escrow Agent does not receive the amount of the Advance from the
      Investor or the shares of Common Stock to be purchased by the Investor from
      the
      Company, the Escrow Agent shall notify the Company and the Investor.

     

    In
      the
      event that the Escrow Agent has not received the Common Stock to be purchased
      by
      the Investor from the Company, in no event will the Escrow Funds be released
      to
      the Company until such shares are received by the Escrow Agreement. For purposes
      of this Agreement, the term "Common Stock certificates” shall mean Common Stock
      certificates to be purchased pursuant to the respective Advance Notice pursuant
      to the Standby Equity Distribution Agreement.

     

    6. Deposit
      of Funds.
      The Escrow Agent is hereby authorized to deposit the wire transfer proceeds
      in
      the Escrow Account.

     

    7. Suspension
      of Performance: Disbursement Into Court.

     

    a. Escrow
      Agent.
      If at
      any time, there shall exist any dispute between the Company and the Investor
      with respect to holding or disposition of any portion of the Escrow Funds or
      the
      Common Stock or any other obligations of Escrow Agent hereunder, or if at any
      time Escrow Agent is unable to determine, to Escrow Agent’s sole satisfaction,
      the proper disposition of any portion of the Escrow Funds or Escrow Agent’s
      proper actions with respect to its obligations hereunder, or if the parties
      have
      not within thirty (30) days of the furnishing by Escrow Agent of a notice of
      resignation pursuant to Section 9 hereof, appointed a successor Escrow Agent
      to
      act hereunder, then Escrow Agent may, in its sole discretion, take either or
      both of the following actions:

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    

     

    i. Suspend
      the performance of any of its obligations (including without limitation any
      disbursement obligations) under this Escrow Agreement until such dispute or
      uncertainty shall be resolved to the sole satisfaction of Escrow Agent or until
      a successor Escrow Agent shall be appointed (as the case may be); provided
      however, Escrow Agent shall continue to invest the Escrow Funds in accordance
      with Section 8 hereof; and/or

     

    ii. Petition
      (by means of an interpleader action or any other appropriate method) any court
      of competent jurisdiction in any venue convenient to Escrow Agent, for
      instructions with respect to such dispute or uncertainty, and to the extent
      required by law, pay into such court, for holding and disposition in accordance
      with the instructions of such court, all funds held by it in the Escrow Funds,
      after deduction and payment to Escrow Agent of all fees and expenses (including
      court costs and attorneys’ fees) payable to, incurred by, or expected to be
      incurred by Escrow Agent in connection with performance of its duties and the
      exercise of its rights hereunder.

     

    iii. Escrow
      Agent shall have no liability to the Company, the Investor, or any person with
      respect to any such suspension of performance or disbursement into court,
      specifically including any liability or claimed liability that may arise, or
      be
      alleged to have arisen, out of or as a result of any delay in the disbursement
      of funds held in the Escrow Funds or any delay in with respect to any other
      action required or requested of Escrow Agent.

     

    8. Investment
      of Escrow Funds

     

    .
      The
      Escrow Agent shall deposit the Escrow Funds in a non-interest bearing money
      market account. 

     

    If
      Escrow
      Agent has not received a Joint Written Direction at any time that an investment
      decision must be made, Escrow Agent may retain the Escrow Fund, or such portion
      thereof, as to which no Joint Written Direction has been received, in a
      non-interest bearing money market account. 

     

    9. Resignation
      and Removal of Escrow Agent.
      Escrow Agent may resign from the performance of its duties hereunder at any
      time
      by giving thirty (30) days’ prior written notice to the parties or may be
      removed, with or without cause, by the parties, acting jointly, by furnishing
      a
      Joint Written Direction to Escrow Agent, at any time by the giving of ten (10)
      days’ prior written notice to Escrow Agent as provided herein below. Upon any
      such notice of resignation or removal, the representatives of the Investor
      and
      the Company identified in Sections 13a.(iv) and 13b.(iv), below, jointly shall
      appoint a successor Escrow Agent hereunder, which shall be a commercial bank,
      trust company or other financial institution with a combined capital and surplus
      in excess of US$10,000,000.00. Upon the acceptance in writing of any appointment
      of Escrow Agent hereunder by a successor Escrow Agent, such successor Escrow
      Agent shall thereupon succeed to and become vested with all the rights, powers,
      privileges and duties of the retiring Escrow Agent, and the retiring Escrow
      Agent shall be discharged from its duties and obligations under this Escrow
      Agreement, but shall not be discharged from any liability for actions taken
      as
      Escrow Agent hereunder prior to such succession. After any retiring Escrow
      Agent’s resignation or removal, the provisions of this Escrow Agreement shall
      inure to its benefit as to any actions taken or omitted to be taken by it while
      it was Escrow Agent under this Escrow Agreement. The retiring Escrow Agent
      shall
      transmit all records pertaining to the Escrow Funds and shall pay all funds
      held
      by it in the Escrow Funds to the successor Escrow Agent, after making copies
      of
      such records as the retiring Escrow Agent deems advisable and after deduction
      and payment to the retiring Escrow Agent of all fees and expenses (including
      court costs and attorneys’ fees) payable to, incurred by, or expected to be
      incurred by the retiring Escrow Agent in connection with the performance of
      its
      duties and the exercise of its rights hereunder.

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

     

    10. Liability
      of Escrow Agent.

     

    a. Escrow
      Agent shall have no liability or obligation with respect to the Escrow Funds
      except for Escrow Agent’s willful misconduct or gross negligence. Escrow Agent’s
      sole responsibility shall be for the safekeeping, investment, and disbursement
      of the Escrow Funds in accordance with the terms of this Agreement. Escrow
      Agent
      shall have no implied duties or obligations and shall not be charged with
      knowledge or notice or any fact or circumstance not specifically set forth
      herein. Escrow Agent may rely upon any instrument, not only as to its due
      execution, validity and effectiveness, but also as to the truth and accuracy
      of
      any information contained therein, which Escrow Agent shall in good faith
      believe to be genuine, to have been signed or presented by the person or parties
      purporting to sign the same and conform to the provisions of this Agreement.
      In
      no event shall Escrow Agent be liable for incidental, indirect, special, and
      consequential or punitive damages. Escrow Agent shall not be obligated to take
      any legal action or commence any proceeding in connection with the Escrow Funds,
      any account in which Escrow Funds are deposited, this Agreement or the Standby
      Equity Distribution Agreement, or to appear in, prosecute or defend any such
      legal action or proceeding. Escrow Agent may consult legal counsel selected
      by
      it in the event of any dispute or question as to construction of any of the
      provisions hereof or of any other agreement or its duties hereunder, or relating
      to any dispute involving any party hereto, and shall incur no liability and
      shall be fully indemnified from any liability whatsoever in acting in accordance
      with the opinion or instructions of such counsel. The Company and the Investor
      jointly and severally shall promptly pay, upon demand, the reasonable fees
      and
      expenses of any such counsel and Escrow Agent is hereby authorized to pay such
      fees and expenses from funds held in escrow.

     

    b. The
      Escrow Agent is hereby authorized, in its sole discretion, to comply with orders
      issued or process entered by any court with respect to the Escrow Funds, without
      determination by the Escrow Agent of such court’s jurisdiction in the matter. If
      any portion of the Escrow Funds is at any time attached, garnished or levied
      upon under any court order, or in case the payment, assignment, transfer,
      conveyance or delivery of any such property shall be stayed or enjoined by
      any
      court order, or in any case any order judgment or decree shall be made or
      entered by any court affecting such property or any part thereof, then and
      in
      any such event, the Escrow Agent is authorized, in its sole discretion, to
      rely
      upon and comply with any such order, writ judgment or decree which it is advised
      by legal counsel selected by it, binding upon it, without the need for appeal
      or
      other action; and if the Escrow Agent complies with any such order, writ,
      judgment or decree, it shall not be liable to any of the parties hereto or
      to
      any other person or entity by reason of such compliance even though such order,
      writ judgment or decree may be subsequently reversed, modified, annulled, set
      aside or vacated. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    

     

    11. Indemnification
      of Escrow Agent.
      From and at all times after the date of this Agreement, the parties jointly
      and
      severally, shall, to the fullest extent permitted by law and to the extent
      provided herein, indemnify and hold harmless Escrow Agent and each director,
      officer, employee, attorney, agent and affiliate of Escrow Agent (collectively,
      the “Indemnified Parties”)
      against any and all actions, claims (whether or not valid), losses, damages,
      liabilities, costs and expenses of any kind or nature whatsoever (including
      without limitation reasonable attorney’s fees, costs and expenses) incurred by
      or asserted against any of the Indemnified Parties from and after the date
      hereof, whether direct, indirect or consequential, as a result of or arising
      from or in any way relating to any claim, demand, suit, action, or proceeding
      (including any inquiry or investigation) by any person, including without
      limitation the parties to this Agreement, whether threatened or initiated,
      asserting a claim for any legal or equitable remedy against any person under
      any
      statute or regulation, including, but not limited to, any federal or state
      securities laws, or under any common law or equitable cause or otherwise,
      arising from or in connection with the negotiation, preparation, execution,
      performance or failure of performance of this Agreement or any transaction
      contemplated herein, whether or not any such Indemnified Party is a party to
      any
      such action or proceeding, suit or the target of any such inquiry or
      investigation; provided, however, that no Indemnified Party shall have the
      right
      to be indemnified hereunder for liability finally determined by a court of
      competent jurisdiction, subject to no further appeal, to have resulted solely
      from the gross negligence or willful misconduct of such Indemnified Party.
      If
      any such action or claim shall be brought or asserted against any Indemnified
      Party, such Indemnified Party shall promptly notify the Company and the Investor
      hereunder in writing, and the and the Company shall assume the defense thereof,
      including the employment of counsel and the payment of all expenses. Such
      Indemnified Party shall, in its sole discretion, have the right to employ
      separate counsel (who may be selected by such Indemnified Party in its sole
      discretion) in any such action and to participate and to participate in the
      defense thereof, and the fees and expenses of such counsel shall be paid by
      such
      Indemnified Party, except that the Investor and/or the Company shall be required
      to pay such fees and expense if (a) the Investor or the Company agree to pay
      such fees and expenses, or (b) the Investor and/or the Company shall fail to
      assume the defense of such action or proceeding or shall fail, in the sole
      discretion of such Indemnified Party, to employ counsel reasonably satisfactory
      to the Indemnified Party in any such action or proceeding, (c) the Investor
      and
      the Company are the plaintiff in any such action or proceeding or (d) the named
      or potential parties to any such action or proceeding (including any potentially
      impleaded parties) include both Indemnified Party the Company and/or the
      Investor and Indemnified Party shall have been advised by counsel that there
      may
      be one or more legal defenses available to it which are different from or
      additional to those available to the Company or the Investor. The Investor
      and
      the Company shall be jointly and severally liable to pay fees and expenses
      of
      counsel pursuant to the preceding sentence, except that any obligation to pay
      under clause (a) shall apply only to the party so agreeing. All such fees and
      expenses payable by the Company and/or the Investor pursuant to the foregoing
      sentence shall be paid from time to time as incurred, both in advance of and
      after the final disposition of such action or claim. The obligations of the
      parties under this section shall survive any termination of this Agreement,
      and
      resignation or removal of the Escrow Agent shall be independent of any
      obligation of Escrow Agent.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

     

    12. Expenses/Fees
      of Escrow Agent.
      Except as set forth in Section 11 the Company shall reimburse Escrow Agent
      for
      all of its reasonable out-of-pocket expenses, including attorneys’ fees, travel
      expenses, telephone and facsimile transmission costs, postage (including express
      mail and overnight delivery charges), copying charges and the like as outlined
      in Section 12.4 of the Standby Equity Distribution Agreement dated the date
      hereof. In addition, the Escrow Agent shall be paid a fee of $2,500 in
      consideration for acting as Escrow Agent. All of the compensation and
      reimbursement obligations set forth in this Section shall be payable by the
      Company, upon demand by Escrow Agent. The obligations of the Company under
      this
      Section shall survive any termination of this Agreement and the resignation
      or
      removal of Escrow Agent.

     

    13. Warranties.

     

    a. The
      Investor makes the following representations and warranties to the Escrow
      Agent:

     

    i. The
      Investor has full power and authority to execute and deliver this Agreement
      and
      to perform its obligations hereunder.

     

    ii. This
      Agreement has been duly approved by all necessary action of the Investor,
      including any necessary approval of the limited partner of the Investor, has
      been executed by duly authorized officers of the Investor’s general partner,
      enforceable in accordance with its terms.

     

    iii. The
      execution, delivery, and performance of the Investor of this Agreement will
      not
      violate, conflict with, or cause a default under the agreement of limited
      partnership of the Investor, any applicable law or regulation, any court order
      or administrative ruling or degree to which the Investor is a party or any
      of
      its property is subject, or any agreement, contract, indenture, or other binding
      arrangement.

     

    iv. Mark
      A.
      Angelo has been duly appointed to act as the representative of Investor
      hereunder and has full power and authority to execute, deliver, and perform
      this
      Agreement, to execute and deliver any Joint Written Direction, to amend, modify,
      or waive any provision of this Agreement, and to take any and all other actions
      as the Investor’s representative under this Agreement, all without further
      consent or direction form, or notice to, the Investor or any other
      party.

     

    v. No
      party
      other than the parties hereto have, or shall have, any lien, claim or security
      interest in the Escrow Funds or any part thereof. No financing statement under
      the Uniform Commercial Code is on file in any jurisdiction claiming a security
      interest in or describing (whether specifically or generally) the Escrow Funds
      or any part thereof.

     

    vi. All
      of
      the representations and warranties of the Investor contained herein are true
      and
      complete as of the date hereof and will be true and complete at the time of
      any
      disbursement from the Escrow Funds.

     

    b. The
      Company makes the following representations and warranties to Escrow Agent
      and
      the Investor:

     

    i. The
      Company is
      a
      corporation duly organized, validly existing, and in good standing under the
      laws of the State of Idaho, and has full power and authority to execute and
      deliver this Agreement and to perform its obligations hereunder.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    

     

    ii. This
      Agreement has been duly approved by all necessary corporate action of the
      Company, including any necessary shareholder approval, has been executed by
      duly
      authorized officers of the Company, enforceable in accordance with its
      terms.

     

    iii. The
      execution, delivery, and performance by the Company of this Escrow Agreement
      is
      in accordance with the Standby Equity Distribution Agreement and will not
      violate, conflict with, or cause a default under the articles of incorporation
      or bylaws of the Company, any applicable law or regulation, any court order
      or
      administrative ruling or decree to which the Company is a party or any of its
      property is subject, or any agreement, contract, indenture, or other binding
      arrangement.

     

    iv. Dr.
      Dennis D. Keiser has been duly appointed to act as the representative of the
      Company hereunder and has full power and authority to execute, deliver, and
      perform this Agreement, to execute and deliver any Joint Written Direction,
      to
      amend, modify or waive any provision of this Agreement and to take all other
      actions as the Company’s Representative under this Agreement, all without
      further consent or direction from, or notice to, the Company or any other
      party.

     

    v. No
      party
      other than the parties hereto shall have, any lien, claim or security interest
      in the Escrow Funds or any part thereof. No financing statement under the
      Uniform Commercial Code is on file in any jurisdiction claiming a security
      interest in or describing (whether specifically or generally) the Escrow Funds
      or any part thereof.

     

    vi. All
      of
      the representations and warranties of the Company contained herein are true
      and
      complete as of the date hereof and will be true and complete at the time of
      any
      disbursement from the Escrow Funds.

     

    14. Consent
      to Jurisdiction and Venue.
      In the event that any party hereto commences a lawsuit or other proceeding
      relating to or arising from this Agreement, the parties hereto agree that the
      United States District Court for the District of New Jersey shall have the
      sole
      and exclusive jurisdiction over any such proceeding. If all such courts lack
      federal subject matter jurisdiction, the parties agree that the Superior Court
      Division of New Jersey, Chancery Division of Hudson County shall have sole
      and
      exclusive jurisdiction. Any of these courts shall be proper venue for any such
      lawsuit or judicial proceeding and the parties hereto waive any objection to
      such venue. The parties hereto consent to and agree to submit to the
      jurisdiction of any of the courts specified herein and agree to accept the
      service of process to vest personal jurisdiction over them in any of these
      courts.

     

    15. Notice.
      All notices and other communications hereunder shall be in writing and shall
      be
      deemed to have been validly served, given or delivered five (5) days after
      deposit in the United States mail, by certified mail with return receipt
      requested and postage prepaid, when delivered personally, one (1) day delivery
      to any overnight courier, or when transmitted by facsimile transmission and
      addressed to the party to be notified as follows:

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    
      	
              If
                to Investor, to:

            	
              Cornell
                Capital Partners, LP

            
	 	
              101
                Hudson Street - Suite 3700

            
	 	
              Jersey
                City, New Jersey 07302

            
	 	
              Attention: Mark
                Angelo

            
	 	
              Facsimile: (201)
                985-8266

            
	 	 
	
              If
                to Escrow Agent, to: 

            	
              Anslow
                & Jaclin, LLP

            
	 	
              195
                Route 9, Suite 204

            
	 	
              Manalapan,
                NJ 07726

            
	 	
              Telephone: (732)
                409-1212

            
	 	
              Facsimile: (732)
                577-1188

            
	 	 
	
              If
                to Company, to:

            	
              Intrepid
                Technology & Resources, Inc.

            
	 	
              501
                West Broadway - Suite 200

            
	 	
              Idaho
                Falls, ID 83402

            
	 	
              Attention: Dr.
                Dennis D. Keiser

            
	 	
              Telephone: (208)
                529-5337

            
	 	
              Facsimile: (208)
                529-1014

            
	 	 
	
              With
                a copy to:

            	
              Kirkpatrick
                & Lockhart Nicholson Graham LLP

            
	 	
              201
                South Biscayne Boulevard - Suite 2000

            
	 	
              Miami,
                FL 33131-2399

            
	 	
              Attention: Clayton
                E. Parker, Esq.

            
	 	
              Telephone: (305)
                539-3300

            
	 	
              Facsimile: (305)
                358-7095

            

    

    

    Or
      to
      such other address as each party may designate for itself by like
      notice.

     

    16. Amendments
      or Waiver.
      This Agreement may be changed, waived, discharged or terminated only by a
      writing signed by the parties of the Escrow Agent. No delay or omission by
      any
      party in exercising any right with respect hereto shall operate as waiver.
      A
      waiver on any one occasion shall not be construed as a bar to, or waiver of,
      any
      right or remedy on any future occasion.

     

    17. Severability.
      To the extent any provision of this Agreement is prohibited by or invalid under
      applicable law, such provision shall be ineffective to the extent of such
      prohibition, or invalidity, without invalidating the remainder of such provision
      or the remaining provisions of this Agreement.

     

    18. Governing
      Law.
      This Agreement shall be construed and interpreted in accordance with the
      internal laws of the State of New Jersey without giving effect to the conflict
      of laws principles thereof.

     

    19. Entire
      Agreement.
      This Agreement constitutes the entire Agreement between the parties relating
      to
      the holding, investment, and disbursement of the Escrow Funds and sets forth
      in
      their entirety the obligations and duties of the Escrow Agent with respect
      to
      the Escrow Funds.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    

     

    20. Binding
      Effect.
      All of the terms of this Agreement, as amended from time to time, shall be
      binding upon, inure to the benefit of and be enforceable by the respective
      heirs, successors and assigns of the Investor, the Company, or the Escrow
      Agent.

     

    21. Execution
      of Counterparts.
      This Agreement and any Joint Written Direction may be executed in counter parts,
      which when so executed shall constitute one and same agreement or
      direction.

     

    22. Termination.
      Upon the first to occur of the termination of the Standby Equity Distribution
      Agreement dated the date hereof or the disbursement of all amounts in the Escrow
      Funds and Common Stock into court pursuant to Section 7 hereof, this Agreement
      shall terminate and Escrow Agent shall have no further obligation or liability
      whatsoever with respect to this Agreement or the Escrow Funds or Common
      Stock.

     

    

    

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]

    

    

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

    IN
      WITNESS WHEREOF
      the
      parties have hereunto set their hands and seals the day and year above set
      forth.

     

    
      	 	
              INTREPID
                TECHNOLOGY & RESOURCES, INC.

            
	 	 
	 	
              By:
                /s/ Dr. Dennis D. Keiser     

            
	 	
              Name:
                Dr. Dennis D. Keiser

            
	 	
              Title: President
                & CEO

            
	 	 
	 	 
	 	
              CORNELL
                CAPITAL PARTNERS, LP

            
	 	 
	 	
              By: Yorkville
                Advisors, LLC

            
	 	
              Its: General
                Partner

            
	 	 
	 	
              By:
                /s/ Mark A. Angelo      

            
	 	
              Name: Mark
                A. Angelo

            
	 	
              Title: Portfolio
                Manager

            
	 	 
	 	 
	 	
              ANSLOW
                & JACLIN, LLP

            
	 	 
	 	
              By: /s/
                Gregg E. Jaclin, Esq.     

            
	 	
              Name: Gregg
                E. Jaclin, Esq.

            
	 	
              Title: Partner

            

    

    

    

    
      
        
        

      

      
        11

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