DRUGMAX INC
LOAN & SECURITY AGREEMENT
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<TYPE>EX-10.10
<SEQUENCE>3
<FILENAME>dex1010.htm
<DESCRIPTION>LOAN & SECURITY AGREEMENT
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<TITLE>Loan &amp; Security Agreement</TITLE>
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  <p align=left><b>EXHIBIT 10.10</b></p> <p align=center><b><FONT SIZE=2>FOURTH AMENDMENT AND MODIFICATION</font></b><br> <b><FONT SIZE=2>TO LOAN AND SECURITY AGREEMENT</font></b></p> <p
align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><FONT SIZE=2>THIS FOURTH AMENDMENT AND MODIFICATION TO LOAN AND SECURITY AGREEMENT </font></b><font size=2>(the
&#147;</font><b><font size=2>Amendment</font></b><font size=2>&#148;) is made effective as of October 25, 2002 by and among </font><b><FONT SIZE=2>DRUGMAX, INC.</font></b><font size=2>, a Nevada corporation, formerly known as DrugMax.com, Inc.
(&#147;</font><b><font size=2>DrugMax</font></b><font size=2>&#148;), </font><b><FONT SIZE=2>VALLEY DRUG COMPANY</font></b><font size=2>, an Ohio corporation (&#147;</font><b><font size=2>Valley</font></b><font size=2>&#148;), </font><b><FONT
SIZE=2>DISCOUNT RX, INC.</font></b><font size=2>, a Louisiana corporation (&#147;</font><b><font size=2>Discount RX</font></b><font size=2>&#148;), </font><b><FONT SIZE=2>VALLEY DRUG COMPANY SOUTH</font></b><font size=2>, a Louisiana corporation
(&#147;</font><b><font size=2>Valley South</font></b><font size=2>&#148;) (DrugMax, Valley, Discount RX and Valley South being hereinafter referred to individually as a &#147;</font><b><font size=2>Borrower</font></b><font size=2>&#148; and
collectively as the &#147;</font><b><font size=2>Borrowers</font></b><font size=2>&#148;), </font><b><FONT SIZE=2>DESKTOP MEDIA GROUP, INC.</font></b><font size=2>, a Florida corporation (&#147;</font><b><font size=2>Desktop</font></b><font
size=2>&#148;), </font><b><FONT SIZE=2>VETMALL, INC.</font></b><font size=2>, a Florida corporation (&#147;</font><b><font size=2>VetMall</font></b><font size=2>&#148;) (Desktop and VetMall being hereinafter referred to individually as a
&#147;</font><b><font size=2>Guarantor</font></b><font size=2>&#148; and collectively as the &#147;</font><b><font size=2>Guarantors</font></b><font size=2>&#148;) and </font><b><FONT SIZE=2>STANDARD FEDERAL BANK NATIONAL ASSOCIATION</font></b><font
size=2>, formerly known as Michigan National Bank, as successor in interest to Mellon Bank, N.A. (&#147;</font><b><font size=2>Bank</font></b><font size=2>&#148;).</font></p> <p align=center><u><b><FONT SIZE=2>BACKGROUND</font></b></u></p> <p
align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><FONT SIZE=2>A.</font></b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>Borrowers, Guarantors and Bank have entered into a Loan and Security Agreement dated October 24,
2000, as amended by (i) that certain letter agreement dated February 13, 2001, (ii) that certain Amendment and Modification to Loan and Security Agreement dated June 13, 2001, (iii) that certain Second Amendment and Modification to Loan and Security
Agreement dated October 24, 2001, (iii) that certain Third Amendment and Modification to Loan and Security Agreement dated June 6, 2002, and (v) those certain letter agreements between Borrowers and Bank dated June 27, 2002, August 2, 2002 and
August 14, 2002, respectively (as amended, the &#147;</font><b><font size=2>Loan Agreement</font></b><font size=2>&#148;).</font></p> <p align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><FONT
SIZE=2>B.</font></b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>Borrowers and Guarantors have requested and Bank has agreed to further amend the Loan Agreement as provided in this Amendment.</font></p> <p
align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><FONT SIZE=2>C.</font></b>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>Capitalized terms not defined in this Amendment will have the meanings set forth in the Loan
Agreement. </font></p> <p align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><FONT SIZE=2>NOW, THEREFORE</font></b><font size=2>, intending to be legally bound hereby,
Borrowers, Guarantors and Bank agree as follows: </font></p>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>1.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Contract Period</font></b></u><b><font size=2>.</font></b><font size=2> The defined term
&#147;Contract Period&#148; as set forth in <u><b>Section 1.1</b></u> of the Loan Agreement shall be and is hereby amended to read in its entirety as follows: </font></td> </tr></table>

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<td valign=top><font size=2> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&#147;</font><i><b><font size=2>Contract Period</font></b></i><font size=2> means the period of time commencing on the date of this Agreement and expiring on
October 24, 2004.&#148; </font></td> </tr></table><br>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>2.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Termination of Revolving Credit Facility and Termination Fee</font></b></u><font size=2>. In
conjunction with the resetting of the Contract Period</font><b><font size=2>, </font></b><u><b><font size=2>Sections 8.10 (a),(b) and (c)</font></b></u><font size=2> of the Loan Agreement shall be and are hereby amended to read in their entirety as
follows:</font></td></tr></table><br>
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<td valign=top width="20"><font size=2>&#147;</font><b><font size=2>(a)</font></b></td>
<td width="17">&nbsp;</td>
<td valign=top><font size=2>If the termination occurs after October 24, 2001, but on or before October 24, 2002, the termination fee will be equal to 2% of the Maximum Revolving Credit Amount; </font></td></tr>
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<td width="17">&nbsp;</td>
<td>&nbsp;</td></tr>
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<td valign=top width="20"><b><font size=2>(b)</font></b></td>
<td width="17">&nbsp;</td>
<td valign=top><font size=2>If the termination occurs after October 24, 2002, but on or before October 24, 2003, the termination fee will be equal to 1.5% of the Maximum Revolving Credit Amount; and</font></td></tr>
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<td>&nbsp;</td></tr>
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<td valign=top width="20"><b><font size=2>(c)</font></b></td>
<td width="17">&nbsp;</td>
<td valign=top><font size=2>If the termination occurs after October 24, 2003, but on or before October 23, 2004, the termination fee will be equal to 1% of the Maximum Revolving Credit Amount.&#148; </font></td></tr></table><br>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>3.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Applicable Margin</font></b></u><b><font size=2>. </font></b><font size=2>Commencing with the receipt
of Borrowers&#146; consolidated and consolidating financial statements pursuant to </font><u><b><font size=2>Section 15.1</font></b></u><b><font size=2></font></b><font size=2>of the Loan Agreement for the fiscal year ending March 31, 2003 and
absent a Default or an Event of Default, the pricing matrix set forth in the term &#147;Applicable Margin&#148; as such term is defined in </font><u><b><font size=2>Section 1.1</font></b></u><b><font size=2></font></b><font size=2>of the Loan
Agreement shall be and is hereby amended to read in its entirety as follows: </font></td> </tr></table><br>
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<td valign=bottom align=left width="93"><b><font size=1>Ratio of </font></b><br><b><font size=1>Funded</font></b></td>
<td width="14">&nbsp;</td>
<td valign=bottom align=center width="118" colspan="3"><b><font size=1>Revolving</font></b><br><u><b><font size=1>Credit Facility</font></b></u></td>
<td width="15">&nbsp;</td>
<td valign=bottom align=center width="96" colspan="3"><b><font size=1>Term</font></b><br><u><b><font size=1>Loan</font></b></u></td>
<td width="16" colspan="5">&nbsp;</td> </tr>
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<td width="229">&nbsp;</td>
<td width="14">&nbsp;</td>
<td valign=bottom align=left width="93"><b><font size=1>Debt to</font></b></td>
<td width="14">&nbsp;</td>
<td valign=bottom align=left width="39"><b><font size=1>Base</font></b></td>
<td width="15">&nbsp;</td>
<td valign=bottom align=left width="65"><b><font size=1>LIBOR Base</font></b></td>
<td width="15">&nbsp;</td>
<td valign=bottom align=center width="96" colspan="3"><b><FONT SIZE=1>LIBOR</font></b></td>
<td width="16" colspan="3">&nbsp;</td> </tr>
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<td valign=bottom align=left width="229"><u><b><font size=1>Level</font></b></u></td>
<td width="14">&nbsp;</td>
<td valign=bottom align=left width="93"><u><b><FONT SIZE=1>EBITDA</font></b></u></td>
<td width="14">&nbsp;</td>
<td valign=bottom align=left width="39"><u><b><font size=1>Rate + </font></b></u></td>
<td width="15">&nbsp;</td>
<td valign=bottom align=left width="65"><u><b><font size=1>Rate + </font></b></u></td>
<td width="15">&nbsp;</td>
<td valign=bottom align=left width="45"><u><b><font size=1>Rate +</font></b></u></td>
<td width="15">&nbsp;</td>
<td valign=bottom align=left width="37"><u><b><font size=1>Rate +</font></b></u></td>
<td width="16">&nbsp;</td> </tr>
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<td valign=bottom align=left width="229"><font size=2>Level I</font></td>
<td width="14">&nbsp;</td>
<td valign=top align=left width="93"><font size=2>&#62;=6.00:1</font></td>
<td width="14">&nbsp;</td>
<td valign=top align=left width="39"><font size=2>1.00% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="65"><font size=2>3.50% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="45"><font size=2>1.25% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="37"><font size=2>3.75%</font></td>
<td width="16">&nbsp;</td> </tr>
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<td valign=bottom align=left width="229"><font size=2>Level II</font></td>
<td width="14">&nbsp;</td>
<td valign=top align=left width="93"><font size=2>&#62;=5.00:1&#60;6.00:1</font></td>
<td width="14">&nbsp;</td>
<td valign=top align=left width="39"><font size=2>0.75%</font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="65"><font size=2>3.25% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="45"><font size=2>1.00% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="37"><font size=2>3.50%</font></td>
<td width="16">&nbsp;</td> </tr>
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<td valign=bottom align=left width="229"><font size=2>Level III </font></td>
<td width="14">&nbsp;</td>
<td valign=top align=left width="93"><font size=2>&#62;=4.00:1&#60;5.00:1</font></td>
<td width="14">&nbsp;</td>
<td valign=top align=left width="39"><font size=2>0.50%</font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="65"><font size=2>3.00% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="45"><font size=2>0.75% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="37"><font size=2>3.25%</font></td>
<td width="16">&nbsp;</td> </tr>
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<td valign=bottom align=left width="229"><font size=2>Level IV </font></td>
<td width="14">&nbsp;</td>
<td valign=top align=left width="93"><font size=2>&#60;4.00:1</font></td>
<td width="14">&nbsp;</td>
<td valign=top align=left width="39"><font size=2>0.25% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="65"><font size=2>2.75%</font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="45"><font size=2>0.50% </font></td>
<td width="15">&nbsp;</td>
<td valign=top align=left width="37"><font size=2>3.00%</font></td>
<td width="16">&nbsp;</td> </tr></table><br> <br>
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<td valign=top>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>Borrowers acknowledge and agree that as of the date hereof the Applicable Margin is equal to the Level I pricing set forth above. Borrowers further acknowledge and
agree that all other term and conditions of the defined term &#147;Applicable Margin&#148; as such term is defined in </font><u><b><font size=2>Section 1.1</font></b></u><b><font size=2> </font></b><font size=2>of the Loan </font></td>
<td valign=top></td></tr></table><br> <p align="center"><font size=2>2</font></p>

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<td valign=top><font size=2>Agreement (except for the pricing matrix which has been amended as set forth above) remain in full force and effect and are hereby ratified and confirmed. </font></td></tr></table><br>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>4.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Borrowing Base</font></b></u><font size=2>. Notwithstanding anything to the contrary herein or in the
Loan Documents, upon receipt of Borrowers&#146; consolidated and consolidating financial statements pursuant to </font><u><b><font size=2>Section 15.3</font></b></u><b><font size=2></font></b><font size=2> of the Loan Agreement for the fiscal
quarter ending September 30, 2002, the Borrowing Base described in </font><u><b><font size=2>Section 2.3</font></b></u><b><font size=2> </font></b><font size=2>of the Loan Agreement shall also include an advance rate of up to 100% of the amount by
which (i) the amount of funds maintained in the blocked account pursuant to </font><u><b><font size=2>Section 14.6</font></b></u><b><font size=2> </font></b><font size=2>of the Loan Agreement exceeds (ii) the outstanding principal balance of the
Term Loan. Borrowers acknowledge and agree that the additional component of the Borrowing Base described in this </font><u><b><font size=2>Section 4</font></b></u><b><font size=2> </font></b><font size=2>shall be adjusted, upon receipt of
Borrowers&#146; consolidated and consolidating financial statements pursuant to </font><u><b><font size=2>Section 15.3</font></b></u><b><font size=2> </font></b><font size=2>of the Loan Agreement and absent a Default or an Event of Default,
commencing with their fiscal quarter ending September 30, 2002, and upon receipt of Borrowers&#146; consolidated and consolidating financial statements and absent a Default or an Event of Default for each fiscal quarter end thereafter. </font></td>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>5.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Valley South Reserve</font></b></u><font size=2>. The defined term &#147;Valley South Reserve&#148;
as set forth in <u><b>Section 1.1</b></u> of the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows: </font></td> </tr></table><br>
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<td valign=top><i><font size=2>&#147;</font><b><font size=2>Valley South Reserve </font></b></i><font size=2>means a reserve against Availability under the Revolving Credit Facility for Advances based on the Value of Valley South&#146;s Eligible
Accounts and Eligible Inventory in an amount equal to One Million Dollars ($1,000,000); </font><u><font size=2>provided however,</font></u><font size=2> absent a Default or an Event of Default (i) such reserve may be reduced or released if new
equity proceeds are infused for working capital purposes into Borrowers with such reduction being equal to fifty percent (50%) of each dollar of new equity proceeds infused into Borrowers; and (ii) commencing with the receipt by Bank of
Borrowers&#146; consolidated financial statements pursuant to </font><u><b><font size=2>Section 15.1</font></b></u><b><font size=2> </font></b><font size=2>for the fiscal year ending March 31, 2003 and for each fiscal quarter thereafter, such
reserve may be reduced or released by an amount equal to fifty percent (50%) of each dollar of Net Income realized by Borrowers in excess of the Net Income covenant as set forth in </font><u><b><font size=2>Section 14.1</font></b></u><b><font
size=2> </font></b><font size=2>of the Loan Agreement for the applicable compliance periods.&#148;</font></td></tr></table><br>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>6.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Net Income</font></b></u><b><font size=2>.</font></b><font size=2> The defined term
&#147;</font><i><font size=2>Net Income</font></i><font size=2>&#148; as set forth in </font><u><b><font size=2>Section 1.1</font></b></u><font size=2> the Loan Agreement shall be and is hereby amended to read, in its entirety, as follows:
</font></td></tr></table><br>
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<td valign=top></td>
<td valign=top><font size=2>&#147;</font><i><b><font size=2>Net Income </font></b></i><font size=2>means income (or loss) after Tax Expense and shall have the meaning given such term by GAAP, </font><u><font size=2>provided</font></u><font
size=2></font><u><font size=2> that</font></u><font size=2>, there shall be </font></td> </tr></table><br> <p align="center"><font size=2>3</font></p>

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<td valign=top><font size=2>specifically excluded therefrom (a) gains from the sale of capital assets, (b) net income of any other Person in which the Person or Persons whose net income is being determined has an ownership interest, unless received
by the Person or Persons whose net income is being determined in a cash distribution, (c) any gains arising from extraordinary items, as defined by GAAP, (d) any income tax benefit (gains) from net operating loss carry forwards, (e) any recovery of
any bad debt expense, and (f) the dollar amount of any Accounts which are then converted to and/or evidenced by a note receivable.&#146;&#146;</font></td></tr></table><br>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>7.</b> </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Net Income</font></b></u><font size=2>. </font><u><b><font size=2>Section 14.1</font></b></u><b><font
size=2> </font></b><font size=2>of the Loan Agreement shall be and is hereby amended to read in its entirety as follows:</font></td> </tr></table><br>
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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>&#147;</font><b><font size=2>14.1 </font></b><u><b><font size=2>Net Income</font></b></u><font size=2>. Borrowers will have Net Income, determined on a consolidated basis with
respect to the Borrowers only and not including any Guarantor or other Subsidiary, of not less than the following amounts for the following periods (if a loss is indicated, the loss will not be greater than the specified amount):</font></td>
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<td valign=bottom align=left width="92"><u><b><font size=1>Amount</font></b></u></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=center width="324"><u><b><font size=1>Period</font></b></u></td>
<td width="17">&nbsp;</td> </tr>
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<td width="92">&nbsp;</td>
<td width="17">&nbsp;</td>
<td width="324">&nbsp;</td>
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<td valign=bottom align=left width="92"><font size=2>($890,000) </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending June 30, 2002</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$180,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending September 30, 2002</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$300,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending December 31, 2002</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$450,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending March 31, 2003</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$140,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal year ending March 31, 2003</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$250,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending June 30, 2003</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$250,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending September 30, 2003</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$250,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending December 31, 2003</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$250,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending March 31, 2004</font></td>
<td width="17">&nbsp;</td> </tr>
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<td valign=bottom align=left width="92"><font size=2>$1,000,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal year ending March 31, 2004</font></td>
<td width="17">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="92"><font size=2>$300,000 </font></td>
<td width="17">&nbsp;</td>
<td valign=bottom align=left width="324"><font size=2>Fiscal quarter ending June 30, 2004 and for each fiscal quarter thereafter&#148;</font></td>
<td width="17">&nbsp;</td> </tr></table><br> <br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td valign=top></td>
<td valign=top><font size=2>Agreement is acceptable if both parties agree that the numbers through fiscal quarter ended March 31, 2003 are pre-tax.</font></td></tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>8.</b> </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Stand-Alone Net Income</font></b></u><font size=2>. </font><u><b><font size=2>Section
14.2</font></b></u><b><font size=2>&nbsp;</font></b><font size=2>of the Loan Agreement shall be and is hereby amended to read in its entirety as follows:</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>&#147;</font><b><font size=2>14.2 </font></b><u><b><font size=2>Stand-Alone Net Income</font></b></u><font size=2>. Each Borrower, on a stand-alone basis and not consolidated
with any other Borrower or any Guarantor or other Subsidiary, will have positive Net Income (and no net </font></td> </tr></table><br> <p align="center"><font size=2>4</font></p>

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<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>losses) for each fiscal quarter commencing with the fiscal quarter ending September 30, 2002.&#148;</font></td></tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>9.</b> </font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Net Worth</font></b></u><font size=2>. </font><u><b><font size=2>Section 14.3</font></b></u><b><font
size=2> </font></b><font size=2>of the Loan Agreement shall be and is hereby amended to read in its entirety as follows:</font></td></tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>&#147;</font><b><font size=2>14.3 </font></b><u><b><font size=2>Net Worth</font></b></u><font size=2>. Borrowers will maintain Net Worth, determined on a consolidated basis with
respect to the Borrowers only and not including any Guarantor or other Subsidiary, of not less than the following amounts for the following periods:</font></td> </tr></table><br>
<table cellspacing=0 cellpadding=0 align=center>
<tr>
<td valign=bottom align=center width="85"><u><b><font size=1>Amount</font></b></u></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=center width="331"><u><b><font size=1>Period</font></b></u></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$30,525,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of June 30, 2002</font></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$30,705,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of September 30, 2002 and at all times thereafter through December 30, 2002</font></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$31,005,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of December 31, 2002 and at all times thereafter through March 30, 2003</font></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$31,555,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of March 31, 2003 and at all times thereafter through June 29, 2003</font></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$31,805,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of June 30, 2003 and at all times thereafter through September 29, 2003</font></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$32,055,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of September 30, 2003 and at all times thereafter through December 30, 2003</font></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$32,305,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of December 31, 2003 and at all times thereafter through March 30, 2004</font></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$32,555,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of March 31, 2004 and at all times thereafter through June 29, 2004</font></td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td width="85">&nbsp;</td>
<td width="16">&nbsp;</td>
<td width="331">&nbsp;</td>
<td width="16">&nbsp;</td> </tr>
<tr>
<td valign=top align=left width="85"><font size=2>$32,855,000 </font></td>
<td width="16">&nbsp;</td>
<td valign=bottom align=left width="331"><font size=2>As of June 30, 2004 and at all times thereafter through September 29, 2004</font></td>
<td width="16">&nbsp;</td> </tr></table><br> <br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>10.</b> </font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Current Ratio</font></b></u><font size=2>. </font><u><b><font size=2>Section 14.4</font></b></u><b><font size=2>
</font></b><font size=2>of the Loan Agreement shall be amended to read in its entirety as follows:</font></td> </tr></table><br> <p align="center"><font size=2>5</font></p>

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<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>&#147;</font><b><font size=2>14.4 </font></b><u><b><font size=2>Current Ratio</font></b></u><font size=2>. Borrowers will maintain a Current Ratio, determined on a consolidated
basis with respect to the Borrowers only and not including any Guarantor or other Subsidiary of not less than 1.10 to 1.0 for the fiscal quarter ending June 30, 2002 and at all times thereafter.&#148;</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>11.</b> </font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Indebtedness to Net Worth Ratio</font></b></u><b><font size=2>. </font></b><u><b><font size=2>Article
14</font></b></u><b><font size=2> </font></b><font size=2>of the Loan Agreement shall be and is hereby amended to add the following financial covenant as a new </font><u><b><font size=2>Section 14.9</font></b></u><font size=2>: </font></td>
</tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>&#147;</font><b><font size=2>14.9 </font></b><u><b><font size=2>Indebtedness to Net Worth Ratio</font></b></u><font size=2>. Borrowers will maintain a ratio of Indebtedness
to Net Worth of not more than 1.3 to 1.0 for the fiscal month ending March 31, 2003 and for each fiscal month end thereafter. &#146;&#146;</font></td></tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>12.</b> </font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Accounts Receivable Limitations</font></b></u><b><font size=2>. </font></b><font size=2>Borrowers covenant and agree
that Borrowers will not have (i) Accounts in excess of $800,000 (as reduced as provided below, the </font><b><font size=2>&#147;PPS Account Limit&#148;</font></b><font size=2>) in the aggregate due to any Borrower from Professional Pharmacy
Solutions, Inc. as of September 30, 2002 and for each fiscal quarter end thereafter, (ii) Accounts at any time in excess of $500,000 in the aggregate due to any Borrower from Quality RX, Inc. and/or Brookfield Pharmacies, Inc., and (iii) Accounts at
any time in excess of $500,000 in the aggregate due to any Borrower from any Affiliate or related party of any Obligor (excluding Accounts due among Borrowers that are otherwise expressly permitted under the Loan Agreement and constitute
&#147;Eligible Accounts&#148; under </font><u><b><font size=2>Section 1.1</font></b></u><b><font size=2> &nbsp;</font></b><font size=2>of the Loan Agreement). Borrowers covenant and agree that the PPS Account Limit set forth in </font><u><b><font
size=2>subsection (i)</font></b></u><b><font size=2> &nbsp;</font></b><font size=2>above will decrease by an amount equal to $25,000 commencing with their fiscal quarter ending December 31, 2002 and for each fiscal quarter end thereafter. Borrowers
further covenant and agree that any and all Accounts described in </font><u><b><font size=2>subsections (ii) and (iii)</font></b></u><b><font size=2> &nbsp;</font></b><font size=2>above will not be at any time be more than thirty (30) days past due
for any reason.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>13.</b> </font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Bank Accounts</font></b></u><font size=2>. Notwithstanding anything to the contrary contained in the Loan Agreement,
within ninety (90) days of the date hereof, Borrowers will covenant and agree to maintain or cause to be maintained at LaSalle Bank or its Affiliates that certain investment account number 500700020-00 currently maintained by Borrower with Mellon
Bank, N.A. or its Affiliates. Borrowers will execute and deliver to LaSalle Bank or its Affiliates any documents, agreement or other items requested by LaSalle Bank or its Affiliates to evidence the transfer of such account and security interest of
Bank in such account.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>14.</b> </font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Release of Mortgage</font></b></u><font size=2>. Upon the written request of Borrowers, Bank agrees to release that
certain mortgage lien granted to Bank by River Road Real Estate, LLC with respect to the property leased by Discount RX and Valley South located at 10016 River Road, St. Rose, Louisiana 70087 (the </font><b><font
size=2>&#147;Mortgage&#148;</font></b><font size=2>); </font><u><font size=2>provided</font></u><font size=2>&nbsp;</font><u><font size=2>that</font></u><font size=2>, (i) new equity proceeds in an amount not less than $1,000,000 are infused into
Borrowers and a $1,000,000 reserve against Availability under the Revolving Credit</font></td> </tr></table><br> <p align="center"><font size=2>6</font></p>

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<td width="39">&nbsp;</td>
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<td valign=top><font size=2>Facility for Advances is established by Bank, (ii) such new equity proceeds are not also applied to reduce and/or release the Valley South Reserve as provided in </font><u><b><font size=2>Section 5</font></b></u><b><font
size=2>&nbsp;</font></b><font size=2>above, and (iii) no Default or Event of Default has occurred. Borrower shall pay to Bank all costs and expenses incurred by Bank in connection with such release of lien, including any attorneys&#146; fees and
other legal costs, expenses and charges.</font></td></tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>15.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Audit Fee</font></b></u><b><font size=2>. </font></b><font size=2>Notwithstanding anything to the contrary
contained in the Loan Agreement, including without limitation </font><u><b><font size=2>Section 12.7</font></b></u><b><font size=2>&nbsp;</font></b><font size=2>thereof, Obligors agree to pay to Bank all costs and expenses of Bank related to any
visits, inspections and field examinations of Obligors at a per man per day rate of $750, but not to exceed $15,000.00 during any one-year period, plus out-of-pocket expenses, </font><u><font size=2>provided</font></u><font
size=2>&nbsp;</font><u><font size=2>that</font></u><font size=2>, after the occurrence of an Event of Default, Obligors agree to pay any and all costs and expenses of Bank related to such visits, inspections and field examination, without
limitation.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>16.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Amendment Fee</font></b></u><b><font size=2>. </font></b><font size=2>As a condition for Bank entering
into this Amendment, Borrowers agree to pay to Bank an amendment fee (the </font><b><font size=2>&#147;Amendment Fee&#148;</font></b><font size=2>) in the amount of Five Thousand Dollars ($5,000.00), which Amendment Fee has been fully earned by
Bank. The Amendment Fee shall be due and payable from Borrowers to Bank contemporaneously with Borrowers&#146; execution of this Amendment. Bank is hereby irrevocably authorized to deduct such payments from any account of any Borrower maintained
with Bank or to advance sums under the Revolving Credit Facility without further notice to Borrowers to pay such installments.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>17.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Conditions Precedent</font></b></u><b><font size=2>. </font></b><font size=2>Bank&#146;s obligation to
enter into this Amendment is subject to the fulfillment, to the satisfaction of Bank, of each of the following conditions. All of such agreements, documents and other items must be in form, content and all other respects satisfactory to Bank in its
sole discretion.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>17.1</b></font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Executed Amendment Documents</font></b></u><font size=2>. Bank shall have received each of the Amendment and
any and all other documents collateral thereto.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>17.2</b></font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Authorizing Resolutions</font></b></u><b><font size=2>. </font></b><font size=2>Bank shall have received a
certificate from the Secretary of each Borrower attesting to the resolutions of each Borrower&#146;s Board of Directors authorizing its execution, delivery, and performance of this Amendment and authorizing specific officers of such Borrower to
execute the same. In addition, Bank shall also have received a resolution from the members of River Road Real Estate, LLC authorizing its execution, delivery, and performance of the Mortgage.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>17.3</b></font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>No Material Adverse Change</font></b></u><b><font size=2>. </font></b><font size=2>Bank shall have received
evidence that no Material Adverse Change nor any material change in the value of the Collateral shall have occurred from the date of financial information and projections most recently provided to Bank.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>17.4</b></font>&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Other Documents</font></b></u><b><font size=2>. </font></b><font size=2>All other documents and legal matters
in connection with the transactions contemplated by this Amendment shall have been delivered, executed, or recorded.</font></td> </tr></table><br> <p align="center"><font size=2>7</font></p>

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<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>18.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Confirmation of Collateral</font></b></u><font size=2>. Nothing contained herein shall be deemed to be a
compromise, satisfaction, accord and satisfaction, novation or release of any of the Loan Documents, or any rights or obligations thereunder, or a waiver by Bank of any of its rights under the Loan Documents or at law or in equity. All liens,
security interest, rights and remedies granted to Bank in the Loan Documents are hereby ratified, confirmed and continued. Borrowers and Guarantors acknowledge and agree that the term &#147;Loan Documents&#148; as used in the Loan Agreement and any
other documents executed in connection therewith shall include, without limitation, this Amendment and any and all other documents executed in connection herewith.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>19.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Challenge to Enforcement</font></b></u><font size=2>.</font><b><font size=2> </font></b><font
size=2>Borrowers and Guarantors acknowledge and agree that they do not have any defense, set-off, counterclaim or challenge against the payment of any sums owing under the Loan Documents, or the enforcement of any of the terms or conditions
thereof.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>20.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Additional Representation and Warranties</font></b></u><font size=2>. Borrowers and Guarantors hereby
represent and warrant, which representations and warranties shall survive until all Obligations are paid and satisfied in full, as follows:</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>(a)</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>All representations and warranties of Borrowers and Guarantors set forth in the Loan Documents are true
and complete in all material respects as of the date hereof.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>(b)</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>Upon the effectiveness of this Amendment, no condition or event exists or has occurred which would
constitute an event of default under the Loan Documents or under any other material agreement between Borrowers, any Guarantor and any other third party (or would, upon the giving of notice or the passage of time, or both constitute an event of
default).</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="78">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>(c)</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2>Borrowers have not received any notice of default or event of default from any other lender, trustee or
lessor with respect to any other loan, financing or lease agreement between such parties and any Borrower.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>21.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Certain Fees, Costs, Expenses and Expenditures</font></b></u><font size=2>. Borrowers will pay all of
Bank&#146;s expenses in connection with the review, preparation, negotiation, documentation and closing of this Amendment, including without limitation, any attorneys&#146; fees and other legal costs, expenses and charges.</font></td>
</tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>22.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Time of Essence</font></b></u><font size=2>. Time is of the essence of this Amendment.</font></td>
</tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>23.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>No Waiver</font></b></u><font size=2>. Except as otherwise provided herein, nothing contained and no
actions taken by Bank in connection herewith shall constitute nor shall they be deemed to be a waiver, release or amendment of or to any rights, remedies, or privileges afforded to Bank under the Loan Documents or under the UCC. Nothing herein shall
constitute a waiver by Bank of any Borrower&#146;s or any</font></td> </tr></table><br> <p align="center"><font size=2>8</font></p>

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<tr>
<td width="39">&nbsp;</td>
<td valign=top></td>
<td valign=top><font size=2>Guarantor&#146;s compliance with the terms of the Loan Documents, nor shall anything contained herein constitute an agreement by Bank to enter into any further amendments with Borrowers and
Guarantors.</font></td></tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>24.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Inconsistencies</font></b></u><font size=2>. To the extent of any inconsistencies between the terms and
conditions of this Amendment and the terms and conditions of the Loan Documents, the terms and conditions of this Amendment shall prevail. All terms and conditions of the Loan Documents not inconsistent herewith shall remain in full force and effect
and are hereby ratified and confirmed by Borrowers and Guarantors.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>25.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Law Governing</font></b></u><font size=2>. This Amendment has been made, executed and delivered in the
Commonwealth of Pennsylvania and will be construed in accordance with and governed by the laws of such Commonwealth, without regard to any rules or principles regarding conflicts of law or any rule or canon of construction which interprets
agreements against the draftsman.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>26.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Counterparts; Facsimile Signatures</font></b></u><font size=2>. This Amendment may be executed in any
number of counterparts, all of which taken together constitute one and the same instrument, and any of the parties hereto may execute this Amendment by signing any such counterpart. Any signature delivered via facsimile shall be deemed an original
signature hereto.</font></td> </tr></table><br>
<table width="100%" cellspacing=0 cellpadding=0 border=0>
<tr>
<td width="39">&nbsp;</td>
<td>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<font size=2><b>27.</b></font>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<u><b><font size=2>Joint and Several</font></b></u><font size=2>. The obligations of Borrowers and Guarantors under this
Amendment shall be joint and several obligations.</font></td> </tr></table><br> <p align="center"><font size=2>9</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <font size=2><BR></font> <p align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<b><FONT SIZE=2>IN WITNESS WHEREOF</font></b><font size=2>, the
parties hereto have executed this Agreement as of the date first above written.</font></p>
<table cellspacing=0 cellpadding=0 align=center>
<tr>
<td valign=bottom align=left width="306"></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><u><b><FONT SIZE=2>BORROWERS:</font></b></u><br><br><b><FONT SIZE=2>DRUGMAX, INC.</font></b><font size=2>, formerly known as DrugMax.com, Inc.</font></td> </tr>
<tr>
<td valign=bottom align=left width="306"><br></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><br><font size=2>By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>/s/ W</font><FONT SIZE=1>ILLIAM </font><FONT SIZE=2>L</font><FONT SIZE=1>A</font><FONT SIZE=2>G</font><FONT
SIZE=1>AMBA</font><FONT SIZE=2>, President</FONT></u></td> </tr>
<tr>
<td width="306">&nbsp;</td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="68"><font size=2>Name/Title:</font></td>
<td valign=bottom align=left width="205"><b><font size=1>William LaGamba, President</font></b></td> </tr></table><br>
<table cellspacing=0 cellpadding=0 align=center>
<tr>
<td valign=bottom align=left width="306"></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><b><FONT SIZE=2>VALLEY DRUG COMPANY</font></b></td> </tr>
<tr>
<td valign=bottom align=left width="306"><br></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><br><font size=2>By:&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>/s/ W</font><FONT SIZE=1>ILLIAM</font><font size=2> L</font><FONT SIZE=1>A</font><FONT SIZE=2>G</font><FONT
SIZE=1>AMBA</font><FONT SIZE=2>, C.O.O.</FONT></U></TD> </tr>
<tr>
<td width="306">&nbsp;</td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="68"><font size=2>Name/Title:</font></td>
<td valign=bottom align=left width="205"><b><font size=1>William LaGamba, C.O.O.</font></b></td> </tr></table><br>
<table cellspacing=0 cellpadding=0 align=center>
<tr>
<td valign=bottom align=left width="306"></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><b><FONT SIZE=2>DISCOUNT RX, INC.</font></b></td> </tr>
<tr>
<td valign=bottom align=left width="306"><br></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><br><font size=2>By:&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>/s/ W</font><FONT SIZE=1>ILLIAM</font><font size=2> L</font><FONT SIZE=1>A</font><FONT SIZE=2>G</font><FONT
SIZE=1>AMBA</font><FONT SIZE=2>, C.O.O.</FONT></U></TD> </tr>
<tr>
<td width="306">&nbsp;</td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="68"><font size=2>Name/Title:</font></td>
<td valign=bottom align=left width="205"><b><font size=1>William LaGamba, C.O.O.</font></b></td> </tr></table><br>
<table cellspacing=0 cellpadding=0 align=center>
<tr>
<td valign=bottom align=left width="306"></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><b><FONT SIZE=2>VALLEY DRUG COMPANY SOUTH</font></b></td> </tr>
<tr>
<td valign=bottom align=left width="306"><br></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><br><font size=2>By:&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>/s/ W</font><FONT SIZE=1>ILLIAM</font><font size=2> L</font><FONT SIZE=1>A</font><FONT SIZE=2>G</font><FONT
SIZE=1>AMBA</font><FONT SIZE=2>, President</FONT></u></td> </tr>
<tr>
<td width="306">&nbsp;</td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="68"><font size=2>Name/Title:</font></td>
<td width="205">&nbsp;</td> </tr></table><br>
<table cellspacing=0 cellpadding=0 align=center>
<tr>
<td valign=bottom align=left width="306"></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><u><b><FONT SIZE=2>GUARANTORS</font></b></u><font size=2>:</font><br><br><b><FONT SIZE=2>DESKTOP MEDIA GROUP, INC.</font></b></td> </tr>
<tr>
<td valign=bottom align=left width="306"><br></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><br><font size=2>By:&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>/s/ W</font><FONT SIZE=1>ILLIAM</font><font size=2> L</font><FONT SIZE=1>A</font><FONT SIZE=2>G</font><FONT
SIZE=1>AMBA</font><FONT SIZE=2>, President </FONT></U></TD> </tr>
<tr>
<td width="306">&nbsp;</td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="68"><font size=2>Name/Title:</font></td>
<td valign=bottom align=left width="205"><b><font size=1>William LaGamba, President</font></b></td> </tr></table><br> <p align="center"><font size=2>10</font></p>

<p Style='page-break-before:always'>
<HR  SIZE="3" COLOR="#999999" WIDTH="100%" ALIGN="CENTER">
  <font size=2><BR></font>
<table cellspacing=0 cellpadding=0 align=center>
<tr>
<td valign=bottom align=left width="306"></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><b><FONT SIZE=2>VETMALL, INC.</font></b></td> </tr>
<tr>
<td valign=bottom align=left width="306"><br></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><br><font size=2>By:&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</font><u><font size=2>/s/ W</font><FONT SIZE=1>ILLIAM</font><font size=2> L</font><FONT SIZE=1>A</font><FONT SIZE=2>G</font><FONT
SIZE=1>AMBA</font><FONT SIZE=2>, President</FONT></u></td> </tr>
<tr>
<td width="306">&nbsp;</td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="68"><font size=2>Name/Title:</font></td>
<td valign=bottom align=left width="205"><b><font size=1>William LaGamba, President</font></b></td> </tr></table><br>
<table cellspacing=0 cellpadding=0 align=center>
<tr>
<td valign=bottom align=left width="306"></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><u><b><FONT SIZE=2>BANK:</font></b></u><br><br><b><FONT SIZE=2>STANDARD FEDERAL BANK NATIONAL ASSOCIATION</font></b><font size=2>, formerly known as Michigan National Bank, as successor in
interest to Mellon Bank, N.A</font></td> </tr>
<tr>
<td valign=bottom align=left width="306"><br></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><br><font size=2>By:&nbsp;&nbsp;&nbsp;LaSalle Business Credit, Inc., as agent</font></td> </tr>
<tr>
<td valign=bottom align=left width="306"><br></td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="273" colspan="2"><br><font size=2>By:&nbsp;&nbsp;&nbsp;</font><u><font size=2>/s/ S</font><FONT SIZE=1>TEPHEN</font><font size=2> C. C</font><FONT SIZE=1>AFFREY</font><font size=2>, V.P.</font></u></td> </tr>
<tr>
<td width="306">&nbsp;</td>
<td width="48">&nbsp;</td>
<td valign=bottom align=left width="68"><font size=2>Name/Title:</font></td>
<td valign=bottom align=left width="205"><b><font size=1>Stephen C. Caffrey, Vice President</font></b></td> </tr></table><br> <p align="center"><font size=2>11</font></p>

<p Style='page-break-before:always'>
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  <font size=2><BR></font> <CENTER><font size=2>12</font></CENTER>
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