Unassociated Document


     

    INVESTOR
      RIGHTS AGREEMENT

     

    This
      Investor Rights Agreement (this “Agreement”) is made and entered into as of June
      23, 2006, by and among DrugMax, Inc., a Nevada corporation (the “Company”), and
      Deerfield Special Situations Fund, L.P., a Delaware limited partnership, and
      Deerfield Special Situations Fund International Limited, a British Virgin
      Islands company (collectively, the “Purchasers”).

     

    W
      I T N E S S E T H

     

    WHEREAS,
      pursuant to a Note and Warrant Purchase Agreement, dated as of the date hereof,
      among the Company and the Purchasers (the “Purchase
      Agreement”),
      the
      Company has agreed to issue and sell to the Purchasers promissory notes in
      the
      aggregate principal amount of $10 million (collectively, the “Notes”),
      and
      eight warrants (the “Warrants”)
      to
      purchase an aggregate of 16,500,000 shares of the Company’s Common Stock (the
“Shares”);
      

     

    WHEREAS,
      the
      obligations of the Company under the Notes are secured by a security interest
      in
      the assets of the Company pursuant to the Security Agreement, dated as of the
      date hereof, by the Company in favor of the Purchasers (the “Security
      Agreement”);

     

    WHEREAS,
      to
      induce the Purchasers to execute and deliver the Purchase Agreement, the Company
      has agreed to provide to the Purchasers and its permitted assigns certain
      registration rights under the Securities Act of 1933, as amended (the
“Securities
      Act”),
      and
      applicable state securities laws; and 

     

    WHEREAS,
      this
      Agreement, together with the Purchase Agreement, the Notes, the Warrants and
      the
      Security Agreement are hereinafter collectively referred to as the “Transaction
      Documents”.

     

    NOW
      THEREFORE,
      in
      consideration of the foregoing and other good and valuable consideration, the
      parties hereto agree as follows:

     

    1. Definitions.

     

    As
      used
      in this Agreement, the following terms shall have the following
      meanings:

     

    
      	 	
              (a)

            	
              “Claims”
                shall have the meaning ascribed to it in Section
                6(a).

            


    

     

    
      	 	
              (b)

            	
              “Exchange
                Act”
                shall mean the Securities Exchange Act of 1934, as
                amended.

            


    

     

    
      	 	
              (c)

            	
              "Holder"
                or “Holders”
                mean a holder or holders of Registrable
                Securities.

            


    

     

    
      	 	
              (d)

            	
              “Indemnified
                Person”
                shall mean a party entitled to indemnification pursuant to Section
                6.

            


    

     

    
      	 	
              (e)

            	
              “Registrable
                Securities”
                shall mean (i) the Shares, (ii) the shares of Common Stock or other
                securities issued or issuable to the Purchasers or their permitted
                transferees or designees (a) upon exercise of the Warrants, or (b)
                upon
                any distribution with respect to, any exchange for or any replacement
                of
                the Warrants, or (c) upon any conversion, exercise or exchange of
                any
                securities issued in connection with any such distribution, exchange
                or
                replacement; (iii) securities issued or issuable upon any stock split,
                stock dividend, recapitalization or similar event with respect to
                such
                shares of Common Stock; and (iv) any other security issued as a dividend
                or other distribution with respect to, in exchange for, or in replacement
                of, the securities referred to in the preceding
                clauses.

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	 	
              (f)

            	
              “Registration
                Period”
                shall have the meaning ascribed to it in Section
                2(ii).

            


    

     

    
      	 	
              (g)

            	
              “Registration
                Statement”
                means a registration statement or registration statements of the
                Company
                filed under the Securities Act covering Registrable
                Securities.

            


    

     

    
      	 	
              (h)

            	
              “Register,”
                “Registered”
                and “Registration”
                refer to a registration effected by preparing and filing a registration
                statement in compliance with the Securities Act and pursuant to Rule
                415
                under the Securities Act or any successor rule providing for offering
                securities on a continuous basis (“Rule
                415”),
                and the declaration or ordering of effectiveness of such registration
                statement by the United States Securities and Exchange Commission
                (the
                “Commission”).

            


    

     

    
      	 	
              (i)

            	
              “Rule
                144”
                shall have the meaning ascribed to it in Section
                8.

            


    

     

    
      	 	
              (j)

            	
              “Securities
                Act”
                shall mean the Securities Act of 1933, as
                amended.

            


    

     

    
      	 	
              (k)

            	
              “Violations”
                shall have the meaning ascribed to it in Section
                6(a).

            


    

     

    Capitalized
      terms defined in the introductory paragraph or the recitals to this Agreement
      shall have the respective meanings therein provided. Capitalized terms used
      herein and not otherwise defined herein shall have the meanings set forth in
      the
      Purchase Agreement or elsewhere in the Transaction Documents.

     

    2. Mandatory
      Registration.

     

    (i) The
      Company shall prepare and file with the Securities and Exchange Commission
      (the
“Commission”)
      not
      later than the 60th day (the “Filing
      Date”)
      after
      the Closing Date under the Purchase Agreement a Registration Statement or
      Registration Statements (as necessary) on Form S-3 covering the resale of all
      of
      the Registrable Securities, in an amount sufficient to cover the resale of
      the
      shares issuable upon exercise of the Warrants. In the event that Form S-3 is
      unavailable for such a registration, the Company shall use such other form
      as is
      available and appropriate for such a registration. Any Registration Statement
      prepared pursuant hereto shall register for resale at least that number of
      shares of Common Stock equal to the Shares. The Company shall use its reasonable
      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 240th
      day
      after the Filing Date (such day referred to herein as the “Effective
      Date”).

     

    (ii) The
      Company shall use its reasonable best efforts to keep each Registration
      Statement effective pursuant to Rule 415 at all times until such date as is
      the
      earlier of (i) the date on which all of the Registrable Securities have been
      sold pursuant to a Registration Statement and (ii) the date on which the
      Registrable Securities (in the opinion of counsel to the Purchasers and
      acceptable to legal counsel for the Company) may be immediately sold without
      restriction (including without limitation as to volume restrictions by each
      holder thereof) and without registration under the Securities Act (the
“Registration
      Period”).

     

    
      
        
        

      

      
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    3. Obligations
      of the Company.
      In
      connection with the registration of the Registrable Securities, the Company
      shall do each of the following:

     

    (a) Prepare
      and file with the Commission the Registration Statements required by Section
      2
      of this Agreement and such amendments (including post-effective amendments)
      and
      supplements to the Registration Statements and the prospectuses used in
      connection with the Registration Statements, as may be necessary to keep the
      Registration effective at all times during the Registration Period, and, during
      the Registration Period, to comply with the provisions of the Securities Act
      with respect to the disposition of all of the Registrable Securities until
      such
      time as all of such Registrable Securities have been disposed of in accordance
      with the intended methods of disposition by the seller or sellers thereof as
      set
      forth in the Registration Statements;

     

    (b) If
      the
      Registrable Securities are included in a Registration Statement, the Company
      shall promptly furnish, after such Registration Statement is prepared, filed
      with the Commission, publicly disseminated and distributed by the Company,
      to
      the Holders and their legal counsel, a copy of the Registration Statement,
      each
      preliminary prospectus, each final prospectus, and all amendments and
      supplements thereto and such other documents as the Holders may reasonably
      request in order to facilitate the disposition of its Registrable
      Securities;

     

    (c) As
      soon
      as practicable for the Company and its counsel, but no later than five business
      days after receipt thereof, furnish to the Holders and their counsel copies
      of
      appropriate correspondence between the Company and the Commission with respect
      to any registration statement or amendment or supplement thereto filed pursuant
      to this Agreement;

     

    (d) Use
      its
      reasonable best efforts to (i) register and qualify the Registrable Securities
      covered by the Registration Statement under such other securities or blue sky
      laws, if applicable, of such jurisdictions as any Holder may reasonably request,
      (ii) prepare and file in those jurisdictions such amendments (including
      post-effective amendments) and supplements to such registrations and
      qualifications as may be necessary to maintain the effectiveness thereof at
      all
      times during the Registration Period, (iii) take such other actions as may
      be
      necessary to maintain such registrations and qualifications in effect at all
      times during the Registration Period and (iv) take all other actions necessary
      or advisable to qualify the Registrable Securities for sale in such
      jurisdictions, except that the Company shall not for any such purpose be
      required to qualify generally to do business as a foreign corporation in any
      jurisdiction wherein it would not but for the requirements of this subsection
      (d) be obligated to be so qualified, or to subject itself to taxation in any
      such jurisdiction, or to consent to general service of process in any such
      jurisdiction;

     

    (e) If
      required, list such securities on the Nasdaq Stock Market (“Nasdaq”)
      or
      such other national securities exchanges on which any securities of the Company
      are then listed, and file any filings required by Nasdaq and/or such other
      filings; 

     

    (f) Notify
      the Holders and (if requested by the Holders) confirm such advice in writing,
      (i) when or if the prospectus or any prospectus supplement or post-effective
      amendment has been filed with the Commission, and, with respect to the
      Registration Statement or any post-effective amendment, when the same has been
      declared effective by the Commission, (ii) of any request by the Commission
      for
      amendments or supplements to the Registration Statement or the prospectus or
      for
      additional information, (iii) of the issuance by the Commission of any stop
      order suspending the effectiveness of the Registration Statement or the
      initiation of any proceedings for that purpose, (iv) of the receipt by the
      Company of any notification with respect to the suspension of the qualification
      of the Registrable Shares for sale in any jurisdiction or the initiation or
      threatening of any proceeding for such purpose, and (v) of the happening of
      any
      event as a result of which the prospectus included in such Registration
      Statement, as then in effect, includes an untrue statement of a material fact
      or
      omits to state a material fact required to be stated therein or necessary to
      make the statements therein not misleading in the light of the circumstances
      then existing;

     

    
      
        
        

      

      
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    (g) If
      any
      fact contemplated by clause (v) of paragraph (f), above, shall exist, prepare
      a
      supplement or post-effective amendment to the Registration Statement or the
      related prospectus or any document incorporated therein by reference or file
      any
      other required document so that, as thereafter delivered to the purchasers
      of
      the Registrable Securities the prospectus will not contain an untrue statement
      of material fact or omit to state any material fact necessary to make the
      statements therein not misleading;

     

    (h) Cooperate
      with each Holder to facilitate the timely preparation and delivery of
      certificates for the Registrable Securities to be offered pursuant to the
      Registration Statement and to enable such certificates for the Registrable
      Securities to be in such denominations or amounts, as the case may be, as each
      Holder may reasonably request, and registered in such names as each Holder
      may
      request; and, within three business days after a Registration Statement which
      includes Registrable Securities is ordered effective by the Commission, the
      Company shall deliver, and shall cause legal counsel selected by the Company
      to
      deliver, to the transfer agent for the Registrable Securities (with copies
      to
      the Holders) an appropriate instruction and opinion of such counsel,
      satisfactory to the Company, and the Holders and their legal
      counsel;

     

    (i) Enter
      into customary agreements and take all other customary and appropriate actions
      in order to expedite or facilitate the disposition of such Registrable
      Securities. 

     

    (j) The
      Company shall hold in confidence and not make any disclosure of information
      concerning a Holder provided to the Company unless (i) disclosure of such
      information is necessary to comply with federal or state securities laws and/or
      the requests of any self-regulatory organizations, (ii) the disclosure of such
      information is necessary to avoid or correct a misstatement or omission in
      any
      Registration Statement, (iii) the release of such information is ordered
      pursuant to a subpoena or other order from a court or governmental body of
      competent jurisdiction, or (iv) such information has been made generally
      available to the public other than by disclosure in violation of this or any
      other agreement. The Company agrees that it shall, upon learning that disclosure
      of such information concerning a Holder is sought in or by a court or
      governmental body of competent jurisdiction or though other means, give prompt
      notice to such Holder prior to making such disclosure, and allow such Holders,
      at its expense, to undertake appropriate action to prevent disclosure of, or
      to
      obtain a protective order for, such information.

     

    (k) In
      the
      event that, in the judgment of the Company, it is advisable to suspend use
      of a
      prospectus included in a Registration Statement due to pending material
      developments or other events that have not yet been publicly disclosed and
      as to
      which the Company believes public disclosure would be detrimental to the
      Company, the Company shall notify all Holders to such effect, and, upon receipt
      of such notice, each such Holder shall immediately discontinue any sales of
      Registrable Securities pursuant to such Registration Statement until such Holder
      has received copies of a supplemental or amended prospectus or until such Holder
      is advised in writing by the Company that then current prospectus may be used
      and has received copies of any additional or supplemental filings that are
      incorporated or deemed incorporated by reference in such prospectus.
      Notwithstanding anything to the contrary herein, the Company shall not exercise
      its rights under this Section 3(k) to suspend of Registrable Securities for
      a
      period in excess of 45 days consecutively or 90 days in any 365-day
      period.

     

    
      
        
        

      

      
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    4. Obligations
      of the Holders to Provide Information.
      In
      connection with the registration of the Registrable Securities, each Holder
      shall furnish to the Company such information regarding itself, the Registrable
      Securities held by it and the intended method of disposition of the Registrable
      Securities held by it as shall be reasonably requested by the Company to effect
      the registration of such Registrable Securities, and the Holders shall execute
      any and all such documents in connection with such registration as the Company
      and its legal counsel may reasonably request. At least five business days prior
      to the first anticipated filing date of the Registration Statement, the Company
      shall notify the Holders of the information the Company requires of the Holders
      to be included in the Registration Statement. The Company shall not be required
      to include the Registrable Securities of a Holder in a Registration Statement
      who fails to furnish the Company with any such information except where such
      failure does not materially prejudice the Company’s ability to register such
      Registrable Securities. The Holders shall give sufficient notice to the Company
      before selling any Registrable Securities so that the Company may prepare and
      file any necessary post-effective amendments to the Registration Statement
      or
      such additional filings as shall be necessary or desirable. 

     

    5. Expenses
      of Registration.
      All
      expenses, other than underwriting discounts and commissions and other fees
      and
      expenses of investment bankers, other brokerage commissions and legal fees
      of
      the Holders, incurred in connection with registrations, filings or
      qualifications pursuant to Section 3, but including, without limitation, all
      registration, listing, and qualification fees, printing and accounting fees,
      and
      the fees and disbursements of counsel for the Company, with respect to the
      Registration Statement filed pursuant hereto, shall be borne by the Company.
      

     

    6. Indemnification.
      In the
      event any Registrable Securities are included in a Registration Statement under
      this Agreement:

     

    (a) The
      Company will indemnify and hold harmless the Holders, each of their respective
      officers, directors, members, managers, partners and shareholders, and each
      person, if any, who controls a Holder within the meaning of the Securities
      Act
      or the Exchange Act against any losses, claims, damages, liabilities or expenses
      (joint or several) incurred (collectively, “Claims”)
      to
      which any of them may become subject under the Securities Act, the Exchange
      Act
      or otherwise, insofar as such Claims (or actions or proceedings, whether
      commenced or threatened, in respect thereof) arise out of or are based upon:
      (i)
      any untrue statement or alleged untrue statement of a material fact contained
      in
      the Registration Statement or any post-effective amendment thereof or the
      omission or alleged omission to state therein a material fact required to be
      stated therein or necessary in order to make the statements therein, in light
      of
      the circumstances in which they were made, not misleading, (ii) any untrue
      statement or alleged untrue statement of a material fact contained in any
      preliminary prospectus if used prior to the effective date of such Registration
      Statement, or contained in the final prospectus (as amended or supplemented,
      if
      the Company files any amendment thereof or supplement thereto with the
      Commission) or the omission to state therein any material fact necessary in
      order to make the statements made therein, in light of the circumstances under
      which they were made, not misleading, or (iii) any violation or alleged
      violation by the Company of the Securities Act, the Exchange Act, any state
      securities law or any rule or regulation under the Securities Act, the Exchange
      Act or any state securities law (the matters in foregoing clauses (i) through
      (iii) being, collectively, “Violations”).
      The
      Company shall, subject to the provisions of Section 6(c) below, reimburse each
      Indemnified Person, promptly as such expenses are incurred and are due and
      payable, for any reasonable legal and other reasonable costs, expenses and
      disbursements in giving testimony or furnishing documents in response to a
      subpoena or otherwise, including without limitation, the costs, expenses and
      disbursements, as and when incurred, of investigating, preparing or defending
      any such action, suit, proceeding or investigation (whether or not in connection
      with litigation in which an Indemnified Person is a party), incurred by it
      in
      connection with the investigation or defense of any such Claim. Notwithstanding
      anything to the contrary contained herein, the indemnification agreement
      contained in this Section 6(a) shall not (i) apply to any Claim arising out
      of
      or based upon any untrue statement or omission made in a Registration Statement,
      preliminary prospectus or prospectus, or any amendment or supplement, in each
      case, in reliance upon and in conformity with information furnished in writing
      to the Company by or on behalf of any Indemnified Person expressly for use
      in
      connection with the preparation of the Registration Statement or any such
      amendment thereof or supplement thereto; (ii) be available to the extent that
      such Claim is based upon a failure of a Holder to deliver or to cause to be
      delivered the prospectus made available by the Company, if such prospectus
      was
      timely made available by the Company pursuant to Section 3(b) hereof; or (iii)
      apply to amounts paid in settlement of any Claim if such settlement is effected
      without the prior written consent of the Company, which consent shall not be
      unreasonably withheld. Such indemnity shall remain in full force and effect
      regardless of any investigation made by or on behalf of an Indemnified Person
      and shall survive the transfer of the Registrable Securities by the Purchasers
      pursuant to Section 9. 

     

    
      
        
        

      

      
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    (b) Each
      Holder will indemnify the Company and its officers and directors and each person
      if any, who controls the Company within the meaning of the Securities Act or
      the
      Exchange Act against any Claims arising out of or based upon a Violation which
      occurs in reliance upon and in conformity with information furnished in writing
      to the Company, by or on behalf of such Holder, expressly for use in connection
      with the preparation of the Registration Statement, preliminary prospectus
      or
      prospectus (including any modifications, amendments or supplements thereto)
      provided, however, that in no event shall any indemnity by a Holder under this
      Section 6 exceed the amount of the net proceeds received by such Holder in
      connection with the offering effected through such Registration
      Statement.

     

    (c) Promptly
      after receipt by an Indemnified Person under this Section 6 of notice of the
      commencement of any action (including any governmental action), such Indemnified
      Person shall, if a Claim in respect thereof is to be made against any
      indemnifying party under this Section 6, deliver to the indemnifying party
      a
      written notice of the commencement thereof, and the indemnifying party shall
      have the right to participate in, and to the extent that the indemnifying party
      so desires, jointly with any other indemnifying party similarly notified, to
      assume control of the defense thereof with counsel mutually satisfactory to
      the
      indemnifying party and the Indemnified Person; provided, however, that an
      Indemnified Person shall have the right to retain its own counsel with the
      reasonable fees and expenses to be paid by the indemnifying party, if, in the
      reasonable opinion of counsel retained by the Indemnified Person, the
      representation of the Indemnified Person by counsel retained by the indemnifying
      party would be inappropriate due to actual or potential differing interests
      between such Indemnified Person and any other party represented by such counsel
      in such proceeding. In such event, the Company shall pay for only one separate
      legal counsel for the Holders, and such legal counsel shall be selected by
      the
      Holders. The failure to deliver written notice to an indemnifying party within
      a
      reasonable time after the commencement of any such action shall not relieve
      such
      indemnifying party of any liability to the Indemnified Person under this Section
      6, except to the extent that the indemnifying party is materially prejudiced
      in
      its ability to defend such action. The indemnification required by this Section
      6 shall be made by periodic payments of the amount thereof during the course
      of
      the investigation or defense, as such expense, loss, damage or liability is
      incurred and is due and payable.

     

    (d) No
      indemnifying party, in the defense of any such claim or litigation, shall,
      except with the consent of each Indemnified Party, consent to entry of any
      judgment or enter into any settlement which does not include as an unconditional
      term thereof the giving by the claimant or plaintiff to such Indemnified Person
      of an unconditional and irrevocable release from all liability in respect of
      such claim or litigation and no Indemnified Party shall consent to entry of
      any
      judgment or settle such claim or litigation without the prior written consent
      of
      the indemnifying party, which consent shall not be unreasonably withheld,
      conditioned or delayed.

     

    
      
        
        

      

      
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    7. Contribution.
      To the
      extent any indemnification by an indemnifying party is prohibited or limited
      under applicable law, the indemnifying party agrees, in lieu of indemnifying
      such Indemnified Person to such extent, to contribute to the amount paid or
      payable by an Indemnified Person as a result of such loss, claim, damage,
      liability or expense in such proportion as is appropriate to reflect the
      relative fault of the indemnifying party on the one hand and the Indemnified
      Person on the other hand in connection with the statements or omissions which
      resulted in such Claim, as well as any other relevant equitable considerations.
      The relative fault of the indemnifying party and the Indemnified Person shall
      be
      determined by reference to, among other things, whether the untrue or alleged
      untrue statement of a material fact or the omission to state a material fact
      on
      which such Claim is based relates to information supplied by the indemnifying
      party or by the Indemnified Person, and the parties’ relative intent, knowledge,
      access to information and opportunity to correct or prevent such statement
      or
      omission. Notwithstanding the foregoing, (a) no contribution shall be made
      under
      circumstances where the payor would not have been liable for indemnification
      under the fault standards set forth in Section 6, (b) no seller of Registrable
      Securities guilty of fraudulent misrepresentation (within the meaning of Section
      11(f) of the Securities Act) shall be entitled to contribution from any seller
      of Registrable Securities who was not guilty of such fraudulent
      misrepresentation and (c) contribution by any seller of Registrable Securities
      shall be limited in amount to the net proceeds received by such seller from
      the
      sale of such Registrable Securities. The Company and the Holders agree that
      it
      would not be just and equitable if contribution pursuant to this Section 7
      were
      determined by pro rata
      allocation (even if the Holders and any other party were treated as one entity
      for such purpose) or by any other method of allocation that does not take
      account of the equitable considerations referred to in this Section. No party
      shall be liable for contribution with respect to any action, suit, proceeding
      or
      claim settled without its prior written consent, which consent shall not be
      unreasonably withheld, conditioned or delayed. 

     

    8. Reports
      Under Exchange Act.
      With a
      view to making available to the Holders the benefits of Rule 144 promulgated
      under the Securities Act or any other similar rule or regulation of the
      Commission that may at any time permit the Holders to sell securities of the
      Company to the public without registration (“Rule
      144”),
      the
      Company agrees to 

     

    (i)
      make
      and keep public information available, as those terms are understood and defined
      in Rule 144;

     

    (ii)
      use
      its reasonable best efforts to file with the Commission in a timely manner
      all
      reports and other documents required of the Company under the Securities Act
      and
      the Exchange Act; and

     

    (iii)
      furnish to any Holder so long as any Holder owns Shares or Warrants promptly
      upon request, (i) a written statement by the Company that it has complied with
      the reporting requirements of the Securities Act and the Exchange Act, (ii)
      a
      copy of the most recent annual or periodic report of the Company and such other
      reports and documents so filed by the Company and (iii) such other information
      as may be reasonably requested to permit the Holders to sell such securities
      pursuant to Rule 144 without registration.

     

    9. Assignment
      of the Registration Rights.
      The
      rights to have the Company register Registrable Securities pursuant to this
      Agreement shall be automatically assigned by a Purchaser to any transferee
      of
      the Shares or Warrants held by such Purchaser if: (a) such Purchaser 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; (b) the Company is, at the time of such transfer within five
      business days after such transfer or assignment, furnished with written notice
      of the name and address of such transferee or assignee; and (c) at or before
      the
      time the Company receives the written notice contemplated by clause (b) of
      this
      sentence, the transferee or assignee agrees in writing with the Company to
      be
      bound by all of the provisions contained herein.

     

    
      
        
        

      

      
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    10. Amendment
      of Registration Rights.
      Any
      provision of this Agreement may be amended and the observance thereof may be
      waived (either generally or in a particular instance and either retroactively
      or
      prospectively), only with the written consent of the Company and the Holders.
      Any amendment or waiver effected in accordance with this Section 10 shall be
      binding upon the Company and the Holders.

     

    11. Miscellaneous.

     

    (a) A
      person
      or entity is deemed to be a holder of Registrable Securities whenever such
      person or entity owns of record such Registrable Securities or Warrants
      exercisable into such Registrable Securities. If the Company receives
      conflicting instructions, notices or elections from two or more persons or
      entities with respect to the same Registrable Securities, the Company shall
      act
      upon the basis of the instructions, notice or election received from the
      registered owner of such Registrable Securities or Warrants.

     

    (b) Any
      notice required or permitted hereunder shall be given in writing (unless
      otherwise specified herein) and shall be effective upon personal delivery,
      via
      facsimile (upon receipt of confirmation of error-free transmission) or two
      business days following deposit of such notice with an internationally
      recognized courier service, with postage prepaid and addressed to each of the
      other parties thereunto entitled at the address set forth below in this Section
      11(b), or at such other addresses as a party may designate by ten (10) days
      advance written notice to each of the other parties hereto.

     

    All
      notices shall be addressed as follows:

     

    


    If
      to the
      Purchasers, addressed to: 

     

    c/o
      Deerfield Management Company L.P.

    780
      Third
      Avenue, 37th Floor

    New
      York,
      New York 10017

    Attention:
      James E. Flynn

    Facsimile
      No.: (212) 573-8111

    


    With
      a
      copy to:

     

    Katten
      Muchin Rosenman LLP

    575
      Madison Avenue

    New
      York,
      New York 10022

    Attention:
      Robert Weiss, Esq.

    Telecopier
      No: (212) 940-8776

    


     

    If
      to any
      Holder, to such address as such Holder notifies the Company in writing.


     

    In
      each
      case, with a copy to:

     

    Katten
      Muchin Rosenman LLP

    575
      Madison Avenue

    New
      York,
      New York 10022

    Attention:
      Robert Weiss, Esq.

    Telecopier
      No: (212) 940-8776

    


    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    If
      to the
      Company, addressed to: 

     

    DrugMax,
      Inc.

    312
      Farmington Avenue

    Farmington,
      CT 06032-1968

    Attention:
      General Counsel

    Facsimile
      No.: (860) 676-8764

    


    With
      a
      copy to:

    


    Robinson
      & Cole LLP

    280
      Trumbull Street

    Hartford,
      CT 06103

    Attention:
      John B. Lynch Jr. Esq.

    Telecopier
      No: (860) 275-8299

    


    (c) Failure
      of any party to exercise any right or remedy under this Agreement or otherwise,
      or delay by a party in exercising such right or remedy, shall not operate as
      a
      waiver thereof.

     

    (d) This
      Agreement shall be governed by and interpreted in accordance with the laws
      of
      the State of New York, without giving effect to conflicts of laws issues. Each
      of the parties agrees to the jurisdiction of the federal courts whose districts
      encompass any part of the City of New York or the state courts of the State
      of
      New York sitting in the City of New York in connection with any dispute arising
      under this Agreement and hereby waives, to the maximum extent permitted by
      law,
      any objection, including any objection based on forum non
      conveniens,
      to the
      bringing of any such proceeding in such jurisdictions. This Agreement may be
      signed in two or more counterparts, each of which shall be deemed an original.
      The headings of this Agreement are for convenience of reference and shall not
      form part of, or affect the interpretation of, this Agreement. If any provision
      of this Agreement shall be invalid or unenforceable in any jurisdiction, such
      validity or unenforceability shall not affect the validity or enforceability
      of
      the remainder of this Agreement or the validity or enforceability of this
      Agreement in any other jurisdiction. Subject to the provisions of Section 10
      hereof, this Agreement may be amended only by an instrument in writing signed
      by
      the party to be charged with enforcement.

     

    (e) This
      Agreement, together with the other Transaction Documents, constitutes the entire
      agreement among the parties hereto with respect to the subject matter hereof.
      This Agreement supersedes all prior agreements and understandings among the
      parties hereto with respect to the subject matter hereof.

     

    (f) Subject
      to the requirements of Section 9 hereof, this Agreement shall inure for the
      benefit of and be binding upon the successors and assigns of each of the parties
      hereto.

     

    (g) All
      pronouns and any variations thereof refer to the masculine, feminine or neuter,
      singular or plural, as the context may require.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    


    IN
      WITNESS WHEREOF, the parties have caused this Investor Rights Agreement to
      be
      executed as of the date first written above.

     

    
      	 	 	 
	 	DRUGMAX,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/
	 	
              
Name:
	 	Title 


      	 	 	 
	 	DEERFIELD
              SPECIAL SITUATIONS FUND, L.P. 
	 
 	 
 	 
 
	 	By:  	Deerfield
              Capital,
              L.P., its general partner
	 	 	 
	 	By: 	J.E. Flynn Capital, LLC, its general
              partner 
	 	 	 
	 	 	 
	 	By: 	/s/ 
	 	
              
Name: 
	 	Title 


      	 	 	 
	 	DEERFIELD
              SPECIAL SITUATIONS FUND INTERNATIONAL,
              LIMITED
	 
 	 
 	 
 
	 	By:  	/s/
	 	
              
Name:
	 	Title:




    


    
      
        
        

      

      10