The round was suspended for the night due to darkness. The event is still trying to catch up after a two-hour weather delay in the first round pushed action back.
Fredrik Andersson posted a course-record, 7-under 63 to jump into a share of second place at 7-under-par 133. He is joined there by Carlos Rodiles and Sergio Garcia, who each posted rounds of 67. Emanuele Canonica is one stroke further back at minus-6.
Khan, who finished his first round earlier Friday, began his second round on the 10th tee at Pula Golf Club. He dropped in a birdie at the 11th to get to minus-5. The Englishman later posted birdies at 15 and 17 to head to the front side at seven-under.
Khan, who was a playoff winner earlier this year at the Wales Open, drained a birdie putt at the first and came right back to birdie No. 2.
He again converted back-to-back birdies from the sixth to jump to minus-11. Khan faltered to a bogey at the ninth as his lead slipped to three shots.
'Overall I'm happy, but a little disappointed with this morning,' said Khan. 'I left myself a 6-foot putt on the 14th last night because when it's getting dark it's quite hard to see the line, but in hindsight I should have had a go at it. I then bogeyed the next as well, but overall it's an improvement and only the second time since Wales that I've played well and putted well at the same time.'
Khan admitted afterwards he hasn't been feeling well since last week and almost withdrew before the first round.
'Warming up on Wednesday morning I felt very dizzy and was aching all over and had to pull out of the pro-am,' Khan said. 'I felt a bit better on Thursday and was laid back out there and gave it a go and the putts started to drop. It's one of those thing when you are not overly concerned about the score and things start to happen.'
Andersson was hot early in his round. He birdied five of his first six holes before a birdie at the eighth got him to 6 under. The Swede was going low, but he carded four straight pars from the ninth to shoot 29 on the front side.
The 32-year-old birdied the 13th and 16th to get to minus-8. Andersson tripped to a bogey at the last, but he still bettered the course record by one stroke.
Garcia carded an eagle, three birdies and two bogeys during his round of 67. Rodiles posted four birdies and two bogeys over his first nine holes. He picked up two more birdies and another bogey on his way in to share second place.
Alastair Forsyth shot a 2-under 68 and stands in a tie for sixth place at 5-under-par 135. He is joined there by Tomas Jesus Munoz, who is minus-5 through 15 holes.
Mark Roe, Gonzalo Fernandez-Castano, Darren Fichardt, Peter Fowler, Ricardo Gonzalez, Jose Manuel Lara, Santiago Luna, Markus Brier and Francois Delamontagne share eighth place at 4-under-par 136.