REGISTRATION RIGHTS AGREEMENT

                  This Registration  Rights Agreement (this "Agreement") is made
and entered  into as of June 24, 2004,  by and among AXM Pharma,  Inc., a Nevada
corporation (the "Company"), and the purchasers listed on Schedule I hereto (the
"Purchasers").

                  This   Agreement  is  being   entered  into  pursuant  to  the
Securities  Purchase Agreement dated as of the date hereof among the Company and
the Purchasers (the "Purchase Agreement").

                  The Company and the Purchasers hereby agree as follows:

          1.      Definitions.

                  Capitalized  terms used and not otherwise defined herein shall
have the meanings  given such terms in the Purchase  Agreement.  As used in this
Agreement, the following terms shall have the following meanings:

                  "Advice" shall have meaning set forth in Section 3(m).

                  "Affiliate"  means,  with  respect  to any  Person,  any other
Person that directly or indirectly  controls or is controlled by or under common
control with such Person.  For the purposes of this definition,  "control," when
used with respect to any Person,  means the possession,  direct or indirect,  of
the power to direct or cause the  direction  of the  management  and policies of
such Person, whether through the ownership of voting securities,  by contract or
otherwise;  and the terms of "affiliated,"  "controlling"  and "controlled" have
meanings correlative to the foregoing.

                  "Board" shall have meaning set forth in Section 3(n).

                  "Business Day" means any day except  Saturday,  Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
state  of New  York  generally  are  authorized  or  required  by  law or  other
government actions to close.

                  "Closing  Date"  means  the date of the final  closing  of the
purchase and sale of the Preferred  Stock and Warrants  pursuant to the Purchase
Agreement.

                  "Commission" means the Securities and Exchange Commission.

                  "Common  Stock" means the Company's  Common  Stock,  par value
$.001 per share.

                  "Effectiveness  Date" means with  respect to the  Registration
Statement the earlier of the  ninetieth  (90th) day following the Filing Date or
the date  which is  within  five  (5) days of the date on which  the  Commission
informs the Company  that the  Commission  (i) will not review the  Registration
Statement  or  (ii)  that  the  Company  may  request  the  acceleration  of the
effectiveness of the Registration Statement and the Company makes such request.



<PAGE>


                  "Effectiveness  Period"  shall have the  meaning  set forth in
Section 2.

                  "Event" shall have the meaning set forth in Section 7(e).

                  "Event Date" shall have the meaning set forth in Section 7(e).

                  "Exchange Act" means the  Securities  Exchange Act of 1934, as
amended.

                  "Filing Date" means July 15, 2004.

                  "Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.

                  "Indemnified  Party"  shall  have  the  meaning  set  forth in
Section 5(c).

                  "Indemnifying  Party"  shall  have the  meaning  set  forth in
Section 5(c).

                  "Losses" shall have the meaning set forth in Section 5(a).

                  "Person"  means an individual or a  corporation,  partnership,
trust,  incorporated  or  unincorporated  association,  joint  venture,  limited
liability  company,  joint stock company,  government (or an agency or political
subdivision thereof) or other entity of any kind.

                  "Preferred  Stock"  means the Series C  Convertible  Preferred
Stock,  par value $.001 per share and stated value  $100,000  per share,  of the
Company issued to the Purchasers pursuant to the Purchase Agreement.

                  "Proceeding" means an action,  claim,  suit,  investigation or
proceeding   (including,   without  limitation,   an  investigation  or  partial
proceeding, such as a deposition), whether commenced or threatened.

                  "Prospectus" means the prospectus included in the Registration
Statement  (including,  without  limitation,  a  prospectus  that  includes  any
information  previously  omitted from a prospectus filed as part of an effective
registration  statement  in  reliance  upon  Rule  430A  promulgated  under  the
Securities Act), as amended or supplemented by any prospectus  supplement,  with
respect  to  the  terms  of  the  offering  of any  portion  of the  Registrable
Securities covered by the Registration  Statement,  and all other amendments and
supplements to the  Prospectus,  including  post-effective  amendments,  and all
material incorporated by reference in such Prospectus.

                  "Registrable  Securities  means the  shares  of  Common  Stock
issuable upon  conversion of the Preferred  Stock and the shares of Common Stock
issuable upon exercise of the Warrants.

                  "Registration Statement" means the registration statements and
any additional  registration statements contemplated by Section 2, including (in
each case) the  Prospectus,  amendments  and  supplements  to such  registration


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<PAGE>

statement or  Prospectus,  including  pre- and  post-effective  amendments,  all
exhibits   thereto,   and  all  material   incorporated  by  reference  in  such
registration statement.

                  "Rule  144"  means  Rule  144  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                  "Rule  158"  means  Rule  158  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                  "Rule  415"  means  Rule  415  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                  "Rule  424"  means  Rule  424  promulgated  by the  Commission
pursuant to the  Securities  Act, as such Rule may be amended from time to time,
or any similar rule or regulation  hereafter  adopted by the  Commission  having
substantially the same effect as such Rule.

                  "Securities Act" means the Securities Act of 1933, as amended.

                  "Special  Counsel"  means one special  counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.

                  "Warrants"  means the  warrants to  purchase  shares of Common
Stock issued to the Purchasers pursuant to the Purchase Agreement.

          2.      Resale Registration.

                  On or prior to the Filing Date the Company  shall  prepare and
file  with  the  Commission  a  "resale"  Registration  Statement  covering  all
Registrable Securities for an offering to be made on a continuous basis pursuant
to Rule 415.  The  Registration  Statement  shall be on Form SB-2 (except if the
Company is not then eligible to register for resale the  Registrable  Securities
on Form SB-2, in which case such  registration  shall be on another  appropriate
form in accordance  herewith).  The Company shall (i) not permit any  securities
other than the Registrable  Securities and the securities  listed on Schedule II
hereto  to be  included  in the  Registration  Statement  and  (ii) use its best
efforts to cause the Registration  Statement to be declared  effective under the
Securities  Act as  promptly as possible  after the filing  thereof,  but in any
event prior to the Effectiveness  Date, and to keep such Registration  Statement
continuously  effective  under  the  Securities  Act  until  such date as is the
earlier  of (x)  the  date  when  all  Registrable  Securities  covered  by such
Registration  Statement have been sold or (y) the date on which the  Registrable
Securities  may  be  sold  without  any  restriction  pursuant  to  Rule  144 as
determined by the counsel to the Company  pursuant to a written  opinion letter,
addressed to the  Company's  transfer  agent to such effect (the  "Effectiveness
Period").  If at any  time  and  for  any  reason,  an  additional  Registration
Statement  is  required  to be filed  because at such time the actual  number of
shares of Common Stock into which the  Preferred  Stock is  convertible  and the
Warrants are exercisable exceeds the number of shares of Registrable  Securities
remaining under the Registration  Statement,  the Company shall have twenty (20)


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<PAGE>

Business Days to file such additional  Registration  Statement,  and the Company
shall use its best efforts to cause such additional Registration Statement to be
declared effective by the Commission as soon as possible,  but in no event later
than sixty (60) days after filing.

          3.      Registration Procedures.

                  In  connection  with the  Company's  registration  obligations
hereunder, the Company shall:

                  (a) Prepare and file with the  Commission,  on or prior to the
Filing  Date,  a  Registration  Statement on Form SB-2 (or if the Company is not
then  eligible to register for resale the  Registrable  Securities  on Form SB-2
such registration shall be on another  appropriate form in accordance  herewith)
in accordance with the method or methods of distribution thereof as specified by
the Holders (except if otherwise directed by the Holders) and in accordance with
applicable  law, and cause the  Registration  Statement to become  effective and
remain effective as provided herein; provided, however, that not less than three
(3)  Business  Days prior to the  filing of the  Registration  Statement  or any
related Prospectus or any amendment or supplement thereto, the Company shall (i)
furnish to the  Holders and any Special  Counsel,  copies of all such  documents
proposed  to be filed,  which  documents  will be  subject to the review of such
Holders and such Special  Counsel,  and (ii) cause its  officers and  directors,
counsel  and  independent  certified  public  accountants  to  respond  to  such
inquiries as shall be necessary,  in the reasonable  opinion of Special Counsel,
to conduct a reasonable review of such documents. The Company shall not file the
Registration  Statement or any such  Prospectus or any amendments or supplements
thereto to which the Holders of a majority of the Registrable  Securities or any
Special  Counsel shall  reasonably  object in writing  within three (3) Business
Days of their receipt thereof.

                  (b) (i) Prepare and file with the Commission such  amendments,
including  post-effective  amendments,  to the Registration  Statement as may be
necessary to keep the Registration  Statement  continuously  effective as to the
applicable  Registrable  Securities for the Effectiveness Period and prepare and
file with the Commission such additional Registration Statements as necessary in
order to register for resale  under the  Securities  Act all of the  Registrable
Securities;  (ii) cause the related  Prospectus to be amended or supplemented by
any required  Prospectus  supplement,  and as so  supplemented  or amended to be
filed pursuant to Rule 424 (or any similar provisions then in force) promulgated
under the Securities Act; (iii) respond as promptly as possible, but in no event
later than  fifteen  (15)  business  days,  to any  comments  received  from the
Commission with respect to the Registration  Statement or any amendment  thereto
and as promptly as possible  provide the Holders true and complete copies of all
correspondence   from  and  to  the  Commission  relating  to  the  Registration
Statement;  and (iv) comply in all material  respects with the provisions of the
Securities  Act and the  Exchange  Act with  respect to the  disposition  of all
Registrable   Securities  covered  by  the  Registration  Statement  during  the
applicable  period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.

                  (c)  Notify  the  Holders of  Registrable  Securities  and any
Special  Counsel as promptly as possible (and, in the case of (i)(A) below,  not
less than three (3) days prior to such  filing)  and (if  requested  by any such
Person)  confirm  such  notice in writing no later  than two (2)  Business  Days


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<PAGE>

following  the day (i)(A) when a  Prospectus  or any  Prospectus  supplement  or
post-effective  amendment to the  Registration  Statement is filed; (B) when the
Commission  notifies  the  Company  whether  there  will be a  "review"  of such
Registration  Statement and whenever the Commission  comments in writing on such
Registration Statement and (C) with respect to the Registration Statement or any
post-effective  amendment,  when  the  same has  become  effective;  (ii) of any
request by the Commission or any other Federal or state  governmental  authority
for amendments or supplements to the Registration Statement or Prospectus or for
additional  information;  (iii) of the  issuance by the  Commission  of any stop
order suspending the effectiveness of the Registration Statement covering any or
all of the  Registrable  Securities  or the  initiation  or  threatening  of any
Proceedings for that purpose; (iv) if at any time any of the representations and
warranties of the Company contained in any agreement  contemplated hereby ceases
to be true and  correct  in all  material  respects;  (v) of the  receipt by the
Company of any notification  with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction, or the initiation of any Proceeding for such purpose; and (vi)
of the occurrence of any event that makes any statement made in the Registration
Statement  or  Prospectus  or  any  document   incorporated   or  deemed  to  be
incorporated  therein  by  reference  untrue  in any  material  respect  or that
requires  any  revisions  to the  Registration  Statement,  Prospectus  or other
documents so that, in the case of the Registration  Statement or the Prospectus,
as the case may be, it will not contain any untrue  statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements  therein, in the light of the circumstances under which they
were made, not misleading.

                  (d) Use its best  efforts  to avoid the  issuance  of,  or, if
issued,  obtain  the  withdrawal  of, as  promptly  as  possible,  (i) any order
suspending  the  effectiveness  of  the  Registration   Statement  or  (ii)  any
suspension of the qualification (or exemption from  qualification) of any of the
Registrable Securities for sale in any jurisdiction.

                  (e) If  requested  by the Holders of a majority in interest of
the Registrable Securities,  (i) promptly incorporate in a Prospectus supplement
or  post-effective  amendment to the Registration  Statement such information as
the  Company  reasonably  agrees  should be  included  therein and (ii) make all
required filings of such Prospectus supplement or such post-effective  amendment
as soon as  practicable  after the  Company  has  received  notification  of the
matters to be  incorporated  in such  Prospectus  supplement  or  post-effective
amendment.

                  (f) If requested by any Holder, furnish to such Holder and any
Special  Counsel,   without  charge,   at  least  one  conformed  copy  of  each
Registration   Statement  and  each  amendment  thereto,   including   financial
statements  and  schedules,   all  documents   incorporated   or  deemed  to  be
incorporated  therein by reference,  and all exhibits to the extent requested by
such Person (including those previously  furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.

                  (g)  Promptly deliver to each Holder and any  Special Counsel,
without charge, as many copies of the Prospectus or Prospectuses (including each
form of prospectus) and each amendment or supplement thereto as such Persons may
reasonably  request;  and subject to the provisions of Section 3(n), the Company
hereby  consents to the use of such  Prospectus and each amendment or supplement
thereto by each of the selling  Holders in connection with the offering and sale


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<PAGE>

of the  Registrable  Securities  covered by such Prospectus and any amendment or
supplement thereto.

                  (h)  Prior to any  public offering  of Registrable Securities,
use its best  efforts  to  register  or qualify or  cooperate  with the  selling
Holders  and  any  Special  Counsel  in  connection  with  the  registration  or
qualification  (or exemption from such  registration or  qualification)  of such
Registrable  Securities for offer and sale under the securities or Blue Sky laws
of such  jurisdictions  within  the  United  States as any  Holder  requests  in
writing,   to  keep  each  such  registration  or  qualification  (or  exemption
therefrom) effective during the Effectiveness Period and to do any and all other
acts or  things  necessary  or  advisable  to  enable  the  disposition  in such
jurisdictions of the Registrable Securities covered by a Registration Statement;
provided,  however,  that the Company shall not be required to qualify generally
to do business in any jurisdiction  where it is not then so qualified or to take
any  action  that would  subject  it to  general  service of process in any such
jurisdiction  where it is not then so  subject  or  subject  the  Company to any
material tax in any such jurisdiction where it is not then so subject.

                  (i)  Cooperate  with the  Holders  to  facilitate  the  timely
preparation and delivery of certificates  representing Registrable Securities to
be sold pursuant to a Registration Statement, which certificates,  to the extent
permitted by the Purchase  Agreement and applicable federal and state securities
laws, shall be free of all restrictive  legends,  and to enable such Registrable
Securities  to be in such  denominations  and  registered  in such  names as any
Holder may request in connection with any sale of Registrable Securities.

                  (j) Upon the occurrence of any event  contemplated  by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment,  including
a post-effective amendment, to the Registration Statement or a supplement to the
related  Prospectus or any document  incorporated  or deemed to be  incorporated
therein  by  reference,  and file  any  other  required  document  so  that,  as
thereafter  delivered,  neither the  Registration  Statement nor such Prospectus
will contain an untrue  statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements  therein,
in the light of the circumstances under which they were made, not misleading.

                  (k) Use its best efforts to cause all  Registrable  Securities
relating  to the  Registration  Statement  to be  listed on the  American  Stock
Exchange or any other securities  exchange,  quotation system or market, if any,
on which  similar  securities  issued by the Company are then listed as and when
required pursuant to the Purchase Agreement.

                  (l) Comply in all material  respects with all applicable rules
and  regulations of the Commission and make generally  available to its security
holders  earning  statements  satisfying  the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period  (or 90 days  after the end of any  12-month  period if such  period is a
fiscal  year)  commencing  on the first day of the first  fiscal  quarter of the
Company after the effective date of the Registration Statement,  which statement
shall conform to the requirements of Rule 158.

                  (m) The Company may require each selling  Holder to furnish to
the  Company  information  regarding  such Holder and the  distribution  of such
Registrable Securities as is required by law to be disclosed in the Registration


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<PAGE>

Statement,  Prospectus,  or any amendment or supplement thereto, and the Company
may exclude from such registration the Registrable Securities of any such Holder
who  unreasonably  fails to furnish such  information  within a reasonable  time
after receiving such request.

                  Each Holder covenants and agrees that (i) it will not sell any
Registrable  Securities under the  Registration  Statement until it has received
copies of the  Prospectus as then amended or  supplemented  as  contemplated  in
Section 3(g) and notice from the Company that such  Registration  Statement  and
any  post-effective  amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply  with the  prospectus  delivery  requirements  of the  Securities  Act as
applicable to them in connection with sales of Registrable  Securities  pursuant
to the Registration Statement.

                  Each  Holder  agrees by its  acquisition  of such  Registrable
Securities  that, upon receipt of a notice from the Company of the occurrence of
any  event of the kind  described  in  Section  3(c)(ii),  3(c)(iii),  3(c)(iv),
3(c)(v), 3(c)(vi) or 3(n), such Holder will forthwith discontinue disposition of
such Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement  contemplated  by Section 3(j), or until it is advised in writing (the
"Advice")  by the  Company  that  the use of the  applicable  Prospectus  may be
resumed,  and,  in  either  case,  has  received  copies  of any  additional  or
supplemental  filings  that are  incorporated  or deemed to be  incorporated  by
reference in such Prospectus or Registration Statement.

                  (n) If (i) there is material non-public  information regarding
the Company which the  Company's  Board of Directors  (the  "Board")  reasonably
determines  not to be in the  Company's  best interest to disclose and which the
Company is not  otherwise  required to disclose,  or (ii) there is a significant
business  opportunity  (including,  but  not  limited  to,  the  acquisition  or
disposition  of assets  (other than in the  ordinary  course of business) or any
merger,  consolidation,  tender offer or other similar transaction) available to
the Company  which the Board  reasonably  determines  not to be in the Company's
best  interest to disclose,  then the Company may postpone or suspend  filing or
effectiveness  of a  registration  statement  for a  period  not  to  exceed  20
consecutive  days,  provided  that the Company  may not  postpone or suspend its
obligation under this Section 3(n) for more than 45 days in the aggregate during
any 360 day period;  provided,  however, that no such postponement or suspension
shall be permitted for  consecutive 20 day periods,  arising out of the same set
of facts, circumstances or transactions.

          4.      Registration Expenses.

                  All  fees  and  expenses  incident  to the  performance  of or
compliance  with this  Agreement  by the  Company,  except as and to the  extent
specified  in  Section  4,  shall  be borne by the  Company  whether  or not the
Registration  Statement  is filed or becomes  effective  and  whether or not any
Registrable Securities are sold pursuant to the Registration Statement. The fees
and  expenses  referred to in the  foregoing  sentence  shall  include,  without
limitation, (i) all registration and filing fees (including, without limitation,
fees and  expenses  (A) with  respect to filings  required  to be made with each
securities  exchange  or market on which  Registrable  Securities  are  required
hereunder to be listed,  (B) with respect to filing fees  required to be paid to
the National  Association of Securities  Dealers,  Inc. and the NASD Regulation,
Inc. and (C) in compliance  with state  securities or Blue Sky laws  (including,
without  limitation,  fees and  disbursements  of  counsel  for the  Holders  in
connection  with  Blue Sky  qualifications  of the  Registrable  Securities  and


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<PAGE>

determination  of the eligibility of the  Registrable  Securities for investment
under the laws of such jurisdictions as the Holders of a majority of Registrable
Securities  may  designate)),   (ii)  printing  expenses   (including,   without
limitation,  expenses of printing certificates for Registrable Securities and of
printing  prospectuses  if the  printing of  prospectuses  is  requested  by the
holders of a majority of the Registrable Securities included in the Registration
Statement),  (iii)  messenger,  telephone and delivery  expenses,  (iv) fees and
disbursements of counsel for the Company and Special Counsel for the Holders, in
the case of the Special Counsel,  to a maximum amount of $7,500,  (v) Securities
Act liability insurance, if the Company so desires such insurance, and (vi) fees
and expenses of all other Persons retained by the Company in connection with the
consummation of the  transactions  contemplated  by this  Agreement,  including,
without limitation,  the Company's independent public accountants (including the
expenses  of any  comfort  letters  or costs  associated  with the  delivery  by
independent  public  accountants  of a comfort  letter or comfort  letters).  In
addition,  the Company  shall be  responsible  for all of its internal  expenses
incurred in connection with the consummation of the transactions contemplated by
this Agreement (including,  without limitation, all salaries and expenses of its
officers and employees  performing legal or accounting  duties),  the expense of
any annual audit, the fees and expenses  incurred in connection with the listing
of the Registrable Securities on any securities exchange as required hereunder.

          5.      Indemnification.

                  (a)  Indemnification  by  the  Company.   The  Company  shall,
notwithstanding  any termination of this Agreement,  indemnify and hold harmless
each Holder,  the officers,  directors,  agents,  brokers (including brokers who
offer and sell  Registrable  Securities  as principal as a result of a pledge or
any failure to perform under a margin call of Common Stock), investment advisors
and employees of each of them,  each Person who controls any such Holder (within
the meaning of Section 15 of the  Securities  Act or Section 20 of the  Exchange
Act) and the officers,  directors, agents and employees of each such controlling
Person,  to the fullest extent permitted by applicable law, from and against any
and  all  losses,  claims,  damages,  liabilities,   costs  (including,  without
limitation,   costs  of   preparation   and   attorneys'   fees)  and   expenses
(collectively,  "Losses"), as incurred,  arising out of or based upon any untrue
or alleged  untrue  statement of a material fact  contained in the  Registration
Statement,  any  Prospectus  or any form of  prospectus  or in any  amendment or
supplement thereto or in any preliminary prospectus,  or arising out of or based
upon any omission or alleged  omission of a material  fact required to be stated
therein  or  necessary  to make  the  statements  therein  (in  the  case of any
Prospectus or form of prospectus  or  supplement  thereto),  in the light of the
circumstances under which they were made, not misleading,  except to the extent,
but only to the extent, that such untrue statements or omissions arise out of or
are based upon information regarding the Holders or such other Indemnified Party
furnished in writing to the Company by a Holder expressly for use therein, which
information  was  reasonably  relied on by the Company for use therein or to the
extent  that such  information  relates  to a Holder or such  Holder's  proposed
method of distribution of Registrable  Securities and was reviewed and expressly
approved in writing by a Holder expressly for use in the Registration Statement,
such  Prospectus  or such form of  Prospectus  or in any amendment or supplement
thereto.  The  Company  shall  notify the Holders  promptly of the  institution,
threat  or  assertion  of any  Proceeding  of  which  the  Company  is  aware in
connection with the transactions contemplated by this Agreement.


                                      -8-
<PAGE>


                  (b) Indemnification by Holders.  Each Holder shall,  severally
and not  jointly,  indemnify  and hold  harmless  the  Company,  its  directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses,  as
incurred, arising out of or based upon any untrue or alleged untrue statement of
a material fact contained in the Registration Statement, any Prospectus,  or any
form  of  prospectus,  or in  any  amendment  or  supplement  thereto  or in any
preliminary prospectus,  or arising out of or based upon any omission or alleged
omission of a material fact  required to be stated  therein or necessary to make
the  statements  therein (in the case of any Prospectus or form of prospectus or
supplement  thereto),  in the light of the  circumstances  under which they were
made, not misleading,  to the extent,  but only to the extent,  that such untrue
statement or omission is contained in any information so furnished in writing by
such Holder or other  Indemnified Party to the Company expressly for use therein
and that such  information  was  reasonably  relied  upon by the Company for use
therein,  or to the extent that such information  relates to such Holder or such
Holder's  proposed  method of  distribution  of  Registrable  Securities and was
reviewed and expressly  approved in writing by such Holder  expressly for use in
the  Registration  Statement,  such Prospectus or such form of Prospectus or any
amendment  or  supplement  thereto.  Notwithstanding  anything  to the  contrary
contained  herein,  the Holders shall be liable under this Section 5(b) for only
that  amount as does not exceed the net  proceeds  to such Holder as a result of
the sale of Registrable Securities pursuant to such Registration Statement.

                  (c) Conduct of Indemnification  Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity  hereunder
(an  "Indemnified  Party"),  such  Indemnified  Party  promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying  Party) in writing,  and
the  Indemnifying  Party  shall be  entitled  to  assume  the  defense  thereof,
including the employment of counsel  reasonably  satisfactory to the Indemnified
Party and the  payment of all fees and  expenses  incurred  in  connection  with
defense  thereof;  provided,  that the failure of any Indemnified  Party to give
such notice  shall not  relieve the  Indemnifying  Party of its  obligations  or
liabilities pursuant to this Agreement,  except (and only) to the extent that it
shall  be  finally  determined  by a  court  of  competent  jurisdiction  (which
determination  is not  subject to appeal or further  review)  that such  failure
shall have  proximately  and materially  adversely  prejudiced the  Indemnifying
Party.

                  An Indemnified  Party shall have the right to employ  separate
counsel in any such  Proceeding and to participate in the defense  thereof,  but
the  fees  and  expenses  of  such  counsel  shall  be at the  expense  of  such
Indemnified  Party or Parties unless:  (1) the Indemnifying  Party has agreed in
writing to pay such fees and expenses;  or (2) the Indemnifying Party shall have
failed  promptly to assume the defense of such  Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named  parties to any such  Proceeding  (including  any  impleaded  parties)
include both such Indemnified Party and the Indemnifying Party, and such parties
shall have been  advised by counsel  that a conflict  of  interest  is likely to
exist if the same  counsel  were to  represent  such  Indemnified  Party and the
Indemnifying  Party (in which  case,  if such  Indemnified  Party  notifies  the
Indemnifying  Party in writing that it elects to employ separate  counsel at the
expense of the Indemnifying  Party,  the  Indemnifying  Party shall not have the
right to assume the defense  thereof and such counsel shall be at the expense of
the  Indemnifying  Party).  The  Indemnifying  Party shall not be liable for any
settlement of any such Proceeding  effected without its written  consent,  which


                                      -9-
<PAGE>

consent shall not be unreasonably  withheld or delayed.  No  Indemnifying  Party
shall,  without the prior written consent of the Indemnified  Party,  effect any
settlement  of any  pending  or  threatened  Proceeding  in respect of which any
Indemnified  Party is a party and  indemnity has been sought  hereunder,  unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.

                  All fees and expenses of  the  Indemnified   Party  (including
reasonable  fees  and  expenses  to  the  extent  incurred  in  connection  with
investigating   or  preparing  to  defend  such   Proceeding  in  a  manner  not
inconsistent  with this  Section)  shall be paid to the  Indemnified  Party,  as
incurred,  within  ten (10)  Business  Days of  written  notice  thereof  to the
Indemnifying  Party  (regardless of whether it is ultimately  determined that an
Indemnified Party is not entitled to indemnification  hereunder;  provided, that
the  Indemnified  Party shall reimburse all such fees and expenses to the extent
it is finally judicially  determined that such Indemnified Party is not entitled
to indemnification hereunder).

                  (d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is due but unavailable to an Indemnified Party because of a failure
or refusal  of a  governmental  authority  to enforce  such  indemnification  in
accordance  with its terms (by reason of public policy or otherwise),  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
fault of the  Indemnifying  Party and  Indemnified  Party in connection with the
actions,  statements  or omissions  that  resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and  Indemnified  Party shall be  determined  by reference to, among other
things,  whether any action in question,  including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been  taken  or made  by,  or  relates  to  information  supplied  by,  such
Indemnifying,  Party or Indemnified  Party,  and the parties'  relative  intent,
knowledge,  access to  information  and  opportunity  to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include,  subject to the  limitations set forth
in Section 5(c), any reasonable  attorneys' or other reasonable fees or expenses
incurred  by such party in  connection  with any  Proceeding  to the extent such
party   would  have  been   indemnified   for  such  fees  or  expenses  if  the
indemnification  provided  for in this  Section was  available  to such party in
accordance with its terms.

                  The  parties  hereto  agree  that  it would  not  be  just and
equitable if  contribution  pursuant to this Section 5(d) were determined by pro
rata  allocation  or by any other method of  allocation  that does not take into
account the equitable  considerations  referred to in the immediately  preceding
paragraph. 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.

                  The indemnity and contribution agreements  contained  in  this
Section are in addition to any liability that the Indemnifying  Parties may have
to the Indemnified Parties pursuant to the law.

          6.      Rule 144.


                                      -10-
<PAGE>


                  As long as any Holder owns Shares, Conversion Shares, Warrants
or Warrant Shares, the Company covenants to timely file (or obtain extensions in
respect  thereof  and file  within the  applicable  grace  period)  all  reports
required  to be filed by the Company  after the date hereof  pursuant to Section
13(a)  or  15(d)  of the  Exchange  Act.  As long  as any  Holder  owns  Shares,
Conversion Shares, Warrants or Warrant Shares, if the Company is not required to
file reports  pursuant to Section  13(a) or 15(d) of the  Exchange  Act, it will
prepare and furnish to the Holders and make  publicly  available  in  accordance
with Rule  144(c)  promulgated  under the  Securities  Act annual and  quarterly
financial statements,  together with a discussion and analysis of such financial
statements  in form and  substance  substantially  similar  to those  that would
otherwise  be required to be  included in reports  required by Section  13(a) or
15(d) of the Exchange Act, as well as any other information required thereby, in
the time period  that such  filings  would have been  required to have been made
under the Exchange  Act. The Company  further  covenants  that it will take such
further action as any Holder may reasonably request,  all to the extent required
from time to time to enable  such Person to sell  Conversion  Shares and Warrant
Shares  without  registration  under the Securities Act within the limitation of
the  exemptions  provided  by Rule 144  promulgated  under the  Securities  Act,
including  providing any legal  opinions  relating to such sale pursuant to Rule
144. Upon the request of any Holder,  the Company shall deliver to such Holder a
written certification of a duly authorized officer as to whether it has complied
with such requirements.

          7.      Miscellaneous.

                  (a) Remedies.  In the event of a breach by the Company or by a
Holder,  of any of their  obligations  under this Agreement,  such Holder or the
Company,  as the case may be, in  addition to being  entitled  to  exercise  all
rights granted by law and under this Agreement,  including  recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary  damages would not provide  adequate
compensation  for any losses  incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific  performance  in respect of such breach,  it shall waive the
defense that a remedy at law would be adequate.

                  (b) No Inconsistent Agreements. Neither the Company nor any of
its  subsidiaries  has,  as of the date hereof  entered  into and  currently  in
effect,  nor shall the Company or any of its subsidiaries,  on or after the date
of this Agreement,  enter into any agreement with respect to its securities that
is  inconsistent  with the rights  granted to the Holders in this  Agreement  or
otherwise conflicts with the provisions hereof.  Except as disclosed in Schedule
2.1(c)  of  the  Purchase  Agreement,   neither  the  Company  nor  any  of  its
subsidiaries  has  previously  entered  into any  agreement  currently in effect
granting any  registration  rights with respect to any of its  securities to any
Person.  Without  limiting the generality of the foregoing,  without the written
consent  of the  Holders  of a  majority  of the  then  outstanding  Registrable
Securities,  the Company  shall not grant to any Person the right to request the
Company to register  any  securities  of the Company  under the  Securities  Act
unless the rights so granted are subject in all  respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict with the
provisions of this Agreement.

                  (c) No Piggyback on Registrations. Neither the Company nor any
of its security holders (other than the Holders in such capacity pursuant hereto


                                      -11-
<PAGE>

or as  disclosed  in Schedule  2.1(c) of the  Purchase  Agreement or Schedule II
attached  hereto) may  include  securities  of the  Company in the  Registration
Statement,  and the  Company  shall  not after the date  hereof  enter  into any
agreement providing such right to any of its  securityholders,  unless the right
so granted is subject in all respects to the prior rights in full of the Holders
set forth herein,  and is not otherwise in conflict with the  provisions of this
Agreement.

                  (d) Piggy-Back Registrations. If at any time when there is not
an  effective  Registration  Statement  covering (i)  Conversion  Shares or (ii)
Warrant  Shares,  the  Company  shall  determine  to  prepare  and file with the
Commission a registration  statement relating to an offering for its own account
or the  account  of  others  under  the  Securities  Act  of  any of its  equity
securities,  other than on Form S-4 or Form S-8 (each as  promulgated  under the
Securities Act) or their then  equivalents  relating to equity  securities to be
issued solely in connection  with any  acquisition  of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit plans,  the Company shall send to each holder of Registrable  Securities
written  notice of such  determination  and,  if within  thirty  (30) days after
receipt  of  such  notice,  or  within  such  shorter  period  of time as may be
specified  by the Company in such  written  notice as may be  necessary  for the
Company to comply with its obligations  with respect to the timing of the filing
of such  registration  statement,  any such holder  shall so request in writing,
(which request shall specify the Registrable  Securities intended to be disposed
of by the  Purchasers),  the  Company  will  cause  the  registration  under the
Securities  Act of all  Registrable  Securities  which the  Company  has been so
requested  to  register  by the holder,  to the extent  requisite  to permit the
disposition of the Registrable Securities so to be registered,  provided that if
at any time  after  giving  written  notice of its  intention  to  register  any
securities and prior to the effective date of the  registration  statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its  election,  give written  notice of such  determination  to such holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration  (but not from its  obligation to pay expenses in  accordance  with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be  permitted  to  delay  registering  any  Registrable  Securities  being
registered  pursuant  to this  Section  7(d) for the same period as the delay in
registering   such  other   securities.   The  Company  shall  include  in  such
registration  statement  all or any  part of such  Registrable  Securities  such
holder requests to be registered;  provided, however, that the Company shall not
be required to register any Registrable Securities pursuant to this Section 7(d)
that are eligible for sale pursuant to Rule 144(k) of the Securities Act. In the
case of an  underwritten  public  offering,  if the managing  underwriter(s)  or
underwriter(s)  should  reasonably  object to the  inclusion of the  Registrable
Securities  in  such   registration   statement,   then  if  the  Company  after
consultation with the managing  underwriter should reasonably determine that the
inclusion of such Registrable  Securities would materially  adversely affect the
offering  contemplated  in  such  registration  statement,  and  based  on  such
determination  recommends  inclusion in such registration  statement of fewer or
none of the  Registrable  Securities  of the  Holders,  then (x) the  number  of
Registrable  Securities of the Holders included in such  registration  statement
shall  be  reduced  pro-rata  among  such  Holders  (based  upon the  number  of
Registrable  Securities  requested to be included in the  registration),  if the
Company after consultation with the  underwriter(s)  recommends the inclusion of
fewer Registrable  Securities,  or (y) none of the Registrable Securities of the
Holders shall be included in such registration  statement,  if the Company after
consultation  with the  underwriter(s)  recommends the inclusion of none of such
Registrable Securities;  provided, however, that if Securities are being offered
for the  account  of other  persons or  entities  as well as the  Company,  such


                                      -12-
<PAGE>

reduction  shall not represent a greater  fraction of the number of  Registrable
securities  intended to be offered by the Holders  than the  fraction of similar
reductions imposed on such other persons or entities (other than the Company).

                  (e) Failure to File  Registration  Statement and Other Events.
The Company and the Purchasers agree that the Holders will suffer damages if the
Registration  Statement  is not  filed on or prior  to the  Filing  Date and not
declared  effective by the Commission on or prior to the Effectiveness  Date and
maintained in the manner contemplated herein during the Effectiveness Time or if
certain  other events occur.  The Company and the Holders  further agree that it
would not be feasible to ascertain  the extent of such  damages with  precision.
Accordingly,  if,  except as set forth in  Section  3(n),  (A) the  Registration
Statement is not filed on or prior to the Filing Date,  or (B) the  Registration
Statement is not declared effective by the Commission on or prior to October 15,
2004 (or in the event an additional  Registration Statement is filed because the
actual  number of  shares of Common  Stock  into  which the  Preferred  Stock is
convertible  and the  Warrants are  exercisable  exceeds the number of shares of
Common Stock initially  registered is not filed and declared  effective with the
time periods set forth in Section 2), or (C) the Company  fails to file with the
Commission a request for  acceleration  in accordance  with Rule 461 promulgated
under the  Securities  Act within  five (5)  Business  Days of the date that the
Company  is  notified  (orally  or in  writing,  whichever  is  earlier)  by the
Commission  that a  Registration  Statement  will not be  "reviewed,"  or is not
subject to further review,  or (D) the Registration  Statement is filed with and
declared effective by the Commission but thereafter ceases to be effective as to
all  Registrable  Securities  at  any  time  prior  to  the  expiration  of  the
Effectiveness  Period,  without  being  succeeded by a  subsequent  Registration
Statement filed with and declared effective by the Commission in accordance with
Section 2 hereof or (E) the Company has breached Section 3(n), or (F) trading in
the Common Stock shall be suspended or if the Common Stock is delisted  from the
American  Stock Exchange for any reason for more than three Business Days in the
aggregate  (any such failure or breach being  referred to as an "Event," and for
purposes  of clauses  (A) and (B) the date on which such  Event  occurs,  or for
purposes  of clause  (C) the date on which  such  five  Business  Day  period is
exceeded, or for purposes of clause (D) after more than twenty Business Days, or
for  purposes of clause (F) the date on which such three  Business Day period is
exceeded, being referred to as "Event Date"), the Company shall pay an amount as
liquidated  damages to each Holder equal to 1.0% for the first calendar month or
portion  thereof and 0.5% for each calendar month  thereafter or portion thereof
of the Holder's  initial  investment in the Preferred Stock from the Event Date,
less any amount of Preferred Stock that has been converted by such Holder, until
the applicable Event is cured.  Notwithstanding anything to the contrary in this
paragraph  (e), if (I) any of the Events  described  in clauses  (A), (B) or (C)
shall have occurred,  (II) on or prior to the applicable Event Date, the Company
shall  have  exercised  its  rights  under  Section  3(n)  hereof  and (III) the
postponement or suspension  permitted pursuant to such Section 3(n) shall remain
effective as of such applicable Event Date, then the applicable Event Date shall
be deemed instead to occur on the second  Business Day following the termination
of such postponement or suspension. Notwithstanding anything contained herein to
the contrary,  in no event shall the liquidated  damages amount exceed  eighteen
percent (18%) of the Holder's initial investment in the Preferred Stock.

                  (f) Amendments and Waivers.  The provisions of this Agreement,
including  the  provisions  of this  sentence,  may not be amended,  modified or
supplemented,  and waivers or consents to departures from the provisions  hereof


                                      -13-
<PAGE>

may not be given,  unless the same shall be in writing and signed by the Company
and  the  Holders  of   three-fourths   (3/4)  of  the  Registrable   Securities
outstanding.

                  (g)  Notices.  Any notice,  demand,  request,  waiver or other
communication  required or permitted to be given  hereunder  shall be in writing
and shall be effective (a) upon hand delivery by telex (with correct answer back
received),  telecopy or facsimile at the address or number  designated below (if
delivered on a business day during normal business hours where such notice is to
be received),  or the first  business day following  such delivery (if delivered
other than on a business day during normal  business  hours where such notice is
to be received) or (b) on the second  business day following the date of mailing
by express courier service,  fully prepaid,  addressed to such address,  or upon
actual receipt of such mailing,  whichever shall first occur.  The addresses for
such  communications  shall be with  respect to each  Holder at its  address set
forth  under its name on  Schedule I  attached  hereto,  or with  respect to the
Company, addressed to:

                                    AXM Pharma, Inc.
                                    3960 Howard Hughes Parkway
                                    Suite 500
                                    Las Vegas, Nevada 89109
                                    Attention: Chet Howard, CFO
                                    Tel. No.: (702) 990-3659
                                    Fax No.:  (702) 990-3501

With a copy, which shall
 not constitute notice to:          Law Offices of Louis E. Taubman, P.C.
                                    225 Broadway, Suite 1200
                                    New York, New York  10007
                                    Attention:  Louis E. Taubman, Esq.
                                    Tel No.:  (212) 732-7184
                                    Fax No.:  (212) 202-6380

or to such other address or addresses or facsimile number or numbers as any such
party may most recently have  designated in writing to the other parties  hereto
by such notice.

                  (h)  Successors and Assigns.  This Agreement  shall be binding
upon and inure to the benefit of the parties and their  successors and permitted
assigns and shall inure to the  benefit of each  Holder and its  successors  and
assigns.  The  Company  may not assign  this  Agreement  or any of its rights or
obligations  hereunder  without the prior written  consent of each Holder.  Each
Purchaser  may assign its rights  hereunder  in the manner and to the Persons as
permitted under the Purchase Agreement.

                  (i)  Assignment  of  Registration  Rights.  The rights of each
Holder  hereunder,  including the right to have the Company  register for resale
Registrable Securities in accordance with the terms of this Agreement,  shall be
automatically  assignable  by each Holder to any Affiliate of such Holder or any
other  Holder  or  Affiliate  of any other  Holder  of all or a  portion  of the
Preferred  Stock or the  Registrable  Securities  if: (i) the  Holder  agrees in
writing with the  transferee  or assignee to assign such  rights,  and a copy of
such agreement is furnished to the Company  within a reasonable  time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or


                                      -14-
<PAGE>

assignment,  furnished  with written  notice of (a) the name and address of such
transferee  or  assignee,  and (b) the  securities  with  respect  to which such
registration  rights are being  transferred  or assigned,  (iii)  following such
transfer  or  assignment  the  further  disposition  of such  securities  by the
transferee or assignees is restricted  under the  Securities  Act and applicable
state  securities  laws,  (iv) at or before the time the  Company  receives  the
written notice  contemplated  by clause (ii) of this Section,  the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement, and (v) such transfer shall have been made in accordance with
the applicable  requirements of the Purchase Agreement. In addition, each Holder
shall have the right to assign its rights hereunder to any other Person with the
prior written  consent of the Company,  which consent shall not be  unreasonably
withheld  provided that such  assignment  shall be in accordance with applicable
securities  laws.  The rights to  assignment  shall apply to the Holders (and to
subsequent) successors and assigns.

                  (j) Counterparts. This Agreement may be executed in any number
of  counterparts,  each of  which  when so  executed  shall be  deemed  to be an
original  and, all of which taken  together  shall  constitute  one and the same
Agreement.   In  the  event  that  any   signature  is  delivered  by  facsimile
transmission,  such  signature  shall create a valid  binding  obligation of the
party  executing  (or on whose behalf such  signature is executed) the same with
the same  force and  effect as if such  facsimile  signature  were the  original
thereof.

                  (k)  Governing  Law. This  Agreement  shall be governed by and
construed in accordance with the internal laws of the State of New York, without
giving  effect to any of the conflicts of law  principles  which would result in
the application of the substantive law of another  jurisdiction.  This Agreement
shall not  interpreted  or  construed  with any  presumption  against  the party
causing this Agreement to be drafted.

                  (l)  Cumulative  Remedies.  The remedies  provided  herein are
cumulative and not exclusive of any remedies provided by law.

                  (m)  Severability.   If  any  term,  provision,   covenant  or
restriction  of  this  Agreement  is  held  to  be  invalid,  illegal,  void  or
unenforceable in any respect, the remainder of the terms, provisions,  covenants
and  restrictions  set forth  herein  shall  remain in full force and effect and
shall in no way be affected,  impaired or  invalidated,  and the parties  hereto
shall use their  reasonable  efforts to find and employ an alternative  means to
achieve the same or substantially  the same result as that  contemplated by such
term, provision,  covenant or restriction.  It is hereby stipulated and declared
to be the  intention of the parties that they would have  executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.

                  (n) Headings. The headings herein are for convenience only, do
not  constitute  a part of this  Agreement  and  shall not be deemed to limit or
affect any of the provisions hereof.

                  (o) Shares Held by the Company  and its  Affiliates.  Whenever
the  consent or approval of Holders of a  specified  percentage  of  Registrable
Securities is required hereunder,  Registrable Securities held by the Company or
its  Affiliates  (other than any Holder or  transferees or successors or assigns


                                      -15-
<PAGE>

thereof  if such  Holder is deemed  to be an  Affiliate  solely by reason of its
holdings of such  Registrable  Securities)  shall not be counted in  determining
whether  such  consent or  approval  was given by the  Holders of such  required
percentage.

                  (p) Independent Nature of Purchasers. The Company acknowledges
that the  obligations  of each  Purchaser  under the  Transaction  Documents are
several  and not  joint  with the  obligations  of any other  Purchaser,  and no
Purchaser shall be responsible in any way for the performance of the obligations
of any other Purchaser under the Transaction Documents. The Company acknowledges
that the  decision  of each  Purchaser  to purchase  securities  pursuant to the
Purchase  Agreement has been made by such Purchaser  independently  of any other
purchase and independently of any information, materials, statements or opinions
as to  the  business,  affairs,  operations,  assets,  properties,  liabilities,
results of  operations,  condition  (financial or otherwise) or prospects of the
Company  or of its  Subsidiaries  which  may have  made or  given  by any  other
Purchaser or by any agent or employee of any other  Purchaser,  and no Purchaser
or any of its agents or employees  shall have any liability to any Purchaser (or
any other person) relating to or arising from any such  information,  materials,
statements or opinions.  The Company acknowledges that nothing contained herein,
or in any Transaction  Document,  and no action taken by any Purchaser  pursuant
hereto or  thereto  (including,  but not  limited  to,  the (i)  inclusion  of a
Purchaser in the Registration Statement and (ii) review by, and consent to, such
Registration  Statement  by a  Purchaser)  shall be  deemed  to  constitute  the
Purchasers as a partnership,  an association,  a joint venture or any other kind
of entity,  or create a presumption that the Purchasers are in any way acting in
concert  or as a group  with  respect to such  obligations  or the  transactions
contemplated by the Transaction  Documents.  The Company  acknowledges that each
Purchaser  shall be  entitled to  independently  protect and enforce its rights,
including without limitation, the rights arising out of this Agreement or out of
the other  Transaction  Documents,  and it shall not be necessary  for any other
Purchaser  to be  joined  as an  additional  party  in any  proceeding  for such
purpose. The Company acknowledges that for reasons of administrative convenience
only,  the  Transaction  Documents  have been prepared by counsel for one of the
Purchasers  and such counsel does not represent all of the  Purchasers  but only
such  Purchaser  and the other  Purchasers  have retained  their own  individual
counsel  with  respect to the  transactions  contemplated  hereby.  The  Company
acknowledges  that it has elected to provide all Purchasers  with the same terms
and Transaction  Documents for the convenience of the Company and not because it
was required or requested to do so by the Purchasers.  The Company  acknowledges
that such procedure with respect to the Transaction  Documents in no way creates
a presumption that the Purchasers are in any way acting in concert or as a group
with  respect to the  Transaction  Documents  or the  transactions  contemplated
hereby or thereby.


                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]








                                      -16-
<PAGE>


         IN WITNESS  WHEREOF,  the parties hereto have caused this  Registration
Rights Agreement to be duly executed by their respective  authorized  persons as
of the date first indicated above.

                                      AXM PHARMA, INC.


                                      By:_____________________________________
                                         Name:
                                         Title:


                                      PURCHASER:


                                      By:_____________________________________
                                         Name:
                                         Title:














                                      -17-
<PAGE>


                                   Schedule I
                                   ----------
                                   Purchasers
                                   ----------


Excalibaur Limited Partnership
33 Prince Arthur Avenue
Toronto, ON M5R 1B2

SRG Capital, LLC
120 Broadway, 40th Floor
New York, New York 10271

Greenwich Growth Fund Limited
14 Par-La-Wille Road
PO  Box HM
2257, Hamilton, Bermuda HM08

Whalehaven Fund Limited
14 Par-La-Wille Road
PO Box HM 2257
Hamilton, Bermuda HM08

Cranshire Capital LP

Iroquois Capital, LP

Omicron Master Trust
810 Seventh Avenue 39th Floor
New York, New York 10019

Stonestreet

Enable Growth Partners
One Sansome, Suite 2900
San Francisco, CA 94105

Crescent International LTD
c/o Greenlight (Switzerland) SA
84 Av. Louis-Casai, CH 1216 Cointrin
Geneva, Switzerland

Richard Mollinsky










                                      -18-
<PAGE>


                                   Schedule II
        Securities Permitted to be Included on the Registration Statement

1.   Shares of Common Stock underlying warrants issued to the placement agent in
     connection with the offering.

2.   Shares of Common Stock  underlying  the Shares of Series B Preferred  Stock
     and  Warrants  held by Banyan Mac 24,  Ltd.,  Banyan  Asia  Limited,  Terra
     Capital  Partners,  as placement  agent of the Series B Preferred Stock and
     Warrants and their heirs and assigns.

3.   Aston Organization 300,000 shares of Common Stock

4.   XCL Partners,  Inc.  120,000 shares of Common Stock Common Stock underlying
     200,000 warrants


5.   Madden Consulting, Inc. 300,000 shares of Common Stock

6.   Great Eastern Securities,  Inc. 100,000 shares of Common Stock Common Stock
     underlying 50,000 warrants

7.   Gryphon Master Fund, L.P. Common Stock underlying 100,000 warrants

8.   SF Capital Partners, Ltd. Common Stock underlying 100,000 warrants

9.   Banyan  Asia  Ltd.  and Mac 24  Limited  Common  Stock  underlying  100,000
     warrants (total between the two)









                                      -19-