Advance Nanotech, Inc.
<DOCUMENT>
<TYPE>EX-10.8
<SEQUENCE>5
<FILENAME>v011711_ex10-8.txt
<TEXT>

Exhibit 10.8

                   [FORM OF PLACEMENT AGENT PURCHASE WARRANT]

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

                                WARRANT AGREEMENT

                               FOR COMMON STOCK OF

                             ADVANCE NANOTECH, INC.

Warrant No. ____                             Warrant to purchase an aggregate of

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

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

         The Company shall register this Warrant,  upon records to be maintained
by the Company for that purpose  (the  "Warrant  Register"),  in the name of the
record  Holder  hereof  from time to time.  The  Company  may deem and treat the
registered  Holder of this Warrant as the absolute  owner hereof for the purpose

<PAGE>

of any  exercise  hereof or any  distribution  to the Holder,  and for all other
purposes, and the Company shall not be affected by notice to the contrary.

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

        1. Exercise; Payment for Ownership Interest.

                  (a) Upon the terms and  subject  to the  conditions  set forth
herein,  this Warrant may be exercised in whole or in part by the Holder  hereof
at any time,  or from time to time,  on or after the date hereof and on or prior
to the  earlier  to occur of (i) the  "Early  Expiration  Date," as such term is
hereinafter  defined,  and (ii) 5:00:00 p.m. New York local time on [JANUARY __,
2010] (the "Expiration  Date"), by presentation and surrender of this Warrant to
the principal offices of the Company, or at the office of its Transfer Agent, if
any,  together  with the  Purchase  Form  annexed  hereto,  duly  executed,  and
accompanied  by payment to the Company of an amount  equal to the Warrant  Share
Price  multiplied  by the number of Warrant  Shares as to which this  Warrant is
then being exercised in immediately available funds in U.S. dollars by certified
or official bank check or wire transfer of the cash  purchase  price;  provided,
however,  that in each case,  the minimum  number of Warrant  Shares as to which
this Warrant is being  exercised shall be the lesser of (i) 5,000 Warrant Shares
or (ii) all  Warrant  Shares then held by the Holder on an as  exercised  basis;
provided, further, that in the event of any merger, consolidation or sale, lease
or transfer of all or substantially  all of the assets of the Company,  prior to
the  Expiration  Date,  the Holder shall have the right to exercise this Warrant
commencing at such time through the Expiration  Date into the kind and amount of
shares of stock and other securities and property (including cash) receivable by
a holder of the number of shares of Common Stock into which this  Warrant  might
have been exercisable  immediately prior thereto. Any transfer of Warrant Shares
obtained by the Holder in exercise of this Warrant is subject to the requirement
that such  transfer  be in  compliance  with the  applicable  provisions  of the
Securities  Purchase  Agreement,  if any, and that such securities be registered
under the Securities  Act, and applicable  state  securities laws or exempt from
registration under such laws. The Holder of this Warrant shall be deemed to be a
stockholder  of the  Warrant  Shares as to which this  Warrant is  exercised  in


                                      -2-
<PAGE>

accordance  herewith  effective  immediately  after the close of business on the
date on which the Holder  shall have  delivered  to the Company  this Warrant in
proper form for  exercise  and payment in U.S.  dollars by certified or official
bank check or wire transfer of immediately  available funds of the cash purchase
price for the number of Warrant  Shares as to which the  exercise is being made,
notwithstanding  that the  stock  transfer  books of the  Company  shall be then
closed or that  certificates  representing such Warrant Shares shall not then be
physically delivered to the Holder. The Company shall not enter into any merger,
consolidation  or sale,  lease or  transfer of all or  substantially  all of the
assets of the Company  unless  effective  provision  shall be made so as to give
effect to the provisions set forth in this subsection (a).

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

                  (ii) As used herein, "Market Price" means, with respect to any
         applicable  security as of any  applicable  date,  (i) the last closing
         trade price of such security on whichever national  securities exchange
         or trading market (including,  without  limitation,  the Nasdaq and the
         OTC Bulletin Board) is the principal trading market where such security
         is listed by the Company  for  trading  (the  "Principal  Market"),  as
         reported by Bloomberg,  or (ii) if the Principal  Market should operate
         on an extended  hours basis and does not  designate  the closing  trade
         price,  then  the  last  trade  price  of such  security  prior  to the
         commencement of extended  trading hours on the applicable  date, but in
         no event later than 4:30:00  p.m.,  New York local time, as reported by
         Bloomberg,  or  (iii)  if no last  trade  price  is  reported  for such
         security by Bloomberg,  the average of the bid prices, on the one hand,
         and the ask prices,  on the other hand,  of all market  makers for such
         security as reported in the "pink  sheets" by Pink Sheets LLC (formerly
         the National Quotation Bureau, Inc.). The applicable trading market for
         such  calculation,  whether  it is the  Principal  Market  or the "pink
         sheets", is hereafter referred to as the "Trading Market".  The Company
         shall make all determinations pursuant to this paragraph in good faith.
         In the absence of any available public quotations for the Common Stock,
         the Board  shall  determine  in good faith the fair value of the Common
         Stock, which  determination  shall be set forth in a certificate by the
         Secretary of the Company.

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

                  (b) If this  Warrant  shall be  exercised  in part  only,  the
Company,  upon  surrender of this Warrant for  cancellation,  shall  execute and
deliver,  promptly  (but in no event  more than ten  business  days  after  such
surrender),  a new  Warrant  evidencing  the  rights of the  Holder  thereof  to
purchase the balance of the Warrant Shares purchasable hereunder as to which the
Warrant has not been  exercised.  If this  Warrant is  exercised  in part,  such
exercise  shall be for a whole number of Warrant  Shares.  Upon any exercise and
surrender of this Warrant,  the Company (i) will issue and deliver to the Holder
a certificate  or  certificates  in the name of the Holder for the largest whole
number of Warrant  Shares to which the Holder  shall be  entitled  and,  if this


                                      -3-
<PAGE>

Warrant is exercised in whole, in lieu of any fractional  Warrant Share to which
the Holder  otherwise  might be  entitled,  cash in an amount  equal to the fair
value of such  fractional  Warrant  Share  (determined  in such  reasonable  and
equitable manner as the Board of Directors of the Company (the "Board") shall in
good faith  determine),  and (ii) will deliver  promptly  thereafter  (but in no
event  more  than  ten  business  days  thereafter)  to the  Holder  such  other
securities, properties and cash which the Holder may be entitled to receive upon
such exercise, or the proportionate part thereof if this Warrant is exercised in
part, pursuant to the provisions of this Warrant.

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

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

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

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

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

                  2.1 Adjustments.

                  (a)  Definition  of  Additional  Stock.  The term  "Additional
Shares of Common  Stock"  includes  all  shares  of Common  Stock  issued by the
Company after the Date of Issuance, other than:

                  (i) Shares of Common Stock (subject to appropriate  adjustment
         for any stock  dividend,  stock  split,  combination  or other  similar
         recapitalization  affecting  such  shares)  issuable  or  issued to the
         Company's  employees,  directors  or  consultants  pursuant  to a stock
         option  plan or  restricted  stock  plan  or  other  compensation  plan
         approved by the Board;

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

                  (iii) Shares of Common  Stock  issued or issuable  pursuant to
         subsection 2.1(b)(iv) below; and


                                      -4-
<PAGE>

                  (iv) Shares of Common Stock  issuable upon exercise of options
         or warrants,  or upon  conversion  of  convertible  securities or other
         rights, outstanding as of the Date of Issuance.

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

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

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

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

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

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

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


                                      -5-
<PAGE>

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

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

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

         (d) Issuance of Options and Convertible  Securities  Deemed Issuance of
Additional  Shares of Common Stock. If the Company,  at any time or from time to
time after the Date of  Issuance,  shall  issue any  options,  warrants or other
rights to purchase Common Stock (collectively, "Options") or securities that, by
their terms,  directly or indirectly,  are convertible  into or exchangeable for
shares of Common Stock ("Convertible Securities") or shall fix a record date for
the determination of holders of any class of securities  entitled to receive any
such Options or  Convertible  Securities,  then the maximum  number of shares of
Common Stock (as set forth in the instrument  relating thereto without regard to
any  provision  contained  therein for a subsequent  adjustment  of such number)
issuable  upon the  exercise  of such  Options  or,  in the case of  Convertible
Securities and Options therefor,  the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record date shall have been fixed,  as
of the close of business on such record date,  provided that in any such case in
which Additional Shares of Common Stock are deemed to be issued pursuant to this
Section 2.1(d):

                  (i) no further  adjustment in the Warrant Share Price shall be
         made upon the subsequent  issue of Convertible  Securities or shares of
         Common  Stock  upon the  exercise  of such  Options  or  conversion  or
         exchange of such Convertible Securities and, upon the expiration of any
         such Option or the termination of any such right to convert or exchange
         such  Convertible  Securities,  the Warrant  Share Price then in effect
         hereunder shall forthwith be increased to the Warrant Share Price which
         would have been in effect at the time of such expiration or termination
         had such Option or Convertible  Securities,  to the extent  outstanding
         immediately prior to such expiration or termination, never been issued,
         and the Common Stock issuable  thereunder  shall no longer be deemed to
         be outstanding;

                  (ii) if such Options or Convertible  Securities by their terms
         provide, with the passage of time or otherwise, for any increase in the
         consideration  payable to the  Company,  or  decrease  in the number of
         shares of Common  Stock  issuable,  upon the  exercise,  conversion  or
         exchange  thereof,  the Warrant Share Price  computed upon the original


                                      -6-
<PAGE>

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

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

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

         (e) Determination of Consideration.  For purposes of Subsections 2.1(c)
and  2.1(d),  the  consideration  received  by the  Company for the issue of any
Additional Shares of Common Stock shall be computed as follows:

                           (A) Cash and Property: Such consideration shall:

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

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

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


                                      -7-
<PAGE>

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

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

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

         In the  event  that at any  time,  as a result  of an  adjustment  made
pursuant to this Section 2.1, the Holder of this Warrant thereafter shall become
entitled  to  receive  any  shares of the  Company,  other  than  Common  Stock,
thereafter  the number of such other shares so receivable  upon exercise of this
Warrant  shall be  subject  to  adjustment  from time to time in a manner and on
terms as nearly  equivalent as practicable to the provisions with respect to the
Common Stock contained herein.

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


                                      -8-
<PAGE>

holders of  warrants  issued  after the date  hereof,  at which time the Holders
shall be entitled to the same protection for extraordinary  dividends as granted
to such future holders of warrants, if any.

                  2.2 Other  Action  Affecting  Warrant  Shares.  If the Company
takes any action  affecting  its shares of Common  Stock after the date  hereof,
that would be covered by Section  2.1 but for the manner in which such action is
taken or structured,  which would in any way diminish the value of this Warrant,
then the Warrant Share Price shall be adjusted in such manner as the Board shall
in good faith determine to be equitable under the circumstances.

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

                  2.4 Other Notices. If at any time:

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

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

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

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


                                      -9-
<PAGE>

rights,  the date on which  the  holders  of shares  of  Common  Stock  shall be
entitled  to exercise  their  rights with  respect  thereto,  and such notice in
accordance  with the  foregoing  clause (y) shall also specify the date on which
the holders of shares of Common Stock shall be entitled to exchange their shares
of  Common  Stock  for  securities  or  other  property  deliverable  upon  such
reorganization,  reclassification,  consolidation,  merger,  sale,  dissolution,
liquidation or winding up, as the case may be.

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

                  2.6  Appraisal.  If a  majority  in  interest  of the  Holders
reasonably disagrees with any of the Board's determinations  referred to in this
Section 2 (each, a  "Determination"),  and such majority of Holders shall notify
the Company of its  disagreement  by furnishing to the Company a written  notice
setting forth in reasonable detail the fact of such dispute,  the basis for such
dispute,   and  such  Holders'   alternative   calculation   (such   notice,   a
"Determination  Dispute  Notice"),  and such  Determination  Dispute  Notice  is
received by the Company within seven (7) days of the Company having given notice
of the Determination to the Holders, then the Company and a majority in interest
of such Holders (the "Warrant  Representative") shall resolve such Determination
Dispute in  accordance  with the terms and  provisions  of this Section 2.6. The
Holders agree that this Section 2.6 sets forth the  exclusive  mechanism for the
Holders  to make any such  dispute  and to  resolve  the same,  and shall not be
entitled  to make any such  dispute in any other  manner.  The  Company  and the
Warrant  Representative  shall use good faith efforts to mutually agree upon the
designation of a single Qualified  Appraiser (as defined below) within seven (7)
business  days of the  receipt by the Company of a valid  Determination  Dispute
Notice received by the Company in within the time period set forth above in this
Section 2.6. If such a single  Qualified  Appraiser is  designated,  that person
shall make a Determination. If the Company and the Warrant Representative do not
so agree  upon the  designation  of a single  Qualified  Appraiser  within  such
period,  then within five (5) business  days  following  the end of such period,
each of the  Company  and the Warrant  Representative  by written  notice to the
other shall designate a Qualified  Appraiser (or if any party fails to so select
a Qualified  Appraiser within the time period specified,  the Person selected by
the  other  party  shall  be the  Qualified  Appraiser)  and the  two  Qualified
Appraisers  so  designated   shall  within  ten  (10)  business  days  of  their
designation  jointly  designate  a third  Qualified  Appraiser,  and such  third
Qualified   Appraiser  so  designated,   solely,   shall  independently  make  a
Determination.  The parties may submit the basis for their  respective  views to
the Appraiser in writing. In such event, each party shall furnish its submission
to the  other  party at the same  time as the  submission  is  furnished  to the
Qualified Appraiser, and the other party shall have two (2) business days within
which to furnish a single  rebuttal to such original  submission.  The Qualified
Appraiser may consider such submissions in reaching the Determination.  If there
is only a single  Qualified  Appraiser,  the fees and expenses of the  Qualified
Appraiser  shall be paid equally by the Company and the Warrant  Representative.
If three Qualified Appraisers are appointed,  the Company shall pay the fees and
expenses  of  the   Qualified   Appraiser   which  it   appoints,   the  Warrant
Representative  shall pay the fees and expenses of the Qualified Appraiser which


                                      -10-
<PAGE>

it appoints, and the fees and expenses of the third Qualified Appraiser shall be
shared  equally by the Company and the Warrant  Representative.  The  designated
Qualified  Appraiser  shall  make  the  Determination  not  later  than ten (10)
business days following the  appointment of the Qualified  Appraiser  making the
Determination.  The  Determination  made by the applicable  Qualified  Appraiser
shall be final,  conclusive  and  binding  on the  parties  hereto.  None of the
Qualified  Appraisers  shall be affiliated with any of the Company,  the Warrant
Representative  or  another  Qualified  Appraiser.  For  the  purposes  of  this
Agreement,  "Qualified  Appraiser"  shall mean an individual who is engaged on a
regular basis  (although  not  necessarily  full time) in valuing  securities or
arrangements similar to this Agreement, as the case may be, and may include (but
shall not be limited to) professional business appraisers, investment bankers or
accountants.

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

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

         5. Warrants Exchangeable;  Assignment;  Loss, Theft, Destruction,  Etc.
This Warrant is  exchangeable,  without  expense,  upon surrender  hereof by the
Holder hereof at the principal  offices of the Company,  or at the office of its
Transfer  Agent,  if any,  for new  Warrants of like tenor  representing  in the
aggregate the right to subscribe  for and purchase the Warrant  Shares which may
be subscribed  for and purchased  hereunder,  each such new Warrant to represent
the  right  to  subscribe  for and  purchase  such  Warrant  Shares  as shall be
designated by such Holder hereof at the time of such  surrender.  Upon surrender


                                      -11-
<PAGE>

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

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

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

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

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

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


                                      -12-
<PAGE>

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

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

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

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


                                      -13-
<PAGE>

         14. Miscellaneous.

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

                           If to the Company:

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

                           If to the Holder:

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

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

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

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


                                      -14-
<PAGE>

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

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




             [the balance of this page is intentionally left blank]






                                      -15-
<PAGE>

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


                                                 ADVANCE NANOTECH, INC.


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



                                      -16-
<PAGE>

                                  PURCHASE FORM


Dated: __________

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

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

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


                                                --------------------------------
                                                   (Signature)



                                                --------------------------------
                                                   (Print or type name)



                                                --------------------------------
                                                   (Address)

                                                --------------------------------


                                                --------------------------------


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

<PAGE>

                               FORM OF ASSIGNMENT


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

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

Dated: ________________  ___,  200__


                                                --------------------------------

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

                                                Address of Transferee:

                                                --------------------------------

                                                --------------------------------

                                                --------------------------------


In the presence of:


--------------------------------



                               CONSENT OF ASSIGNEE

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

Dated:
       ----------------------                   --------------------------------
                                                (Signature of Assignee)


                                                --------------------------------
                                                (Print or type name)


</TEXT>
</DOCUMENT>
