FORM OF WARRANT

THE  WARRANT  REPRESENTED  BY THIS  CERTIFICATE  AND THE  SHARES  ISSUABLE  UPON
EXERCISE  HEREOF HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS IN RELIANCE ON EXEMPTIONS FROM
REGISTRATION  REQUIREMENTS  UNDER SAID LAWS, AND NEITHER SUCH SECURITIES NOR ANY
INTEREST  THEREIN  MAY  BE  OFFERED,   SOLD,  PLEDGED,   ASSIGNED  OR  OTHERWISE
TRANSFERRED  UNLESS  (1)  A  REGISTRATION  STATEMENT  WITH  RESPECT  THERETO  IS
EFFECTIVE  UNDER THE ACT AND ANY APPLICABLE  STATE  SECURITIES  LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH  SECURITIES,  WHICH
COUNSEL  AND OPINION  ARE  REASONABLY  SATISFACTORY  TO THE  COMPANY,  THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED,  ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED  WITHOUT  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER  THE ACT OR
APPLICABLE STATE SECURITIES LAWS.

         THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.

                                AXM PHARMA, INC.

              WARRANT FOR THE PURCHASE OF UP TO 1,000,000 SHARES OF
                    COMMON STOCK, PAR VALUE $0.001 PER SHARE

NO. UW-B1                                                         440,000 SHARES

         THIS CERTIFIES that, for value received,  Banyan Asia Limited,  with an
address at 780 Third Avenue,  44th Floor,  New York,  NY 10017 Attn:  Stephen J.
Lemanski (including any transferee,  the "Holder"), is entitled to subscribe for
and purchase from AXM Pharma,  Inc., a Nevada corporation (the "Company"),  upon
the terms and  conditions  set  forth  herein,  at any time or from time to time
before 5:00 P.M., New York time, December 30, 2008 (the "Exercise  Period"),  up
to four hundred and forty  thousand  (440,000)  shares of the Common Stock at an
initial exercise price per share equal to $3.00,  subject to adjustment pursuant
to the terms  hereof (the  "Exercise  Price").  As used  herein,  the term "this
Warrant"  shall mean and  include  this  Warrant  and any  Warrant  or  Warrants
hereafter issued as a consequence of the exercise or transfer of this Warrant in
whole or in part.

         The number of shares of Common  Stock  issuable  upon  exercise of this
Warrant (the "Warrant  Shares") and the Exercise Price may be adjusted from time
to time as hereinafter set forth.

         1. (a) This Warrant may be exercised  during the Exercise  Period as to
all or a lesser number of whole Warrant  Shares by the surrender of this Warrant
(with the Exercise  Form  attached  hereto duly  executed) to the Company at its
office at 4695 Macarthur Court, Newport Beach, California 92660, Attention:



<PAGE>

President,  or at such other place as is  designated  in writing by the Company,
together  with a certified or bank  cashier's  check payable to the order of the
Company in an amount equal to the  Exercise  Price  multiplied  by the number of
Warrant Shares for which this Warrant is being exercised.

            (b) This  Warrant  may also be  exercised  by the  Holder  through a
cashless  exercise,  as  described  in this  Section  1(b).  This Warrant may be
exercised,  in whole or in part,  by (i) the  delivery  to the Company of a duly
executed  Exercise Form specifying the number of Warrant Shares to be applied to
such exercise, and (ii) the surrender to a common carrier for overnight delivery
to the Company, or as soon as practicable following the date the Holder delivers
the  Exercise  Form to the  Company,  of  this  Warrant  (or an  indemnification
undertaking  with  respect  to this  Warrant  in the case of its loss,  theft or
destruction). The number of shares of Common Stock to be issued upon exercise of
this Warrant pursuant to this Section 1(b) shall equal the value of this Warrant
(or the portion thereof being  canceled)  computed as of the date of delivery of
this Warrant to the Company using the following formula:

                  X =  Y(A-B)
                       ------
                         A

     where:

                  X =  the number of shares of Common  Stock to be issued to the
                       Holder  under  this  Section  1(b);
                  Y =  the number of Warrant Shares identified in the Exercise
                       Form as being applied to the subject exercise;
                  A =  the Current Market Price on such date; and
                  B =  the Exercise Price on such date

For  purposes of this Section  1(b),  the  "Current  Market  Price" per share of
Common Stock on any day shall mean: (i) if the principal trading market for such
securities is a national or regional securities  exchange,  the closing price on
such  exchange on such day; or (ii) if sales  prices for shares of Common  Stock
are reported by the NASDAQ National Market System or NASDAQ Small Cap Market (or
a similar  system then in use),  the last reported  sales price (regular way) so
reported on such day; or (iii) if neither (i) nor (ii) above are applicable, and
if  bid  and  ask  prices  for  shares  of  Common  Stock  are  reported  in the
over-the-counter  market by NASDAQ  (or,  if not so  reported,  by the  National
Quotation Bureau), the average of the high bid and low ask prices so reported on
such day.  Notwithstanding the foregoing, if there is no reported closing price,
last reported  sales price,  or bid and ask prices,  as the case may be, for the
day in question,  then the Current  Market Price shall be  determined  as of the
latest date prior to such day for which such closing price,  last reported sales
price,  or bid and ask prices,  as the case may be, are  available,  unless such
securities have not been traded on an exchange or in the over-the-counter market
for 30 or more days immediately prior to the day in question,  in which case the
Current  Market Price shall be  determined  in good faith by, and reflected in a
formal resolution of, the Board of Directors of the Company.

The Company  acknowledges  and agrees that this Warrant was issued on August __,
2003 (the "Issuance Date").  Consequently,  the Company  acknowledges and agrees


                                      -2-
<PAGE>

that, if the Holder conducts a cashless  exercise pursuant to this Section 1(b),
the period  during  which the Holder held this Warrant may, for purposes of Rule
144  promulgated  under the Securities  Act of 1933, as amended (the "Act"),  be
"tacked" to the period during which the Holder holds the Warrant Shares received
upon such cashless exercise.

         Notwithstanding  the  foregoing,  the  Holder  may  conduct a  cashless
exercise  pursuant to this Section 1(b) only after the first  anniversary of the
Issuance Date, and then only in the event that a registration statement covering
the  resale of the  Warrant  Shares is not then  effective  at the time that the
Holder wishes to conduct such cashless exercise.

         2. Upon each  exercise  of the  Holder's  rights  to  purchase  Warrant
Shares,  the Holder  shall be deemed to be the  holder of record of the  Warrant
Shares issuable upon such exercise,  notwithstanding  that the transfer books of
the  Company  shall then be closed or  certificates  representing  such  Warrant
Shares shall not then have been  actually  delivered  to the Holder.  As soon as
practicable  after each such exercise of this  Warrant,  the Company shall issue
and deliver to the Holder a certificate or  certificates  for the Warrant Shares
issuable  upon  such  exercise,  registered  in the  name of the  Holder  or its
designee.  If this Warrant  should be exercised in part only, the Company shall,
upon  surrender  of this  Warrant  for  cancellation,  execute and deliver a new
Warrant  evidencing  the right of the  Holder to  purchase  the  balance  of the
Warrant Shares (or portions thereof) subject to purchase hereunder.

         3. (a) Any  Warrants  issued  upon the  transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant  Register as
they are issued. The Company shall be entitled to treat the registered holder of
any  Warrant  on the  Warrant  Register  as the  owner in fact  thereof  for all
purposes and shall not be bound to recognize  any equitable or other claim to or
interest  in such  Warrant  on the part of any  other  person,  and shall not be
liable for any  registration  or transfer of Warrants which are registered or to
be  registered  in the name of a fiduciary or the nominee of a fiduciary  unless
made with the actual  knowledge  that a  fiduciary  or nominee is  committing  a
breach  of  trust in  requesting  such  registration  or  transfer,  or with the
knowledge  of such facts that its  participation  therein  amounts to bad faith.
This  Warrant  shall  be  transferable  only on the  books of the  Company  upon
delivery thereof duly endorsed by the Holder or by his duly authorized  attorney
or representative, or accompanied by proper evidence of succession,  assignment,
or  authority to  transfer.  In all cases of transfer by an attorney,  executor,
administrator,  guardian, or other legal representative, duly authority shall be
produced.  Upon any  registration  of transfer,  the Company shall deliver a new
Warrant  or  Warrants  to the  person  entitled  thereto.  This  Warrant  may be
exchanged,  at the option of the Holder thereof,  for another Warrant,  or other
Warrants  of  different  denominations,  of like tenor and  representing  in the
aggregate  the right to  purchase a like number of Warrant  Shares (or  portions
thereof),   upon  surrender  to  the  Company  or  its  duly  authorized  agent.
Notwithstanding the foregoing,  the Company may require prior to registering any
transfer  of a Warrant  an opinion of  counsel  reasonably  satisfactory  to the
Company that such  transfer  complies  with the  provisions  of the Act, and the
rules and regulations thereunder.


            (b) The Holder  acknowledges that he has been advised by the Company
that neither this Warrant nor the Warrant Shares have been registered  under the



                                      -3-
<PAGE>

Act, that this Warrant is being or has been issued and the Warrant Shares may be
issued on the basis of the statutory  exemption  provided by Section 4(2) of the
Act or Rule 506 of Regulation D  promulgated  thereunder,  or both,  relating to
transactions  by an issuer  not  involving  any  public  offering,  and that the
Company's reliance thereon is based in part upon the representations made by the
original Holder in the original  Holder's  Subscription  Agreement  executed and
delivered  in  accordance  with the  terms of the  Offering  (the  "Subscription
Agreement").  The Holder  acknowledges  that he has been informed by the Company
of, or is otherwise familiar with, the nature of the limitations  imposed by the
Act and the rules and regulations  thereunder on the transfer of securities.  In
particular,  the Holder  agrees  that no sale,  assignment  or  transfer of this
Warrant or the Warrant  Shares  issuable upon exercise  hereof shall be valid or
effective,  and the Company shall not be required to give any effect to any such
sale,  assignment  or transfer,  unless (i) the sale,  assignment or transfer of
this  Warrant  or such  Warrant  Shares is  registered  under the Act,  it being
understood  that  neither this  Warrant nor such  Warrant  Shares are  currently
registered  for sale and that the Company has no  obligation  or intention to so
register this Warrant or such Warrant Shares except as specifically provided for
in that certain  Registration  Rights Agreement,  of even date herewith,  by and
among the  Company,  the Holder and certain  other  parties  (the  "Registration
Rights  Agreement"),  or (ii) this  Warrant  or such  Warrant  Shares  are sold,
assigned or transferred in accordance with all the  requirements and limitations
of Rule 144 under the Act, it being understood that Rule 144 is not available at
the time of the  original  issuance of this Warrant for the sale of this Warrant
or such Warrant  Shares and that there can be no  assurance  that Rule 144 sales
will be available at any  subsequent  time, or (iii) such sale,  assignment,  or
transfer is otherwise exempt from  registration  under the Act in the opinion of
counsel reasonably acceptable to the Company.

         4. The Company  shall at all times  reserve and keep  available out its
authorized  and unissued  Common Stock,  solely for the purpose of providing for
the exercise of the rights to purchase all Warrant  Shares  granted  pursuant to
the Warrants, such number of shares of Common Stock as shall, from time to time,
be sufficient  therefor.  The Company  covenants that all shares of Common Stock
issuable upon exercise of this Warrant,  upon receipt by the Company of the full
Exercise Price therefor, shall be validly issued, fully paid, nonassessable, and
free of preemptive rights.

         5.  (a) In case  the  Company  shall  at any  time  after  the date the
Warrants  were first  issued (i)  declare a dividend on the  outstanding  Common
Stock payable in shares of its capital  stock,  (ii)  subdivide the  outstanding
Common Stock,  (iii) combine the outstanding  Common Stock into a smaller number
of shares, or (iv) issue any shares of its capital stock by  reclassification of
the Common Stock  (including  any such  reclassification  in  connection  with a
consolidation  or merger in which the  Company is the  continuing  corporation),
then,  in each case,  the  Exercise  Price,  and the  number of  Warrant  Shares
issuable  upon  exercise  of this  Warrant , in effect at the time of the record
date  for  such  dividend  or  of  the  effective  date  of  such   subdivision,
combination, or reclassification,  shall be proportionately adjusted so that the
Holder  after such time shall be entitled to receive  the  aggregate  number and
kind of shares which,  if such Warrant had been exercised  immediately  prior to
such time,  he would have owned upon such  exercise and been entitled to receive
by virtue of such dividend, subdivision, combination, or reclassification.  Such
adjustment  shall be made  successively  whenever  any event  listed above shall
occur.


                                      -4-
<PAGE>



            (b) In case the  Company  shall  issue or fix a record  date for the
issuance  to all  holders of Common  Stock of rights,  options,  or  warrants to
subscribe  for or  purchase  Common  Stock (or  securities  convertible  into or
exchangeable  for Common  Stock) at a price per share (or having a conversion or
exchange price per share, if a security  convertible  into or  exchangeable  for
Common  Stock) less than the then  applicable  Exercise  Price per share on such
record  date,  then,  in each case,  the  Exercise  Price  shall be  adjusted by
multiplying the Exercise Price in effect  immediately  prior to such record date
by a fraction,  the  numerator  of which shall be the number of shares of Common
Stock  outstanding on such record date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
so to be offered (or the aggregate  initial  conversion or exchange price of the
convertible or exchangeable  securities so to be offered) would purchase at such
Exercise  Price and the  denominator  of which  shall be the number of shares of
Common  Stock  outstanding  on such  record  date plus the number of  additional
shares of Common Stock to be offered for subscription or purchase (or into which
the  convertible  or  exchangeable  securities  so to be offered  are  initially
convertible or  exchangeable).  Such  adjustment  shall become  effective at the
close of business on such record date;  provided,  however,  that, to the extent
the shares of Common Stock (or securities  convertible  into or exchangeable for
shares  of  Common  Stock)  are not  delivered,  the  Exercise  Price  shall  be
readjusted after the expiration of such rights,  options,  or warrants (but only
with respect to warrants exercised after such expiration), to the Exercise Price
which would then be in effect had the adjustments made upon the issuance of such
rights,  options,  or warrants  been made upon the basis of delivery of only the
number of shares of Common Stock (or securities convertible into or exchangeable
for shares of Common Stock) actually issued. In case any subscription  price may
be paid in a  consideration  part or all of which  shall be in a form other than
cash,  the value of such  consideration  shall be as determined in good faith by
the board of directors of the Company, whose determination shall be conclusive.

            (c) In case the Company  shall  distribute  to all holders of Common
Stock (including any such  distribution  made to the stockholders of the Company
in  connection  with a  consolidation  or  merger in which  the  Company  is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the  record  date  for such  distribution,  does  not  exceed  5% of the then
applicable  Exercise Price at the record date for such  distribution)  or assets
(other than  distributions  and dividends payable in shares of Common Stock), or
rights,  options,  or warrants to subscribe  for or purchase  Common  Stock,  or
securities   convertible  into  or  exchangeable  for  shares  of  Common  Stock
(excluding  those with  respect to the  issuance of which an  adjustment  of the
Exercise Price is provided pursuant to Section 5(b) hereof), then, in each case,
the Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately  prior to the  record  date for the  determination  of  stockholders
entitled to receive  such  distribution  by a fraction,  the  numerator of which
shall be the then  applicable  Exercise  Price per share of Common Stock on such
record  date,  less the fair market value (as  determined  in good faith by, and
reflected  in a formal  resolution  of, the board of  directors  of the Company,
whose determination shall be conclusive absent manifest error) of the portion of
the evidences of indebtedness or assets so to be distributed, or of such rights,
options, or warrants or convertible or exchangeable securities, or the amount of
such cash,  applicable to one share,  and the denominator of which shall be such



                                      -5-
<PAGE>

Exercise Price per share of Common Stock. Such adjustment shall become effective
at the close of business on such record date.

            (d) No  adjustment  in the Exercise  Price shall be required if such
adjustment is less than $.01; provided,  however,  that any adjustments which by
reason of this Section 5(d) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest  one-thousandth of
a share, as the case may be.

            (e) In any  case in  which  this  Section  5 shall  require  that an
adjustment  in the  Exercise  Price be made  effective as of a record date for a
specified  event,  the Company may elect to defer,  until the occurrence of such
event,  issuing to the Holder,  if the Holder  exercised this Warrant after such
record date,  the shares of Common  Stock,  if any,  issuable upon such exercise
over and above the shares of Common Stock,  if any,  issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however,  that  the  Company  shall  deliver  to the  Holder a due bill or other
appropriate  instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.

            (f) Upon each  adjustment  of the Exercise  Price as a result of the
calculations made in Sections 5(b) or 5(c) hereof, this Warrant shall thereafter
evidence the right to purchase,  at the adjusted  Exercise Price, that number of
shares  (calculated  to the nearest  thousandth)  obtained  by dividing  (A) the
product  obtained by multiplying the number of shares  purchasable upon exercise
of this  Warrant  prior to  adjustment  of the number of shares by the  Exercise
Price in effect prior to  adjustment  of the Exercise  Price by (B) the Exercise
Price in effect after such adjustment of the Exercise Price.

            (g)  Whenever  there  shall be an  adjustment  as  provided  in this
Section 5, the Company shall promptly cause written notice thereof to be sent by
registered  mail,  postage  prepaid,  to the Holder,  at its address as it shall
appear  in the  Warrant  Register,  which  notice  shall  be  accompanied  by an
officer's  certificate  setting forth the number of Warrant  Shares  purchasable
upon the exercise of this Warrant and the Exercise  Price after such  adjustment
and setting forth a brief  statement of the facts  requiring such adjustment and
the  computation  thereof,  which  officer's  certificate  shall  be  conclusive
evidence of the correctness of any such adjustment absent manifest error.

            (h) The Company  shall not be required to issue  fractions of shares
of Common Stock or other  capital stock of the Company upon the exercise of this
Warrant.  If any  fraction of a share would be issuable on the  exercise of this
Warrant (or  specified  portions  thereof),  the  Company  shall  purchase  such
fraction for an amount in cash equal to the same fraction of the Exercise  Price
of such share of Common Stock on the date of exercise of this Warrant.

         6. (a) In case of any  consolidation  or combination  with or merger of
the Company with or into  another  corporation  or entity  (other than a merger,
consolidation or combination in which the Company is the surviving or continuing



                                      -6-
<PAGE>

corporation),  or  in  case  of  any  sale,  lease,  or  conveyance  to  another
corporation,  entity or person of the  property  and assets of any nature of the
Company as an entirety or substantially as an entirety,  or any compulsory share
exchange,  pursuant to which share  exchange the Common Stock is converted  into
other  securities,  cash  or  other  property  (collectively  an  "Extraordinary
Event"), such successor,  leasing, or purchasing corporation,  entity or person,
as the case may be,  shall (i) execute  with the Holder an  agreement  providing
that the Holder shall have the right thereafter to receive upon exercise of this
Warrant  solely  the kind and  amount of  shares of stock and other  securities,
property,  cash, or any combination thereof  (collectively  "Extraordinary Event
Consideration")  receivable  upon  such  Extraordinary  Event by a holder of the
number of  shares  of Common  Stock  for  which  this  Warrant  might  have been
exercised immediately prior to such Extraordinary Event, and (ii) make effective
provision in its certificate of  incorporation  or otherwise,  if necessary,  to
effect such agreement. Such agreement shall provide for adjustments, which shall
be as nearly equivalent as practicable to the adjustments in Section 5.

            (b) In case of any  reclassification  or  change  of the  shares  of
Common Stock  issuable upon exercise of this Warrant (other than a change in par
value or from no par  value  to a  specified  par  value,  or as a  result  of a
subdivision or  combination,  but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation,  combination
or merger of another corporation or entity into the Company in which the Company
is the continuing corporation and in which there is a reclassification or change
(including  a change  to the right to  receive  cash or other  property)  of the
shares of Common Stock  (other than a change in par value,  or from no par value
to a specified par value,  or as a result of a subdivision or  combination,  but
including  any  change  in the  shares  into two or more  classes  or  series of
shares),  the Holder shall have the right thereafter to receive upon exercise of
this Warrant solely the kind and amount of shares of stock and other securities,
property,    cash,   or   any   combination   thereof   receivable   upon   such
reclassification,  change,  consolidation,  combination or merger by a holder of
the  number of shares of Common  Stock for which  this  Warrant  might have been
exercised  immediately prior to such  reclassification,  change,  consolidation,
combination  or  merger.  Thereafter,  appropriate  provision  shall be made for
adjustments,  which  shall  be  as  nearly  equivalent  as  practicable  to  the
adjustments in Section 5.

            (c) The above  provisions of this Section 6 shall similarly apply to
successive  reclassifications  and  changes  of shares  of  Common  Stock and to
successive consolidations, combinations, mergers, sales, leases, or conveyances.

         7. In case at any time the Company shall propose to:

            (a) pay any  dividend or make any  distribution  on shares of Common
Stock in shares  of Common  Stock or make any  other  distribution  (other  than
regularly  scheduled cash dividends  which are not in a greater amount per share
than the most recent such cash dividend) to all holders of Common Stock; or

            (b) issue any rights,  warrants,  or other securities to all holders
of Common Stock entitling them to purchase any additional shares of Common Stock
or any other rights, warrants, or other securities; or



                                      -7-
<PAGE>


            (c) effect any  reclassification  or change of outstanding shares of
Common  Stock,  or any  consolidation,  merger,  sale,  lease,  or conveyance of
property or other Extraordinary Event; or

            (d)  effect  any  liquidation,  dissolution,  or  winding-up  of the
Company; or

            (e) take any other  action  which would cause an  adjustment  to the
Exercise Price;

then,  and in any one or more of such  cases,  the  Company  shall give  written
notice  thereof,  by  registered  mail,  postage  prepaid,  to the Holder at the
Holder's address as it shall appear in the Warrant Register,  mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be  entitled  to  receive  any  such  dividend,  distribution,  rights,
warrants,  or other securities are to be determined,  (ii) the date on which any
such   reclassification,   change  of   outstanding   shares  of  Common  Stock,
consolidation,   merger,  sale,  lease,  conveyance  of  property,  liquidation,
dissolution,  or winding-up is expected to become effective,  and the date as of
which it is expected  that  holders of record of shares of Common Stock shall be
entitled to exchange  their shares for  securities  or other  property,  if any,
deliverable   upon  such   reclassification,   change  of  outstanding   shares,
consolidation,   merger,  sale,  lease,  conveyance  of  property,  liquidation,
dissolution, or winding-up, or (iii) the date of such action which would require
an adjustment to the Exercise Price.

         8. The issuance of any shares or other  securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities,  shall be made without charge to the Holder for
any tax or other  charge in respect of such  issuance.  The  Company  shall not,
however,  be  required  to pay any tax which may be  payable  in  respect of any
transfer  involved in the issue and delivery of any  certificate in a name other
than  that of the  Holder  and the  Company  shall not be  required  to issue or
deliver any such certificate  unless and until the person or persons  requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.


<PAGE>



         9. Unless registered pursuant to the Registration Rights Agreement, the
Warrant  Shares  issued upon exercise of this Warrant shall be subject to a stop
transfer  order and the  certificate  or  certificates  evidencing  such Warrant
Shares shall bear the following legend:

         "THE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED
UNDER  THE  SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "ACT"),  OR ANY  STATE
SECURITIES  LAWS, AND NEITHER SUCH  SECURITIES  NOR ANY INTEREST  THEREIN MAY BE
OFFERED,  SOLD,  PLEDGED,   ASSIGNED  OR  OTHERWISE  TRANSFERRED  UNLESS  (1)  A
REGISTRATION  STATEMENT WITH RESPECT  THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAWS,  OR (2) THE COMPANY  RECEIVES AN OPINION OF
COUNSEL  TO THE  HOLDER  OF SUCH  SECURITIES,  WHICH  COUNSEL  AND  OPINION  ARE
REASONABLY  SATISFACTORY  TO THE COMPANY,  THAT SUCH  SECURITIES MAY BE OFFERED,
SOLD,  PLEDGED,  ASSIGNED OR TRANSFERRED IN THE MANNER  CONTEMPLATED  WITHOUT AN



                                      -8-
<PAGE>

EFFECTIVE  REGISTRATION  STATEMENT UNDER THE ACT OR APPLICABLE  STATE SECURITIES
LAWS."

         10. Upon receipt of evidence  satisfactory  to the Company of the loss,
theft,  destruction,  or  mutilation  of any Warrant (and upon  surrender of any
Warrant if  mutilated),  the  Company  shall  execute  and deliver to the Holder
thereof a new Warrant of like date, tenor, and denomination.



<PAGE>


         11. The holder of this Warrant shall not have solely on account of such
status, any rights of a stockholder of the Company,  either at law or in equity,
or to any notice of meetings of stockholders or of any other  proceedings of the
Company, except as provided in this Warrant.

         12. The Warrants are  redeemable,  commencing 60 days from the Issuance
Date,  by the  Company at a price of $.05 per Warrant at any time prior to their
exercise or expiration  upon 30 days prior written  notice;  provided,  however,
that  the (i)  closing  sales  price  for  the  Common  Stock  for at  least  30
consecutive  calendar  days  ending on the third day prior to the date notice of
redemption  is given by the Company  has been at least  $4.00 per share;  (ii) a
registration  statement relating to the Warrant Shares issuable upon exercise of
the Warrants has been declared  effective by the Commission and is available for
resale of such Warrant Shares during the entire 30-day notice period;  and (iii)
the holder would not be prevented from selling the Warrant Shares  issuable upon
exercise of the Warrants  subject to the notice of redemption as a result of the
lock-up/dribble-out  provisions  contained  in  Section  3.10 of the  Securities
Purchase  Agreement under which the Preferred Stock and the Warrants were issued
and sold by the Company, after aggregating the number of Warrant Shares issuable
upon exercise of the Warrants subject to the notice of redemption with (A) those
Warrant Shares currently held by the holder and (B) those shares of Common Stock
currently  held by the  holder  as a result of its  conversion  of shares of the
Preferred  Stock.  The  Warrants  remain  exercisable  during the 30-day  notice
period. Any Warrant holder who does not exercise that holder's Warrants prior to
their expiration or redemption, as the case may be, forfeits that holder's right
to purchase the shares of Warrant Shares  underlying the Warrants.  For purposes
of  determining  whether  and  to  what  extent  Warrants  may be  eligible  for
redemption pursuant to paragraph (iii) above, the Company may request the holder
provide a written statement as to the number of Warrant Shares currently held by
the holder and shares of Common Stock  currently  held by the holder as a result
of its conversion of shares of the Preferred Stock. This request, if made, shall
be in writing and the holder shall respond in writing within five business days.
If the holder fails to respond within the requisite time period, the Company may
assume that the Warrants are eligible for redemption pursuant to paragraph (iii)
and,  assuming all other  conditions of this Section are met,  issue a notice of
redemption to the holder.

         13. The Company may by notice to the holders of all the  Warrants  make
any changes or  corrections in the Warrants (i) that it shall deem in good faith
appropriate  to cure any ambiguity or to correct any  defective or  inconsistent
provision or manifest  mistake or error contained in the Warrants;  or (ii) that
it may deem  necessary or  desirable  and which shall not  adversely  affect the
interests of the holders of Warrants; provided, however, that the Warrants shall
not otherwise be modified,  supplemented  or altered in any respect  except with
the consent in writing of the holders of Warrants representing not less than 51%
of the Warrants then outstanding;  and provided,  further, that no change in the



                                      -9-
<PAGE>

number  or  nature  of the  securities  purchasable  upon the  exercise  of this
Warrant,  or increasing the Exercise Price therefor,  or the acceleration of the
termination of the Exercise Period, shall be made without the consent in writing
of the holders of Warrants representing not less than two-thirds of the Warrants
then outstanding (other than such changes as are specifically prescribed by this
Warrant as originally executed or are made in compliance with applicable law).

         14. This Warrant has been  negotiated  and  consummated in the State of
New York and shall be construed in accordance  with the laws of the State of New
York  applicable  to contracts  made and  performed  within such State,  without
regard to principles governing conflicts of law.

         15. The Company shall not effect the exercise of this  Warrant,  and no
person who is a holder of this  Warrant  shall have the right to  exercise  this
Warrant,  to the extent that after giving effect to such  exercise,  such person
(together with such person's  affiliates)  would  beneficially  own in excess of
4.99% of the shares of the Common  Stock  outstanding  immediately  after giving
effect to such exercise.  For purposes of the foregoing sentence,  the aggregate
number of  shares of Common  Stock  beneficially  owned by such  Person  and its
affiliates  shall include,  without  limitation,  the number of shares of Common
Stock  issuable  upon  exercise  of this  Warrant  with  respect  to  which  the
determination of such sentence is being made, but shall exclude shares of Common
Stock which would be issuable  upon (i) exercise of the  remaining,  unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii) exercise or conversion of the  unexercised  or  unconverted  portion of any
other  securities  of the  Company  beneficially  owned by such  Person  and its
affiliates  (including,  without  limitation,  shares of  Preferred  Stock,  any
debentures,  convertible notes or other convertible preferred stock or warrants)
subject to a limitation on conversion  or exercise  analogous to the  limitation
contained herein. Except as set forth in the preceding sentence, for purposes of
this  paragraph,  beneficial  ownership  shall be calculated in accordance  with
Section 13(d) of the Exchange Act. For purposes of this Warrant,  in determining
the  number of  outstanding  shares of Common  Stock,  a Holder  may rely on the
number of  outstanding  shares of Common Stock as reflected in (1) the Company's
most recent Form 10-Q, Form 10-K or other public filing with the Commission,  as
the case may be, (2) a more recent public  announcement  by the Company,  or (3)
any other notice by the Company or its transfer  agent  setting forth the number
of shares of Common  Stock  outstanding.  For any  reason at any time,  upon the
written or oral request of the Holder of this Warrant,  the Company shall within
five business  days confirm  orally and in writing to the Holder of this Warrant
the number of shares of Common Stock then  outstanding.  In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to
the  conversion  or exercise of  securities of the Company by the Holder of this
Warrant and its affiliates since the date as of which such number of outstanding
shares of Common Stock was reported.  In effecting the exercise of this Warrant,
the Company shall be entitled to rely on a representation  by the Holder of this
Warrant as to the number of shares that it beneficially owns for purposes of the
above 4.99% limitation calculation.

         By written  notice to the Company,  the Holder may waive the provisions
of this  Section but any such waiver  will not be  effective  until the 65th day
after such notice is delivered to the Company.






                                      -10-
<PAGE>


Dated:  December 30, 2003

                                           AXM PHARMA, INC.
Attest:

                                           By:
                                              ---------------------------------
                                                     Peter Cunningham,
                                                     President


















                                      -11-
<PAGE>


                                AXM PHARMA, INC.

                               FORM OF ASSIGNMENT

         (To be executed  by the  registered  holder if such  holder  desires to
transfer the attached Warrant.)

To:      AXM Pharma, Inc.
         4695 Macarthur Court
         Newport Beach, California 92660

         Attention: President

         FOR  VALUE  RECEIVED,   _______________   hereby  sells,  assigns,  and
transfers  unto  _______________  that certain  Warrant  (Number  UW-______)  to
purchase  __________  shares of Common Stock, par value $0.001 per share, of AXM
Pharma,  Inc.  (the  "Company"),  together with all right,  title,  and interest
therein,    and    does    hereby    irrevocably    constitute    and    appoint
________________________  attorney to transfer  such Warrant on the books of the
Company, with full power of substitution.

Dated:
       --------------------

                                           Signature:
                                                      ------------------------


                                           NOTICE:

         The signature on the foregoing  Assignment  must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.















                                      -12-
<PAGE>


                                AXM PHARMA, INC.

                                  EXERCISE FORM

         (To be completed and signed only upon exercise of the Warrants)

To:      AXM Pharma, Inc.
         4695 Macarthur Court
         Newport Beach, California 92660

         Attention: President

         The  undersigned  hereby  exercises  his  or  its  rights  to  purchase
___________  Warrant Shares  covered by the within  Warrant and tenders  payment
herewith  in the  amount  of  $_________  by  [tendering  cash or  delivering  a
certified  check or bank cashier's  check,  payable to the order of the Company]
[surrendering  ______  shares of Common  Stock  received  upon  exercise  of the
attached  Warrant,  which  shares  have a  Current  Market  Price  equal to such
payment] in accordance  with the terms thereof,  and requests that  certificates
for such securities be issued in the name of, and delivered to:



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

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

                                      ------------------------------------------
                                      (Print Name, Address and Social Security
                                              or Tax Identification Number)

and,  if such  number of  Warrant  Shares  shall not be all the  Warrant  Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.


Dated: ____________, ________               Name:
                                                 ------------------------------
                                                        (Please Print)

                                       Address:
                                                 ------------------------------

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

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


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





                                      -13-


<PAGE>





                                 FORM OF WARRANT

THE  WARRANT  REPRESENTED  BY THIS  CERTIFICATE  AND THE  SHARES  ISSUABLE  UPON
EXERCISE  HEREOF HAVE NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS IN RELIANCE ON EXEMPTIONS FROM
REGISTRATION  REQUIREMENTS  UNDER SAID LAWS, AND NEITHER SUCH SECURITIES NOR ANY
INTEREST  THEREIN  MAY  BE  OFFERED,   SOLD,  PLEDGED,   ASSIGNED  OR  OTHERWISE
TRANSFERRED  UNLESS  (1)  A  REGISTRATION  STATEMENT  WITH  RESPECT  THERETO  IS
EFFECTIVE  UNDER THE ACT AND ANY APPLICABLE  STATE  SECURITIES  LAWS, OR (2) THE
COMPANY RECEIVES AN OPINION OF COUNSEL TO THE HOLDER OF SUCH  SECURITIES,  WHICH
COUNSEL  AND OPINION  ARE  REASONABLY  SATISFACTORY  TO THE  COMPANY,  THAT SUCH
SECURITIES MAY BE OFFERED, SOLD, PLEDGED,  ASSIGNED OR TRANSFERRED IN THE MANNER
CONTEMPLATED  WITHOUT  AN  EFFECTIVE  REGISTRATION  STATEMENT  UNDER  THE ACT OR
APPLICABLE STATE SECURITIES LAWS.

         THE TRANSFER OF THIS WARRANT IS RESTRICTED AS DESCRIBED HEREIN.

                                AXM PHARMA, INC.

              WARRANT FOR THE PURCHASE OF UP TO 1,000,000 SHARES OF
                    COMMON STOCK, PAR VALUE $0.001 PER SHARE

NO. UW-B2                                                         560,000 SHARES

         THIS  CERTIFIES  that, for value  received,  Banyan Mac 24 Ltd, with an
address at 780 Third Avenue,  44th Floor,  New York,  NY 10017 Attn:  Stephen J.
Lemanski (including any transferee,  the "Holder"), is entitled to subscribe for
and purchase from AXM Pharma,  Inc., a Nevada corporation (the "Company"),  upon
the terms and  conditions  set  forth  herein,  at any time or from time to time
before 5:00 P.M., New York time, December 30, 2008 (the "Exercise  Period"),  up
to five hundred and sixty  thousand  (560,000)  shares of the Common Stock at an
initial exercise price per share equal to $3.00,  subject to adjustment pursuant
to the terms  hereof (the  "Exercise  Price").  As used  herein,  the term "this
Warrant"  shall mean and  include  this  Warrant  and any  Warrant  or  Warrants
hereafter issued as a consequence of the exercise or transfer of this Warrant in
whole or in part.

         The number of shares of Common  Stock  issuable  upon  exercise of this
Warrant (the "Warrant  Shares") and the Exercise Price may be adjusted from time
to time as hereinafter set forth.

         1. (a) This Warrant may be exercised  during the Exercise  Period as to
all or a lesser number of whole Warrant  Shares by the surrender of this Warrant
(with the Exercise  Form  attached  hereto duly  executed) to the Company at its
office at 4695 Macarthur  Court,  Newport Beach,  California  92660,  Attention:
President,  or at such other place as is  designated  in writing by the Company,
together  with a certified or bank  cashier's  check payable to the order of the



<PAGE>

Company in an amount equal to the  Exercise  Price  multiplied  by the number of
Warrant Shares for which this Warrant is being exercised.

            (b) This  Warrant  may also be  exercised  by the  Holder  through a
cashless  exercise,  as  described  in this  Section  1(b).  This Warrant may be
exercised,  in whole or in part,  by (i) the  delivery  to the Company of a duly
executed  Exercise Form specifying the number of Warrant Shares to be applied to
such exercise, and (ii) the surrender to a common carrier for overnight delivery
to the Company, or as soon as practicable following the date the Holder delivers
the  Exercise  Form to the  Company,  of  this  Warrant  (or an  indemnification
undertaking  with  respect  to this  Warrant  in the case of its loss,  theft or
destruction). The number of shares of Common Stock to be issued upon exercise of
this Warrant pursuant to this Section 1(b) shall equal the value of this Warrant
(or the portion thereof being  canceled)  computed as of the date of delivery of
this Warrant to the Company using the following formula:

                  X =  Y(A-B)
                       ------
                         A

     where:

                  X = the  number of shares of Common  Stock to be issued to
                      the Holder under this Section 1(b);
                  Y = the number of
                      Warrant  Shares  identified  in the Exercise Form as being
                      applied to the subject exercise;
                  A = the  Current  Market  Price on such date; and
                  B = the Exercise Price on such date

For  purposes of this Section  1(b),  the  "Current  Market  Price" per share of
Common Stock on any day shall mean: (i) if the principal trading market for such
securities is a national or regional securities  exchange,  the closing price on
such  exchange on such day; or (ii) if sales  prices for shares of Common  Stock
are reported by the NASDAQ National Market System or NASDAQ Small Cap Market (or
a similar  system then in use),  the last reported  sales price (regular way) so
reported on such day; or (iii) if neither (i) nor (ii) above are applicable, and
if  bid  and  ask  prices  for  shares  of  Common  Stock  are  reported  in the
over-the-counter  market by NASDAQ  (or,  if not so  reported,  by the  National
Quotation Bureau), the average of the high bid and low ask prices so reported on
such day.  Notwithstanding the foregoing, if there is no reported closing price,
last reported  sales price,  or bid and ask prices,  as the case may be, for the
day in question,  then the Current  Market Price shall be  determined  as of the
latest date prior to such day for which such closing price,  last reported sales
price,  or bid and ask prices,  as the case may be, are  available,  unless such
securities have not been traded on an exchange or in the over-the-counter market
for 30 or more days immediately prior to the day in question,  in which case the
Current  Market Price shall be  determined  in good faith by, and reflected in a
formal resolution of, the Board of Directors of the Company.

The Company  acknowledges  and agrees that this Warrant was issued on August __,
2003 (the "Issuance Date").  Consequently,  the Company  acknowledges and agrees
that, if the Holder conducts a cashless  exercise pursuant to this Section 1(b),


                                      -2-
<PAGE>

the period  during  which the Holder held this Warrant may, for purposes of Rule
144  promulgated  under the Securities  Act of 1933, as amended (the "Act"),  be
"tacked" to the period during which the Holder holds the Warrant Shares received
upon such cashless exercise.

         Notwithstanding  the  foregoing,  the  Holder  may  conduct a  cashless
exercise  pursuant to this Section 1(b) only after the first  anniversary of the
Issuance Date, and then only in the event that a registration statement covering
the  resale of the  Warrant  Shares is not then  effective  at the time that the
Holder wishes to conduct such cashless exercise.

         2. Upon each  exercise  of the  Holder's  rights  to  purchase  Warrant
Shares,  the Holder  shall be deemed to be the  holder of record of the  Warrant
Shares issuable upon such exercise,  notwithstanding  that the transfer books of
the  Company  shall then be closed or  certificates  representing  such  Warrant
Shares shall not then have been  actually  delivered  to the Holder.  As soon as
practicable  after each such exercise of this  Warrant,  the Company shall issue
and deliver to the Holder a certificate or  certificates  for the Warrant Shares
issuable  upon  such  exercise,  registered  in the  name of the  Holder  or its
designee.  If this Warrant  should be exercised in part only, the Company shall,
upon  surrender  of this  Warrant  for  cancellation,  execute and deliver a new
Warrant  evidencing  the right of the  Holder to  purchase  the  balance  of the
Warrant Shares (or portions thereof) subject to purchase hereunder.

         3. (a) Any  Warrants  issued  upon the  transfer or exercise in part of
this Warrant shall be numbered and shall be registered in a Warrant  Register as
they are issued. The Company shall be entitled to treat the registered holder of
any  Warrant  on the  Warrant  Register  as the  owner in fact  thereof  for all
purposes and shall not be bound to recognize  any equitable or other claim to or
interest  in such  Warrant  on the part of any  other  person,  and shall not be
liable for any  registration  or transfer of Warrants which are registered or to
be  registered  in the name of a fiduciary or the nominee of a fiduciary  unless
made with the actual  knowledge  that a  fiduciary  or nominee is  committing  a
breach  of  trust in  requesting  such  registration  or  transfer,  or with the
knowledge  of such facts that its  participation  therein  amounts to bad faith.
This  Warrant  shall  be  transferable  only on the  books of the  Company  upon
delivery thereof duly endorsed by the Holder or by his duly authorized  attorney
or representative, or accompanied by proper evidence of succession,  assignment,
or  authority to  transfer.  In all cases of transfer by an attorney,  executor,
administrator,  guardian, or other legal representative, duly authority shall be
produced.  Upon any  registration  of transfer,  the Company shall deliver a new
Warrant  or  Warrants  to the  person  entitled  thereto.  This  Warrant  may be
exchanged,  at the option of the Holder thereof,  for another Warrant,  or other
Warrants  of  different  denominations,  of like tenor and  representing  in the
aggregate  the right to  purchase a like number of Warrant  Shares (or  portions
thereof),   upon  surrender  to  the  Company  or  its  duly  authorized  agent.
Notwithstanding the foregoing,  the Company may require prior to registering any
transfer  of a Warrant  an opinion of  counsel  reasonably  satisfactory  to the
Company that such  transfer  complies  with the  provisions  of the Act, and the
rules and regulations thereunder.



<PAGE>


            (b) The Holder  acknowledges that he has been advised by the Company
that neither this Warrant nor the Warrant Shares have been registered  under the
Act, that this Warrant is being or has been issued and the Warrant Shares may be


                                      -3-
<PAGE>

issued on the basis of the statutory  exemption  provided by Section 4(2) of the
Act or Rule 506 of Regulation D  promulgated  thereunder,  or both,  relating to
transactions  by an issuer  not  involving  any  public  offering,  and that the
Company's reliance thereon is based in part upon the representations made by the
original Holder in the original  Holder's  Subscription  Agreement  executed and
delivered  in  accordance  with the  terms of the  Offering  (the  "Subscription
Agreement").  The Holder  acknowledges  that he has been informed by the Company
of, or is otherwise familiar with, the nature of the limitations  imposed by the
Act and the rules and regulations  thereunder on the transfer of securities.  In
particular,  the Holder  agrees  that no sale,  assignment  or  transfer of this
Warrant or the Warrant  Shares  issuable upon exercise  hereof shall be valid or
effective,  and the Company shall not be required to give any effect to any such
sale,  assignment  or transfer,  unless (i) the sale,  assignment or transfer of
this  Warrant  or such  Warrant  Shares is  registered  under the Act,  it being
understood  that  neither this  Warrant nor such  Warrant  Shares are  currently
registered  for sale and that the Company has no  obligation  or intention to so
register this Warrant or such Warrant Shares except as specifically provided for
in that certain  Registration  Rights Agreement,  of even date herewith,  by and
among the  Company,  the Holder and certain  other  parties  (the  "Registration
Rights  Agreement"),  or (ii) this  Warrant  or such  Warrant  Shares  are sold,
assigned or transferred in accordance with all the  requirements and limitations
of Rule 144 under the Act, it being understood that Rule 144 is not available at
the time of the  original  issuance of this Warrant for the sale of this Warrant
or such Warrant  Shares and that there can be no  assurance  that Rule 144 sales
will be available at any  subsequent  time, or (iii) such sale,  assignment,  or
transfer is otherwise exempt from  registration  under the Act in the opinion of
counsel reasonably acceptable to the Company.

         4. The Company  shall at all times  reserve and keep  available out its
authorized  and unissued  Common Stock,  solely for the purpose of providing for
the exercise of the rights to purchase all Warrant  Shares  granted  pursuant to
the Warrants, such number of shares of Common Stock as shall, from time to time,
be sufficient  therefor.  The Company  covenants that all shares of Common Stock
issuable upon exercise of this Warrant,  upon receipt by the Company of the full
Exercise Price therefor, shall be validly issued, fully paid, nonassessable, and
free of preemptive rights.

         5.  (a) In case  the  Company  shall  at any  time  after  the date the
Warrants  were first  issued (i)  declare a dividend on the  outstanding  Common
Stock payable in shares of its capital  stock,  (ii)  subdivide the  outstanding
Common Stock,  (iii) combine the outstanding  Common Stock into a smaller number
of shares, or (iv) issue any shares of its capital stock by  reclassification of
the Common Stock  (including  any such  reclassification  in  connection  with a
consolidation  or merger in which the  Company is the  continuing  corporation),
then,  in each case,  the  Exercise  Price,  and the  number of  Warrant  Shares
issuable  upon  exercise  of this  Warrant , in effect at the time of the record
date  for  such  dividend  or  of  the  effective  date  of  such   subdivision,
combination, or reclassification,  shall be proportionately adjusted so that the
Holder  after such time shall be entitled to receive  the  aggregate  number and
kind of shares which,  if such Warrant had been exercised  immediately  prior to
such time,  he would have owned upon such  exercise and been entitled to receive
by virtue of such dividend, subdivision, combination, or reclassification.  Such
adjustment  shall be made  successively  whenever  any event  listed above shall
occur.


                                      -4-
<PAGE>



            (b) In case the  Company  shall  issue or fix a record  date for the
issuance  to all  holders of Common  Stock of rights,  options,  or  warrants to
subscribe  for or  purchase  Common  Stock (or  securities  convertible  into or
exchangeable  for Common  Stock) at a price per share (or having a conversion or
exchange price per share, if a security  convertible  into or  exchangeable  for
Common  Stock) less than the then  applicable  Exercise  Price per share on such
record  date,  then,  in each case,  the  Exercise  Price  shall be  adjusted by
multiplying the Exercise Price in effect  immediately  prior to such record date
by a fraction,  the  numerator  of which shall be the number of shares of Common
Stock  outstanding on such record date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
so to be offered (or the aggregate  initial  conversion or exchange price of the
convertible or exchangeable  securities so to be offered) would purchase at such
Exercise  Price and the  denominator  of which  shall be the number of shares of
Common  Stock  outstanding  on such  record  date plus the number of  additional
shares of Common Stock to be offered for subscription or purchase (or into which
the  convertible  or  exchangeable  securities  so to be offered  are  initially
convertible or  exchangeable).  Such  adjustment  shall become  effective at the
close of business on such record date;  provided,  however,  that, to the extent
the shares of Common Stock (or securities  convertible  into or exchangeable for
shares  of  Common  Stock)  are not  delivered,  the  Exercise  Price  shall  be
readjusted after the expiration of such rights,  options,  or warrants (but only
with respect to warrants exercised after such expiration), to the Exercise Price
which would then be in effect had the adjustments made upon the issuance of such
rights,  options,  or warrants  been made upon the basis of delivery of only the
number of shares of Common Stock (or securities convertible into or exchangeable
for shares of Common Stock) actually issued. In case any subscription  price may
be paid in a  consideration  part or all of which  shall be in a form other than
cash,  the value of such  consideration  shall be as determined in good faith by
the board of directors of the Company, whose determination shall be conclusive.

            (c) In case the Company  shall  distribute  to all holders of Common
Stock (including any such  distribution  made to the stockholders of the Company
in  connection  with a  consolidation  or  merger in which  the  Company  is the
continuing corporation) evidences of its indebtedness, cash (other than any cash
dividend which, together with any cash dividends paid within the 12 months prior
to the  record  date  for such  distribution,  does  not  exceed  5% of the then
applicable  Exercise Price at the record date for such  distribution)  or assets
(other than  distributions  and dividends payable in shares of Common Stock), or
rights,  options,  or warrants to subscribe  for or purchase  Common  Stock,  or
securities   convertible  into  or  exchangeable  for  shares  of  Common  Stock
(excluding  those with  respect to the  issuance of which an  adjustment  of the
Exercise Price is provided pursuant to Section 5(b) hereof), then, in each case,
the Exercise Price shall be adjusted by multiplying the Exercise Price in effect
immediately  prior to the  record  date for the  determination  of  stockholders
entitled to receive  such  distribution  by a fraction,  the  numerator of which
shall be the then  applicable  Exercise  Price per share of Common Stock on such
record  date,  less the fair market value (as  determined  in good faith by, and
reflected  in a formal  resolution  of, the board of  directors  of the Company,
whose determination shall be conclusive absent manifest error) of the portion of
the evidences of indebtedness or assets so to be distributed, or of such rights,
options, or warrants or convertible or exchangeable securities, or the amount of
such cash,  applicable to one share,  and the denominator of which shall be such
Exercise Price per share of Common Stock. Such adjustment shall become effective
at the close of business on such record date.



                                      -5-
<PAGE>



            (d) No  adjustment  in the Exercise  Price shall be required if such
adjustment is less than $.01; provided,  however,  that any adjustments which by
reason of this Section 5(d) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under this
Section 5 shall be made to the nearest cent or to the nearest  one-thousandth of
a share, as the case may be.

            (e) In any  case in  which  this  Section  5 shall  require  that an
adjustment  in the  Exercise  Price be made  effective as of a record date for a
specified  event,  the Company may elect to defer,  until the occurrence of such
event,  issuing to the Holder,  if the Holder  exercised this Warrant after such
record date,  the shares of Common  Stock,  if any,  issuable upon such exercise
over and above the shares of Common Stock,  if any,  issuable upon such exercise
on the basis of the Exercise Price in effect prior to such adjustment; provided,
however,  that  the  Company  shall  deliver  to the  Holder a due bill or other
appropriate  instrument evidencing the Holder's right to receive such additional
shares upon the occurrence of the event requiring such adjustment.

            (f) Upon each  adjustment  of the Exercise  Price as a result of the
calculations made in Sections 5(b) or 5(c) hereof, this Warrant shall thereafter
evidence the right to purchase,  at the adjusted  Exercise Price, that number of
shares  (calculated  to the nearest  thousandth)  obtained  by dividing  (A) the
product  obtained by multiplying the number of shares  purchasable upon exercise
of this  Warrant  prior to  adjustment  of the number of shares by the  Exercise
Price in effect prior to  adjustment  of the Exercise  Price by (B) the Exercise
Price in effect after such adjustment of the Exercise Price.

            (g)  Whenever  there  shall be an  adjustment  as  provided  in this
Section 5, the Company shall promptly cause written notice thereof to be sent by
registered  mail,  postage  prepaid,  to the Holder,  at its address as it shall
appear  in the  Warrant  Register,  which  notice  shall  be  accompanied  by an
officer's  certificate  setting forth the number of Warrant  Shares  purchasable
upon the exercise of this Warrant and the Exercise  Price after such  adjustment
and setting forth a brief  statement of the facts  requiring such adjustment and
the  computation  thereof,  which  officer's  certificate  shall  be  conclusive
evidence of the correctness of any such adjustment absent manifest error.

            (h) The Company  shall not be required to issue  fractions of shares
of Common Stock or other  capital stock of the Company upon the exercise of this
Warrant.  If any  fraction of a share would be issuable on the  exercise of this
Warrant (or  specified  portions  thereof),  the  Company  shall  purchase  such
fraction for an amount in cash equal to the same fraction of the Exercise  Price
of such share of Common Stock on the date of exercise of this Warrant.

         6. (a) In case of any  consolidation  or combination  with or merger of
the Company with or into  another  corporation  or entity  (other than a merger,
consolidation or combination in which the Company is the surviving or continuing
corporation),  or  in  case  of  any  sale,  lease,  or  conveyance  to  another
corporation,  entity or person of the  property  and assets of any nature of the



                                      -6-
<PAGE>

Company as an entirety or substantially as an entirety,  or any compulsory share
exchange,  pursuant to which share  exchange the Common Stock is converted  into
other  securities,  cash  or  other  property  (collectively  an  "Extraordinary
Event"), such successor,  leasing, or purchasing corporation,  entity or person,
as the case may be,  shall (i) execute  with the Holder an  agreement  providing
that the Holder shall have the right thereafter to receive upon exercise of this
Warrant  solely  the kind and  amount of  shares of stock and other  securities,
property,  cash, or any combination thereof  (collectively  "Extraordinary Event
Consideration")  receivable  upon  such  Extraordinary  Event by a holder of the
number of  shares  of Common  Stock  for  which  this  Warrant  might  have been
exercised immediately prior to such Extraordinary Event, and (ii) make effective
provision in its certificate of  incorporation  or otherwise,  if necessary,  to
effect such agreement. Such agreement shall provide for adjustments, which shall
be as nearly equivalent as practicable to the adjustments in Section 5.

            (b) In case of any  reclassification  or  change  of the  shares  of
Common Stock  issuable upon exercise of this Warrant (other than a change in par
value or from no par  value  to a  specified  par  value,  or as a  result  of a
subdivision or  combination,  but including any change in the shares into two or
more classes or series of shares), or in case of any consolidation,  combination
or merger of another corporation or entity into the Company in which the Company
is the continuing corporation and in which there is a reclassification or change
(including  a change  to the right to  receive  cash or other  property)  of the
shares of Common Stock  (other than a change in par value,  or from no par value
to a specified par value,  or as a result of a subdivision or  combination,  but
including  any  change  in the  shares  into two or more  classes  or  series of
shares),  the Holder shall have the right thereafter to receive upon exercise of
this Warrant solely the kind and amount of shares of stock and other securities,
property,    cash,   or   any   combination   thereof   receivable   upon   such
reclassification,  change,  consolidation,  combination or merger by a holder of
the  number of shares of Common  Stock for which  this  Warrant  might have been
exercised  immediately prior to such  reclassification,  change,  consolidation,
combination  or  merger.  Thereafter,  appropriate  provision  shall be made for
adjustments,  which  shall  be  as  nearly  equivalent  as  practicable  to  the
adjustments in Section 5.

            (c) The above  provisions of this Section 6 shall similarly apply to
successive  reclassifications  and  changes  of shares  of  Common  Stock and to
successive consolidations, combinations, mergers, sales, leases, or conveyances.

         7. In case at any time the Company shall propose to:

            (a) pay any  dividend or make any  distribution  on shares of Common
Stock in shares  of Common  Stock or make any  other  distribution  (other  than
regularly  scheduled cash dividends  which are not in a greater amount per share
than the most recent such cash dividend) to all holders of Common Stock; or

            (b) issue any rights,  warrants,  or other securities to all holders
of Common Stock entitling them to purchase any additional shares of Common Stock
or any other rights, warrants, or other securities; or




                                      -7-
<PAGE>


            (c) effect any  reclassification  or change of outstanding shares of
Common  Stock,  or any  consolidation,  merger,  sale,  lease,  or conveyance of
property or other Extraordinary Event; or

            (d)  effect  any  liquidation,  dissolution,  or  winding-up  of the
Company; or

            (e) take any other  action  which would cause an  adjustment  to the
Exercise Price;

then,  and in any one or more of such  cases,  the  Company  shall give  written
notice  thereof,  by  registered  mail,  postage  prepaid,  to the Holder at the
Holder's address as it shall appear in the Warrant Register,  mailed at least 15
days prior to (i) the date as of which the holders of record of shares of Common
Stock to be  entitled  to  receive  any  such  dividend,  distribution,  rights,
warrants,  or other securities are to be determined,  (ii) the date on which any
such   reclassification,   change  of   outstanding   shares  of  Common  Stock,
consolidation,   merger,  sale,  lease,  conveyance  of  property,  liquidation,
dissolution,  or winding-up is expected to become effective,  and the date as of
which it is expected  that  holders of record of shares of Common Stock shall be
entitled to exchange  their shares for  securities  or other  property,  if any,
deliverable   upon  such   reclassification,   change  of  outstanding   shares,
consolidation,   merger,  sale,  lease,  conveyance  of  property,  liquidation,
dissolution, or winding-up, or (iii) the date of such action which would require
an adjustment to the Exercise Price.

         8. The issuance of any shares or other  securities upon the exercise of
this Warrant, and the delivery of certificates or other instruments representing
such shares or other securities,  shall be made without charge to the Holder for
any tax or other  charge in respect of such  issuance.  The  Company  shall not,
however,  be  required  to pay any tax which may be  payable  in  respect of any
transfer  involved in the issue and delivery of any  certificate in a name other
than  that of the  Holder  and the  Company  shall not be  required  to issue or
deliver any such certificate  unless and until the person or persons  requesting
the issue thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid.

         9. Unless registered pursuant to the Registration Rights Agreement, the
Warrant  Shares  issued upon exercise of this Warrant shall be subject to a stop
transfer  order and the  certificate  or  certificates  evidencing  such Warrant
Shares shall bear the following legend:

         "THE SHARES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT BEEN REGISTERED
UNDER  THE  SECURITIES  ACT OF  1933,  AS  AMENDED  (THE  "ACT"),  OR ANY  STATE
SECURITIES  LAWS, AND NEITHER SUCH  SECURITIES  NOR ANY INTEREST  THEREIN MAY BE
OFFERED,  SOLD,  PLEDGED,   ASSIGNED  OR  OTHERWISE  TRANSFERRED  UNLESS  (1)  A
REGISTRATION  STATEMENT WITH RESPECT  THERETO IS EFFECTIVE UNDER THE ACT AND ANY
APPLICABLE  STATE  SECURITIES  LAWS,  OR (2) THE COMPANY  RECEIVES AN OPINION OF
COUNSEL  TO THE  HOLDER  OF SUCH  SECURITIES,  WHICH  COUNSEL  AND  OPINION  ARE
REASONABLY  SATISFACTORY  TO THE COMPANY,  THAT SUCH  SECURITIES MAY BE OFFERED,
SOLD,  PLEDGED,  ASSIGNED OR TRANSFERRED IN THE MANNER  CONTEMPLATED  WITHOUT AN
EFFECTIVE  REGISTRATION  STATEMENT UNDER THE ACT OR APPLICABLE  STATE SECURITIES
LAWS."





                                      -8-
<PAGE>


         10. Upon receipt of evidence  satisfactory  to the Company of the loss,
theft,  destruction,  or  mutilation  of any Warrant (and upon  surrender of any
Warrant if  mutilated),  the  Company  shall  execute  and deliver to the Holder
thereof a new Warrant of like date, tenor, and denomination.

         11. The holder of this Warrant shall not have solely on account of such
status, any rights of a stockholder of the Company,  either at law or in equity,
or to any notice of meetings of stockholders or of any other  proceedings of the
Company, except as provided in this Warrant.

         12. The Warrants are  redeemable,  commencing 60 days from the Issuance
Date,  by the  Company at a price of $.05 per Warrant at any time prior to their
exercise or expiration  upon 30 days prior written  notice;  provided,  however,
that  the (i)  closing  sales  price  for  the  Common  Stock  for at  least  30
consecutive  calendar  days  ending on the third day prior to the date notice of
redemption  is given by the Company  has been at least  $4.00 per share;  (ii) a
registration  statement relating to the Warrant Shares issuable upon exercise of
the Warrants has been declared  effective by the Commission and is available for
resale of such Warrant Shares during the entire 30-day notice period;  and (iii)
the holder would not be prevented from selling the Warrant Shares  issuable upon
exercise of the Warrants  subject to the notice of redemption as a result of the
lock-up/dribble-out  provisions  contained  in  Section  3.10 of the  Securities
Purchase  Agreement under which the Preferred Stock and the Warrants were issued
and sold by the Company, after aggregating the number of Warrant Shares issuable
upon exercise of the Warrants subject to the notice of redemption with (A) those
Warrant Shares currently held by the holder and (B) those shares of Common Stock
currently  held by the  holder  as a result of its  conversion  of shares of the
Preferred  Stock.  The  Warrants  remain  exercisable  during the 30-day  notice
period. Any Warrant holder who does not exercise that holder's Warrants prior to
their expiration or redemption, as the case may be, forfeits that holder's right
to purchase the shares of Warrant Shares  underlying the Warrants.  For purposes
of  determining  whether  and  to  what  extent  Warrants  may be  eligible  for
redemption pursuant to paragraph (iii) above, the Company may request the holder
provide a written statement as to the number of Warrant Shares currently held by
the holder and shares of Common Stock  currently  held by the holder as a result
of its conversion of shares of the Preferred Stock. This request, if made, shall
be in writing and the holder shall respond in writing within five business days.
If the holder fails to respond within the requisite time period, the Company may
assume that the Warrants are eligible for redemption pursuant to paragraph (iii)
and,  assuming all other  conditions of this Section are met,  issue a notice of
redemption to the holder.

         13. The Company may by notice to the holders of all the  Warrants  make
any changes or  corrections in the Warrants (i) that it shall deem in good faith
appropriate  to cure any ambiguity or to correct any  defective or  inconsistent
provision or manifest  mistake or error contained in the Warrants;  or (ii) that
it may deem  necessary or  desirable  and which shall not  adversely  affect the
interests of the holders of Warrants; provided, however, that the Warrants shall
not otherwise be modified,  supplemented  or altered in any respect  except with
the consent in writing of the holders of Warrants representing not less than 51%
of the Warrants then outstanding;  and provided,  further, that no change in the
number  or  nature  of the  securities  purchasable  upon the  exercise  of this
Warrant,  or increasing the Exercise Price therefor,  or the acceleration of the



                                      -9-
<PAGE>

termination of the Exercise Period, shall be made without the consent in writing
of the holders of Warrants representing not less than two-thirds of the Warrants
then outstanding (other than such changes as are specifically prescribed by this
Warrant as originally executed or are made in compliance with applicable law).

         14. This Warrant has been  negotiated  and  consummated in the State of
New York and shall be construed in accordance  with the laws of the State of New
York  applicable  to contracts  made and  performed  within such State,  without
regard to principles governing conflicts of law.

         15. The Company shall not effect the exercise of this  Warrant,  and no
person who is a holder of this  Warrant  shall have the right to  exercise  this
Warrant,  to the extent that after giving effect to such  exercise,  such person
(together with such person's  affiliates)  would  beneficially  own in excess of
4.99% of the shares of the Common  Stock  outstanding  immediately  after giving
effect to such exercise.  For purposes of the foregoing sentence,  the aggregate
number of  shares of Common  Stock  beneficially  owned by such  Person  and its
affiliates  shall include,  without  limitation,  the number of shares of Common
Stock  issuable  upon  exercise  of this  Warrant  with  respect  to  which  the
determination of such sentence is being made, but shall exclude shares of Common
Stock which would be issuable  upon (i) exercise of the  remaining,  unexercised
portion of this Warrant beneficially owned by such Person and its affiliates and
(ii) exercise or conversion of the  unexercised  or  unconverted  portion of any
other  securities  of the  Company  beneficially  owned by such  Person  and its
affiliates  (including,  without  limitation,  shares of  Preferred  Stock,  any
debentures,  convertible notes or other convertible preferred stock or warrants)
subject to a limitation on conversion  or exercise  analogous to the  limitation
contained herein. Except as set forth in the preceding sentence, for purposes of
this  paragraph,  beneficial  ownership  shall be calculated in accordance  with
Section 13(d) of the Exchange Act. For purposes of this Warrant,  in determining
the  number of  outstanding  shares of Common  Stock,  a Holder  may rely on the
number of  outstanding  shares of Common Stock as reflected in (1) the Company's
most recent Form 10-Q, Form 10-K or other public filing with the Commission,  as
the case may be, (2) a more recent public  announcement  by the Company,  or (3)
any other notice by the Company or its transfer  agent  setting forth the number
of shares of Common  Stock  outstanding.  For any  reason at any time,  upon the
written or oral request of the Holder of this Warrant,  the Company shall within
five business  days confirm  orally and in writing to the Holder of this Warrant
the number of shares of Common Stock then  outstanding.  In any case, the number
of outstanding shares of Common Stock shall be determined after giving effect to
the  conversion  or exercise of  securities of the Company by the Holder of this
Warrant and its affiliates since the date as of which such number of outstanding
shares of Common Stock was reported.  In effecting the exercise of this Warrant,
the Company shall be entitled to rely on a representation  by the Holder of this
Warrant as to the number of shares that it beneficially owns for purposes of the
above 4.99% limitation calculation.

         By written  notice to the Company,  the Holder may waive the provisions
of this  Section but any such waiver  will not be  effective  until the 65th day
after such notice is delivered to the Company.







                                      -10-
<PAGE>


Dated:  December 30, 2003

                                              AXM PHARMA, INC.
Attest:

                                              By:
                                                 -----------------------------
                                                       Peter Cunningham,
                                                       President

















                                      -11-
<PAGE>


                                AXM PHARMA, INC.

                               FORM OF ASSIGNMENT

         (To be executed  by the  registered  holder if such  holder  desires to
transfer the attached Warrant.)

To:      AXM Pharma, Inc.
         4695 Macarthur Court
         Newport Beach, California 92660

         Attention: President

         FOR  VALUE  RECEIVED,   _______________   hereby  sells,  assigns,  and
transfers  unto  _______________  that certain  Warrant  (Number  UW-______)  to
purchase  __________  shares of Common Stock, par value $0.001 per share, of AXM
Pharma,  Inc.  (the  "Company"),  together with all right,  title,  and interest
therein,    and    does    hereby    irrevocably    constitute    and    appoint
________________________  attorney to transfer  such Warrant on the books of the
Company, with full power of substitution.

Dated:
       --------------------

                                           Signature:
                                                      -------------------------


                                     NOTICE:

         The signature on the foregoing  Assignment  must correspond to the name
as written upon the face of this Warrant in every particular, without alteration
or enlargement or any change whatsoever.












                                      -12-
<PAGE>


                                AXM PHARMA, INC.

                                  EXERCISE FORM

         (To be completed and signed only upon exercise of the Warrants)

To:      AXM Pharma, Inc.
         4695 Macarthur Court
         Newport Beach, California 92660

         Attention: President

         The  undersigned  hereby  exercises  his  or  its  rights  to  purchase
___________  Warrant Shares  covered by the within  Warrant and tenders  payment
herewith  in the  amount  of  $_________  by  [tendering  cash or  delivering  a
certified  check or bank cashier's  check,  payable to the order of the Company]
[surrendering  ______  shares of Common  Stock  received  upon  exercise  of the
attached  Warrant,  which  shares  have a  Current  Market  Price  equal to such
payment] in accordance  with the terms thereof,  and requests that  certificates
for such securities be issued in the name of, and delivered to:


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

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

                                        ----------------------------------------
                                        (Print Name, Address and Social Security
                                                 or Tax Identification Number)

and,  if such  number of  Warrant  Shares  shall not be all the  Warrant  Shares
covered by the within Warrant, that a new Warrant for the balance of the Warrant
Shares covered by the within Warrant be registered in the name of, and delivered
to, the undersigned at the address stated below.


Dated: ____________, ________               Name:
                                                 ------------------------------
                                                        (Please Print)

                                       Address:
                                                 ------------------------------

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

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


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




                                      -13-