Document:

EXHIBIT 10.12

                           [FORM OF INVESTOR WARRANT]

NEITHER THIS WARRANT NOR THE SECURITIES  ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),
AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE  ASSIGNED  UNLESS SO REGISTERED OR AN EXEMPTION  FROM  REGISTRATION
UNDER THE SECURITIES  ACT IS AVAILABLE.  NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON  EXERCISE  HEREOF ARE  TRANSFERABLE  EXCEPT AS EXPRESSLY SET FORTH
HERIN.  THIS LEGEND  SHALL BE ENDORSED  UPON ANY WARRANT  ISSUED IN EXCHANGE FOR
THIS WARRANT.

                                WARRANT AGREEMENT
                               FOR COMMON STOCK OF
                             ADVANCE NANOTECH, INC.

Warrant No. ____                             Warrant to purchase an aggregate of

Date of Issuance: [FEBRUARY __,] 2005          __________ shares of Common Stock

         THIS CERTIFIES that, for value  received,  [_________________________],
or his/her/its permitted transferees,  successors or assigns (collectively,  the
"Holder"),  is entitled to purchase  from  ADVANCE  NANOTECH,  INC.,  a Colorado
corporation  (the  "Company"),  at any time,  and from time to time,  during the
exercise  period  referred to in Section 1 hereof,  [__________________________]
([____________])  fully  paid,  validly  issued and  nonassessable  shares  (the
"Warrant  Shares") of common  stock of the  Company,  par value $0.00l per share
(the "Common  Stock"),  at the exercise price of Three Dollars ($3.00) per share
(the "Warrant Share Price").  Securities  issuable upon exercise of this Warrant
and the Warrant Share Price payable therefor are subject to adjustment from time
to time as  hereinafter  set forth.  As used herein,  the term  "Warrant"  shall
include any warrant or warrants  hereafter issued in consequence of the exercise
of this  Warrant  Agreement  in part or transfer of this  Warrant in whole or in
part. Capitalized terms used herein and not defined have the respective meanings
given to them in that  certain  Securities  Purchase  Agreement,  dated the date
hereof,  by and among the Company and the other parties named  therein.  As used
herein, the term "Holders" shall include holders of all Warrants.

         The Company shall register this Warrant,  upon records to be maintained
by the Company for that purpose  (the  "Warrant  Register"),  in the name of the
record  Holder  hereof  from time to time.  The  Company  may deem and treat the
registered  Holder of this Warrant as the absolute  owner hereof for the purpose
of any  exercise  hereof or any  distribution  to the Holder,  and for all other
purposes, and the Company shall not be affected by notice to the contrary.

         Subject to Section 4 of this Warrant and the  applicable  provisions of
the Securities Purchase Agreement and applicable law, the Company shall register
any permitted  transfer of any portion of this Warrant in the Warrant  Register,
upon surrender of this Warrant, with the Form of Assignment attached hereto duly
completed  and  signed,  to the  Transfer  Agent (as  defined  herein) or to the
Company.  Upon any such  registration  or permitted  transfer,  a new warrant to
purchase Common Stock, in  substantially  the form of this Warrant (any such new
warrant, a "New Warrant"), evidencing the portion of this Warrant so transferred
shall be issued to the permitted  transferee  and a New Warrant  evidencing  the
remaining portion of this Warrant not so transferred, if any, shall be issued to
the  transferring  Holder.  The  acceptance  of the New Warrant by the permitted
transferee  thereof shall be deemed the acceptance by such permitted  transferee
of all of the rights and  obligations  of a holder of a Warrant.  Any  permitted
transfer or assignment of this Warrant and Warrant Shares obtained by the Holder
in exercise of this Warrant is subject to any applicable  restrictions under the
Securities Purchase Agreement, if any, and the requirements that such securities
be registered  under the Securities Act and applicable  state securities laws or
exempt from  registration  under such laws,  and the  provisions of Section 5 of
this Warrant.

<PAGE>

         1. EXERCISE; PAYMENT FOR OWNERSHIP INTEREST.

         (a) Upon the terms and subject to the conditions set forth herein, this
Warrant may be exercised  in whole or in part by the Holder  hereof at any time,
or from time to time, on or after the date hereof and on or prior to the earlier
to  occur  of (i) the  "Early  Expiration  Date,"  as such  term is  hereinafter
defined,  and (ii) 5:00:00 p.m. New York local time on [February  __, 2008] (the
"Expiration  Date"),  by  presentation  and  surrender  of this  Warrant  to the
principal  offices of the Company,  or at the office of its Transfer  Agent,  if
any,  together  with the  Purchase  Form  annexed  hereto,  duly  executed,  and
accompanied  by payment to the Company of an amount  equal to the Warrant  Share
Price  multiplied  by the number of Warrant  Shares as to which this  Warrant is
then being exercised in immediately available funds in U.S. dollars by certified
or official bank check or wire transfer of the cash  purchase  price;  provided,
however,  that in each case,  the minimum  number of Warrant  Shares as to which
this Warrant is being  exercised shall be the lesser of (i) 5,000 Warrant Shares
or (ii) all  Warrant  Shares then held by the Holder on an as  exercised  basis;
provided, further, that in the event of any merger, consolidation or sale, lease
or transfer of all or substantially  all of the assets of the Company,  prior to
the  Expiration  Date,  the Holder shall have the right to exercise this Warrant
commencing at such time through the Expiration  Date into the kind and amount of
shares of stock and other securities and property (including cash) receivable by
a holder of the number of shares of Common Stock into which this  Warrant  might
have been exercisable  immediately prior thereto. Any transfer of Warrant Shares
obtained by the Holder in exercise of this Warrant is subject to the requirement
that such  transfer  be in  compliance  with the  applicable  provisions  of the
Securities  Purchase  Agreement,  if any, and that such securities be registered
under the Securities  Act, and applicable  state  securities laws or exempt from
registration under such laws. The Holder of this Warrant shall be deemed to be a
stockholder  of the  Warrant  Shares as to which this  Warrant is  exercised  in
accordance  herewith  effective  immediately  after the close of business on the
date on which the Holder  shall have  delivered  to the Company  this Warrant in
proper form for  exercise  and payment in U.S.  dollars by certified or official
bank check or wire transfer of immediately  available funds of the cash purchase
price for the number of Warrant  Shares as to which the  exercise is being made,
notwithstanding  that the  stock  transfer  books of the  Company  shall be then
closed or that  certificates  representing such Warrant Shares shall not then be
physically delivered to the Holder. The Company shall not enter into any merger,
consolidation  or sale,  lease or  transfer of all or  substantially  all of the
assets of the Company  unless  effective  provision  shall be made so as to give
effect to the provisions set forth in this subsection (a).

                  (i) As used  herein,  "Early  Expiration  Date" means ten (10)
         business  days after  delivery of written  notice by the Company to the
         Holder that during the preceding thirty (30)  consecutive  trading days
         (x) the Market  Price (as defined  herein) for a share of Common  Stock
         was equal to or greater than Three Hundred Fifty Percent  (350%) of the
         then-applicable Warrant Share Price, and (y) the average trading volume
         of the Common Stock was at least 100,000 shares per day.

                  (ii) 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.

                  (iii) 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.

<PAGE>

         (b) If this Warrant shall be exercised in part only, the Company,  upon
surrender of this Warrant for cancellation,  shall execute and deliver, promptly
(but in no event  more than ten  business  days  after  such  surrender),  a new
Warrant  evidencing  the rights of the Holder thereof to purchase the balance of
the Warrant  Shares  purchasable  hereunder as to which the Warrant has not been
exercised.  If this Warrant is exercised in part,  such exercise  shall be for a
whole number of Warrant Shares. Upon any exercise and surrender of this Warrant,
the  Company  (i)  will  issue  and  deliver  to the  Holder  a  certificate  or
certificates  in the name of the Holder for the largest  whole number of Warrant
Shares to which the Holder  shall be entitled  and, if this Warrant is exercised
in whole, in lieu of any fractional  Warrant Share to which the Holder otherwise
might be entitled,  cash in an amount equal to the fair value of such fractional
Warrant Share  (determined in such reasonable and equitable  manner as the Board
of Directors of the Company (the "Board")  shall in good faith  determine),  and
(ii) will deliver  promptly  thereafter  (but in no event more than ten business
days thereafter) to the Holder such other securities,  properties and cash which
the Holder may be entitled to receive upon such exercise,  or the  proportionate
part thereof if this Warrant is exercised in part, pursuant to the provisions of
this Warrant.

         2. ANTI-DILUTION  PROVISIONS.  The Warrant Share Price in effect at any
time and the  number  and kind of  securities  issuable  upon  exercise  of this
Warrant shall be subject to  adjustment  from time to time upon the happening of
certain events as follows:

         2.1 ADJUSTMENTs.

         (a)  DEFINITION OF ADDITIONAL  STOCK.  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 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  issued or issuable  pursuant to
         subsection 2.1(b)(iv) below; and

                  (iv) 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.

         (b) DIVIDEND,  SUBDIVISION,  COMBINATION OR  RECLASSIFICATION OF COMMON
STOCK.  In the  event  that the  Company  shall at any time or from time to time
after the issuance of this Warrant but prior to the exercise hereof:

                           (i)  make  a   dividend   or   distribution   on  the
                  outstanding shares of Common Stock payable in capital stock;

                           (ii)   subdivide  or  reclassify  or  reorganize  its
                  outstanding  shares of Common  Stock into a greater  number of
                  shares;

                           (iii)  combine  or   reclassify  or  reorganize   its
                  outstanding  shares of Common  Stock into a smaller  number of
                  shares; or

                           (iv) issue, by  reclassification  of its Common Stock
                  or other  reorganization,  any  Additional  Shares  of  Common
                  Stock;

<PAGE>

then the number and kind of Warrant  Shares  purchasable  upon  exercise of this
Warrant  shall be  adjusted  so that the Holder upon  exercise  hereof  shall be
entitled to receive the kind and number of Warrant Shares or other securities of
the Company  that the Holder  would have owned or have been  entitled to receive
after the happening of any of the events  described  above had this Warrant been
exercised  immediately  prior to the  happening of such event or any record date
with respect  thereto.  Whenever the number of Warrant Shares  purchasable  upon
exercise  hereof is adjusted  as herein  provided,  the  Warrant  Price shall be
adjusted by multiplying the Warrant Price by a fraction,  the numerator of which
is equal to the  number  of  shares of  Common  Stock  purchasable  prior to the
adjustment  and the  denominator  of which is equal to the  number  of shares of
Common Stock  purchasable  after the adjustment.  An adjustment made pursuant to
this Section 2.1(b) shall become effective  immediately after the record date in
the case of a dividend or distribution  and shall become  effective  immediately
after the effective date in the case of a subdivision,  combination or issuance.
If, as a result of an  adjustment  made  pursuant to this  Section  2.1(b),  the
Holder of this Warrant thereafter surrendered for exercise shall become entitled
to receive  shares of two or more  classes of capital  stock or shares of Common
Stock and any other class of capital stock of the Company, the Board (whose good
faith  determination  shall be  applied  fairly and  ratably  to all  Holders of
Warrants and shall be conclusive  and shall be described in a written  notice to
all Holders of Warrants  promptly after such adjustment) shall determine in good
faith the  allocation  of the adjusted  Warrant Share Price between or among the
shares of such classes of capital stock or shares of Common Stock and such other
class of capital stock.

         The  adjustment to the number of Warrant  Shares  purchasable  upon the
exercise of this Warrant  described  in this  Section  2.1(b) shall be made each
time any event listed in  paragraphs  (i) through  (iv) of this  Section  2.1(b)
occurs.

         (c) ISSUANCE OF COMMON STOCK BELOW WARRANT SHARE PRICE.  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 (b)), 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:

                  (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.

         (d) ISSUANCE OF OPTIONS AND CONVERTIBLE  SECURITIES  DEEMED ISSUANCE OF
ADDITIONAL  SHARES OF COMMON Stock. 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") 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,  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 2.1(d):

                  (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 or the termination of any such right to convert or exchange
         such  Convertible  Securities,  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;

<PAGE>

                  (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;

                  (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.

         (e) DETERMINATION OF CONSIDERATION.  For purposes of Subsections 2.1(c)
and  2.1(d),  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  2.1(d),  relating to
         Options and Convertible Securities, shall be determined by dividing

                                    (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

<PAGE>

                                    (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 2.1, 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.

         (f) Extraordinary Distributions.  In case the Company shall at any time
or from  time to time,  after  the  issuance  of the  Warrant  but  prior to the
exercise  hereof,  distribute to all holders of its Common Stock  (including any
such distribution made in connection with a consolidation or merger in which the
Company is the continuing or surviving  corporation  and the Common Stock is not
changed or  exchanged)  cash,  evidences of  indebtedness,  securities  or other
property or assets  (excluding any such event for which adjustment is made under
Section  2) or  rights or  warrants  to  subscribe  for or  purchase  any of the
foregoing,  then,  and in each  such  case,  the  Holder  shall be  entitled  to
participate  in any such  distribution  based on the  number of shares of Common
Stock it would have been  entitled  to receive had the  Warrant  been  exercised
immediately prior to the occurrence of such distribution,  as if the Holder were
the  owner of such  shares  of  Common  Stock at the time of such  distribution.
Notwithstanding  the  foregoing,  this  Section  2.1(f)  shall be of no force or
effect until and unless such time as the Company  shall grant a similar right to
holders of  warrants  issued  after the date  hereof,  at which time the Holders
shall be entitled to the same protection for extraordinary  dividends as granted
to such future holders of warrants, if any.

         2.2 OTHER ACTION  AFFECTING  WARRANT  SHARES.  If the Company takes any
action affecting its shares of Common Stock after the date hereof, that would be
covered  by  Section  2.1 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 shall be adjusted in such manner as the Board shall in good
faith determine to be equitable under the circumstances.

         2.3 NOTICE OF  ADJUSTMENTS.  Upon the occurrence of each  adjustment or
readjustment  of the Warrant Share Price pursuant to this Section 2, the Company
at its expense  will as promptly as  possible,  but in any event within ten (10)
business days,  compute such  adjustment or  readjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment or
readjustment,  including  a statement  of the  adjusted  Warrant  Share Price or
adjusted  number of shares of Common  Stock,  if any,  issuable upon exercise of
each Warrant,  describing in reasonable  detail the  transaction  giving rise to
such  adjustments  and showing in detail the facts upon which such adjustment or
readjustment  is based.  The Company will  forthwith  mail, by first class mail,
postage  prepaid,  a copy of each such certificate to the Holder of this Warrant
at the address of such Holder as shown on the books of the  Company,  and to its
Transfer Agent.

         2.4 OTHER NOTICES. If at any time:

         (a) the  Company  shall  (i)  offer  for  subscription  pro rata to the
holders of shares of the Common  Stock any  additional  equity in the Company or
other rights; or (ii) pay a dividend in additional shares of the Common Stock or
distribute  securities  or other  property or assets to the holders of shares of
the Common Stock (including, without limitation, cash, evidences of indebtedness
and equity and debt securities);

         (b) there shall be any capital  reorganization or  reclassification  or
consolidation  or merger of the Company with, or sale,  transfer or lease of all
or substantially all of its assets to, another entity; or

         (c) there shall be a voluntary or involuntary dissolution,  liquidation
or winding up of the Company;

<PAGE>

then,  in any one or more of said cases,  the Company shall give, by first class
mail,  postage  prepaid,  to the Holder of this  Warrant at the  address of such
Holder as shown on the books of the Company, (x) at least 10 days' prior written
notice  of the date on which the books of the  Company  shall  close or a record
shall be taken for such subscription rights, dividend, distribution or issuance;
provided that such ten (10) day period shall be increased to thirty (30) days in
the case of Section 2.4(a)(ii),  and (y) in the case of any such reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding  up, at least 10 days'  prior  written  notice of the date when the same
shall take place if no stockholder  vote is required and at least 10 days' prior
written  notice of the record date for  stockholders  entitled to vote upon such
matter if a stockholder  vote is required.  Such notice in  accordance  with the
foregoing  clause (x) shall also specify,  in the case of any such  subscription
rights,  the date on which  the  holders  of shares  of  Common  Stock  shall be
entitled  to exercise  their  rights with  respect  thereto,  and such notice in
accordance  with the  foregoing  clause (y) shall also specify the date on which
the holders of shares of Common Stock shall be entitled to exchange their shares
of  Common  Stock  for  securities  or  other  property  deliverable  upon  such
reorganization,  reclassification,  consolidation,  merger,  sale,  dissolution,
liquidation or winding up, as the case may be.

         2.5 ADJUSTMENT  CALCULATIONS.  No adjustment in the Warrant Share Price
shall be required unless such  adjustment  would require an increase or decrease
of at  least  one  cent  ($0.01)  in such  price;  provided,  however,  that any
adjustments  which by reason of this  Section  2.5 are not  required  to be made
shall be carried  forward and taken into  account in any  subsequent  adjustment
required to be made hereunder.  All  calculations  under this Section 2 shall be
made to the nearest cent or to the nearest one-hundredth of a share, as the case
may be.

         2.6  Appraisal.  If a majority in  interest  of the Holders  reasonably
disagrees with any of the Board's  determinations  referred to in this Section 2
(each, a "Determination"), and such majority of Holders shall notify the Company
of its  disagreement by furnishing to the Company a written notice setting forth
in reasonable detail the fact of such dispute,  the basis for such dispute,  and
such Holders'  alternative  calculation  (such notice, a "Determination  Dispute
Notice"),  and such  Determination  Dispute  Notice is  received  by the Company
within seven (7) days of the Company having given notice of the Determination to
the  Holders,  then the Company and a majority in interest of such  Holders (the
"Warrant Representative") shall resolve such Determination Dispute in accordance
with the terms and  provisions  of this Section 2.6. The Holders agree that this
Section 2.6 sets forth the exclusive  mechanism for the Holders to make any such
dispute  and to resolve  the same,  and shall not be  entitled  to make any such
dispute in any other manner.  The Company and the Warrant  Representative  shall
use good  faith  efforts to  mutually  agree  upon the  designation  of a single
Qualified  Appraiser  (as defined  below)  within seven (7) business days of the
receipt by the Company of a valid  Determination  Dispute Notice received by the
Company in within the time period set forth above in this Section 2.6. If such a
single   Qualified   Appraiser   is   designated,   that  person  shall  make  a
Determination.  If the Company and the  Warrant  Representative  do not so agree
upon the designation of a single Qualified  Appraiser  within such period,  then
within five (5) business  days  following  the end of such  period,  each of the
Company  and the  Warrant  Representative  by written  notice to the other shall
designate a Qualified  Appraiser (or if any party fails to so select a Qualified
Appraiser  within the time period  specified,  the Person  selected by the other
party shall be the  Qualified  Appraiser)  and the two  Qualified  Appraisers so
designated  shall within ten (10)  business  days of their  designation  jointly
designate a third Qualified  Appraiser,  and such third  Qualified  Appraiser so
designated,  solely,  shall independently make a Determination.  The parties may
submit the basis for their respective views to the Appraiser in writing. In such
event,  each party shall  furnish its  submission to the other party at the same
time as the  submission is furnished to the Qualified  Appraiser,  and the other
party shall have two (2) business days within which to furnish a single rebuttal
to  such  original  submission.   The  Qualified  Appraiser  may  consider  such
submissions in reaching the  Determination.  If there is only a single Qualified
Appraiser,  the fees  and  expenses  of the  Qualified  Appraiser  shall be paid
equally  by the  Company  and the  Warrant  Representative.  If three  Qualified
Appraisers  are  appointed,  the Company  shall pay the fees and expenses of the
Qualified Appraiser which it appoints,  the Warrant Representative shall pay the
fees and expenses of the Qualified Appraiser which it appoints, and the fees and
expenses of the third Qualified Appraiser shall be shared equally by the Company
and the Warrant  Representative.  The designated  Qualified Appraiser shall make
the   Determination  not  later  than  ten  (10)  business  days  following  the
appointment  of  the  Qualified   Appraiser   making  the   Determination.   The
Determination  made  by the  applicable  Qualified  Appraiser  shall  be  final,
conclusive and binding on the parties hereto.  None of the Qualified  Appraisers
shall be  affiliated  with any of the  Company,  the Warrant  Representative  or
another  Qualified  Appraiser.  For the purposes of this  Agreement,  "Qualified
Appraiser"  shall mean an individual who is engaged on a regular basis (although
not necessarily full time) in valuing securities or arrangements similar to this
Agreement,  as the case may be, and may  include  (but shall not be limited  to)
professional business appraisers, investment bankers or accountants.

<PAGE>

         3. NO VOTING RIGHTS AS STOCKHOLDERS OR LIABILITIES. Except as otherwise
provided herein,  this Warrant shall not be deemed to confer upon the Holder any
right  to vote or to  consent  to or  receive  notice  as a  stockholder  of the
Company, as such, in respect of any matters  whatsoever,  or any other rights or
liabilities as a stockholder, prior to the exercise hereof. Nothing contained in
this  Warrant  shall be deemed as  imposing  any  liabilities  on the  Holder to
purchase any securities  whether such liabilities are asserted by the Company or
by creditors or stockholders of the Company or otherwise.

         4.  WARRANTS AND WARRANT  SHARES NOT  TRANSFERABLE  EXCEPT AS EXPRESSLY
PROVIDED IN THIS SECTION. This Warrant and the underlying shares of Common Stock
may not be offered, sold or transferred except in compliance with the applicable
terms of the Securities Purchase Agreement,  if any, and the Securities Act, and
any applicable state securities laws, or an exception  therefrom,  and then only
against  receipt  of an  agreement  of the  person to whom such offer or sale or
transfer is made to comply with the  provisions  of this Warrant with respect to
any  resale  or other  disposition  of such  securities;  provided  that no such
agreement  shall be  required  from any person  purchasing  this  Warrant or the
underlying shares of Common Stock pursuant to a registration statement effective
under the Securities Act. No such disposition  shall occur without an opinion of
such Holder's  counsel,  which opinion shall be reasonably  satisfactory  to the
Company's counsel.  Notwithstanding the foregoing,  Also, this Warrant shall not
be transferable..

         5. WARRANTS EXCHANGEABLE;  ASSIGNMENT;  LOSS, THEFT, DESTRUCTION,  ETC.
This Warrant is  exchangeable,  without  expense,  upon surrender  hereof by the
Holder hereof at the principal  offices of the Company,  or at the office of its
Transfer  Agent,  if any,  for new  Warrants of like tenor  representing  in the
aggregate the right to subscribe  for and purchase the Warrant  Shares which may
be subscribed  for and purchased  hereunder,  each such new Warrant to represent
the  right  to  subscribe  for and  purchase  such  Warrant  Shares  as shall be
designated by such Holder hereof at the time of such  surrender.  Upon surrender
of this Warrant to the Company at its principal  office, or at the office of its
Transfer Agent, if any, with an instrument of assignment duly executed and funds
sufficient to pay any transfer tax, the Company shall,  without charge,  execute
and deliver a new Warrant in the name of the assignee  named in such  instrument
of assignment  and this Warrant shall promptly be cancelled;  provided,  that no
such  assignment  shall be  effected  except  in  accordance  with the terms and
conditions of the Securities  Purchase  Agreement and Section 4 of this Warrant.
This Warrant may be divided or combined with other warrants which carry the same
rights upon  presentation  hereof at the principal office of the Company,  or at
the  office of its  Transfer  Agent,  if any,  together  with a  written  notice
specifying  the names and  denominations  in which new Warrants are to be issued
and signed by the Holder hereof; provided, that no such assignment,  transfer or
other  disposition of this Warrant shall be effected  except in accordance  with
the terms and conditions of the Securities  Purchase  Agreement and Section 4 of
this Warrant. The term "Warrant" as used herein includes any Warrants into which
this Warrant may be divided or  exchanged.  Upon 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,  upon
delivery of indemnity reasonably satisfactory to the Company, or, in the case of
any such mutilation, upon surrender or cancellation of this Warrant, the Company
will issue to the Holder  hereof a new  Warrant of like  tenor,  in lieu of this
Warrant, representing the right to subscribe for and purchase the Warrant Shares
which  may be  subscribed  for and  purchased  hereunder.  Any such new  Warrant
executed and delivered shall constitute an additional  contractual obligation of
the  Company,  whether  or not this  Warrant  so  lost,  stolen,  destroyed,  or
mutilated shall be at any time enforceable by anyone.

         6. LEGENDS; INVESTMENT REPRESENTATIONS.  Any certificate evidencing the
securities  issued  upon  exercise  of  this  Warrant  shall  bear a  legend  in
substantially the following form:

         THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY
OTHER  SECURITIES   LAWS,  AND  SUCH  SECURITIES  MAY  NOT  BE  OFFERED,   SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED UNLESS SO REGISTERED OR
AN  EXEMPTION  FROM  REGISTRATION  UNDER  SAID  ACT  AND  ANY  OTHER  APPLICABLE
SECURITIES LAWS IS AVAILABLE.

         7. MODIFICATIONS AND WAIVERS.  The Holder of this Warrant  acknowledges
and agrees that the terms of this  Warrant  may be  amended,  modified or waived
only by the written agreement between the Holder and the Company.

<PAGE>

         8.  EXPENSES.  The Company  shall pay all  expenses  and other  charges
payable in  connection  with the  preparation,  issuance  and  delivery  of this
Warrant  and  all  substitute  Warrants.  The  Holder  shall  pay all  taxes  in
connection with any sale, assignment or other transfer of this Warrant.

         9. BOOKS.  The Company shall  maintain,  at the office or agency of the
Company  maintained by the Company,  books for the  registration and transfer of
the Warrant.

         10.  RESERVATION OF WARRANT  SHARES.  The Company  covenants and agrees
that it will at all times  reserve  and keep  available,  free  from  preemptive
rights,  out of the aggregate of its authorized but unissued Common Stock or its
authorized and issued Common Stock held in its treasury,  solely for the purpose
of enabling it to satisfy any  obligation to issue Warrant  Shares upon exercise
of this Warrant,  the maximum number of shares of Common Stock which may then be
deliverable upon the exercise of this Warrant. The Company or, if appointed, the
transfer agent for the Common Stock (the "Transfer Agent"), and every subsequent
transfer  agent for any shares of the Company's  capital stock issuable upon the
exercise  of any  of the  rights  of  purchase  aforesaid  will  be  irrevocably
authorized and directed at all times to reserve such number of authorized shares
as shall be required  for such  purpose.  The  Company  will keep a copy of this
Warrant on file with the Transfer Agent and with every subsequent transfer agent
for any shares of the Company's  capital stock issuable upon the exercise of the
rights of purchase  represented  by this Warrant.  The Company will furnish such
Transfer Agent a copy of all notices of  adjustments  and  certificates  related
thereto  transmitted  to the Holder  pursuant  to Section 2 hereof.  The Company
covenants  that all Warrant  Shares  which may be issued  upon  exercise of this
Warrant will, upon issue, be validly issued,  fully paid and nonassessable,  not
subject  to any  preemptive  rights,  and free from all taxes,  liens,  security
interests, charges, and other encumbrances with respect to the issuance thereof.

         11.  REGISTRATION.  Pursuant to a certain Registration Rights Agreement
of even date herewith  between the Company and the Holder,  among other parties,
the Company is required to register  under the Securities Act the Warrant Shares
which may be acquired by such Holder.  Any  permitted  transferee  must become a
party to said Registration  Rights Agreement in order to have the benefit of the
same.

         12. LISTING ON SECURITIES EXCHANGES;  REGISTRATION. If, and so long as,
any  class of the  Company's  Common  Stock  shall  be  listed  on any  national
securities  exchange  (as  defined  in the  Exchange  Act) or  NASDAQ or the OTC
Bulletin  Board,  the Company shall use its  reasonable  best efforts to, at its
expense,  obtain and maintain the approval for listing upon  official  notice of
issuance of all Warrant  Shares and maintain the listing of Warrant Shares after
their  issuance;  and the  Company  will so  list  on such  national  securities
exchange or NASDAQ or the OTC Bulletin Board, if applicable, will register under
the Exchange Act (or any similar statute then in effect), and will maintain such
listing of, any other  securities that at any time are issuable upon exercise of
this Warrant if and at the time any securities of the same class shall be listed
on such  national  securities  exchange or NASDAQ or OTC  Bulletin  Board by the
Company.

         13. NO DILUTION OR IMPAIRMENT. The Company will not act for the purpose
of  avoiding or seeking to avoid the  observance  or  performance  of any of the
terms  of  this  Warrant,  by  amendment  of  its  certificate  or  articles  of
incorporation or other  organizational  documents or through any reorganization,
transfer  of  assets,  consolidation,  merger,  dissolution,  issue  or  sale of
securities or any other action, but will, at all times, in good faith, assist in
the  carrying out of all such terms.  Without  limiting  the  generality  of the
foregoing,  the Company  will not  increase the par value of any shares of stock
receivable on the exercise of this Warrant above the amount payable  therefor on
such exercise.

         14. MISCELLANEOUS.

         14.1 NOTICES.  All notices and other  communications shall be mailed by
first-class  certified or registered mail,  postage  prepaid,  sent by reputable
overnight delivery, delivered by hand or sent by facsimile as follows:

<PAGE>

                           If to the Company:

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

                           If to the Holder:

                           The address and/or facsimile furnished to the Company
                           in  writing  by the last  registered  Holder  of this
                           Warrant who shall have  furnished  an address  and/or
                           facsimile to the Company in writing;

except that any of the foregoing may from time to time by written  notice to the
other  designate  another  address  which shall  thereupon  become its effective
address for the purposes of this  paragraph.  Any notices,  requests or consents
hereunder shall be deemed given, and any instruments delivered,  five days after
they have been mailed by  first-class  certified or registered  mail U.S.  Mail,
postage prepaid,  or upon receipt if delivered by a reputable  overnight courier
or if delivered personally or by facsimile transmission.

         14.2  ENTIRE  AGREEMENT.  This  Warrant,  including  the  exhibits  and
documents  referred  to  herein  which are a part  hereof,  contain  the  entire
understanding  of the parties  hereto with respect to the subject matter and may
be amended only by a written instrument  executed by the parties hereto or their
successors or assigns.  Any paragraph  headings  contained in this Agreement are
for  reference  purposes  only and shall not  affect in any way the  meaning  or
interpretation of this Warrant.

         14.3  GOVERNING LAW. This Warrant shall be governed by and construed in
accordance with the laws of the State of New York with respect to contracts made
and to be fully  performed  therein,  without  regard to the  conflicts  of laws
principles thereof.  The parties hereto hereby agree that any suit or proceeding
arising  under this  Warrant,  or in  connection  with the  consummation  of the
transactions  contemplated hereby, shall be brought solely in a federal or state
court  located in the County of New York and State of New York. By its execution
hereof,  both the Company and the  undersigned  hereby  consent and  irrevocably
submit to the in personam  jurisdiction  of the federal and state courts located
in the  County of New York and State of New York and agree  that any  process in
any suit or proceeding commenced in such courts under this Warrant may be served
upon it personally or by certified or registered mail, return receipt requested,
or by Federal Express or other courier  service,  with the same force and effect
as if personally served upon the applicable party in New York and in the city or
county in which such other court is located.  The parties  hereto each waive any
claim that any such  jurisdiction is not a convenient forum for any such suit or
proceeding  and any defense of lack of in  personam  jurisdiction  with  respect
thereto.

         14.4  Headings.  The  headings  of this  Warrant  are for  purposes  of
reference  only and shall not  limit or  otherwise  affect  the  meaning  of any
provision of this Warrant.

             [the balance of this page is intentionally left blank]

<PAGE>

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

                                                     ADVANCE NANOTECH, INC.

                                                     By:
                                                        ------------------------
                                                           Name:
                                                           Title:

<PAGE>

                                  PURCHASE FORM

Dated: __________

The undersigned  hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing  _____ Warrant Shares and hereby makes full cash payment of
$_____________ in payment of the exercise price thereof. The undersigned has had
the  opportunity  to ask  questions of and receive  answers from the officers of
Advance Nanotech,  Inc. (the "Company") regarding the affairs of the Company and
related matters,  and has had the opportunity to obtain  additional  information
necessary  to  verify  the  accuracy  of  all  information  so  obtained.   [The
undersigned  understands  that the  shares  have not been  registered  under the
Securities  Act of  1933,  as  amended,  or the  securities  laws  of any  other
jurisdiction,  and hereby  represents  to the Company  that the  undersigned  is
acquiring the shares for its own account,  for  investment,  and not with a view
to, or for sale in connection  with, the distribution of any such shares.] [This
may not apply depending upon whether a registration statement is effective.]

                                        (Signature)

                                        (Print or type name)

                                        (Address)

NOTICE:  The signature of this Purchase  Form must  correspond  with the name as
written upon the face of the within Warrant,  or upon the assignment thereof, if
applicable, in every particular,  without alteration,  enlargement or any change
whatsoever.

<PAGE>

                               FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant)

         FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto  ______________________  the right  represented  by the  within  Warrant to
purchase  ________ shares of Common Stock of  _____________  to which the within
Warrant  relates and appoints  _____________  attorney to transfer said right on
the  books  of  ___________________  with  full  power  of  substitution  in the
premises.

Dated:   __________________   ___,  200__

(Signature  must  conform in all  respects to name of holder as specified on the
face of the Warrant)

                                        Address of Transferee:

In the presence of:

                               CONSENT OF ASSIGNEE

         I HEREBY  CONSENT  to abide by the terms and  conditions  of the within
Warrant.

Dated:
                                        (Signature of Assignee)

                                        (Print or type name)EXHIBIT 10.13

                   [FORM OF PLACEMENT AGENT PURCHASE WARRANT]

NEITHER THIS WARRANT NOR THE SECURITIES  ISSUABLE UPON EXERCISE HEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES  ACT"),
AND SUCH SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE  ASSIGNED  UNLESS SO REGISTERED OR AN EXEMPTION  FROM  REGISTRATION
UNDER THE SECURITIES  ACT IS AVAILABLE.  NEITHER THIS WARRANT NOR THE SECURITIES
ISSUABLE UPON  EXERCISE  HEREOF ARE  TRANSFERABLE  EXCEPT AS EXPRESSLY SET FORTH
HEREIN.  THIS LEGEND SHALL BE ENDORSED  UPON ANY WARRANT  ISSUED IN EXCHANGE FOR
THIS WARRANT.

                                WARRANT AGREEMENT

                               FOR COMMON STOCK OF

                             ADVANCE NANOTECH, INC.

Warrant No. ____                             Warrant to purchase an aggregate of

Date of Issuance: [FEBRUARY __,] 2005          __________ shares of Common Stock

THIS  CERTIFIES  that,  for  value  received,  [_________________________],   or
his/her/its  permitted  transferees,  successors or assigns  (collectively,  the
"Holder"),  is entitled to purchase  from  ADVANCE  NANOTECH,  INC.,  a Colorado
corporation  (the  "Company"),  at any time,  and from time to time,  during the
exercise  period  referred to in Section 1 hereof,  [__________________________]
([____________])  fully  paid,  validly  issued and  nonassessable  shares  (the
"Warrant  Shares") of common  stock of the  Company,  par value $0.00l per share
(the "Common  Stock"),  at the exercise  price of Two Dollars  ($2.00) per share
(the "Warrant Share Price").  Securities  issuable upon exercise of this Warrant
and the Warrant Share Price payable therefor are subject to adjustment from time
to time as  hereinafter  set forth.  As used herein,  the term  "Warrant"  shall
include any warrant or warrants  hereafter issued in consequence of the exercise
of this  Warrant  Agreement  in part or transfer of this  Warrant in whole or in
part. Capitalized terms used herein and not defined have the respective meanings
given to them in that  certain  Securities  Purchase  Agreement,  dated the date
hereof,  by and among the Company and the other parties named  therein.  As used
herein, the term "Holders" shall include holders of all Warrants.

The Company shall  register  this Warrant,  upon records to be maintained by the
Company for that purpose  (the  "Warrant  Register"),  in the name of the record
Holder hereof from time to time.  The Company may deem and treat the  registered
Holder of this  Warrant as the  absolute  owner  hereof  for the  purpose of any
exercise hereof or any  distribution to the Holder,  and for all other purposes,
and the Company shall not be affected by notice to the contrary.

Subject  to  Section 4 of this  Warrant  and the  applicable  provisions  of the
Securities Purchase Agreement and applicable law, the Company shall register any
permitted transfer of any portion of this Warrant in the Warrant Register,  upon
surrender of this  Warrant,  with the Form of  Assignment  attached  hereto duly
completed  and  signed,  to the  Transfer  Agent (as  defined  herein) or to the
Company.  Upon any such  registration  or permitted  transfer,  a new warrant to
purchase Common Stock, in  substantially  the form of this Warrant (any such new
warrant, a "New Warrant"), evidencing the portion of this Warrant so transferred
shall be issued to the permitted  transferee  and a New Warrant  evidencing  the
remaining portion of this Warrant not so transferred, if any, shall be issued to
the  transferring  Holder.  The  acceptance  of the New Warrant by the permitted
transferee  thereof shall be deemed the acceptance by such permitted  transferee
of all of the rights and  obligations  of a holder of a Warrant.  Any  permitted
transfer or assignment of this Warrant and Warrant Shares obtained by the Holder
in exercise of this Warrant is subject to any applicable  restrictions under the
Securities Purchase Agreement, if any, and the requirements that such securities
be registered  under the Securities Act and applicable  state securities laws or
exempt from  registration  under such laws,  and the  provisions of Section 5 of
this Warrant.

<PAGE>

1. Exercise; Payment for Ownership Interest.

(a) Upon the terms and subject to the conditions set forth herein,  this Warrant
may be exercised in whole or in part by the Holder  hereof at any time,  or from
time to time,  on or after the date  hereof  and on or prior to the  earlier  to
occur of (i) the "Early Expiration  Date," as such term is hereinafter  defined,
and  (ii)  5:00:00  p.m.  New  York  local  time on  [FEBRUARY  __,  2010]  (the
"Expiration  Date"),  by  presentation  and  surrender  of this  Warrant  to the
principal  offices of the Company,  or at the office of its Transfer  Agent,  if
any,  together  with the  Purchase  Form  annexed  hereto,  duly  executed,  and
accompanied  by payment to the Company of an amount  equal to the Warrant  Share
Price  multiplied  by the number of Warrant  Shares as to which this  Warrant is
then being exercised in immediately available funds in U.S. dollars by certified
or official bank check or wire transfer of the cash  purchase  price;  provided,
however,  that in each case,  the minimum  number of Warrant  Shares as to which
this Warrant is being  exercised shall be the lesser of (i) 5,000 Warrant Shares
or (ii) all  Warrant  Shares then held by the Holder on an as  exercised  basis;
provided, further, that in the event of any merger, consolidation or sale, lease
or transfer of all or substantially  all of the assets of the Company,  prior to
the  Expiration  Date,  the Holder shall have the right to exercise this Warrant
commencing at such time through the Expiration  Date into the kind and amount of
shares of stock and other securities and property (including cash) receivable by
a holder of the number of shares of Common Stock into which this  Warrant  might
have been exercisable  immediately prior thereto. Any transfer of Warrant Shares
obtained by the Holder in exercise of this Warrant is subject to the requirement
that such  transfer  be in  compliance  with the  applicable  provisions  of the
Securities  Purchase  Agreement,  if any, and that such securities be registered
under the Securities  Act, and applicable  state  securities laws or exempt from
registration under such laws. The Holder of this Warrant shall be deemed to be a
stockholder  of the  Warrant  Shares as to which this  Warrant is  exercised  in
accordance  herewith  effective  immediately  after the close of business on the
date on which the Holder  shall have  delivered  to the Company  this Warrant in
proper form for  exercise  and payment in U.S.  dollars by certified or official
bank check or wire transfer of immediately  available funds of the cash purchase
price for the number of Warrant  Shares as to which the  exercise is being made,
notwithstanding  that the  stock  transfer  books of the  Company  shall be then
closed or that  certificates  representing such Warrant Shares shall not then be
physically delivered to the Holder. The Company shall not enter into any merger,
consolidation  or sale,  lease or  transfer of all or  substantially  all of the
assets of the Company  unless  effective  provision  shall be made so as to give
effect to the provisions set forth in this subsection (a).

(i) As used herein,  "Early  Expiration Date" means ten (10) business days after
delivery  of  written  notice by the  Company  to the  Holder  that  during  the
preceding thirty (30) consecutive  trading days (x) the Market Price (as defined
herein) for a share of Common  Stock was equal to or greater  than Four  Hundred
Percent (400%) of the  then-applicable  Warrant Share Price, and (y) the average
trading volume of the Common Stock was at least 100,000 shares per day.

(ii) 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.

(iii) 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.

<PAGE>

(b) If this Warrant shall be exercised in part only, the Company, upon surrender
of this Warrant for cancellation, shall execute and deliver, promptly (but in no
event  more  than  ten  business  days  after  such  surrender),  a new  Warrant
evidencing  the rights of the  Holder  thereof to  purchase  the  balance of the
Warrant  Shares  purchasable  hereunder  as to which  the  Warrant  has not been
exercised.  If this Warrant is exercised in part,  such exercise  shall be for a
whole number of Warrant Shares. Upon any exercise and surrender of this Warrant,
the  Company  (i)  will  issue  and  deliver  to the  Holder  a  certificate  or
certificates  in the name of the Holder for the largest  whole number of Warrant
Shares to which the Holder  shall be entitled  and, if this Warrant is exercised
in whole, in lieu of any fractional  Warrant Share to which the Holder otherwise
might be entitled,  cash in an amount equal to the fair value of such fractional
Warrant Share  (determined in such reasonable and equitable  manner as the Board
of Directors of the Company (the "Board")  shall in good faith  determine),  and
(ii) will deliver  promptly  thereafter  (but in no event more than ten business
days thereafter) to the Holder such other securities,  properties and cash which
the Holder may be entitled to receive upon such exercise,  or the  proportionate
part thereof if this Warrant is exercised in part, pursuant to the provisions of
this Warrant.

(c) This  Warrant  may also be  exercised  at such time by means of a  "cashless
exercise"  in which the Holder  shall  tender to the Company the Warrant for the
amount of Warrant Shares for which it is being exercised, along with the written
notice of exercise,  and the Holder  shall be entitled to receive a  certificate
for the number of Warrant  Shares  equal to the  quotient  obtained  by dividing
[(A-B) (X)] by (A), where:

(A) = the Market Price on the Trading Day immediately preceding the date of such
election;

(B) = the Warrant Share Price of this Warrant, as adjusted, at 9:00:00 a.m., New
York local time, on the date of such election; and

(X) = the number of Warrant  Shares  issuable  upon  exercise of this Warrant in
accordance  with the terms of this  Warrant by means of a cash  exercise  rather
than a cashless exercise.

2. Anti-Dilution  Provisions.  The Warrant Share Price in effect at any time and
the number and kind of  securities  issuable upon exercise of this Warrant shall
be subject to adjustment  from time to time upon the happening of certain events
as follows:

2.1 Adjustments.

(a) Definition of Additional Stock. 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 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;

<PAGE>

(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  issued  or  issuable  pursuant  to  subsection
2.1(b)(iv) below; and

(iv) 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.

(b) Dividend,  Subdivision,  Combination or Reclassification of Common Stock. In
the event  that the  Company  shall at any time or from  time to time  after the
issuance of this Warrant but prior to the exercise hereof:

(i) make a dividend or distribution  on the  outstanding  shares of Common Stock
payable in capital stock;

(ii)  subdivide or  reclassify or reorganize  its  outstanding  shares of Common
Stock into a greater number of shares;

(iii) combine or reclassify or reorganize its outstanding shares of Common Stock
into a smaller number of shares; or

(iv) issue, by reclassification of its Common Stock or other reorganization, any
Additional Shares of Common Stock;

then the number and kind of Warrant  Shares  purchasable  upon  exercise of this
Warrant  shall be  adjusted  so that the Holder upon  exercise  hereof  shall be
entitled to receive the kind and number of Warrant Shares or other securities of
the Company  that the Holder  would have owned or have been  entitled to receive
after the happening of any of the events  described  above had this Warrant been
exercised  immediately  prior to the  happening of such event or any record date
with respect  thereto.  Whenever the number of Warrant Shares  purchasable  upon
exercise  hereof is adjusted  as herein  provided,  the  Warrant  Price shall be
adjusted by multiplying the Warrant Price by a fraction,  the numerator of which
is equal to the  number  of  shares of  Common  Stock  purchasable  prior to the
adjustment  and the  denominator  of which is equal to the  number  of shares of
Common Stock  purchasable  after the adjustment.  An adjustment made pursuant to
this Section 2.1(b) shall become effective  immediately after the record date in
the case of a dividend or distribution  and shall become  effective  immediately
after the effective date in the case of a subdivision,  combination or issuance.
If, as a result of an  adjustment  made  pursuant to this  Section  2.1(b),  the
Holder of this Warrant thereafter surrendered for exercise shall become entitled
to receive  shares of two or more  classes of capital  stock or shares of Common
Stock and any other class of capital stock of the Company, the Board (whose good
faith  determination  shall be  applied  fairly and  ratably  to all  Holders of
Warrants and shall be conclusive  and shall be described in a written  notice to
all Holders of Warrants  promptly after such adjustment) shall determine in good
faith the  allocation  of the adjusted  Warrant Share Price between or among the
shares of such classes of capital stock or shares of Common Stock and such other
class of capital stock.

The adjustment to the number of Warrant Shares  purchasable upon the exercise of
this Warrant  described in this Section 2.1(b) shall be made each time any event
listed in paragraphs (i) through (iv) of this Section 2.1(b) occurs.

(c) Issuance of Common Stock Below  Warrant  Share Price.  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
(b)),  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:

(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.

(d) Issuance of Options and Convertible Securities Deemed Issuance of Additional
Shares of Common Stock.  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")  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,  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 2.1(d):

<PAGE>

(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 or the termination of any
such right to convert or exchange such Convertible Securities, 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;

(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.

(e)  Determination  of  Consideration.  For purposes of  Subsections  2.1(c) and
2.1(d),  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 2.1(d),  relating to Options and Convertible  Securities,
shall be determined by dividing

(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

<PAGE>

(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 2.1, 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.

(f) Extraordinary  Distributions.  In case the Company shall at any time or from
time to time,  after the  issuance  of the  Warrant  but  prior to the  exercise
hereof,  distribute  to all  holders of its  Common  Stock  (including  any such
distribution  made in  connection  with a  consolidation  or merger in which the
Company is the continuing or surviving  corporation  and the Common Stock is not
changed or  exchanged)  cash,  evidences of  indebtedness,  securities  or other
property or assets  (excluding any such event for which adjustment is made under
Section  2) or  rights or  warrants  to  subscribe  for or  purchase  any of the
foregoing,  then,  and in each  such  case,  the  Holder  shall be  entitled  to
participate  in any such  distribution  based on the  number of shares of Common
Stock it would have been  entitled  to receive had the  Warrant  been  exercised
immediately prior to the occurrence of such distribution,  as if the Holder were
the  owner of such  shares  of  Common  Stock at the time of such  distribution.
Notwithstanding  the  foregoing,  this  Section  2.1(f)  shall be of no force or
effect until and unless such time as the Company shall grant a similar right to

holders of  warrants  issued  after the date  hereof,  at which time the Holders
shall be entitled to the same protection for extraordinary  dividends as granted
to such future holders of warrants,  if any. 2.2 Other Action Affecting  Warrant
Shares.  If the Company  takes any action  affecting  its shares of Common Stock
after the date  hereof,  that would be covered by Section 2.1 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 shall be adjusted in such
manner as the Board  shall in good faith  determine  to be  equitable  under the
circumstances.

2.3  Notice  of   Adjustments.   Upon  the  occurrence  of  each  adjustment  or
readjustment  of the Warrant Share Price pursuant to this Section 2, the Company
at its expense  will as promptly as  possible,  but in any event within ten (10)
business days,  compute such  adjustment or  readjustment in accordance with the
terms of this Warrant and prepare a certificate setting forth such adjustment or
readjustment,  including  a statement  of the  adjusted  Warrant  Share Price or
adjusted  number of shares of Common  Stock,  if any,  issuable upon exercise of
each Warrant,  describing in reasonable  detail the  transaction  giving rise to
such  adjustments  and showing in detail the facts upon which such adjustment or
readjustment  is based.  The Company will  forthwith  mail, by first class mail,
postage  prepaid,  a copy of each such certificate to the Holder of this Warrant
at the address of such Holder as shown on the books of the  Company,  and to its
Transfer Agent.

2.4 Other Notices. If at any time:

(a) the  Company  shall (i) offer for  subscription  pro rata to the  holders of
shares of the Common Stock any additional equity in the Company or other rights;
or (ii) pay a dividend in  additional  shares of the Common Stock or  distribute
securities  or other  property  or assets to the holders of shares of the Common
Stock (including, without limitation, cash, evidences of indebtedness and equity
and debt securities);

(b)  there  shall  be  any  capital   reorganization  or   reclassification   or
consolidation  or merger of the Company with, or sale,  transfer or lease of all
or substantially all of its assets to, another entity; or

(c) there  shall be a  voluntary  or  involuntary  dissolution,  liquidation  or
winding up of the Company;

then,  in any one or more of said cases,  the Company shall give, by first class
mail,  postage  prepaid,  to the Holder of this  Warrant at the  address of such
Holder as shown on the books of the Company, (x) at least 10 days' prior written
notice  of the date on which the books of the  Company  shall  close or a record
shall be taken for such subscription rights, dividend, distribution or issuance;
provided that such ten (10) day period shall be increased to thirty (30) days in

<PAGE>

the case of Section 2.4(a)(ii),  and (y) in the case of any such reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding  up, at least 10 days'  prior  written  notice of the date when the same
shall take place if no stockholder  vote is required and at least 10 days' prior
written  notice of the record date for  stockholders  entitled to vote upon such
matter if a stockholder  vote is required.  Such notice in  accordance  with the
foregoing  clause (x) shall also specify,  in the case of any such  subscription
rights,  the date on which  the  holders  of shares  of  Common  Stock  shall be
entitled  to exercise  their  rights with  respect  thereto,  and such notice in
accordance  with the  foregoing  clause (y) shall also specify the date on which
the holders of shares of Common Stock shall be entitled to exchange their shares
of  Common  Stock  for  securities  or  other  property  deliverable  upon  such
reorganization,  reclassification,  consolidation,  merger,  sale,  dissolution,
liquidation or winding up, as the case may be.

2.5 Adjustment  Calculations.  No adjustment in the Warrant Share Price shall be
required  unless  such  adjustment  would  require an increase or decrease of at
least one cent ($0.01) in such price;  provided,  however,  that any adjustments
which by reason of this Section 2.5 are not required to be made shall be carried
forward and taken into account in any subsequent  adjustment required to be made
hereunder.  All  calculations  under this Section 2 shall be made to the nearest
cent or to the nearest one-hundredth of a share, as the case may be.

2.6  Appraisal.  If a majority in interest of the Holders  reasonably  disagrees
with any of the Board's  determinations  referred to in this Section 2 (each,  a
"Determination"),  and such  majority of Holders shall notify the Company of its
disagreement  by  furnishing  to the Company a written  notice  setting forth in
reasonable detail the fact of such dispute, the basis for such dispute, and such
Holders'  alternative   calculation  (such  notice,  a  "Determination   Dispute
Notice"),  and such  Determination  Dispute  Notice is  received  by the Company
within seven (7) days of the Company having given notice of the Determination to
the  Holders,  then the Company and a majority in interest of such  Holders (the
"Warrant Representative") shall resolve such Determination Dispute in accordance
with the terms and  provisions  of this Section 2.6. The Holders agree that this
Section 2.6 sets forth the exclusive  mechanism for the Holders to make any such
dispute  and to resolve  the same,  and shall not be  entitled  to make any such
dispute in any other manner.  The Company and the Warrant  Representative  shall
use good  faith  efforts to  mutually  agree  upon the  designation  of a single
Qualified  Appraiser  (as defined  below)  within seven (7) business days of the
receipt by the Company of a valid  Determination  Dispute Notice received by the
Company in within the time period set forth above in this Section 2.6. If such a
single   Qualified   Appraiser   is   designated,   that  person  shall  make  a
Determination.  If the Company and the  Warrant  Representative  do not so agree
upon the designation of a single Qualified  Appraiser  within such period,  then
within five (5) business  days  following  the end of such  period,  each of the
Company  and the  Warrant  Representative  by written  notice to the other shall
designate a Qualified  Appraiser (or if any party fails to so select a Qualified
Appraiser  within the time period  specified,  the Person  selected by the other
party shall be the  Qualified  Appraiser)  and the two  Qualified  Appraisers so
designated  shall within ten (10)  business  days of their  designation  jointly
designate a third Qualified  Appraiser,  and such third  Qualified  Appraiser so
designated,  solely,  shall independently make a Determination.  The parties may
submit the basis for their respective views to the Appraiser in writing. In such
event,  each party shall  furnish its  submission to the other party at the same
time as the  submission is furnished to the Qualified  Appraiser,  and the other
party shall have two (2) business days within which to furnish a single rebuttal
to  such  original  submission.   The  Qualified  Appraiser  may  consider  such
submissions in reaching the  Determination.  If there is only a single Qualified
Appraiser,  the fees  and  expenses  of the  Qualified  Appraiser  shall be paid
equally  by the  Company  and the  Warrant  Representative.  If three  Qualified
Appraisers  are  appointed,  the Company  shall pay the fees and expenses of the
Qualified Appraiser which it appoints,  the Warrant Representative shall pay the
fees and expenses of the Qualified Appraiser which it appoints, and the fees and
expenses of the third Qualified Appraiser shall be shared equally by the Company
and the Warrant  Representative.  The designated  Qualified Appraiser shall make
the   Determination  not  later  than  ten  (10)  business  days  following  the
appointment  of  the  Qualified   Appraiser   making  the   Determination.   The
Determination  made  by the  applicable  Qualified  Appraiser  shall  be  final,
conclusive and binding on the parties hereto.  None of the Qualified  Appraisers
shall be  affiliated  with any of the  Company,  the Warrant  Representative  or
another  Qualified  Appraiser.  For the purposes of this  Agreement,  "Qualified
Appraiser"  shall mean an individual who is engaged on a regular basis (although
not necessarily full time) in valuing securities or arrangements similar to this
Agreement,  as the case may be, and may  include  (but shall not be limited  to)
professional business appraisers, investment bankers or accountants.

<PAGE>

3. No Voting Rights as Stockholders or Liabilities. Except as otherwise provided
herein,  this Warrant shall not be deemed to confer upon the Holder any right to
vote or to consent to or receive  notice as a  stockholder  of the  Company,  as
such, in respect of any matters  whatsoever,  or any other rights or liabilities
as a  stockholder,  prior to the  exercise  hereof.  Nothing  contained  in this
Warrant  shall be deemed as imposing any  liabilities  on the Holder to purchase
any  securities  whether  such  liabilities  are  asserted  by the Company or by
creditors or stockholders of the Company or otherwise.

4. Warrants and Warrant Shares Not Transferable  Except as Expressly Provided in
This Section.  This Warrant and the underlying shares of Common Stock may not be
offered,  sold or transferred  except in compliance with the applicable terms of
the  Securities  Purchase  Agreement,  if any, and the  Securities  Act, and any
applicable  state  securities  laws,  or an exception  therefrom,  and then only
against  receipt  of an  agreement  of the  person to whom such offer or sale or
transfer is made to comply with the  provisions  of this Warrant with respect to
any  resale  or other  disposition  of such  securities;  provided  that no such
agreement  shall be  required  from any person  purchasing  this  Warrant or the
underlying shares of Common Stock pursuant to a registration statement effective
under the Securities Act. No such disposition  shall occur without an opinion of
such Holder's  counsel,  which opinion shall be reasonably  satisfactory  to the
Company's counsel.  Notwithstanding  the foregoing,  Also, this Warrant shall be
transferable by the Placement Agent or Other  Participating  Agent receiving the
same only to its respective officers, directors,  shareholders and employees, as
well as by such persons to their immediate family  affiliates in connection with
estate planning, provided that no such transfer or disposition may be made other
than in compliance with applicable  securities laws and furnishing  satisfactory
evidence of such compliance to the Company.  No permitted transfer shall be made
without surrender of this Warrant with a properly executed Form of Assignment at
the principal offices of the Company.

5.  Warrants  Exchangeable;  Assignment;  Loss,  Theft,  Destruction,  Etc. This
Warrant is exchangeable,  without  expense,  upon surrender hereof by the Holder
hereof at the principal offices of the Company, or at the office of its Transfer
Agent, if any, for new Warrants of like tenor  representing in the aggregate the
right to subscribe  for and purchase the Warrant  Shares which may be subscribed
for and  purchased  hereunder,  each such new Warrant to represent  the right to
subscribe  for and purchase  such Warrant  Shares as shall be designated by such
Holder hereof at the time of such  surrender.  Upon surrender of this Warrant to
the Company at its principal  office, or at the office of its Transfer Agent, if
any, with an instrument of assignment duly executed and funds  sufficient to pay
any transfer tax, the Company shall,  without charge,  execute and deliver a new
Warrant in the name of the assignee  named in such  instrument of assignment and
this Warrant shall  promptly be  cancelled;  provided,  that no such  assignment
shall be effected  except in  accordance  with the terms and  conditions  of the
Securities Purchase Agreement and Section 4 of this Warrant. This Warrant may be
divided or  combined  with  other  warrants  which  carry the same  rights  upon
presentation  hereof at the principal office of the Company, or at the office of
its Transfer Agent, if any,  together with a written notice specifying the names
and  denominations  in which new  Warrants  are to be issued  and  signed by the
Holder hereof; provided, that no such assignment,  transfer or other disposition
of this  Warrant  shall be  effected  except  in  accordance  with the terms and
conditions of the Securities  Purchase  Agreement and Section 4 of this Warrant.
The term "Warrant" as used herein  includes any Warrants into which this Warrant
may be divided or exchanged. Upon 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,  upon delivery of indemnity
reasonably  satisfactory to the Company, or, in the case of any such mutilation,
upon surrender or  cancellation  of this Warrant,  the Company will issue to the
Holder hereof a new Warrant of like tenor, in lieu of this Warrant, representing
the  right to  subscribe  for and  purchase  the  Warrant  Shares  which  may be
subscribed  for and  purchased  hereunder.  Any such new  Warrant  executed  and
delivered shall constitute an additional  contractual obligation of the Company,
whether or not this Warrant so lost, stolen, destroyed, or mutilated shall be at
any time enforceable by anyone.

6.  Legends;   Investment   Representations.   Any  certificate  evidencing  the
securities  issued  upon  exercise  of  this  Warrant  shall  bear a  legend  in
substantially the following form:

THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED UNDER
THE  SECURITIES  ACT OF 1933, AS AMENDED (THE  "SECURITIES  ACT"),  OR ANY OTHER
SECURITIES  LAWS,  AND SUCH  SECURITIES MAY NOT BE OFFERED,  SOLD,  TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED UNLESS SO REGISTERED OR AN EXEMPTION
FROM  REGISTRATION  UNDER SAID ACT AND ANY OTHER  APPLICABLE  SECURITIES LAWS IS
AVAILABLE.

<PAGE>

7. Modifications and Waivers. The Holder of this Warrant acknowledges and agrees
that the terms of this  Warrant may be  amended,  modified or waived only by the
written agreement between the Holder and the Company.

8.  Expenses.  The Company shall pay all expenses and other  charges  payable in
connection with the  preparation,  issuance and delivery of this Warrant and all
substitute Warrants. The Holder shall pay all taxes in connection with any sale,
assignment or other transfer of this Warrant.

9. Books.  The Company  shall  maintain,  at the office or agency of the Company
maintained  by the  Company,  books for the  registration  and  transfer  of the
Warrant.

10. Reservation of Warrant Shares. The Company covenants and agrees that it will
at all times reserve and keep available, free from preemptive rights, out of the
aggregate of its  authorized  but unissued  Common Stock or its  authorized  and
issued Common Stock held in its treasury,  solely for the purpose of enabling it
to satisfy any obligation to issue Warrant Shares upon exercise of this Warrant,
the maximum number of shares of Common Stock which may then be deliverable  upon
the exercise of this Warrant.  The Company or, if appointed,  the transfer agent
for the Common Stock (the "Transfer Agent"), and every subsequent transfer agent
for any shares of the Company's  capital stock issuable upon the exercise of any
of the rights of purchase aforesaid will be irrevocably  authorized and directed
at all times to reserve  such number of  authorized  shares as shall be required
for such purpose.  The Company will keep a copy of this Warrant on file with the
Transfer  Agent and with every  subsequent  transfer agent for any shares of the
Company's  capital  stock  issuable  upon the exercise of the rights of purchase
represented by this Warrant. The Company will furnish such Transfer Agent a copy
of all notices of adjustments and  certificates  related thereto  transmitted to
the Holder pursuant to Section 2 hereof.  The Company covenants that all Warrant
Shares which may be issued upon  exercise of this Warrant will,  upon issue,  be
validly  issued,  fully paid and  nonassessable,  not subject to any  preemptive
rights, and free from all taxes, liens,  security interests,  charges, and other
encumbrances with respect to the issuance thereof.

11.  Registration.  Pursuant to a certain  Registration Rights Agreement of even
date  herewith  between the  Company and the Holder,  the Company is required to
register  under the  Securities  Act the Warrant Shares which may be acquired by
such Holder.  Any permitted  transferee must become a party to said Registration
Rights Agreement in order to have the benefit of the same.

12. Listing on Securities Exchanges; Registration. If, and so long as, any class
of the  Company's  Common  Stock  shall be  listed  on any  national  securities
exchange (as defined in the Exchange  Act) or NASDAQ or the OTC Bulletin  Board,
the Company shall use its reasonable best efforts to, at its expense, obtain and
maintain  the  approval  for  listing  upon  official  notice of issuance of all
Warrant Shares and maintain the listing of Warrant Shares after their  issuance;
and the Company will so list on such national  securities  exchange or NASDAQ or
the OTC Bulletin Board, if applicable,  will register under the Exchange Act (or
any similar  statute  then in effect),  and will  maintain  such listing of, any
other  securities that at any time are issuable upon exercise of this Warrant if
and at the time  any  securities  of the same  class  shall  be  listed  on such
national securities exchange or NASDAQ or OTC Bulletin Board by the Company.

13. No  Dilution  or  Impairment.  The  Company  will not act for the purpose of
avoiding or seeking to avoid the  observance or  performance of any of the terms
of this Warrant, by amendment of its certificate or articles of incorporation or
other  organizational  documents  or through  any  reorganization,  transfer  of
assets, consolidation,  merger, dissolution,  issue or sale of securities or any
other action, but will, at all times, in good faith,  assist in the carrying out
of all such terms. Without limiting the generality of the foregoing, the Company
will not  increase  the par  value of any  shares  of  stock  receivable  on the
exercise of this Warrant above the amount payable therefor on such exercise.

14. Miscellaneous.

14.1  Notices.   All  notices  and  other  communications  shall  be  mailed  by
first-class  certified or registered mail,  postage  prepaid,  sent by reputable
overnight delivery, delivered by hand or sent by facsimile as follows:

<PAGE>

                               If to the Company:

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

                                If to the Holder:

The address  and/or  facsimile  furnished  to the Company in writing by the last
registered  Holder of this Warrant who shall have  furnished  an address  and/or
facsimile to the Company in writing;

except that any of the foregoing may from time to time by written  notice to the
other  designate  another  address  which shall  thereupon  become its effective
address for the purposes of this  paragraph.  Any notices,  requests or consents
hereunder shall be deemed given, and any instruments delivered,  five days after
they have been mailed by  first-class  certified or registered  mail U.S.  Mail,
postage prepaid,  or upon receipt if delivered by a reputable  overnight courier
or if delivered personally or by facsimile transmission.

14.2 Entire  Agreement.  This  Warrant,  including  the exhibits  and  documents
referred to herein which are a part hereof,  contain the entire understanding of
the parties hereto with respect to the subject matter and may be amended only by
a written  instrument  executed by the  parties  hereto or their  successors  or
assigns.  Any paragraph  headings  contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or  interpretation  of
this Warrant.

14.3  Governing  Law.  This  Warrant  shall  be  governed  by and  construed  in
accordance with the laws of the State of New York with respect to contracts made
and to be fully  performed  therein,  without  regard to the  conflicts  of laws
principles thereof.  The parties hereto hereby agree that any suit or proceeding
arising  under this  Warrant,  or in  connection  with the  consummation  of the
transactions  contemplated hereby, shall be brought solely in a federal or state
court  located in the County of New York and State of New York. By its execution
hereof,  both the Company and the  undersigned  hereby  consent and  irrevocably
submit to the in personam  jurisdiction  of the federal and state courts located
in the  County of New York and State of New York and agree  that any  process in
any suit or proceeding commenced in such courts under this Warrant may be served
upon it personally or by certified or registered mail, return receipt requested,
or by Federal Express or other courier  service,  with the same force and effect
as if personally served upon the applicable party

in New York and in the city or county in which such other court is located.  The
parties  hereto  each  waive  any  claim  that  any such  jurisdiction  is not a
convenient  forum for any such suit or proceeding  and any defense of lack of in
personam jurisdiction with respect thereto.

14.4  Headings.  The headings of this Warrant are for purposes of reference only
and shall not limit or  otherwise  affect the meaning of any  provision  of this
Warrant.

[the balance of this page is intentionally left blank]

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

<PAGE>

                             ADVANCE NANOTECH, INC.

                                       By:
Name:
                                     Title:

                                  PURCHASE FORM

Dated: __________

The undersigned  hereby irrevocably elects to exercise the within Warrant to the
extent of purchasing  _____ Warrant Shares and hereby makes full cash payment of
$_____________ in payment of the exercise price thereof.

The  undersigned has had the opportunity to ask questions of and receive answers
from the  officers of Advance  Nanotech,  Inc.  (the  "Company")  regarding  the
affairs of the Company  and  related  matters,  and has had the  opportunity  to
obtain  additional   information   necessary  to  verify  the  accuracy  of  all
information so obtained.

[The undersigned  understands that the shares have not been registered under the
Securities  Act of  1933,  as  amended,  or the  securities  laws  of any  other
jurisdiction,  and hereby  represents  to the Company  that the  undersigned  is
acquiring the shares for its own account,  for  investment,  and not with a view
to, or for sale in connection  with, the distribution of any such shares.] [This
may not apply depending upon whether a registration statement is effective.]

                                   (Signature)

                              (Print or type name)

                                    (Address)

NOTICE:  The signature of this Purchase  Form must  correspond  with the name as
written upon the face of the within Warrant,  or upon the assignment thereof, if
applicable, in every particular,  without alteration,  enlargement or any change
whatsoever.

<PAGE>

                               FORM OF ASSIGNMENT

[To be completed and signed only upon transfer of Warrant)

FOR VALUE  RECEIVED,  the undersigned  hereby sells,  assigns and transfers unto
______________________  the right  represented by the within Warrant to purchase
________  shares of Common Stock of  _____________  to which the within  Warrant
relates and appoints  _____________ attorney to transfer said right on the books
of ___________________ with full power of substitution in the premises.

Dated: ________________ ___, 200__

(Signature  must  conform in all  respects to name of holder as specified on the
face of the Warrant)

                             Address of Transferee:

In the presence of:

                               CONSENT OF ASSIGNEE

I HEREBY CONSENT to abide by the terms and conditions of the within Warrant.

Dated:
                             (Signature of Assignee)

                              (Print or type name)

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