Document:

EXHIBIT 10.10

                     [FORM OF SECURITIES PURCHASE AGREEMENT]

         Securities Purchase Agreement (together with the schedules and exhibits
hereto, this "Agreement"), dated as of February 14, 2005, by and between Advance
Nanotech, Inc., a Colorado corporation (the "Company"),  and each of the Persons
(as defined below) who has executed a signature  page to this Agreement  (each a
"Purchaser," and together, the "Purchasers").

                              W I T N E S S E T H:

         WHEREAS,  the Company desires to issue and sell to the Purchasers,  and
the Purchasers desire to purchase from the Company, the Securities (as such term
is defined below) as set forth below.

         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and the
mutual covenants and agreements  hereinafter  contained,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  intending to be legally bound, the parties hereto hereby agree as
follows:

         1. OFFER AND SALE OF SECURITIES.

         1.1 THE  OFFERING.  The Company is offering  for sale in this  offering
(the "OFFERING") up to 1,700,000  shares (the "Maximum  Offering") of its common
stock,  par value $0.001 per share (the  "COMMON  STOCK").  Notwithstanding  the
foregoing,  the  Company,  in its sole  discretion,  may  increase  the  Maximum
Offering, at any time during the Offering and without prior notice, by up to ten
percent  (10%).  There is no minimum  offering,  and the  Company may accept and
close upon  subscriptions  from time to time in its sole  discretion  during the
offering  period  referred  to in this  Agreement.  In addition to the shares of
Common Stock being offered hereby (the "Shares"),  for every two Shares acquired
by a Purchaser at an applicable  Closing (as such term is  hereinafter  defined)
pursuant  to this  Agreement,  the  Company  shall  deliver to such  Purchaser a
warrant (the  "WARRANT")  to purchase one share of Common  Stock.  The Warrants,
which shall not be  transferable,  shall  initially be  exercisable at $3.00 per
share of Common Stock, subject to adjustment, and be exercisable for a period of
three (3) years  after  issuance  or until the date which is ten (10) days after
the Company furnishes written notice to the Warrant holder that the market price
of the Common Stock has been at least 350% of the then applicable exercise price
of the  Warrant  for a period of at least  thirty  (30)  days,  and the  average
trading  volume of the  Common  Stock has been at least  100,000  shares per day
during the preceding  thirty (30) days.  The shares of Common Stock which may be
acquired upon exercise of a Warrant are sometimes hereinafter referred to as the
"WARRANT  SHARES").  The  Shares  and the  Warrants  are  sometimes  hereinafter
referred to as the "SECURITIES". The Purchasers of the Securities shall have the
benefit of certain  registration rights in respect of the Shares and the Warrant
Shares on the terms and conditions of a Registration  Rights  Agreement,  in the
form of EXHIBIT A hereto (the "REGISTRATION  RIGHTS AGREEMENT").  The Company is
offering the  Securities  only to  individuals,  entities or groups,  including,
without  limitation,  corporations,  limited  liability  companies,  limited  or
general  partnerships,  joint  ventures,  associations,  joint stock  companies,
trusts,  unincorporated  organizations,   or  governments  or  any  agencies  or
political subdivisions thereof (each, a "PERSON") who are "accredited investors"
(as  defined  herein).  The  Company is making the  Offering  of the  Securities
directly  through  certain of its officers and its  directors,  but may engage a
placement  agent (the  "PLACEMENT  AGENT") and other  registered  broker-dealers
("OTHER PARTICIPATING AGENTS") may also place Securities.  If the Company should
engage a Placement Agent or any Other Participating Agent, the Company presently
intends to pay to the Placement Agent and to Other Participating Agents, if any,
commissions  equal to up to 10% of the gross  sales  price of the Shares sold in
the offering by the applicable  Placement Agent or Other Participating Agent. In
addition,  the Company presently intends to issue to any such Placement Agent or
Other Participating Agent, if any, at the final Closing warrants (the "PLACEMENT
AGENT  Warrants")  granting to such person warrant  coverage equal to 10% on the
number of Shares  (but not Warrant  Shares)  sold in the  Offering to  investors
introduced by that person (without  duplication of introduction).  The Placement
Agent  Warrants  shall  initially  be  exercisable  at $2.00 per share of Common

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Stock, subject to adjustment, commencing one year after the date of issuance and
continuing for five (5) years  thereafter,  and,  unlike the Warrants  issued to
Purchasers,  shall contain a cashless  exercise  provision.  The Placement Agent
Warrants shall be  transferable  by the Placement  Agent or Other  Participating
Agent receiving the same to its 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.  The  Company  will
indemnify  the  Placement  Agent and any  Other  Participating  Agents,  if any,
against certain liabilities. The Company will pay its own costs of the Offering.
The Company will also pay a  non-accountable  expense fee to the Placement Agent
equal to 3% of the gross sales price of the Shares (but not any Warrant  Shares)
sold in the Offering to investors  introduced  by the Placement  Agent  (without
duplication of introduction),  such 3% amount being sometimes hereafter referred
to as the  "NON-ACCOUNTABLE  EXPENSE ALLOWANCE".  Notwithstanding the foregoing,
the  Non-Accountable  Expense Allowance shall be reduced on a  dollar-for-dollar
basis by the fees and  expenses  of the  Company's  counsel  for  preparing  and
furnishing the opinion letter  referred to in Section 3.4(d) of this  Agreement.
All subscription proceeds in the Offering will be paid at Closing to the account
or accounts  specified in or pursuant to Section 1.2 herein,  provided  that the
Company will  utilize an escrow agent (the "ESCROW  AGENT") for receipt of funds
if required under applicable law. All references in this Agreement to the Escrow
Agent shall be deemed to be references to the Company in the event that there is
no third party Escrow Agent.

         1.2 SUBSCRIPTION.  Subject to the terms and conditions  hereinafter set
forth in this Agreement, each Purchaser hereby offers to purchase, at a price of
$2.00 per Share, the number of Shares  (together with one  accompanying  Warrant
for  every 2  Shares)  set  forth  beneath  each  such  Purchaser's  name on the
signature  pages  of  this  Agreement,  for an  aggregate  purchase  price  (the
"Purchase  Price") to be paid by such  Purchaser  in the amount set forth on the
signature  page  beneath  such  Purchaser's  name to such account as the Company
shall indicate by written notice to the Purchaser.

         1.3  SUBSCRIPTION  PROCEDURES.   To  submit  this  Subscription,   each
Purchaser must deliver (i) this Agreement,  including,  without limitation,  the
related  Purchaser  Questionnaire,  both duly completed and executed and (ii) an
executed  Registration  Rights  Agreement  to  the  following  address,   unless
otherwise advised by the Company:

         Advance Nanotech, Inc.
         712 Fifth Avenue, 19th Floor
         New York, NY, 10019

         Attention:  Magnus Gittins

         with any questions to be raised with Magnus Gittins at (646) 723 8962.

         The Company may accept or reject subscriptions, in whole or in part, or
accept subscriptions for less than the $50,000 minimum subscription, in its sole
discretion.  The Company shall notify each Purchaser of the portion,  if any, of
such Purchaser's subscription which has been accepted,  payment instructions for
the Purchase Price,  including wire transfer  instructions  and instructions for
delivery  of  payment  by  checks,  if  applicable,  and the date upon which the
applicable  Closing shall be held and payment must be made.  At each  applicable
Closing,  each Purchaser acquiring  Securities at such Closing shall deliver and
pay the applicable  purchase price in full for the Securities being purchased by
such Purchaser at such Closing,  in the amount of $2.00 for each Share for which
such Purchaser's subscription has been accepted, in U.S. dollars, in immediately
available  funds, in accordance with the payment  instructions  contained in the
notification to such Purchaser by the Company.

         2. CLOSING.  Upon acceptance of  subscriptions  for Securities  offered
hereby,  the Company shall hold one or more closings of the purchase and sale of
such Securities (each one, a "CLOSING"; the final closing, the "FINAL CLOSING").
Each Closing  shall be held at such location as the Company may  determine.  The
Final  Closing  will take place on the earlier to occur of (i) February 28, 2005
or (ii) the sale of all of the Securities being offered hereby, unless this date
is extended,  without notice to investors, by the Company in its sole discretion
for up to an  additional  30 days  (the  "TERMINATION  DATE").  The date of each
Closing  will be  referred  to as a  "CLOSING  DATE"  and the date of the  Final

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Closing is referred to as the "FINAL  CLOSING DATE." At the Closing with respect
to the subscription by each Purchaser, to the extent the same is accepted by the
Company,  the  Company  will  register in the name of each such  Purchaser  that
number of Securities  being  purchased by such Purchaser in accordance  with the
information on the applicable signature page of this Agreement.

         2.1 ESCROW. In the event that the Company engages a Placement Agent for
this  Offering,  which the  Company  may not  choose to do,  and the  Company is
required under  applicable  law to arrange for  applicable  funds to be received
into an escrow  account,  then, and only in such case,  pending each Closing all
funds paid in respect of this  Agreement  with regard to such  Closing  shall be
deposited in an escrow account (the "Escrow  Account")  maintained by the Escrow
Agent in accordance with Rule 15c2-4 under the Exchange Act (as defined herein).
The Escrow Account shall not be interest bearing. In such a case, if the Company
accepts subscriptions for the Securities at or prior to the Initial Closing Date
or the Final Closing Date,  as the case may be, then all  subscription  proceeds
received for  subscriptions  accepted by the Company  prior to such Closing Date
shall be paid over to the Company at each Closing,  net of the  Placement  Agent
fees,  if  any,  and  other  offering  expenses,  which  shall  be  paid  to the
appropriate parties at each such Closing. In any event, if the Company shall not
have received and accepted each Purchaser's subscription, then that subscription
shall be void and all funds paid  hereunder  by such  Purchaser  with respect to
such unaccepted  subscription,  without deduction therefrom or interest thereon,
shall be promptly returned to such Purchaser.

         2.2. RETURN OF FUNDS. Each Purchaser hereby authorizes and directs both
the Company and the Escrow Agent,  if any,  jointly and severally,  to return or
direct  the  return  of any  funds  from the  Escrow  Account,  if any,  without
deduction  therefrom  or interest  thereon,  to the same  account from which the
funds were originally drawn, to the extent that such Purchaser's subscription is
not accepted prior to the termination of the Offering.

         3. CONDITIONS TO THE OBLIGATIONS OF EACH PURCHASER AT CLOSING.

         The  obligation  of each  Purchaser  to purchase and pay for the Shares
subscribed  for by such  Purchaser at the  applicable  Closing is subject to the
satisfaction  on or prior to the  applicable  Closing Date or the Final  Closing
Date,  as the case may be,  of the  following  conditions,  each of which may be
waived by the applicable Purchaser:

         3.1 REPRESENTATIONS AND WARRANTIES.  The representations and warranties
of the Company contained in this Agreement which are qualified as to materiality
must be true and correct in all respects, and the representations and warranties
of the  Company  contained  in this  Agreement  which  are not  qualified  as to
materiality must be true and correct in all material  respects,  in each case as
of the applicable Closing Date except to the extent that the representations and
warranties  relate to a  different  date in which case the  representations  and
warranties  must be true and  correct  as  written  or true and  correct  in all
material respects, as the case may be, as of the different date.

         3.2  PERFORMANCE  OF  COVENANTS.  The Company  shall have  performed or
complied with in all material respects all covenants and agreements  required to
be  performed  by it on or  prior to the  applicable  Closing  pursuant  to this
Agreement,   including,   without  limitation,   the  delivery  of  certificates
evidencing the Securities issued to the Purchasers at the Closing.

         3.3 NO INJUNCTIONS;  ETC. No court or governmental injunction, order or
decree  prohibiting  the  purchase  and  sale of the  Securities  or  securities
underlying  the  Securities  will be in effect.  There will not be in effect any
law, rule or regulation  prohibiting  or  restricting  the sale or requiring any
consent or approval  of any Person that has not been  obtained to issue and sell
the Securities or securities underlying the Securities to the Purchasers.

         3.4  CLOSING  DOCUMENTS.  At  each  Closing,  the  Company  shall  have
delivered to each applicable Purchaser the following:

         (a) a certificate of the President of the Company  certifying  that the
conditions in Sections 3.1 and 3.2 have been satisfied;

<PAGE>

         (b) A  certificate  of the  Secretary of the Company,  dated as of that
Closing  Date,  certifying  (i)  the  attached  copies  of  the  Certificate  of
Incorporation  and By-laws of the Company,  (ii) the resolutions of the Board of
Directors of the Company (the "Board")  authorizing the execution,  delivery and
performance  of  this  Agreement  and the  issuance  of the  Securities  and the
securities  underlying  the  Securities  (including,  but not  limited  to,  for
purposes of Section 203 of the Colorado  General  Corporation Law) and (iii) the
incumbency  of the officers duly  authorized  to execute this  Agreement and the
other documents contemplated by this Agreement;

         (c) a  certificate  of the Secretary of State of the State of Colorado,
dated as of a recent  date (but no more than five  business  days)  prior to the
date of the  applicable  Closing,  to the  effect  that the  Company  is in good
standing in the State of Colorado and that all annual reports, if any, have been
filed as  required  and that all taxes  and fees  have  been paid in  connection
therewith;

         (d) an opinion of Company counsel, substantially in the form of Exhibit
B to this Agreement;

         (e) a certificate or certificates  evidencing the Securities  purchased
by such Purchaser; and

         (f) a Registration Rights Agreement duly executed by the Company.

         3.5 WAIVERS AND  CONSENTS.  The Company will have obtained all consents
and waivers  necessary  to execute and deliver  this  Agreement  and all related
documents  and  agreements  and to issue and  deliver  the  Securities,  and all
consents and waivers will be in full force and effect.

         4. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY AT CLOSING.

         The  obligation of the Company to issue and sell the  Securities to any
Purchaser is subject to the satisfaction on or prior to each Closing Date of the
following conditions, each of which may be waived by the Company:

         4.1 RECEIPT OF PURCHASE PRICE.  The Company shall have received payment
in full in immediately available funds in U.S. dollars of the Purchase Price for
the Shares with respect to which the Company has accepted the Subscription  made
by such Purchaser by means of this Agreement.

         4.2 REPRESENTATIONS AND WARRANTIES.  The representations and warranties
of  the  Purchaser  contained  in  this  Agreement  which  are  qualified  as to
materiality must be true and correct in all respects and the representations and
warranties of the Purchaser  contained in this Agreement which are not qualified
as to  materiality  must be true and correct in all material  respects,  in each
case  as  of  the  applicable  Closing  Date  except  to  the  extent  that  the
representations  and  warranties  relate to a  different  date in which case the
representations  and  warranties  must be true and  correct as of the  different
date..

          4.3  PERFORMANCE  OF COVENANTS.  The Purchaser  will have performed or
complied with in all material respects all covenants and agreements  required to
be  performed  by the  Purchaser  on or prior to the  Closing  pursuant  to this
Agreement.

         4.4 PURCHASER  QUESTIONNAIRE.  All of the information furnished by such
Purchaser  in  the  confidential  purchaser   questionnaire   accompanying  this
Agreement (the "Purchaser  Questionnaire") shall have been accurate and complete
in all material respects.

          4.5 NO  INJUNCTIONS.  No court or  governmental  injunction,  order or
decree  prohibiting  the purchase or sale of the  Securities  or the  securities
underlying the Securities will be in effect.

          4.6  CLOSING  DOCUMENTS.  The  Purchaser  will have  delivered  to the
Company a Registration Rights Agreement duly executed by the Purchasers and such
other closing documents as the Company may reasonably request, if any.

<PAGE>

         5. REPRESENTATIONS AND WARRANTIES OF EACH PURCHASER.

         Each  Purchaser,  in  order to  induce  the  Company  to  perform  this
Agreement,  hereby  represents  and  warrants,  severally  and not  jointly,  as
follows:

         5.1 DUE AUTHORIZATION.  Each Purchaser represents for such Purchaser to
the Company that such  Purchaser  has full power and authority and has taken all
action  necessary to authorize  such  Purchaser to execute,  deliver and perform
such Purchaser's obligations under this Agreement.  This Agreement is the legal,
valid and binding obligation of such Purchaser in accordance with its terms.

         5.2 ACCREDITED INVESTOR.  Each Purchaser represents that such Purchaser
is an  Accredited  Investor as that term is defined in  Regulation D promulgated
under the Securities Act of 1933, as amended (the "Securities Act").

         5.3  NO  INVESTMENT   ADVICE.  The  Company  has  not  made  any  other
representations  or warranties to such Purchaser  other than as set forth herein
or incorporated  herein by reference with respect to the Company or rendered any
investment advice.

         5.4  INVESTMENT   EXPERIENCE.   Each  Purchaser  represents  that  such
Purchaser   has  not   authorized   any  Person  to  act  as  such   Purchaser's
Representative (as that term is defined in Regulation D of the General Rules and
Regulations under the Securities Act) in connection with this transaction.  Such
Purchaser  has such  knowledge  and  experience  in  financial,  investment  and
business  matters that such  Purchaser is capable of  evaluating  the merits and
risks of the  prospective  investment  in the  securities  of the Company.  Such
Purchaser has consulted with such independent legal counsel or other advisers as
such Purchaser has deemed appropriate to assist such Purchaser in evaluating the
proposed investment in the Company.

         5.5 ADEQUATE MEANS. Each Purchaser represents as to such Purchaser that
such Purchaser (i) has adequate means of providing for such Purchaser's  current
financial  needs and  possible  contingencies;  and (ii) can  afford (a) to hold
unregistered  securities for an indefinite  period of time as required;  and (b)
sustain a complete loss of the entire amount of the subscription.

         5.6  ACCESS  TO  INFORMATION.   Each  Purchaser  represents  that  such
Purchaser  has been  afforded the  opportunity  to ask questions of, and receive
answers from the officers  and/or  directors of the Company acting on its behalf
concerning  the terms  and  conditions  of this  transaction  and to obtain  any
additional   information,   to  the  extent  that  the  Company  possesses  such
information or can acquire it without unreasonable effort or expense,  necessary
to  verify  the  accuracy  of  the  information  furnished;  and  has  had  such
opportunity  to the extent  such  Purchaser  considers  appropriate  in order to
permit such  Purchaser to evaluate the merits and risks of an  investment in the
Company.  It is understood that all documents,  records and books  pertaining to
this investment have been made available for inspection,  and that the books and
records of the Company will be available upon  reasonable  notice for inspection
by  investors  during  reasonable  business  hours  at its  principal  place  of
business.  The foregoing  shall in no way be deemed to limit the ability of each
Purchaser  to rely on the  representations  and  warranties  set forth herein or
incorporated herein by reference.

         5.7 NO ENDORSEMENT.  Each Purchaser further acknowledges that the offer
and sale of the Securities or the  securities  underlying the Securities has not
been  passed  upon or the merits  thereof  endorsed  or approved by any state or
federal authorities.

         5.8 NON-REGISTERED SECURITIES. Each Purchaser acknowledges that neither
the offer and sale of the Securities or the securities underlying the Securities
have not been registered  under the Securities Act or any state  securities laws
and  the  Securities  and  any  underlying  securities  may be  resold  only  if
registered  pursuant  to  the  provisions  thereunder  or if an  exemption  from
registration is available and if otherwise  permitted by law and contract.  Each
Purchaser  understands  that  the  offer  and  sale  of the  Securities  and the
securities  underlying the Securities is intended to be exempt from registration
under the Securities Act, based, in part, upon the  representations,  warranties
and agreements of such Purchaser contained in this Agreement.

<PAGE>

         5.9 NO RESALE.  Each Purchaser  represents  that the  Securities  being
subscribed  for,  and the  securities  underlying  the  subscription,  are being
acquired  solely  for  the  account  of  such  Purchaser  for  such  Purchaser's
investment  and not  with a view to,  or for  resale  in  connection  with,  any
distribution  in any  jurisdiction  where  such  sale or  distribution  would be
precluded.  By such  representation,  such Purchaser  means that,  other than as
disclosed on both the  signature  page of this  Agreement  and in the  Purchaser
Questionnaire,  no other Person has a beneficial  interest in the  Securities or
the  securities  underlying  the  subscription,  and  that no other  Person  has
furnished or will furnish  directly or indirectly,  any part of or guarantee the
payment of any part of the  consideration  to be paid by such  Purchaser  to the
Company in connection  therewith.  Such  Purchaser does not intend to dispose of
all or any part of the Securities or the securities  underlying the subscription
except in compliance  with the  provisions of the  Securities Act and applicable
state  securities  laws, and understands  that the Securities and the securities
underlying the subscription  are being offered pursuant to a specific  exemption
under the provisions of the Securities Act, which  exemption(s)  depends,  among
other things, upon the compliance with the provisions of the Securities Act.

         5.10 LEGEND.  Each Purchaser  hereby  acknowledges  and agrees that the
Company  may  insert  the  following  or  similar  legend  on  the  face  of the
certificates  evidencing  the  Securities  purchased by such  Purchaser  and the
underlying securities, if any, as the case may be, if the Company deems the same
to be necessary or appropriate:

         "These   securities  have  not  been   registered   under  the
         Securities Act of 1933, as amended (the "Securities  Act"), or
         any  state  securities  laws and may not be sold or  otherwise
         transferred  or  disposed of except  pursuant to an  effective
         registration  statement  under  the  Securities  Act  and  any
         applicable  state  securities  laws,  or an opinion of counsel
         satisfactory  to counsel to the issuer that an exemption  from
         registration under the Securities Act and any applicable state
         securities laws is available."

In addition, the Company may insert a legend to the effect that the Warrants are
non-transferable.

         5.11 BROKER'S OR FINDER'S  COMMISSIONS.  Other than the Placement Agent
(as placement agent on behalf of the Company) or any Other Participating  Agent,
if any, no finder,  broker,  agent,  financial person or other  intermediary has
acted on behalf of any Purchaser in connection  with the sale of the  Securities
by the Company or the  consummation of this Agreement or any of the transactions
contemplated hereby.

         Each Purchaser certifies that each of the foregoing representations and
warranties by such Purchaser set forth in this Section 5 are true as of the date
hereof and shall survive such date.

         6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The Company represents and warrants to the Purchasers that:

         6.1  ORGANIZATION,  GOOD STANDING AND  QUALIFICATION.  The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of  Colorado.  The Company and each  subsidiary  of the Company has
full corporate power and authority to own and hold its properties and to conduct
its business. The Company and each subsidiary of the Company is duly licensed or
qualified to do business,  and in good standing,  in each  jurisdiction in which
the nature of its business requires  licensing,  qualification or good standing,
except for any failure to be so licensed or qualified or in good  standing  that
would not have a material  adverse effect on the Company or any such subsidiary,
taken as a consolidated whole, or its results of operations, assets or financial
condition,  taken as a  consolidated  whole,  or on its  ability to perform  its
obligations under this Agreement or to issue the Securities (a "MATERIAL ADVERSE
EFFECT").

         6.2 CAPITALIZATION. As of the date hereof, the authorized capital stock
of the Company consists of 100,000,000  shares of Common Stock, par value $0.001
per share.  Except as set forth in this Section 6.2, as of the date hereof:  (i)
31,968,696 shares of Common Stock were issued and outstanding; (ii) there are no
outstanding  options and no shares of Common  Stock were  reserved  for issuance
upon exercise of outstanding  options;  (iii) the Company has reserved 3,000,000
shares of Common Stock for issuance upon exercise of options which may be issued

<PAGE>

pursuant to an option plan covering the Company's officers, directors, employees
and consultants,  but no options have been granted to date under such plan; (iv)
the  following  shares of Common  Stock  were  reserved  for  issuance  upon the
exercise of outstanding  warrants:  6,666,666  shares reserved for issuance upon
exercise  of  warrants  issued to Jano  Holdings  Ltd.  (the  "JANO  WARRANTS"),
initially exercisable at $2.00 per share, 4,997,625 shares reserved for issuance
upon  exercise of  warrants  issued on January  20,  2005,  January 26, 2005 and
February  2, 2005 to various  accredited  investors  in a private  placement  of
securities  by the Company  (the  "JANUARY  2005 PRIVATE  PLACEMENT  WARRANTS"),
initially  exercisable  at $3.00 per share,  and  931,775  shares  reserved  for
issuance upon exercise of certain placement agent warrants issued on January 20,
2005,  January 26, 2005 and February 2, 2005 (the "JANUARY 2005 PLACEMENT  AGENT
WARRANTS") to certain  placement agents in connection with the private placement
in January and February 2005, initially  exercisable at $2.00 per share, and the
Company has no other outstanding warrants; and (v) the Company is offering up to
1,700,000  shares of its Common  Stock,  and up to 850,000  Warrants to purchase
Warrant Shares, subject to an additional 10% overallotment in the Company's sole
discretion. All the outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and  nonassessable  and free of preemptive
rights  created by or through the  Company,  and have been issued in  compliance
with all federal and state  securities laws, and were not issued in violation of
any preemptive rights or similar rights to subscribe for or purchase securities.
Except as set forth in this  Section  6.2,  as of the date  hereof  there are no
other  options,   warrants  or  other  rights,   convertible  debt,  agreements,
arrangements or commitments of any character  obligating the Company to issue or
sell any shares of capital  stock of or other  equity  interests in the Company.
The Company has not adopted a stockholders  rights plan,  poison pill or similar
arrangement.  As used in this Agreement,  the term  "Commission  Documents shall
mean all reports,  schedules, forms, statements and other documents filed by the
Company  with  the  United  States  Securities  and  Exchange   Commission  (the
"Commission"  or the  "SEC")  pursuant  to  the  reporting  requirements  of the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"),  including all
exhibits  included  therein and financial  statements and schedules  thereto and
documents or instruments incorporated by reference therein.

         6.3 CORPORATE  POWER,  AUTHORIZATION;  ENFORCEABILITY.  The Company has
full  corporate  power and  authority  to  execute,  deliver  and  perform  this
Agreement,  the Warrants,  and the Registration Rights Agreement  (collectively,
the  "TRANSACTION  DOCUMENTS") and to consummate the  transactions  contemplated
hereby and  thereby.  All action on the part of the  Company,  its  directors or
stockholders  necessary  for  (i) the  authorization,  execution,  delivery  and
performance of the Transaction Documents by the Company, (ii) the authorization,
sale, issuance and delivery of the Common Stock and Warrants contemplated hereby
(iii) the  reservation  of shares of Common Stock for issuance  upon exercise of
the Warrants and (iv) the performance of the Company's obligations hereunder and
thereunder  has been taken.  The  Securities to be purchased on each the Closing
Date and the  underlying  Warrant  Shares have been duly  authorized  and,  when
issued in accordance  with this  Agreement or the Warrants,  as the case may be,
will be validly issued,  fully paid and nonassessable and will be free and clear
of any mortgage, deed of trust, pledge, hypothecation,  assignment, encumbrance,
lien  (statutory  or other) or  preference,  priority,  right or other  security
interest  or  preferential   arrangement  of  any  kind  or  nature   whatsoever
(collectively,   "Liens")   imposed  by  or  through  the  Company   other  than
restrictions  imposed by this  Agreement,  the  Warrants,  and the  Registration
Rights  Agreement,  as the case  may be,  and  applicable  securities  laws.  No
preemptive or other rights to subscribe for or purchase equity securities of the
Company  exists with respect to the issuance and sale of the  Securities  or the
Warrant Shares. The Transaction  Documents have been duly executed and delivered
by the Company,  and constitute the legal, valid and binding  obligations of the
Company,  enforceable against the Company in accordance with their terms, except
as  enforceability  may  be  limited  by  applicable   bankruptcy,   insolvency,
reorganization,  fraudulent  conveyance or transfer,  moratorium or similar laws
affecting  the  enforcement  of  creditors'  rights  generally  and  by  general
principles  of  equity  relating  to   enforceability   (regardless  of  whether
considered in a proceeding at law or in equity).

         6.4      NO CONFLICT; GOVERNMENTAL CONSENTS.

          (a) The execution and delivery by the Company of this  Agreement,  the
Warrants,  and the  Registration  Rights  Agreement and the  consummation of the
transactions  contemplated  hereby  and  thereby  will  not  (i)  result  in the
violation of any provision of the  Certificate  of  Incorporation  or By-laws or
other organizational  documents of the Company or any subsidiary of the Company,
(ii) result in any violation of  Requirements  of Law to or by which the Company
or any subsidiary of the Company is bound,  or (iii) conflict with, or result in
a breach or violation of, any of the terms or provisions of, or constitute (with

<PAGE>

due notice or lapse of time or both) a default under, any bond, debenture,  note
or other evidence of indebtedness,  or any material lease, contract,  indenture,
mortgage,  deed of trust,  loan  agreement,  joint venture or other agreement or
instrument  to which the Company or any  subsidiary of the Company is a party or
by which it or its property is bound,  nor result in the creation or  imposition
of any Lien upon any of the properties or assets of the Company,  except for, in
the case of clauses (ii) and (iii) of this  subsection  6.7(a),  any  violation,
conflict,  breach or default which would not have a Material Adverse Effect. For
purposes of this Agreement,  "REQUIREMENTS OF LAW" means, as to any Person,  any
law, statute, treaty, rule, regulation, right, privilege, qualification, license
or franchise or determination of an arbitrator or a court or other government of
any nation,  state, city, locality or other political  subdivision  thereof, any
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to  government,  and any  corporation or other entity
owned or controlled,  through stock or capital ownership or otherwise, by any of
the foregoing (each, a "GOVERNMENTAL AUTHORITY") or stock exchange, in each case
applicable  or binding  upon such Person or any of its property or to which such
Person or any of its  property  is  subject or  pertaining  to any or all of the
transactions contemplated or referred to herein.

         (b)  No  material  consent,   approval,   license,   permit,  order  or
authorization  of, or  registration,  declaration  or filing  with,  any  court,
administrative  agency or commission or other Governmental  Authority or Person,
and no lapse of any waiting period under any  Requirements of Law, remains to be
obtained (or lapsed) or is  otherwise  required to be obtained by the Company or
any subsidiary of the Company in connection  with the  authorization,  execution
and  delivery  of this  Agreement,  the  Warrants,  or the  Registration  Rights
Agreement  or  the  consummation  of the  transactions  contemplated  hereby  or
thereby,  including,  without limitation the issue and sale of the Securities as
disclosed in this Agreement,  and except filings,  if any, as may be required to
be made by the Company  after each  Closing  with (i) the  Commission,  (ii) the
National  Association of Securities  Dealers,  Inc.  ("NASD"),  (iii) the Nasdaq
Stock  Market,  Inc.  and (iv)  state  blue sky or other  securities  regulatory
authorities.

         6.5 LITIGATION.  There are no claims, actions, suits, investigations or
proceedings  pending  or, to the  Company's  knowledge,  threatened  against the
Company or any subsidiary of the Company or its respective  assets, at law or in
equity, by or before any Governmental Authority, or by or on behalf of any third
party,  except for any claim,  action,  suit,  investigation or proceeding which
would not have a Material  Adverse  Effect nor does the Company  have  knowledge
that  there is any  reasonable  basis  for any of the  foregoing.  There  are no
claims,  actions,  suits,  investigations  or  proceedings  pending  or,  to the
Company's  knowledge,   threatened   proceedings  against  the  Company  or  any
subsidiary  of the Company  contesting  the right of the  Company to use,  sell,
import,  license,  or make  available to any Person any of the  Company's or any
subsidiary's  products  or  services  currently  or  previously  sold,  offered,
licensed or made  available  to any Person or used by the Company or opposing or
attempting to cancel any of the Company's Intellectual Property (as such term is
hereafter defined) rights, except for any claim, action, suit,  investigation or
proceeding which would not have a Material Adverse Effect.

         6.6  COMPLIANCE  WITH LAWS;  NO DEFAULT OR  VIOLATION;  CONTRACTS.  The
Company and each  subsidiary  of the Company is in  compliance  in all  material
respects  with all  Requirements  of Law and all  orders  issued by any court or
Governmental  Authority  against the Company in all  material  respects.  To the
Company's  knowledge,  there is no existing or currently proposed Requirement of
Law which could  reasonably  be expected to prohibit or restrict  the Company or
any subsidiary from, or otherwise materially adversely affect the Company or any
subsidiary  in,  conducting  its  business in any  jurisdiction  in which it now
conducts or proposes to conduct such business.  The Company and each  subsidiary
of the Company have all  licenses,  permits and  approvals  of any  Governmental
Authority  (collectively,  "PERMITS")  that are necessary for the conduct of the
business of the Company and each subsidiary of the Company,  respectively;  (ii)
such Permits are in full force and effect;  and (iii) no violations  are or have
been recorded in respect of any Permit, in each case except such as would not be
reasonably  expected to have a Material Adverse Effect. No material  expenditure
is presently required by the Company to comply with any existing Requirements of
Law or order.  Except as would not be  reasonably  expected  to have a  Material
Adverse Effect,  neither the Company nor any subsidiary of the Company is (i) in
default under or in violation of any indenture,  loan or credit agreement or any
other  agreement or  instrument  to which it is a party of by which it or any of
its properties is bound or (ii) in violation of any order, decree or judgment of
any court, arbitrator or other Governmental  Authority.  The contracts described
in the  Commission  Documents  or  incorporated  by  reference  therein that are
material to the Company  (collectively,  the "Contractual  Obligations")  are in

<PAGE>

full  force and  effect on the date  hereof,  and  neither  the  Company  or any
subsidiary's nor, to the Company's knowledge,  any other party to such contracts
is in breach of or default  under any of such  contracts  nor, to the  Company's
knowledge,  does any  condition  exist that with notice or lapse of time or both
would constitute a default by such other party  thereunder,  in each case except
such as would not be  reasonably  expected  to have a Material  Adverse  Effect.
Neither the Company nor any subsidiary of the Company has not received notice of
a default  and is not in default  under,  or with  respect  to, any  Contractual
Obligation nor, to the Company's  knowledge,  does any condition exist that with
notice or lapse of time or both would constitute a default  thereunder,  in each
case except such as would not be reasonably  expected to have a Material Adverse
Effect. All of such CONTRACTUAL OBLIGATIONS are valid, subsisting, in full force
and effect and  binding  upon the  Company  or each  subsidiary  that is a party
thereto and, to the  Company's  knowledge,  the other parties  thereto,  and the
Company has paid in full or accrued all amounts due thereunder and has satisfied
in full or provided for all of its liabilities and obligations thereunder.

         6.7  ENVIRONMENTAL  MATTERS.  The  Company and each  subsidiary  of the
Company  is in  compliance,  in  all  material  respects,  with  all  applicable
Environmental  Laws.  There is no civil,  criminal or  administrative  judgment,
action,  suit,  demand,  claim,  hearing,  notice of  violation,  investigation,
proceeding,  notice or demand  letter  pending or, to the  Company's  knowledge,
threatened against the Company pursuant to Environmental  Laws. To the Company's
knowledge,  there  are no past or  present  events,  conditions,  circumstances,
activities,  practices,  incidents,  agreements,  actions or plans  which  could
reasonably be expected to prevent  compliance  with, or which have given rise to
or will give rise to liability which would have a Material Adverse Effect, under
Environmental  Laws. For purposes of the foregoing,  "ENVIRONMENTAL  LAWS" means
federal,  state, local and foreign laws,  principles of common laws, civil laws,
regulations,  and codes, as well as orders,  decrees,  judgments or injunctions,
issued,  promulgated,  approved or entered  thereunder  relating  to  pollution,
protection of the environment or public health and safety.

         6.8 TAXES. The Company and each subsidiary of the Company has filed all
required  Tax  returns  and has paid or  caused to be paid,  or has  established
reserves in  accordance  with GAAP for all Tax  liabilities  applicable  to such
entity except as would not have a Material  Adverse  Effect.  No additional  Tax
assessment against the Company or its subsidiaries has been heretofore  proposed
or, to the Company's  knowledge,  threatened by any  Governmental  Authority for
which provision has not been made on its balance sheet.

         No tax  audit is  currently  in  progress  and  there is no  unassessed
deficiency  proposed  or, to the  Company's  knowledge,  threatened  against the
Company or any  subsidiary.  The Company has no  knowledge  of any change in the
rates or basis of assessment of any Tax (other than federal  income tax), of the
Company or any subsidiary  which would reasonably be expected to have a Material
Adverse  Effect.  The  Company  has not  agreed  to or is  required  to make any
adjustments  under  section 481 of the Code by reason of a change of  accounting
method or  otherwise.  None of the assets of the  Company or any  subsidiary  is
required to be treated as being  owned by any Person,  other than the Company or
any of its  subsidiaries,  pursuant to the "safe harbor"  leasing  provisions of
Section 168(f)(8) of the Code. The company is not a "United States real property
holding  corporation" (a "USRPHC") as that term is defined in Section  897(c)(2)
of the Code and the regulations promulgated thereunder.

         For purposes of this Agreement,  "CODE" means the Internal Revenue Code
of 1986, as amended, and "TAXES" means any federal, state,  provincial,  county,
local, foreign and other taxes (including,  without limitation, income, profits,
windfall profits,  alternative,  minimum, accumulated earnings, personal holding
company, capital stock, premium, estimated, excise, sales, use, occupancy, gross
receipts, franchise, ad valorem, severance, capital levy, production,  transfer,
withholding,  employment, unemployment compensation, payroll and property taxes,
import duties and other  governmental  charges and assessments),  whether or not
measured  in  whole  or in  part  by net  income,  and  including  deficiencies,
interest,  additions to tax or interest, and penalties with respect thereto, and
including expenses  associated with contesting any proposed  adjustments related
to any of the foregoing.

         6.9 INTELLECTUAL PROPERTY.

         (a) "Intellectual Property" shall mean all of the following as they are
necessary in connection with the business of the Company or its  subsidiaries as
presently conducted and as they exist in all jurisdictions throughout the world,
in  each  case,  to the  extent  owned  by or  licensed  to the  Company  or its
subsidiaries:  (i) patents,  patent  applications  and  inventions,  designs and
improvements  described and claimed  therein,  patentable  inventions  and other

<PAGE>

patent rights  (including any divisions,  continuations,  continuations-in-part,
reissues,  reexaminations,  or interferences thereof, whether or not patents are
issued on any such  applications  and whether or not any such  applications  are
modified,  withdrawn,  or resubmitted)  ("Patents");  (ii)  trademarks,  service
marks,  trade dress,  trade names,  brand names,  designs,  logos,  or corporate
names,   whether   registered  or  unregistered,   and  all   registrations  and
applications for registration thereof ("TRADEMARKS");  (iii) copyrights and mask
works,  including all renewals and extensions thereof,  copyright  registrations
and  applications  for  registration  thereof,  and  non-registered   copyrights
("COPYRIGHTS");  (iv) trade secrets,  inventions,  know-how, process technology,
databases, confidential business information, customer lists, technical data and
other  proprietary  information  and  rights  ("TRADE  SECRETS");  (v)  computer
software programs,  including, without limitation, all source code, object code,
and documentation related thereto ("SOFTWARE");  (vi) Internet addresses, domain
names, web sites,  web pages and similar rights and items  ("INTERNET  ASSETS");
and  (vii)  all  licenses,  sublicenses  and  other  agreements  or  permissions
including the right to receive royalties,  or any other consideration related to
the property  described in (i)-(vi).  The Intellectual  Property contains all of
the  intellectual  property  necessary to operate the business of the Company as
currently conducted.

         (b) The Company or its subsidiaries  exclusively own (or otherwise have
the  right  to use  the  Intellectual  Property  pursuant  to a  valid  license,
sublicense  or other  agreement),  free  and  clear  of all  Liens,  and has the
unrestricted  right (subject to any such license  terms,  if applicable) to use,
sell, license, or sublicense all Intellectual Property.

         (c) All products and materials made, used or sold by the Company or its
subsidiaries  containing  Trademarks bear the proper federal registration notice
where permitted by law.

         (d) All works  encompassed by the Copyrights and used by the Company or
its subsidiaries have been marked with the proper copyright notice.

         (e) To the Company's  knowledge,  upon reasonable inquiry in accordance
with  sound  business  practice  and  business   judgment,   all  the  Company's
Intellectual  Property rights are valid and  enforceable.  The Company has taken
all  reasonably   necessary  actions  to  maintain  and  protect  each  item  of
Intellectual Property owned by the Company or its subsidiaries.

         (f) The  Company  and each  subsidiary  of the  Company  has  taken all
reasonable precautions to protect the secrecy, confidentiality, and value of its
Trade Secrets and the proprietary nature and value of its Intellectual Property.
To the best of the  Company's  knowledge,  none of the Trade  Secrets,  wherever
located,  the value of which is contingent upon  maintenance of  confidentiality
thereof,  have been  disclosed to any employee,  representative  or agent of the
Company or any other  person not  obligated  to  maintain  such Trade  Secret in
confidence  pursuant  to a  confidentiality  agreement  entered  into  with  the
Company,  except as required  pursuant to the filing of a patent  application by
the Company.

         (g) The Company or a  subsidiary  of the  Company,  as  applicable,  is
diligently  prosecuting  all Patent  applications it has filed, as instructed by
patent counsel.  The Company or a subsidiary of the Company,  as applicable,  is
diligently  filing and preparing to file Patent  applications for all inventions
in  a  manner  and  within  a   sufficient   time  period  to  avoid   statutory
disqualification of any potential Patent application.

         (h) To the  knowledge  of  the  Company,  upon  reasonable  inquiry  in
accordance  with sound  business  practice  and business  judgment,  none of the
Intellectual  Property,  products or services owned, used, developed,  provided,
sold or licensed by the Company, or made for, used or sold by or licensed to the
Company by any person  infringes  upon or otherwise  violates  any  Intellectual
Property rights of others.

         (i) To the  knowledge  of  the  Company,  upon  reasonable  inquiry  in
accordance  with sound  business  practice and business  judgment,  no Person is
infringing upon or otherwise  violating the Intellectual  Property rights of the
Company.

<PAGE>

         6.10 EMPLOYEE BENEFIT PLANS.

         (a) Neither the  Company  nor any entity  which is or was under  common
control  within  the  meaning  of Section  414(b),  (c),  (m) or (o) of the Code
maintains or contributes to, or has within the preceding six years maintained or
contributed  to, or may have any liability with respect to any employee  benefit
plan subject to Title IV of Employee  Retirement Income Security Act of 1974, as
amended  ("ERISA"),  or Section 412 of the Code or any "multiple  employer plan"
within  the  meaning  of  the  Code  or  ERISA.   Each  employee  benefit  plan,
arrangement,   policy,  program,  agreement  or  commitment  which  the  Company
maintains,  contributes  to or may have any  liability  in respect  to (each,  a
"Plan") has been  established and administered in accordance with its terms, and
complies in form and in operation with the applicable requirements of ERISA, the
Code and other  applicable  Requirements  of Law.  No claim with  respect to the
administration  or the  investment of the assets of any Plan (other than routine
claims for benefits) is pending.  No event has occurred in connection with which
the  Company  or any Plan,  directly  or  indirectly,  could be  subject  to any
material  liability  under  ERISA,  the Code or any  other  law,  regulation  or
governmental  order applicable to any Plan, or under any agreement,  instrument,
statute,  rule of law or  regulation  pursuant to or under which the Company has
agreed to  indemnify  any person  against  liability  incurred  under,  or for a
violation or failure to satisfy the requirement of, any such statute, regulation
or  order.  The  Company  has no  liability,  whether  absolute  or  contingent,
including any obligations under any Plan, with respect to any  misclassification
of any person as an independent contractor rather than as an employee.

         (b)  Neither  the  Company  nor any  subsidiary  of the Company has any
obligations to provide or any direct or indirect  liability,  whether contingent
or otherwise, with respect to the provision of health or death benefits to or in
respect of any former  employee,  except as may be required  pursuant to Section
4980B of the  Code and the  corresponding  provisions  of ERISA  and the cost of
which are fully paid by such former employees.

         (c)  There are no  unfunded  obligations  under any Plan  which are not
fully reflected on the Financial Statements.

         (d) The consummation of the transactions contemplated by this Agreement
will not (i) entitle any Company (or  subsidiary)  employee to severance  pay or
(ii) accelerate the time of payment or vesting or trigger any payment or funding
(though a  grantor  trust or  otherwise)  of  compensation  or  benefits  under,
increase the amount payable or trigger any other material  obligations  pursuant
to, any Plan.

         6.11 INVESTMENT COMPANY.  The Company is not an "investment company" or
an  "affiliated  person" of, or  "promoter" or  "principal  underwriter"  for an
investment company, within the meaning of the Investment Company Act of 1940, as
amended.

         6.12  COMPLIANCE.  The Common Stock is  registered  pursuant to Section
12(g) of the  Exchange  Act and the Common  Stock is listed on the OTC  Bulletin
Board under the symbol AVNA.OB, and the Company has taken no action designed to,
or likely to have the  effect of,  terminating  the  registration  of the Common
Stock  under the  Exchange  Act.  The  Company  has not  taken and will not,  in
violation  of  applicable  law,  take  any  action  designed  to or  that  might
reasonably be expected to cause or result in unlawful  manipulation of the price
of the Common Stock to facilitate the sale or resale of the Securities.

         6.13  PRIVATE  OFFERINGS.   Assuming  the  truth  of  each  Purchaser's
representations and acknowledgments  contained in Section 5 hereof,  neither the
Company nor any Person  acting on its behalf (other than the  Purchasers,  as to
whom the Company makes no representations) has offered or sold the Securities by
means of any general  solicitation or general  advertising within the meaning of
Rule 502(c) under the Securities Act. The Company has not sold the Securities to
anyone other than the  subscribers to this  Agreement.  Each Security shall bear
substantially the same legend set forth in Section 8 hereof for at least so long
as required by the Securities Act.

         6.14  BROKER'S  OR  FINDER'S  COMMISSIONS.  Other  than  the  Company's
officers and directors,  if at all, and the Placement  Agent (as placement agent
on behalf of the Company) or any Other  Participating  Agent, if any are engaged
by the Company, no finder, broker, agent, financial person or other intermediary
has acted on behalf of the Company in connection with the sale of the Securities
by the Company or the  consummation of this Agreement or any of the transactions

<PAGE>

contemplated hereby. The Company has not had any direct or indirect contact with
any other investment banking firm (or similar firm) with respect to the offer of
the Securities by the Company to the Purchasers or the Purchasers' subscriptions
for the Securities.

         6.15  DISCLOSURE.  The Transaction  Documents do not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make  the  statements  contained  herein  or  therein,  in the  light  of the
circumstances  under which they were made, not misleading.  The Company does not
have any  knowledge  of any fact that has  specific  application  to the Company
(other than general economic or industry  conditions) and that can reasonably be
foreseen to cause a Material  Adverse  Effect that has not been set forth in the
Transaction Documents or the Commission Documents.

The Company certifies that each of the foregoing  representations and warranties
by the Company  sets forth in this  Section 6 are true as of the date hereof and
such  representations  and warranties shall survive the Closing pursuant to this
Agreement as contemplated in Section 7.1.

         6.16 COMMISSION DOCUMENTS.

         The Company has filed all Commission  Documents required to be filed by
it with the Commission  pursuant to the reporting  requirements  of the Exchange
Act  prior to the date  hereof.  Upon  filing,  each  such  Commission  Document
complied in all material  respects with the requirements of the Exchange Act and
the rules and  regulations of the SEC promulgated  thereunder  applicable to the
Commission Document, and none of the Commission Documents, at the time they were
most recently filed with the SEC,  contained any untrue  statement of a material
fact or  omitted  to state a  material  fact  required  to be stated  therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.

         6.17 INSURANCE.

                  The Company maintains and will continue to maintain  insurance
of the types and in the amounts that the Company reasonably believes is adequate
for its business, including, but not limited to, insurance covering all real and
personal  property  owned  or  leased  by the  Company  against  theft,  damage,
destruction,  acts of vandalism and all other risks customarily  insured against
by similarly  situated  companies,  all of which  insurance is in full force and
effect.

         6.18 REGISTRATION RIGHTS.

         Except as provided in the Registration Rights Agreement, the Company is
not  under  any  contractual  obligation  to  register  any of  its  outstanding
securities  except for  7,000,000  shares of Common Stock to be  registered on a
PARI PASSU basis with the Shares,  and the shares of Common Stock underlying the
Jano Warrants,  the January 2005 Private  Placement  Warrants,  the January 2005
Placement Agent Warrants, and the 9,995,250 shares of Common Stock issued in the
Company's private  placement on January 20, 2005,  January 26, 2005 and February
2, 2005.

         7. INDEMNIFICATION.

         7.1  (a)  The  Company  agrees  to  indemnify  and  hold  harmless  the
Purchasers,  their affiliates and each of their respective directors,  officers,
general and limited partners,  principals, agents and attorneys from and against
any and all losses, claims,  damages,  liabilities,  costs (including reasonable
attorneys' fees) and expenses (collectively,  "LOSSES") to which any such Person
may become  subject,  insofar as such Losses arise out of, in any way relate to,
or result  from (i) any breach of any  representation  or  warranty  made by the
Company  contained in or made pursuant to Article 6 of this  Agreement,  or (ii)
the failure of the Company to fulfill any agreement or covenant  contained in or
made  pursuant to this  Agreement.  In no event,  however,  shall the Company be
liable for indirect, incidental or consequential or special damages of any kind.
All of the  representations  and  warranties  of the Company  made herein  shall
survive the execution and delivery of this Agreement  until the date that is one
(1)  year  after  the  date of this  Agreement,  except  for  (a)  Sections  6.1
(Organization,  Good  Standing and  Qualification),  6.2  (Capitalization),  6.3

<PAGE>

(Corporate Power, Authorization;  Enforceability),  6.13 (Private Offerings) and
6.14 (Broker's or Finder's  Commission),  which  representations  and warranties
shall survive  indefinitely (or if indefinite  survival is not permitted by law,
then for the  maximum  period  permitted  by  applicable  law),  (b) Section 6.8
(Taxes),  which  representation  and warranty  shall  survive until the later to
occur  of (i) the  lapse of the  statute  of  limitations  with  respect  to the
assessment  of  any  tax to  which  such  representation  and  warranty  relates
(including any extensions or waivers thereof) and (ii) sixty (60) days after the
final  administrative  or  judicial  determination  of the  Taxes to which  such
representation  and warranty  relates,  and no claim with respect to Section 6.8
may be asserted thereafter with the exception of claims arising out of any fact,
circumstance, action or proceeding to which the party asserting such claim shall
have  given  notice  to  the  other  parties  to  this  Agreement  prior  to the
termination  of such  period of  reasonable  belief  that a tax  liability  will
subsequently arise therefrom, and (c) Section 6.7 (Environmental Matters), which
representation  and warranty  shall  survive  until the lapse of the  applicable
statute  of  limitations.  Except as set  forth  herein,  all of the  covenants,
agreements  and  obligations  of the Company  shall  survive  the Final  Closing
indefinitely  (or if  indefinite  survival is not permitted by law, then for the
maximum period permitted by applicable law).

         (b) Each Purchaser severally,  and not jointly, agrees to indemnify and
hold  harmless  the  Company,  its  affiliates  and  each  of  their  respective
directors,  officers,  general  and  limited  partners,  principals,  agents and
attorneys  from and  against  any and all  Losses to which any such  Person  may
become  subject,  insofar as such Losses  arise out of, in any way relate to, or
result  from (i) any  breach  of any  representation  or  warranty  made by such
Purchaser contained in or made pursuant to Article 5 of this Agreement,  or (ii)
the failure of such Person to fulfill any agreement or covenant  contained in or
made pursuant to this Agreement.  In no event,  however,  shall any Purchaser be
liable for indirect, incidental or consequential or special damages of any kind.
All of the  representations  and  warranties of each Purchaser made herein shall
survive the  execution  and delivery of this  Agreement  for the maximum  period
permitted  by  applicable  law  with  respect  to  the  statute  of  limitations
applicable to survival of contractual claims for indemnification.  Except as set
forth herein, all of the covenants, agreements and obligations of the Purchasers
shall survive the Final Closing for the maximum  period  permitted by applicable
law with  respect to the  statute  of  limitations  applicable  to  survival  of
contractual  claims  for  indemnification.  Furthermore,  in no event  shall any
Purchaser be required to make indemnification pursuant to this Section in excess
of the gross Purchase Price of the Securities  acquired by such Purchaser in the
Offering.

         7.2   Promptly   after   receipt  by  any  Person   entitled   to  seek
indemnification   under  Section  7.1  of  this  Agreement   (individually,   an
"INDEMNIFIED  PARTY" and collectively,  the "INDEMNIFIED  PARTIES") of notice of
any claim as to which indemnity may be sought,  including,  without  limitation,
the commencement of any action or proceeding,  the Indemnified  Party will, if a
claim in  respect  thereof  may be made  against a Person  required  to  provide
indemnification   under  Section  7.1  of  this  Agreement   (individually,   an
"INDEMNIFYING  PARTY" and collectively,  the "INDEMNIFYING  PARTIES"),  promptly
notify the Indemnifying Party in writing of the commencement  thereof;  provided
that the failure of the Indemnified  Party to so notify the  Indemnifying  Party
will not relieve the Indemnifying  Party from its obligations under this Section
unless,  and only to the extent that, such omission  results in the Indemnifying
Party's  forfeiture  of  substantive  rights  or  defenses  or being  materially
prejudiced by the Indemnified  Person's failure to give such notice. In case any
action or proceeding is brought against any Indemnified  Party,  and it notifies
the Indemnifying Party of the commencement thereof, the Indemnifying Party shall
be entitled  to assume the  defense  thereof at its own  expense,  with  counsel
reasonably  satisfactory to such Indemnified  Party,  which approval will not be
unreasonably  withheld  or delayed  unreasonably;  provided,  however,  that any
Indemnified  Party  may,  at  its  own  expense,   retain  separate  counsel  to
participate  in  such  defense  at  its  own  expense.  After  notice  from  the
Indemnifying  Party to the  Indemnified  Party of its  election to so assume the
defense thereof,  the  Indemnifying  Party will not be liable to the Indemnified
Party  under  that  Section 7 for any legal or any other  expenses  subsequently
incurred by the Indemnified  Party in connection with the defense thereof (other
than reasonable costs of  investigation)  unless incurred at the written request
of the Indemnifying Party. Notwithstanding the above, the Indemnified Party will
have the right to employ  counsel of its own choice in any action or  proceeding
(and be  reimbursed  by the  Indemnifying  Party  for the  reasonable  fees  and
expenses of the counsel and other  reasonable  costs of the  defense) if, in the
written  opinion of such  Indemnified  Party's  counsel,  representation  of the
Indemnified  Party by the counsel  retained by the  Indemnifying  Party would be
inappropriate  due to actual  or  potential  differing  interests  or  conflicts
between the Indemnified  Party and any other party represented by the counsel in
the  action;  provided,  however,  that  the  Indemnifying  Party  will  not  in
connection  with any one action or  proceeding  or  separate  but  substantially

<PAGE>

similar actions or proceedings arising out of the same general  allegations,  be
liable for the  reasonable  fees and expenses of more than one separate  firm of
attorneys  at any time for all  Indemnified  Parties,  except to the extent that
local  counsel,  in  addition  to  regular  counsel,  is  required  in  order to
effectively defend against the action or proceeding.  An Indemnifying Party will
not be liable to any  Indemnified  Party for any settlement or entry of judgment
concerning  any  action  or  proceeding  effected  without  the  consent  of the
Indemnifying  Party,  which  consent  shall not be  unreasonably  withheld.  The
Indemnifying Party agrees that it will not, without the prior written consent of
the  Indemnified  Party,  settle,  compromise  or  consent  to the  entry of any
judgment in any pending or threatened claim relating to the matters contemplated
hereby  (if any  Indemnified  Party  is a party  thereto  or has  been  actually
threatened to be made a party  thereto)  unless such  settlement,  compromise or
consent  includes an unconditional  release of each  Indemnified  Party from all
liability arising or that may arise out of such claim. The rights accorded to an
Indemnified  Party  hereunder  shall  be in  addition  to any  rights  that  any
Indemnified  Party may have at common law, by separate  agreement or  otherwise;
PROVIDED,  HOWEVER,  that  notwithstanding  the  foregoing  or  anything  to the
contrary  contained  in this  Agreement,  (a)  nothing  in this  Section 7 shall
restrict  or limit  any  rights  that  any  Indemnified  Party  may have to seek
equitable  relief and (b) this Section 7 shall be the sole remedy for any breach
of the Company's  representations and warranties contained in this Agreement and
for any breach of any Purchaser's  representations  and warranties  contained in
this  Agreement  except,  in either case,  with respect to claims arising out of
fraud or willful misconduct.

         8. COVENANTS.

         8.1 USE OF  PROCEEDS.  The  Company  will use the  proceeds  from  this
Offering for organizing its operations and corporate  structure in Singapore and
acquiring  additional  technologies  in Singapore and Thailand over the next six
months, and any remaining funds to be available for general corporate purposes.

         8.2 CONDUCT OF THE COMPANY'S  BUSINESS.  Except as contemplated by this
Agreement,  during the period  from the date  hereof to the  Closing  Date,  the
Company  and  its  subsidiaries  will  conduct  their  respective  business  and
operations  solely in the  ordinary  course  of  business  consistent  with past
practice and each shall use reasonable  commercial efforts to keep available the
services of its officers and  employees  and preserve its current  relationships
with  customers,  suppliers,  licensors,  creditors and others  having  business
dealings with it, except as would not be reasonably  expected to have a Material
Adverse Effect.

         8.3  REASONABLE  BEST EFFORTS.  Subject to the terms and  conditions of
this Agreement,  each of the parties hereto will use its reasonable best efforts
to take, or cause to be taken, all actions,  and to do, or cause to be done, all
things  necessary,  proper or advisable under applicable laws and regulations to
consummate  the  transactions  contemplated  by this  Agreement  at the earliest
practicable date.

         8.4 TAX MATTERS.

         (a) The  Company  covenants  that it will use  commercially  reasonable
efforts not to become a USRPHC at any time while any  Purchaser  owns any of the
Securities.

         (b) In the event that a Purchaser  desires to sell or dispose of any of
the  Securities or underlying  securities as permitted  under this Agreement and
applicable law, and upon demand by such Purchaser, the Company agrees to deliver
to  such  Purchaser  a  letter  (the  "LETTER")  which  complies  with  Sections
1.1445-2(c)(3)  and  1.897-2(h) of the Treasury  Regulations,  addressed to such
Purchaser,  stating whether or not the Company is a USRPHC.  The Letter shall be
delivered  to the  Purchaser  one business day prior to the close of any sale or
disposition  of  the  Securities  or  Conversion  Stock  by the  Purchaser  (the
"DELIVERY  DATE").  The Letter shall be dated as of the Delivery Date and signed
by a corporate  officer  who must verify  under  penalties  of perjury  that the
statement is correct to his knowledge and belief pursuant to Section  1.897-2(h)
of the Treasury Regulations.

         8.5 INDEPENDENT PUBLIC ACCOUNTANT.

         The Company shall retain a national public  accounting firm approved by
the  Public  Company  Accounting  Oversight  Board to  serve as its  independent
auditor.

<PAGE>

         9. FOR RESIDENTS OF ALL STATES:  NEITHER THE SECURITIES  OFFERED HEREBY
OR THE UNDERLYING  SECURITIES HAVE BEEN  REGISTERED  UNDER THE SECURITIES ACT OF
1933, AS AMENDED,  OR THE SECURITIES LAWS OF ANY STATE AND ARE BEING OFFERED AND
SOLD IN RELIANCE ON EXEMPTIONS  FROM THE  REGISTRATION  REQUIREMENTS OF SAID ACT
AND SUCH LAWS. THE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED  OR RESOLD EXCEPT AS PERMITTED  UNDER SAID ACT
AND SUCH LAWS PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD
BE  AWARE  THAT  THEY  WILL BE  REQUIRED  TO BEAR  THE  FINANCIAL  RISKS OF THIS
INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE WARRANTS ARE NON-TRANSFERABLE.

         10. NO WAIVER.

         Notwithstanding any of the representations, warranties, acknowledgments
or agreements made herein by the Purchasers, the Purchasers do not thereby or in
any manner waive any rights  granted to the  Purchasers  under  federal or state
securities laws.

         11. MISCELLANEOUS.

         11.1 NOTICES.  Any notice or other communication given hereunder by any
party  hereto  to any other  party  hereto  shall be in  writing  and  delivered
personally or by facsimile  transmission or sent by registered or certified mail
or by any express mail or overnight courier service, postage or fees prepaid:

                  If to the Company:

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

                  If to the Purchasers:

                           To  each  Purchaser  at  such  Purchaser's  name  and
                           address  set  forth  on the  signature  page  to this
                           Agreement.

         Any notice that is delivered personally or by facsimile transmission in
the manner  provided herein shall be deemed to have been duly given to the party
to whom it is  directed  upon  actual  receipt by such  party or its agent.  Any
notice that is addressed  and mailed,  postage  prepaid for most rapid method of
delivery, or sent by courier in the manner herein provided shall be conclusively
presumed  to have been duly given to the party to which it is  addressed  at the
close of business, local time of the recipient, on the fourth business day after
the day it is so placed in the mail or, if earlier,  the date and time of actual
receipt.

         11.2  SUCCESSORS  AND ASSIGNS.  This Agreement will be binding upon and
inure to the benefit of the parties hereto and to their respective heirs,  legal
representatives, successors and assigns, provided, that no party may assign this
Agreement without the prior written consent of the other party, such consent not
to be unreasonably withheld;  provided that any transfer of Securities or shares
of Common  Stock  underlying  such  Securities  must be in  compliance  with the
Transaction Documents and all applicable law.

         11.3 ENTIRE  AGREEMENT.  This Agreement sets forth the entire agreement
and  understanding  among the parties as to the subject matter hereof and merges
and supersedes all prior  discussions,  agreements and understandings of any and
every nature among them; provided that any confidentiality agreement between the
Company and any Purchaser shall remain in effect.  This Agreement may be amended
only by mutual  written  agreement  of the Company and a majority in interest of

<PAGE>

the Purchasers, and the Company may take any action herein prohibited or omit to
take any action  herein  required to be  performed  by it, and any breach of any
covenant,  agreement,  warranty  or  representation  may be waived,  only if the
Company has obtained the written consent or waiver of the Purchasers  purchasing
a majority of the Shares offered hereby.

         11.4 GOVERNING  LAW. This Agreement  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  Agreement,  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  Purchasers  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  Agreement  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.

         11.5 SEVERABILITY. The holding of any provision of this Agreement to be
invalid or  unenforceable by a court of competent  jurisdiction  will not affect
any other  provision  of this  Agreement,  which  will  remain in full force and
effect.  If any provision of this  Agreement is declared by a court of competent
jurisdiction  to be invalid,  illegal or incapable of being enforced in whole or
in part, the provision  will be  interpreted so as to remain  enforceable to the
maximum  extent  permissible  consistent  with  applicable law and the remaining
conditions and provisions or portions thereof will  nevertheless  remain in full
force and  effect  and  enforceable  to the  extent  they are  valid,  legal and
enforceable,  and no provisions will be deemed dependent upon any other covenant
or provision unless so expressed herein.

         11.6 NO WAIVER.  A waiver by either party of a breach of any  provision
of this  Agreement  will  not  operate,  or be  construed,  as a  waiver  of any
subsequent breach by that same party.

         11.7 FURTHER  ASSURANCES.  The parties agree to execute and deliver all
further documents,  agreements and instruments and take further action as may be
necessary or appropriate to carry out the purposes and intent of this Agreement.

         11.8  COUNTERPARTS.  This  Agreement  may be  executed  in two or  more
counterparts,  each of which will be deemed an  original,  but all of which will
together constitute the same instrument.

         11.9 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement creates in
any Person not a party to this Agreement any legal or equitable right, remedy or
claim under this Agreement,  and this Agreement is for the exclusive  benefit of
the parties hereto.  The parties expressly  recognize that this Agreement is not
intended to create a  partnership,  joint venture or other  similar  arrangement
between any of the parties or their respective affiliates.

         11.10  HEADINGS.   The  headings  in  this  Agreement  are  solely  for
convenience  of reference  and shall be given no effect in the  construction  or
interpretation of this Agreement.

         11.11 SECURITIES LAWS DISCLOSURE;  PUBLICITY RESTRICTIONS.  The Company
shall  issue a press  release  by 8:30  a.m.  Eastern  time on the  trading  day
following  each  applicable  Closing,  or file a  Current  Report  on  Form  8-K
disclosing the consummation of the  transactions  consummated on such Closing by
8:30 a.m.  Eastern time on the fourth day  following  each  applicable  Closing.
Except as may be required by applicable Requirements of Law, none of the parties
hereto shall issue a publicity release or public  announcement or otherwise make
any disclosure concerning this Agreement,  the transactions  contemplated hereby
without prior  approval by the other party hereto;  provided that each Purchaser
may disclose on its worldwide web pages and its offering materials,  if any, the
name of the Company,  the name of the Chief Executive Officer of the Company,  a
brief description of the business of the Company  consistent with the Commission
Documents  or the  Company's  press  releases or other  public  statements,  the

<PAGE>

Company's logo and the aggregate  amount of such  Purchaser's  investment in the
Company.  If any  announcement is required by applicable law or the rules of any
securities exchange or market on which such shares of Common Stock are traded to
be made by any party hereto,  prior to making such  announcement such party will
deliver a draft of such  announcement  to the other  parties  and shall give the
other parties  reasonable  opportunity to comment thereon.  The parties agree to
attribute and otherwise  indicate  ownership of the other party's trademarks and
logos.

         11.12  CERTIFICATION.  Each Purchaser certifies that such Purchaser has
read this entire  Agreement and that every  statement on such  Purchaser's  part
made and set forth herein is true and complete.

                  [Remainder of page intentionally left blank.]

<PAGE>

IN WITNESS  WHEREOF,  the  undersigned  has executed  this  Securities  Purchase
Agreement on the date his signature has been subscribed and sworn to below.

The shares of Common Stock and Warrants are to be issued in:

<TABLE>
<CAPTION>
                                                             Print Name of Investor
<S>                                                          <C>
                                                                                shares of Common Stock subscribed
____ individual name                                         for (which number must be an even number), with 1
                                                             Warrant also being issued for every 2 shares of Common
                                                             Stock purchased.
                                                             Subscription  price
paid herewith:
                                                             $                  (being $2.00 x the number of shares
____ tenants in the entirety                                 of Common Stock listed above)

____ corporation (an officer must sign)                      Print Name of Joint Investor
                                                             (if applicable)

____ partnership (all general partners must sign)            Signature of Investor

____ trust                                                   Signature of Joint Investor

____ limited liability company

                                                             (with a copy to:)

                                                             Address of Investor
</TABLE>

Accepted as of the ___ day of ______________,  200_ as to _______________ shares
of Common Stock (which number must be an even number),  it being agreed that the
Company  also shall  deliver 1 Warrant for every two shares of Common  Stock for
which  this  Subscription  is  accepted;   Subscription   price  accepted  being
$______________,  being $2.00 x the number of shares of Common Stock as to which
this Subscription is accepted:

ADVANCE NANOTECH, INC.

By:
     --------------------------------------
Name:
Title:EXHIBIT 10.11

                          REGISTRATION RIGHTS AGREEMENT

         Registration  Rights  Agreement,  dated as of  February  14, 2004 (this
"Agreement"),  by and among Advance Nanotech,  Inc., a Colorado corporation (the
"Company"), and the Purchasers (as defined below).

                              W I T N E S S E T H :

         WHEREAS, the Company is offering (the "Offering") an aggregate of up to
One Million,  Seven Hundred Thousand (1,700,000) shares of its Common Stock, par
value  $0.001 per share  (the  "Common  Stock")  and up to Eight  Hundred  Fifty
Thousand (850,000) of its stock purchase warrants (the "Warrants"), each Warrant
to purchase one share of the Common Stock (each such share underlying a Warrant,
a "Warrant  Share")  (the  securities  offered in the Offering  being  sometimes
hereinafter referred to as (the "Securities"),  in each case subject to an up to
10% overallotment at the Company's sole discretion;

         WHEREAS, the Company desires to issue and sell to the persons listed on
Schedule  A,  attached  hereto  (each  a  "Purchaser,"  and  collectively,   the
"Purchasers"),  the Securities as set forth in one or more  Securities  Purchase
Agreements  entered  into or to be entered  into by and  between the Company and
each Purchaser (the "Securities Purchase Agreement");

         WHEREAS,  the  Company  and the  Purchasers  have  entered or will have
entered into a Securities Purchase Agreement;

         WHEREAS,  it is a  condition  precedent  to  the  consummation  of  the
transactions  contemplated by the Securities Purchase Agreement that the Company
provide for the rights set forth in this Agreement; and

         WHEREAS,  certain terms used in this Agreement are defined in Section 3
hereof.

         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and the
mutual covenants and agreements  hereinafter  contained,  and for other good and
valuable  consideration,  the  receipt  and  sufficiency  of  which  are  hereby
acknowledged,  intending to be legally bound, the parties hereto hereby agree as
follows:

         1. REGISTRATION RIGHTS

                  1.1  REQUIRED   REGISTRATION.   The  Company   shall  use  its
reasonable best efforts to accomplish the following:

                            (x)  prepare  and  file  a  "REQUIRED   REGISTRATION
STATEMENT" (as such term is hereafter
defined) with the SEC by the date (the "REQUIRED FILING DATE") which is not more
than sixty (60) days after the first date to occur (the "COMMENCEMENT  DATE") of
the  following  dates:  the Final  Closing  Date (as such term is defined in the
Securities Purchase  Agreement) or the termination of the Offering,  if there is
no Final Closing Date; and

                            (y)   cause   either   of   the    following    (the
"EFFECTIVENESS ACTIONS") to occur by a date
(the  "REQUIRED  EFFECTIVENESS  DATE")  which is not more than one  hundred  and
twenty (120) days after the Commencement  Date: (A) cause the SEC to declare the
Required  Registration  Statement  to be  effective  or  (B)  cause  the  SEC to
communicate to the Company, orally or in writing, that the Required Registration
Statement will not be reviewed or that the  Commission  has no further  comments
thereupon, whereupon the Company shall cause the Required Registration Statement
to be effective.

The failure of the Company to file a Required  Registration  Statement  prior to
the Required  Filing Date,  or to cause either of the  Effectiveness  Actions to
occur  prior  to the  Required  Effectiveness  Date,  shall  be  deemed  to be a

<PAGE>

"NON-REGISTRATION  EVENT".  As  used  in  this  Agreement,  the  term  "REQUIRED
REGISTRATION  STATEMENT" shall mean a registration statement on Form SB-1 or any
successor  form,  or any other form selected by the Company that is available to
it under  the  Securities  Act  which  conforms  with all  applicable  rules and
regulations,  with respect to all the Registrable Securities  beneficially owned
by the  Purchasers  following  the final Closing (as such term is defined in the
Securities Purchase Agreement) to permit the offer and re-sale from time to time
of such  Registrable  Securities in accordance  with the methods of distribution
provided by the Purchasers.

         The Company and the Purchasers  agree that the  Purchasers  will suffer
damages if a Non-Registration Event occurs, and that it would not be feasible to
ascertain  the  extent  of  such  damages  with  precision.  Accordingly,  if  a
Non-Registration Event should occur, then for each thirty (30) day period during
the pendency of such  Non-Registration  Event, the Company shall deliver to each
Purchaser,  as liquidated  damages,  an amount equal to one and one-half percent
(1.5%)  of the  aggregate  Purchase  Price  (as  such  term  is  defined  in the
Securities  Purchase  Agreement)  paid by such Purchaser for Securities (as such
term is defined in the Securities Purchase  Agreement),  with such payment being
pro-rated  for any  Non-Registration  Event of less than thirty (30) days.  Each
such payment is  hereinafter  referred to as a  "NON-REGISTRATION  EVENT PENALTY
PAYMENT".  Notwithstanding  the  foregoing,  in no event  shall the  Company  be
obligated to pay more than one  Non-Registration  Event  Penalty  Payment to the
same  Purchaser  in respect of a  substantively  concurrent  failure to perform;
i.e., if a Non-Registration  Event Penalty Payment is accruing due to failure to
file a Required  Registration  Statement  prior to the  Required  Filing Date, a
separate  Non-Registration  Event  Penalty  Payment  shall  not  be  due  for  a
contemporaneous  failure to cause an Effectiveness  Action to occur prior to the
Required Effectiveness Date. The Company, at its sole discretion,  shall pay the
Non-Registration Event Penalty Payment in cash or in shares of its Common Stock,
provided, that the Company may not elect to pay some Purchasers in cash while it
pays others in Common  Stock.  In the event that the  Company  elects to pay the
Non-Registration  Event  Penalty  Payment to a Purchaser in shares of its Common
Stock, it shall deliver unregistered,  legended shares of its Common Stock whose
aggregate  Market Price is equal to the  Non-Registration  Event Penalty Payment
due to such Purchaser.

         The Company shall use its reasonable best efforts to keep such Required
Registration  Statement  continuously  effective (the "EFFECTIVE  PERIOD") for a
period of two years after the  Required  Registration  Statement  first  becomes
effective plus whatever period of time as shall equal any period, if any, during
such one year period in which the Company  was not  current  with its  reporting
requirements  under  the  Exchange  Act.  To the  extent  that  the  Registrable
Securities  are  not  sold  under  the  Required  Registration  Statement,   the
Purchasers shall have the registration  rights as enumerated in Sections 1.3 and
1.4 of this Agreement.

                  1.2 CURRENT PUBLIC INFORMATION.  The Company covenants that it
will use reasonable best efforts to file all reports  required to be filed by it
under the  Securities  Act and the  Exchange  Act and the rules and  regulations
adopted by the SEC thereunder, and will use reasonable best efforts to take such
further  action as the  Purchaser  may  reasonably  request,  all to the  extent
required to enable the holders of  Registrable  Securities  to sell  Registrable
Securities  pursuant  to Rule 144 or Rule  144A  adopted  by the SEC  under  the
Securities Act or any similar rule or regulation  hereafter  adopted by the SEC.
The Company shall, upon the request of a holder of Registrable  Securities (each
a "DESIGNATED HOLDER" and collectively,  the "DESIGNATED  HOLDERS"),  deliver to
such  Designated  Holder a written  statement as to whether it has complied with
such requirements.

                  1.3 FORM S-3  REGISTRATION.  If the Company is eligible to use
Form S-3 under the  Securities  Act (or any  similar  successor  form) and shall
receive from a Purchaser  and its  permitted  transferees  (the "S-3  INITIATING
HOLDERS") a written  request or requests that the Company  effect a registration
on such Form S-3,  including  without  limitation,  pursuant  to Rule 415 of the
Securities Act and any related  qualification  or compliance with respect to all
or part of the Registrable  Securities  owned by the S-3 Initiating  Holders and
its permitted transferees (provided, that the S-3 Initiating Holders registering
Registrable  Securities in such registration (together with all other holders of
Registrable  Securities  to be  included in such  registration)  propose to sell
their  Registrable  Securities at an aggregate price  (calculated based upon the
Market Price of the Registrable Securities on the date of filing of the Form S-3
with respect to such  Registrable  Securities) to the public of no less than the
lesser of $6,000,000 or the remaining Registrable Securities), the Company shall
(i) promptly give written notice of the proposed  registration,  and any related
qualification or compliance, to all other holders of Registrable Securities; and
(ii) as soon as practicable, use reasonable best efforts to file and effect such
registration and all such  qualifications and compliances as may be so requested

<PAGE>

and as would  permit  or  facilitate  the sale and  distribution  of all or such
portion of the Registrable Securities as are specified in such request, together
with all or such portion of the  Registrable  Securities  of any other holder in
the group of  holders  joining  in such  request  as is  specified  in a written
request  given  within  fifteen  (15) days  after the  holder's  receipt of such
written notice from the Company. No registration requested by any S-3 Initiating
Holders pursuant to this Section 1.3 shall be deemed a registration  pursuant to
Section 1.1.

                  1.4 PIGGYBACK REGISTRATIONS.

                  (a) RIGHT TO  PIGGYBACK.  Whenever  the  Company  proposes  to
         register any of its  securities  under the  Securities  Act (other than
         pursuant to a registration pursuant to Section 1.3 or a registration on
         Form S-4 or S-8 or any successor or similar forms) and the registration
         form  to be used  may be  used  for  the  registration  of  Registrable
         Securities,  whether or not for sale for its own  account,  the Company
         will give prompt  written notice (but in no event less than twenty five
         (25)  days  before  the  anticipated  filing  date) to all  holders  of
         Registrable  Securities,  and such notice  shall  describe the proposed
         registration  and  distribution and offer to all holders of Registrable
         Securities  the  opportunity  to  register  the  number of  Registrable
         Securities as each such holder may request. The Company will include in
         such registration all Registrable  Securities with respect to which the
         Company has received  written  requests for  inclusion  therein  within
         fifteen (15) days after the holders' receipt of the Company's notice (a
         "PIGGYBACK REGISTRATION").

                  (b) REASONABLE  EFFORTS.  The Company shall use all reasonable
         best efforts to cause the managing  underwriter  or  underwriters  of a
         proposed  underwritten  offering to permit the  Registrable  Securities
         requested to be included in a Piggyback  Registration to be included on
         the same terms and conditions as any similar  securities of the Company
         or any other security holder included therein and to permit the sale or
         other disposition of such Registrable Securities in accordance with the
         intended method of distribution thereof.

                  (c) WITHDRAWAL.  Any Designated Holder shall have the right to
         withdraw its request for inclusion of its Registrable Securities in any
         Registration  Statement  pursuant to this Section 1.4 by giving written
         notice to the Company of its request to withdraw; provided, that in the
         event of such withdrawal (other than pursuant to Section 1.4(e) hereof,
         the Company shall not be required to reimburse such holder for the fees
         and  expenses  referred to in Section  1.6(t)  hereof  incurred by such
         holder prior to such  withdrawal,  unless such  withdrawal was due to a
         material  adverse  change to the  Company.  The Company may  withdraw a
         Piggyback  Registration  at any  time  prior  to the  time  it  becomes
         effective.

                  (d) PRIORITY IN REGISTRATIONS.  If a Piggyback Registration is
         an underwritten  primary registration on behalf of the Company, and the
         managing  underwriters  advise the  Company in writing  (with a copy to
         each party hereto  requesting  registration of Registrable  Securities)
         that in their opinion the number of Registrable Securities requested to
         be  included  on a  secondary  basis in such  registration  exceeds the
         number  which  can be sold  in such  offering  without  materially  and
         adversely  affecting  the  marketability  of such  primary or secondary
         offering  (the  "COMPANY  OFFERING  QUANTITY"),  then the Company  will
         include in such registration securities in the following priority:

                           (i) First,  the Company will  include the  securities
                  the Company proposes to sell.

                           (ii) Second, the Company will include all Registrable
                  Securities  requested to be included by any Designated Holder,
                  and if the  number  of  such  Designated  Holders'  securities
                  requested  to  be  included   exceeds  the  Company   Offering
                  Quantity,  then the  Company  shall  include  only  each  such
                  requesting  Designated  Holders'  pro rata share of the shares
                  available  for  registration  by the  Purchaser,  based on the
                  amount of securities held by such holder.

                           (iii)  Third,   the  Company   will   include   other
                  securities  of the  Company  proposed  to be  included  in the
                  registration.

                  (e) CUTBACK.  If, as a result of the  proration  provisions of
         this  Section  1.4,  any  Designated  Holders  shall not be entitled to
         include all  Registrable  Securities in a Piggyback  Registration  that
         such Designated  Holders has requested to be included,  such holder may
         elect to withdraw his request to include Registrable Securities in such
         registration.

<PAGE>

                  1.5 HOLDBACK AGREEMENTS.

                  (a) To the extent not  inconsistent  with  applicable  law, in
         connection  with a public  offering of securities of the Company,  upon
         the  request  of the  Company  or the  underwriter,  in the  case of an
         underwritten public offering of the Company's  securities,  each holder
         of  Registrable  Securities  who owns at  least  5% of the  outstanding
         capital  stock  of the  Company  on an  "as-converted"  basis  or is an
         officer or director  of the Company  will not effect any public sale or
         distribution  (other than those  included in the  registration)  of any
         securities  of  the  Company,  or any  securities,  options  or  rights
         convertible  into or  exchangeable  or exercisable  for such securities
         during the fourteen  (14) days prior to and the ninety (90) -day period
         beginning  on  such  effective   date,   unless  (in  the  case  of  an
         underwritten public offering) the managing underwriters otherwise agree
         to  a  shorter  period  of  time.  Notwithstanding  the  foregoing,  no
         Designated  Holder  shall be  required to enter into any such "lock up"
         agreement unless and until all of the Company's  executive officers and
         directors  execute  substantially  similar "lock up" agreements and the
         Company uses  commercially  reasonable  efforts to cause each holder of
         more than 5% of its outstanding capital stock to execute  substantially
         similar "lock up"  agreements.  Neither the Company nor the underwriter
         shall amend, terminate or waive a "lock up" agreement unless each "lock
         up" agreement  with a Designated  Holder is also amended or waived in a
         similar manner or terminated, as the case may be.

                  (b) The  Company  shall  have the right at any time to require
         that the Designated  Holders of Registrable  Securities suspend further
         open market offers and sales of  Registrable  Securities  pursuant to a
         Registration  Statement  filed  hereunder  whenever  in the  reasonable
         judgment of the Company after consultation with counsel there is or may
         be in existence a Changing  Event (as defined in this  Agreement).  The
         Company will give the Designated  Holders notice of any such suspension
         and will use all reasonable best efforts to minimize the length of such
         suspension.

                  1.6   REGISTRATION   PROCEDURES.   Whenever  any   Registrable
         Securities  are required to be registered  pursuant to this  Agreement,
         the Company will use reasonable best efforts to effect the registration
         and the sale of such  Registrable  Securities  in  accordance  with the
         intended  methods of  disposition  thereof,  and  pursuant  thereto the
         Company will as expeditiously as possible:

                  (a)  prepare  and  file  with the SEC on any  form,  if not so
         otherwise  provided  for, for which the Company  qualifies,  as soon as
         practicable  after the end of the  period  within  which  requests  for
         registration may be given to the Company, a Registration Statement with
         respect  to the  offer  and  sale of such  Registrable  Securities  and
         thereafter  use  reasonable  best  efforts to cause  such  Registration
         Statement to become effective and remain effective until the completion
         of the  distribution  contemplated  thereby or the required time period
         under this  Agreement,  whichever  is shorter  (and before  filing such
         Registration  Statement,  the  Company  will  furnish  to  the  counsel
         selected  by the holders of a majority  of the  Registrable  Securities
         initiating  such  Registration  Statement  copies of all such documents
         proposed to be filed); PROVIDED, HOWEVER, that the Company may postpone
         for not more than sixty (60) calendar days the filing or  effectiveness
         of any registration statement required pursuant to this Agreement other
         than a Required Registration Statement required to be filed pursuant to
         Section 1.1 of this  Agreement if the Board of  Directors,  in its good
         faith judgment,  determines that such registration  could reasonably be
         expected  to have a  material  adverse  effect on the  Company  and its
         stockholders including, but not limited to, any proposal or plan by the
         Company  to engage in any  acquisition  of  assets  (other  than in the
         ordinary course of business) or any merger, consolidation, tender offer
         or similar  transaction then under  consideration  (in which event, the
         Designated  Holders shall be entitled to withdraw such request,  and if
         such  request  is  withdrawn  such  registration  will  not  count as a
         registration  statement  pursuant  to  this  Agreement)  by  delivering
         written  notice to the  Designated  Holders who requested  inclusion of
         Registrable   Securities   in  such   Registration   Statement  of  its
         determination  to  postpone  such  Registration  Statement;   provided,
         further,  that (i) the Company shall not disclose any information  that
         could be  deemed  material  non-public  information  to any  holder  of
         Registrable  Securities  included in a  Registration  Statement that is
         subject to such postponement, (ii) in no event may the Company postpone
         a filing  requested  hereunder more than twice in any twelve (12) month
         period; PROVIDED, THAT any two postponements must be at least three (3)
         months  apart;  PROVIDED,  FURTHER,  THAT the  Company  shall delay the

<PAGE>

         effectiveness of any such  registration  statement if the SEC rules and
         regulations   prohibit  the  Company  from   declaring  a  Registration
         Statement  effective  because its financial  statements  are stale at a
         time  when  its  fiscal  year has  ended or it has made an  acquisition
         reportable  under  Item 2 of Form 8-K or any  other  similar  situation
         until the  earliest  time in which the SEC would  allow the  Company to
         declare a Registration  Statement  effective (provided that the Company
         shall use its  reasonable  best  efforts to cure any such  situation as
         soon  as  possible  so  that  the  Registration  Statement  can be made
         effective at the earliest possible time);

                  (b)  prepare  and  file  with  the  SEC  such  amendments  and
         supplements to such  Registration  Statement and the prospectus used in
         connection  therewith  as may be  necessary  to keep such  Registration
         Statement effective for a period provided for in the applicable Section
         above,  or if not so  provided,  for a period  of  twelve  (12)  (for a
         registration  pursuant to Rule 415 of the  Securities  Act) or, if such
         Registration Statement relates to an underwritten offering, such period
         as in the  opinion of counsel  for the  underwriters  a  prospectus  is
         required by law to be delivered in connection with sales of Registrable
         Securities by an  underwriter  or dealer or (ii) such shorter period as
         will terminate when all of the securities  covered by such Registration
         Statement have been disposed of in accordance with the intended methods
         of  disposition  by the  seller or  sellers  thereof  set forth in such
         Registration  Statement  (but in any event not before the expiration of
         any longer period  required  under the  Securities  Act), and to comply
         with  the  provisions  of  the  Securities  Act  with  respect  to  the
         disposition of all securities  covered by such  Registration  Statement
         until  such time as all of such  securities  have been  disposed  of in
         accordance  with the intended  methods of  disposition by the seller or
         sellers thereof set forth in such Registration  Statement. In the event
         the  Company  shall give any notice  pursuant  to Section  1.5(b),  the
         applicable time period  mentioned in this Section 1.6(b) during which a
         Registration  Statement is to remain effective shall be extended by the
         number of days  during the period  from and  including  the date of the
         giving of such notice  pursuant to Section  1.5(b) to and including the
         date  when  each  seller  of a  Registrable  Security  covered  by such
         Registration   Statement   shall  have   received  the  copies  of  the
         supplemented or amended prospectus contemplated by Section 1.6(e);

                  (c) furnish to each seller of Registrable Securities, prior to
         filing  a  Registration  Statement,  such  number  of  copies  of  such
         Registration  Statement,  each  amendment and supplement  thereto,  the
         prospectus  included in such  Registration  Statement  (including  each
         preliminary  prospectus)  and such other  documents  as such seller may
         reasonably  request  in  order to  facilitate  the  disposition  of the
         Registrable Securities owned by such seller;

                  (d) register or qualify such Registrable Securities under such
         other  securities or blue sky laws of such  jurisdictions as any seller
         reasonably  requests and do any and all other acts and things which may
         be  reasonably   necessary  or  advisable  to  enable  such  seller  to
         consummate the  disposition in such  jurisdictions  of the  Registrable
         Securities  owned by such seller and to keep each such  registration or
         qualification  (or  exemption  therefrom)  effective  during the period
         which the  Registration  Statement  is  required  to be kept  effective
         (provided,  that  the  Company  will  not be  required  to (i)  qualify
         generally  to do  business  in any  jurisdiction  where  it  would  not
         otherwise  be  required  to  qualify  but for this  subparagraph,  (ii)
         subject itself to taxation in any such jurisdiction or (iii) consent to
         general service of process in any such jurisdiction);

                  (e) notify each seller of such Registrable Securities,  at any
         time when a  prospectus  relating  thereto is required to be  delivered
         under the  Securities  Act, of the  happening of any event (a "CHANGING
         EVENT")  as  a  result  of  which,  the  prospectus  included  in  such
         Registration  Statement contains an untrue statement of a material fact
         or  omits  any  fact  necessary  to make  the  statements  therein  not
         misleading  in the light of the  circumstances  under  which  they were
         made, and, at the request of any such seller,  the Company will as soon
         as possible prepare and furnish to such seller (a "CORRECTION EVENT") a
         reasonable  number of  copies  of a  supplement  or  amendment  to such
         prospectus so that, as thereafter  delivered to the  purchasers of such
         Registrable  Securities,  such  prospectus  will not  contain an untrue
         statement  of a material  fact or omit to state any fact  necessary  to
         make  the  statements  therein  not  misleading  in  the  light  of the
         circumstances under which they were made;

                  (f) cause all such Registrable Securities to be listed on each
         securities  exchange on which similar  securities issued by the Company
         are then listed and, if not so listed, to be listed on The Nasdaq Stock
         Market or the Nasdaq SmallCap trading system or the Nasdaq OTC Bulletin
         Board;

                  (g)  provide  a  transfer  agent  and  registrar  for all such
         Registrable  Securities  not  later  than  the  effective  date of such
         Registration Statement;

<PAGE>

                  (h)  enter   into   such   customary   agreements   (including
         underwriting agreements in customary form with any underwriter,  if any
         selected by the Company) and take all such other actions as the holders
         of  a  majority  of  the  Registrable  Securities  being  sold  or  the
         underwriters,  if any,  reasonably  request  in  order to  expedite  or
         facilitate the disposition of such  Registrable  Securities,  including
         causing  its  officers  to   participate  in  "road  shows"  and  other
         information meetings organized by an underwriter, if any, provided that
         any underwriter shall have been selected by the Company;

                  (i) make available for inspection by any seller of Registrable
         Securities,  any underwriter  participating in any disposition pursuant
         to such  Registration  Statement and any attorney,  accountant or other
         agent  retained by any such seller or  underwriter,  all  financial and
         other  records,  pertinent  corporate  documents and  properties of the
         Company, and cause the Company's employees and independent  accountants
         to supply all  information  reasonably  requested  by any such  seller,
         underwriter,  attorney,  accountant  or agent in  connection  with such
         Registration Statement;

                  (j) before  filing a  Registration  Statement or prospectus or
         any  amendments  or  supplements  thereto,  the Company  shall  provide
         counsel  selected by the Designated  Holders  holding a majority of the
         Registrable Securities being registered in such registration ("HOLDERS'
         COUNSEL") and any other  Inspector (as defined  below) with an adequate
         and appropriate  opportunity to review and comment on such Registration
         Statement and each prospectus  included  therein (and each amendment or
         supplement thereto) to be filed with the SEC, subject to such documents
         being under the  Company's  control,  and the Company  shall notify the
         Holders' Counsel and each seller of Registrable  Securities of any stop
         order issued or threatened by the SEC;

                  (k) otherwise comply with all applicable rules and regulations
         of the SEC,  and make  available to its  security  holders,  as soon as
         reasonably practicable, an earnings statement covering the period of at
         least twelve months beginning with the first day of the Company's first
         full  calendar  quarter after the  effective  date of the  Registration
         Statement,  which  earnings  statement  shall satisfy the provisions of
         Section 11(a) of the Securities Act and Rule 158 thereunder;

                  (l) in the event of the issuance of any stop order  suspending
         the  effectiveness  of  a  Registration  Statement,  or  of  any  order
         suspending  or  preventing  the  use  of  any  related   prospectus  or
         suspending  the  qualification  of  any  securities  included  in  such
         Registration  Statement for sale in any jurisdiction,  the Company will
         use its  reasonable  best efforts  promptly to obtain the withdrawal of
         such order;

                  (m) obtain one or more comfort  letters,  dated the  effective
         date of such Registration Statement (and, if such registration includes
         an  underwritten  offering,  dated  the date of the  closing  under the
         underwriting  agreement),  signed by the Company's  independent  public
         accountants  in customary  form and  covering  such matters of the type
         customarily  covered by comfort letters as the holders of a majority of
         the Registrable Securities being sold reasonably request;

                  (n) provide a legal opinion of the Company's  outside counsel,
         dated the effective date of such  Registration  Statement (and, if such
         registration includes an underwritten  offering,  dated the date of the
         closing  under  the  underwriting  agreement),   with  respect  to  the
         Registration  Statement,  each  amendment and supplement  thereto,  the
         prospectus included therein (including the preliminary  prospectus) and
         such other  documents  relating  thereto in customary form and covering
         such matters of the type customarily  covered by legal opinions of such
         nature;

                  (o) subject to execution and delivery of mutually satisfactory
         confidentiality  agreements,  make  available at  reasonable  times for
         inspection  by any  seller  of  Registrable  Securities,  any  managing
         underwriter  participating  in  any  disposition  of  such  Registrable
         Securities pursuant to a Registration  Statement,  Holders' Counsel and
         any  attorney,  accountant  or other  agent  retained  by any  managing
         underwriter (each, an "INSPECTOr" and collectively,  the "INSPECTORS"),
         during normal business hours of Company at Company's  corporate  office
         in New York, New York and without unreasonable  disruption of Company's
         business or unreasonable  expense to Company and solely for the purpose
         of  due  diligence   with  respect  to  the   registration   statement,
         non-confidential,  legally disclosable, financial and other records and
         pertinent  corporate  documents  of the  Company  and its  subsidiaries

<PAGE>

         (collectively,  the  "RECORDS")  as shall be  reasonably  necessary  to
         enable them to exercise their due diligence  responsibility,  and cause
         the Company's and its subsidiaries' officers,  directors and employees,
         and  the  independent  public  accountants  of  the  Company,  to  make
         available  for  inspection,  at  such  parties'  offices  during  their
         respective normal business hours and without unreasonable disruption of
         their  business or  unreasonable  expense to Company and solely for the
         purpose of due diligence with respect to the Registration Statement all
         information  reasonably  requested by any such  Inspector in connection
         with such Registration Statement;

                  (p) subject to execution and delivery of mutually satisfactory
         confidentiality  agreements,  keep Holders'  Counsel  advised as to the
         initiation and progress of any registration  hereunder  including,  but
         not limited to, providing Holders' Counsel with all correspondence with
         the SEC;

                  (q) cooperate with each seller of  Registrable  Securities and
         each  underwriter  participating in the disposition of such Registrable
         Securities and their respective  counsel in connection with any filings
         required to be made with the NASD; and

                  (r) take all other steps  reasonably  necessary  to effect the
         registration of the Registrable Securities contemplated hereby.

                  (s) CONDITIONS PRECEDENT TO COMPANY'S  OBLIGATIONS PURSUANT TO
         THIS AGREEMENT. It shall be a condition precedent to the obligations of
         Company to take any action  pursuant to this Agreement that each of the
         holders whose Registrable  Securities are to be registered  pursuant to
         this  Agreement  shall  furnish such holder's  written  agreement to be
         bound  by  the  terms  and  conditions  of  this  Agreement   prior  to
         performance  by Company of its  obligations  under this  Agreement.  By
         executing and delivering  this  Agreement,  each holder  represents and
         warrants  that the  information  concerning,  and  representations  and
         warranties  by,  such  holder,  including  information  concerning  the
         securities  of the Company  held,  beneficially  or of record,  by such
         holder,  furnished to the Company  pursuant to the Securities  Purchase
         Agreement and the Purchasers  Questionnaire delivered pursuant thereto,
         are true and correct as if the same were  represented  and warranted on
         the date of any registration  statement by the Company pursuant to this
         Agreement  or any  amendment  thereto,  and each  holder  covenants  to
         immediately  notify  the  Company  in writing of any change in any such
         information, representation or warranty and to refrain from offering or
         disposing of any securities pursuant to any such registration statement
         until  the  Company  has  reflected  such  change  in the  registration
         statement. By executing and delivering this Agreement, each such holder
         further agrees to furnish any additional information as the Company may
         reasonably  request  in  connection  with any action to be taken by the
         Company pursuant to this Agreement, to pay such holder's expenses which
         are not required to be paid by the Company pursuant to this Agreement.

                  (t) All expenses  incident to the Company's  performance of or
         compliance  with this  Agreement  including,  without  limitation,  all
         registration and filing fees payable by the Company,  fees and expenses
         of compliance by the Company with securities or blue sky laws, printing
         expenses  of  the  Company,  messenger  and  delivery  expenses  of the
         Company,  and fees and disbursements of counsel for the Company and all
         independent  certified public accountants of the Company,  underwriters
         (excluding discounts and commissions, which will be paid by the sellers
         of Registrable  Securities)  and other Persons  retained by the Company
         will be borne by the  Company,  and the Company  will pay its  internal
         expenses (including,  without limitation,  all salaries and expenses of
         its Employees  performing legal or accounting  duties),  the expense of
         any annual  audit or  quarterly  review,  the expense of any  liability
         insurance  of the  Company  and the  expenses  and fees for listing the
         securities  to be  registered  on each  securities  exchange  on  which
         similar  securities  issued by the  Company  are then  listed or on The
         Nasdaq  National  Market,  Nasdaq  SmallCap  Market or the OTC Bulletin
         Board trading  system.  The Company shall have no obligation to pay any
         underwriting  discounts  or  commissions  attributable  to the  sale of
         Registrable  Securities and any of the expenses  incurred by any holder
         of Registrable  Securities  which are not payable by the Company,  such
         costs  to be  borne  by such  holder  or  holders,  including,  without
         limitation,   underwriting  fees,  discounts  and  expenses,   if  any,
         applicable   to  any   holder's   Registrable   Securities;   fees  and
         disbursements  of  counsel or other  professionals  that any holder may
         choose to retain in connection  with the  registration  statement filed
         pursuant to this Agreement; selling commissions or stock transfer taxes
         applicable to the  Registrable  Securities  registered on behalf of any
         holder;  any other expenses  incurred by or on behalf of such holder in
         connection  with  the  offer  and  sale  of such  Holder's  Registrable
         Securities other than expenses which the Company is expressly obligated
         to pay pursuant to this Agreement.

<PAGE>

                  1.7 Indemnification.

                  (a) The Company agrees to indemnify and hold harmless,  to the
         fullest extent permitted by law, each holder of Registrable  Securities
         and its  general or limited  partners,  officers,  directors,  members,
         managers, employees, advisors,  representatives,  agents and Affiliates
         (collectively, the "REPRESENTATIVES") from and against any loss, claim,
         damage,  liability,  attorney's  fees,  cost or  expense  and costs and
         expenses of investigating  and defending any such claim  (collectively,
         the "Losses"),  joint or several,  and any action in respect thereof to
         which such holder of Registrable  Securities or its Representatives may
         become subject under the  Securities Act or otherwise,  insofar as such
         Losses (or actions or proceedings,  whether commenced or threatened, in
         respect  thereto)  arise  out of or are  based  upon (i) any  untrue or
         alleged   untrue   statement  of  a  material  fact  contained  in  any
         Registration Statement, prospectus or preliminary or summary prospectus
         or any amendment or supplement  thereto or (ii) any omission or alleged
         omission to state therein a material fact required to be stated therein
         or necessary to make the  statements  therein not  misleading,  and the
         Company shall reimburse each such holder of Registrable  Securities and
         its  Representatives  for any legal or any other  expenses  incurred by
         them in  connection  with  investigating  or  defending or preparing to
         defend against any such Loss, action or proceeding;  provided, however,
         that the  Company  shall  not be  liable  to any such  holder  or other
         indemnitee in any such case to the extent that any such Loss (or action
         or proceeding,  whether  commenced or threatened,  in respect  thereof)
         arises out of or is based upon an untrue  statement  or alleged  untrue
         statement or omission or alleged  omission,  made in such  Registration
         Statement,  any such prospectus or preliminary or summary prospectus or
         any  amendment  or  supplement   thereto,  in  reliance  upon,  and  in
         conformity  with,  written  information  prepared and  furnished to the
         Company by any holder of Registrable  Securities or its Representatives
         expressly  for use  therein or by failure of any holder of  Registrable
         Securities  to  deliver  a  copy  of  the  Registration   Statement  or
         prospectus or any amendments or  supplements  thereto after the Company
         has furnished such holder of Registrable  Securities  with a sufficient
         number of copies of the same. In no event,  however,  shall the Company
         be liable for indirect,  incidental or consequential or special damages
         of any kind. In connection with an underwritten  offering,  the Company
         will indemnify such underwriters, their officers and directors and each
         Person  who  controls  such  underwriters  (within  the  meaning of the
         Securities  Act) to the same extent as provided  above with  respect to
         the indemnification of the holders of Registrable Securities.

                  (b) In connection with any Registration Statement in which the
         holders of Registrable  Securities are  participating  pursuant to this
         Agreement,  the holders of Registrable  Securities  will furnish to the
         Company in writing such information as the Company reasonably  requests
         for  use  in  connection  with  any  such  Registration   Statement  or
         prospectus  and,  to the fullest  extent  permitted  by law,  each such
         holder of Registrable  Securities  will indemnify and hold harmless the
         Company and its Representatives from and against any Losses,  severally
         but not jointly, and any action in respect thereof to which the Company
         and its  Representatives may become subject under the Securities Act or
         otherwise,  insofar as such Losses (or actions or proceedings,  whether
         commenced or threatened,  in respect thereof) arise out of or are based
         upon  (i) the  purchase  or sale of  Registrable  Securities  during  a
         suspension  as set forth in Section  1.5(b)  after  written  receipt of
         notice of such suspension,  (ii) any untrue or alleged untrue statement
         of a material fact contained in the Registration Statement,  prospectus
         or  preliminary  or summary  prospectus  or any amendment or supplement
         thereto,  or (iii) any omission or alleged  omission of a material fact
         required  to be stated  therein  or  necessary  to make the  statements
         therein not  misleading,  but,  with  respect to clauses (ii) and (iii)
         above,  only to the extent  that such untrue  statement  or omission is
         made in such Registration Statement, any such prospectus or preliminary
         or summary  prospectus  or any  amendment  or  supplement  thereto,  in
         reliance upon and in conformity with written  information  prepared and
         furnished  to the  Company  by such  holder of  Registrable  Securities
         expressly  for use therein or by failure of such holder of  Registrable
         Securities  to  deliver  a  copy  of  the  Registration   Statement  or
         prospectus or any amendments or  supplements  thereto after the Company
         has furnished such holder of Registrable  Securities  with a sufficient
         number of copies of the same, and such holder of Registrable Securities
         will reimburse the Company and each Representative for any legal or any
         other expenses  incurred by them in connection  with  investigating  or
         defending  or  preparing  to defend  against  any such Loss,  action or
         proceeding;   PROVIDED,   HOWEVER,  that  such  holder  of  Registrable
         Securities  shall not be liable  in any such  case to the  extent  that
         prior to the filing of any such Registration Statement or prospectus or
         amendment or supplement thereto, such holder of Registrable  Securities
         has furnished in writing to the Company  information  expressly for use

<PAGE>

         in such  Registration  Statement  or  prospectus  or any  amendment  or
         supplement  thereto which corrected or made not misleading  information
         previously  furnished to the Company. In no event,  however,  shall any
         holder be liable for indirect,  incidental or  consequential or special
         damages of any kind.

                  (c) Promptly  after  receipt by any Person in respect of which
         indemnity may be sought pursuant to Section

                  1.7(a) or 1.7(b)  (an  "INDEMNIFIED  PARTY")  of notice of any
         claim or the commencement of any action,  the Indemnified  Party shall,
         if a claim in respect  thereof is to be made against the Person against
         whom such indemnity may be sought (an "INDEMNIFYING  PARTY"),  promptly
         notify  the  Indemnifying   Party  in  writing  of  the  claim  or  the
         commencement of such action;  PROVIDED,  that the failure to notify the
         Indemnifying  Party shall not relieve the  Indemnifying  Party from any
         liability  which it may have to an  Indemnified  Party  otherwise  than
         under  Section  1.7(a) or 1.7(b)  except  to the  extent of any  actual
         prejudice  resulting  therefrom.  If any such claim or action  shall be
         brought  against  an  Indemnified   Party,  and  it  shall  notify  the
         Indemnifying Party thereof, the Indemnifying Party shall be entitled to
         participate  therein,  and, to the extent that it wishes,  jointly with
         any other similarly notified  Indemnifying Party, to assume the defense
         thereof with counsel reasonably  satisfactory to the Indemnified Party.
         After notice from the  Indemnifying  Party to the Indemnified  Party of
         its  election  to assume  the  defense  of such  claim or  action,  the
         Indemnifying Party shall not be liable to the Indemnified Party for any
         legal or other expenses  subsequently incurred by the Indemnified Party
         in connection with the defense  thereof other than reasonable  costs of
         investigation;  PROVIDED,  that the  Indemnified  Party  shall have the
         right to employ separate counsel to represent the Indemnified Party and
         its  Representatives who may be subject to liability arising out of any
         claim in respect of which  indemnity  may be sought by the  Indemnified
         Party against the Indemnifying Party, but the fees and expenses of such
         counsel shall be for the account of such  Indemnified  Party unless (i)
         the  Indemnifying  Party and the Indemnified  Party shall have mutually
         agreed to the retention of such counsel or (ii) in the written  opinion
         of counsel to such Indemnified Party, representation of both parties by
         the same  counsel  would be  inappropriate  due to actual or  potential
         conflicts of interest between them, it being understood,  however, that
         the Indemnifying Party shall not, in connection with any one such claim
         or action or separate but  substantially  similar or related  claims or
         actions  in the  same  jurisdiction  arising  out of the  same  general
         allegations  or  circumstances,  be liable for the fees and expenses of
         more than one separate  firm of attorneys  (together  with  appropriate
         local counsel) at any time for all Indemnified Parties. No Indemnifying
         Party  shall,  without  the prior  written  consent of the  Indemnified
         Party,  effect any  settlement  of any claim or  pending or  threatened
         proceeding in respect of which the  Indemnified  Party is or could have
         been a party and  indemnity  could have been sought  hereunder  by such
         Indemnified  Party,  unless such settlement  includes an  unconditional
         release of such  Indemnified  Party from all  liability  arising out of
         such claim or proceeding  other than the payment of monetary damages by
         the Indemnifying Party on behalf of the Indemnified  Party.  Whether or
         not the  defense of any claim or action is assumed by the  Indemnifying
         Party, such Indemnifying Party will not be subject to any liability for
         any  settlement  made  without its consent,  which  consent will not be
         unreasonably withheld.

                  (d) If the indemnification provided for in this Section 1.7 is
         unavailable  to the  Indemnified  Parties  in  respect  of  any  Losses
         referred  to  herein,   then  each  Indemnifying   Party,  in  lieu  of
         indemnifying  such  Indemnified  Party,  shall contribute to the amount
         paid or payable by such Indemnified Party as a result of such Losses in
         such  proportion  as is  appropriate  to reflect the relative  benefits
         received  by the  Company  on the  one  hand  and  the  holders  of the
         Registrable   Securities   on  the  other  from  the  offering  of  the
         Registrable  Securities,  or if such  allocation  is not  permitted  by
         applicable  law, in such  proportion as is  appropriate  to reflect not
         only the relative  benefits but also the relative  fault of the Company
         on the one hand and the holders of the  Registrable  Securities  on the
         other in connection  with the statements or omissions which resulted in
         such Losses,  as well as any other relevant  equitable  considerations.
         The relative fault of the Company on the one hand and of each holder of
         the  Registrable  Securities  on  the  other  shall  be  determined  by
         reference to, among other things,  whether any action taken,  including
         any untrue or alleged  untrue  statement  of a  material  fact,  or the
         omission  or  alleged  omission  to state a  material  fact  relates to
         information  supplied by such party, and the parties'  relative intent,
         knowledge,  access to information and opportunity to correct or prevent
         such statement or omission.

         The Company and the holders of the Registrable Securities agree that it
would not be just and equitable if contribution  pursuant to this Section 1.7(d)
were  determined  by pro rata  allocation  or by any other method of  allocation
which does not take account of the equitable  considerations  referred to in the
immediately  preceding  paragraph.  The amount paid or payable by an Indemnified
Party  as a  result  of the  Losses  referred  to in the  immediately  preceding

<PAGE>

paragraph  shall be deemed to  include,  subject  to the  limitations  set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in  connection  with  investigating  or  defending  any such  action  or  claim.
Notwithstanding the provisions of this Section 1.7, no holder of the Registrable
Securities shall be required to contribute any amount in excess of the amount by
which the total price at which the  Registrable  Securities  of such holder were
offered to the public  exceeds  the amount of any Losses  which such  holder has
otherwise paid by reason of such untrue or alleged untrue  statement or omission
or alleged omission.  No Person guilty of fraudulent  misrepresentation  (within
the  meaning of  Section  11(f) of the  Securities  Act)  shall be  entitled  to
contribution   from  any  Person   who  was  not   guilty  of  such   fraudulent
misrepresentation.  Each holder's  obligations  to  contribute  pursuant to this
Section  1.7 is several in the  proportion  that the  proceeds  of the  offering
received  by such  holder  of the  Registrable  Securities  bears  to the  total
proceeds  of  the  offering  received  by all  the  holders  of the  Registrable
Securities and not joint.

                  1.8 PARTICIPATION IN REGISTRATIONS.

                  (a) No Person may  participate in any  registration  hereunder
         which is  underwritten  unless  such  Person  (i)  agrees  to sell such
         Person's   securities  on  the  basis  provided  in  any   underwriting
         arrangements  approved by the Person or Persons  entitled  hereunder to
         approve such arrangements (including,  without limitation,  pursuant to
         the terms of any over-allotment or "green shoe" option requested by the
         managing  underwriter(s),  PROVIDED,  that each  holder of  Registrable
         Securities  shall  not be  required  to sell  more  than the  number of
         Registrable  Securities  that such holder has  requested the Company to
         include  in any  registration)  and (ii)  completes  and  executes  all
         questionnaires,   powers   of   attorney,   indemnities,   underwriting
         agreements and other documents  reasonably  required under the terms of
         such underwriting arrangements and this Agreement.

                  (b) Each  Person  that is  participating  in any  registration
         under this Agreement  agrees that,  upon receipt of any notice from the
         Company of the happening of any event of the kind  described in Section
         1.6(e) above, such Person will forthwith discontinue the disposition of
         its Registrable  Securities pursuant to the Registration  Statement and
         all use of the  Registration  Statement  or any  prospectus  or related
         document until such Person's receipt of the copies of a supplemented or
         amended  prospectus as  contemplated  by such Section 1.6(e) and, if so
         directed by the Company,  will deliver to the Company (at the Company's
         expense) all copies, other than permanent file copies, then in holder's
         possession  of such  documents  at the time of receipt of such  notice.
         Furthermore,  each holder  agrees that if such holder uses a prospectus
         in  connection  with the  offering  and sale of any of the  Registrable
         Securities,  the  holder  will  use  only the  latest  version  of such
         prospectus provided by Company

                  2. TRANSFERS OF CERTAIN RIGHTS

                  2.1 TRANSFER.  The rights granted to the Purchaser  under this
         Agreement  are  non-transferable  except for a  transfer,  without  any
         consideration  whatsoever,  to a person or entity which is an Affiliate
         of the transferor, and any such transfer, in any case, shall be subject
         to the  provisions  of  Sections  2.2 and 2.3;  provided  that  nothing
         contained  herein shall be deemed to permit an assignment,  transfer or
         disposition of the Registrable Securities in violation of the terms and
         conditions of the Securities Purchase Agreement, or applicable law.

                  2.2 TRANSFEREES. Any permitted transferee to whom rights under
         this Agreement are transferred  shall, as a condition to such transfer,
         deliver to the Company a written  instrument  by which such  transferee
         agrees to be bound by the obligations  imposed upon the Purchaser under
         this  Agreement  to  the  same  extent  as if  such  transferee  were a
         Purchaser hereunder.

                  2.3  SUBSEQUENT  TRANSFEREES.  A transferee to whom rights are
         transferred  pursuant  to this  Section 2 may not again  transfer  such
         rights to any  other  person  or  entity,  other  than as  provided  in
         Sections 2.1 or 2.2 above.

<PAGE>

         3. CERTAIN  DEFINITIONS The following  capitalized terms shall have the
meanings ascribed to them below:

"Affiliate" means any Person that directly or indirectly  controls,  or is under
control  with,  or is  controlled  by such Person.  As used in this  definition,
"control" (including with its correlative  meanings,  "controlled by" and "under
common control with") shall mean the possession,  directly or indirectly, of the
power to direct or cause the direction of the management or policies of a Person
(whether  through  ownership of securities  or  partnership  or other  ownership
interests, by contract or otherwise).

"Closing  Price" means,  with respect to the  Registrable  Securities (a) if the
shares are listed or admitted for trading on any national securities exchange or
included  in The Nasdaq  National  Market or Nasdaq  SmallCap  Market,  the last
reported  sales price as reported on such exchange or market;  (b) if the shares
are not listed or admitted  for trading on any national  securities  exchange or
included in The Nasdaq National Market or Nasdaq SmallCap Market, the average of
the last reported  closing bid and asked quotation for the shares as reported on
the National  Association  of  Securities  Dealers  Automated  Quotation  System
("NASDAQ") or a similar service if NASDAQ is not reporting such information; (c)
if the shares are not listed or admitted for trading on any national  securities
exchange or included in The Nasdaq  National Market or Nasdaq SmallCap Market or
quoted by NASDAQ or a similar service,  the average of the last reported bid and
asked  quotation for the shares as quoted by a market maker in the shares (or if
there is more  than one  market  maker,  the bid and  asked  quotation  shall be
obtained  from two market  makers and the  average of the lowest bid and highest
asked  quotation).  In the absence of any available  public  quotations  for the
Common Stock,  the Board and a majority of the Holders  shall  determine in good
faith the fair value of the Common Stock.

"Common  Stock"  means the common  stock,  par value  $0.001  per share,  of the
Company.

"Employees" means any current,  former, or retired employee,  office consultant,
advisor, independent contractor, agent, officer or director of the Company.

"Exchange  Act" means the Securities  Exchange Act of 1934, as amended,  and the
rules and regulations of the SEC promulgated thereunder.

"Market  Price" means,  on any date of  determination,  the average of the daily
Closing Price of the Registrable  Securities for the immediately  preceding five
(5) on which the national securities exchanges are open for trading.

"Person"  means any  individual,  company,  partnership,  firm,  joint  venture,
association,    joint-stock   company,   trust,   unincorporated   organization,
governmental body or other entity.

"Registrable  Securities" means, subject to the immediately  following sentence,
(i)  shares of Common  Stock and the  Warrant  Shares  underlying  the  Warrants
acquired by the applicable  Purchaser from the Company in the Offering  pursuant
to the Securities Purchase Agreement, and (ii) any shares of Common Stock issued
or issuable pursuant to this Agreement or directly or indirectly with respect to
the securities referred to in clause (i) by way of stock dividend or stock split
or in  connection  with  a  combination  of  shares,  recapitalization,  merger,
consolidation  or other  reorganization.  As to any particular  shares of Common
Stock  constituting  Registrable  Securities,  such shares of Common  Stock will
cease  to  be  Registrable  Securities  when  they  (x)  have  been  effectively
registered  under  the  Securities  Act and  disposed  of in  accordance  with a
Registration  Statement covering them, (y) have been sold to the public pursuant
to Rule 144 (or by  similar  provision  under the  Securities  Act),  or (z) are
eligible  for resale  under  Rule  144(k)  (or by  similar  provision  under the
Securities  Act) without any limitation on the amount of securities  that may be
sold under paragraph (e) thereof.

"Registration  Statement" means any registration  statement of the Company filed
under the Securities Act which covers any of the Registrable Securities pursuant
to the provisions of this Agreement,  including the  prospectus,  amendments and
supplements to such registration statement, including post-effective amendments,
all  exhibits and all material  incorporated  by reference in such  registration
statement.

<PAGE>

"SEC" means the United States  Securities  and Exchange  Commission or any other
federal agency at the time administering the Securities Act.

"Securities Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the SEC promulgated thereunder.

         4. MISCELLANEOUS.

                  4.1 Recapitalizations,  Exchanges, etc. The provisions of this
         Agreement  shall apply to the full extent set forth herein with respect
         to (i) the  Registrable  Securities,  (ii) any and all shares of Common
         Stock into which the Registrable Securities are converted, exchanged or
         substituted in any recapitalization or other capital  reorganization by
         the Company and (iii) any and all equity  securities  of the Company or
         any   successor   or  assign  of  the   Company   (whether  by  merger,
         consolidation,  sale of  assets  or  otherwise)  which may be issued in
         respect of, in conversion  of, in exchange for or in  substitution  of,
         the Registrable  Securities and shall be appropriately adjusted for any
         stock    dividends,     splits,    reverse    splits,     combinations,
         recapitalizations  and the like  occurring  after the date hereof.  The
         Company  shall  cause any  successor  or  assign  (whether  by  merger,
         consolidation,  sale  of  assets  or  otherwise)  to  enter  into a new
         registration  rights  agreement  with the  Designated  Holders on terms
         substantially  the same as this  Agreement  as a condition  of any such
         transaction.

                  4.2 NO INCONSISTENT AGREEMENTS.  The Company has not and shall
         not enter into any  agreement  with respect to its  securities  that is
         inconsistent  with  the  rights  granted  to  the  Purchasers  in  this
         Agreement or grant any additional  registration rights to any Person or
         with respect to any  securities  which are not  Registrable  Securities
         which are prior in right to or materially  inconsistent with the rights
         granted in this Agreement.  The Parties  acknowledge and agree that the
         Company  has  granted  registration  rights  heretofore  and may  grant
         registration  rights  hereafter,  which are or shall be pari passu with
         the registration  rights of the Purchasers,  and shall not be deemed to
         conflict with this covenant.

                  4.3 AMENDMENTS  AND WAIVERS.  The provisions of this Agreement
         may be amended and the Company may take action  herein  prohibited,  or
         omit to perform any act herein  required to be performed by it, if, but
         only if, the Company has obtained the written  consent of holders of at
         least a majority of the Registrable Securities then in existence.

                  4.4 SEVERABILITY.  Whenever  possible,  each provision of this
         Agreement  shall be  interpreted  in such manner as to be effective and
         valid under  applicable  law, but if any  provision  of this  Agreement
         shall be held to be prohibited by or invalid under applicable law, such
         provision shall be ineffective  only to the extent of such  prohibition
         or invalidity,  without invalidating the remainder of such provision or
         the remaining provisions of this Agreement.

                  4.5  COUNTERPARTS.  This  Agreement  may be executed in one or
         more counterparts each of which shall be deemed an original, but all of
         which together shall constitute one and the same instrument.

                  4.6 Notices. All notices, requests and other communications to
         any party hereunder shall be in writing (including  telecopy,  telex or
         similar  writing)  and  shall  be  deemed  given or made as of the date
         delivered,  if  delivered  personally  or by  telecopy  (provided  that
         delivery  by telecopy  shall be  followed by delivery of an  additional
         copy  personally,  by mail or overnight  courier),  one day after being
         delivered by overnight courier or four business days after being mailed
         by  registered  or  certified  mail  (postage   prepaid  for  the  most
         expeditious form of delivery, return receipt requested), to the parties
         at the  following  addresses  (or to such  other  address  or  telex or
         telecopy  number as a party may have  specified  by notice given to the
         other party pursuant to this provision):

<PAGE>

                           If to the Company, to:

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

                           If to the Purchaser, to:

                           The address or facsimile  number of each Purchaser as
                           recorded in the stockholders records of the Company.

                  4.7  GOVERNING  LAW. This  Agreement  shall be governed by and
         construed in accordance with the laws of the State of New York, without
         regard to the conflicts of laws rules or provisions.

                  4.8  FORUM;  SERVICE OF  PROCESS.  Any legal  suit,  action or
         proceeding brought by any party or any of its affiliates arising out of
         or based upon this  Agreement  shall be  instituted  in any  federal or
         state court in New York  County,  New York,  and each party  waives any
         objection  which it may now or hereafter have to the laying of venue or
         any such  proceeding,  and irrevocably  submits to the  jurisdiction of
         such courts in any such suit, action or proceeding.

                  4.9 CAPTIONS. The captions,  headings and arrangements used in
         this Agreement are for convenience  only and do not in any way limit or
         amplify the terms and provisions hereof.

                  4.10 NO PREJUDICE.  The terms of this  Agreement  shall not be
         construed  in  favor  of  or  against  any  party  on  account  of  its
         participation in the preparation hereof.

                  4.11  WORDS IN  SINGULAR  AND PLURAL  FORM.  Words used in the
         singular form in this  Agreement  shall be deemed to import the plural,
         and vice versa, as the sense may require.

                  4.12 REMEDY FOR BREACH.  The Company hereby  acknowledges that
         in the event of any breach or  threatened  breach by the Company of any
         of the  provisions of this  Agreement,  the holders of the  Registrable
         Securities  would  have no  adequate  remedy  at law and  could  suffer
         substantial and  irreparable  damage.  Accordingly,  the Company hereby
         agrees that, in such event,  the holders of the Registrable  Securities
         shall be entitled,  and  notwithstanding  any election by any holder of
         the  Registrable  Securities  to claim  damages,  to obtain a temporary
         and/or  permanent  injunction to restrain any such breach or threatened
         breach or to obtain specific  performance of any such  provisions,  all
         without prejudice to any and all other remedies which any holder of the
         Registrable Securities may have at law or in equity.

                  4.13 SUCCESSORS AND ASSIGNS;  THIRD PARTY BENEFICIARIES.  This
         Agreement  and all of the  provisions  hereof shall be binding upon and
         inure to the benefit of the parties hereto,  each subsequent  holder of
         the Registrable  Securities and their respective  permitted  successors
         and assigns and  executors,  administrators  and heirs.  Holders of the
         Registrable  Securities are intended third party  beneficiaries of this
         Agreement and this Agreement may be enforced by such holders.

                  4.14 ENTIRE  AGREEMENT.  This  Agreement sets forth the entire
         agreement  and  understanding  between  the  parties as to the  subject
         matter  hereof  and  merges  and  supersedes  all  prior   discussions,
         agreements and understandings of any and every nature among them.

                  [Remainder of page intentionally left blank.]

<PAGE>

         IN WITNESS  WHEREOF,  the parties hereto have caused this  Registration
Rights  Agreement  to be duly  executed  as of the date and year  first  written
above.

                                           ADVANCE NANOTECH, INC.

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

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

         IN  WITNESS  WHEREOF,   the  undersigned   Purchaser  has  caused  this
Registration  Rights Agreement to be duly executed as of the date and year first
above written and to be bound hereby.

Shares of Common Stock and Warrants are in:

<TABLE>
<CAPTION>
                                                             Print Name of Investor

<S>                                                          <C>
                                                                                shares of Common Stock
____ individual name
                                                             _____________ Warrants

____ tenants in the entirety
                                                             Print Name of Joint Investor
                                                             (if applicable)

____ corporation (an officer must sign)
                                                             Signature of Investor

____ partnership (all general partners must sign)
                                                             Signature of Joint Investor

____ trust

                                                             (with a copy to:)

                                                             Address of Investor

____ limited liability company
</TABLE>

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