8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 12, 2004

DrugMax, Inc.

Formerly known as DrugMax.com, Inc.

(Exact name of registrant as specified in its charter)

STATE OF NEVADA	1-15445	34-1755390
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

312 Farmington Avenue

Farmington, CT 06032

(Address of principal executive offices)

Registrant’s telephone number, including area code: (860) 676-1222

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c)) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets.

On November 12, 2004, DrugMax, Inc. (“DrugMax”) and Familymeds, Inc. (“FMG”) completed their previously announced merger, pursuant to which FMG was merged with and into DrugMax, with DrugMax as the surviving entity. A copy of the Agreement and Plan of Merger by and between FMG and DrugMax, dated March 19, 2004, as amended July 1, 2004 and October 11, 2004 (the “Merger Agreement”), was filed with the Securities and Exchange Commission (the “SEC”), as an appendix to DrugMax’s definitive proxy statement on Schedule 14A, on October 12, 2004 (the “Proxy Statement”).

In the merger, the shareholders of FMG (along with certain FMG warrant holders and note holders) received an aggregate of 10,470,507 shares of DrugMax common stock along with warrants to purchase an additional 3,500,090 shares of DrugMax common stock. The exercise price of the warrants is $2.61. In addition, in connection with the merger, DrugMax will issue an aggregate of 663,675 shares of restricted DrugMax common stock, along with options to purchase an additional 1,646,842 shares of DrugMax common stock, to certain employees and directors of FMG. The exercise price of the stock options is $0.57 per share. As a result, the pre-merger DrugMax stockholders as a group, own approximately 40%, and FMG stockholders, employees and directors, as a group, own approximately 60%, of the issued and outstanding shares of DrugMax immediately after the merger, assuming the vesting of all restricted shares and the exercise of all stock options and warrants issued in connection with the merger.

Prior to the merger, Jugal K. Taneja, DrugMax’s largest beneficial stockholder prior to the merger, beneficially owned approximately 19% of the total outstanding shares of DrugMax (based upon 8,201,886 shares of common stock outstanding immediately prior to the merger). Assuming the exercise of all warrants and stock options and the vesting of all restricted stock issued in connection with the merger, Mr. Taneja owns approximately 6% of the total outstanding shares of DrugMax, while ABS Capital Partners III, L.P., the largest stockholder of FMG prior to the merger, and Edgardo Mercadante, FMG’s former Chief Executive Officer and Chairman of the Board, own approximately 26% and 6%, respectively, of the total outstanding shares of DrugMax immediately after the merger (based upon 24,483,000 shares of common stock outstanding immediately after the merger, assuming the exercise of all warrants and stock options and the vesting of all restricted stock issued in connection with the merger). Collectively, Jugal K. Taneja, Edgardo Mercadante and William L. LaGamba, DrugMax’s President, beneficially own approximately 4.9 million shares of DrugMax, representing approximately 19% of the total number of shares outstanding immediately after the merger, assuming the exercise of all warrants and stock options and the vesting of all restricted stock issued in connection with the merger.

Further, pursuant to the Merger Agreement, FMG was entitled to nominate four individuals to the board of directors of DrugMax for consideration by the stockholders of DrugMax at the meeting held on November 12, 2004. The four FMG designees were Edgardo Mercadante, Philip Gerbino, Peter Grua and Laura Witt, all four of whom served on the FMG board of directors. As previously reported, on November 12, 2004, the stockholders elected the foregoing four FMG designees along with Jugal K. Taneja, William L. LaGamba, Mark Majeske and Rakesh Sharma to the DrugMax board of directors. To accommodate the requirements of the Merger Agreement, Robert Loughery, Ronald J. Patrick, Martin Sperber, Howard L. Howell and Sushil Suri were not nominated to serve as directors of DrugMax from and after the date of the merger, and, accordingly, as of November 12, 2004, the date that the new board of directors was elected by the stockholders, they no longer served as directors of DrugMax.

Also, at the November 12, 2004 DrugMax stockholder’s meeting, Mr. Mercadante was named Co-Chairman and Chief Executive Officer of DrugMax; and Mr. Ribaudo was named Chief Financial Officer of DrugMax. Further, on such date, Mr. Taneja, DrugMax’s former Chief Executive Officer, was appointed as Co-Chairman of the Board of Directors, Mr. LaGamba was appointed as President and Chief Operating Officer of DrugMax and Mr. Patrick, DrugMax’s former Chief Financial Officer, was appointed as the chief financial officer of Valley Drug Company, a DrugMax subsidiary. In connection therewith, shortly after the merger, each of Messrs. Taneja, LaGamba, Mercadante and Ribaudo are expected to enter into new employment agreements with DrugMax. As those agreements have not yet been negotiated, management cannot at this time predict the terms of those agreements. However, the merger agreement requires that the terms of those employment agreements be negotiated and approved by the post-merger compensation committee of DrugMax and that Mr. Mercadante and Mr. Taneja receive compensation that is substantially similar to one another and that, similarly, Mr. Ribaudo and Mr. LaGamba receive compensation that is substantially similar to one another.

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Edgardo A. Mercadante, who is 49 year old, has served as FMG’s Chairman of the Board, Chief Executive Officer and President of FMG since 1997. Mr. Mercadante has over twenty-five years of experience in the prescription health care and managed care industries including significant experience in retail pharmacy. Mr. Mercadante was President of Arrow Corporation between the years of 1987 to 1996. He was President and Chief Executive Officer of APP, a pharmacy benefit management company, which he co-founded in 1991. Mr. Mercadante is active in many national and state professional pharmacy organizations. Mr. Mercadante is a licensed pharmacist and holds a B.S. in Pharmacy from Philadelphia College of Pharmacy and Science. Mr. Mercadante served as Division Manager from 1980 to 1986 with Rite Aid Corporation. Mr. Mercadante holds directorships with General Nutrition Centers, MediBank, and ProHealth. He holds a Trusteeship with the University of Sciences in Philadelphia.

Dale J. Ribaudo, who is 47 years old, has served as FMG’s Senior Vice President, Chief Financial Officer and Treasurer since October 2000. Prior to joining FMG, Mr. Ribaudo was Vice President and Controller of Dexter Corporation in Windsor Locks, Connecticut, from March 1999 to September 2000. In that position, Mr. Ribaudo was responsible for managing Dexter’s worldwide accounting and control functions, including planning, reporting and implementation of accounting policy. Prior to becoming Vice President and Controller, Mr. Ribaudo was Treasurer of Dexter. Mr. Ribaudo began his career with PricewaterhouseCoopers, LLP. Mr. Ribaudo is a certified public accountant and holds a B.S. with a major in accounting from Bentley College, an M.S. in finance from Rensselaer Polytechnic Institute, and has completed the Williams College Executive Program.

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Item 3.01 Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing.

In connection with the merger, DrugMax was required to file a new listing application with the Nasdaq SmallCap Market, and, upon the effectiveness of the merger, DrugMax, the surviving company in the merger, was listed and began to trade on the Nasdaq SmallCap Market under the symbol “DMAXD.” The symbol will return to “DMAX” after approximately 20 days. The symbol was modified to alert the public that a reverse merger had taken place.

Item 4.01 Change in Registrant’s Certifying Accountant.

For accounting purposes, the merger will be accounted for as a reverse acquisition, with FMG as the acquirer. The historical financial statements of FMG will become the historical financial statements of DrugMax, and the assets and liabilities acquired of DrugMax by FMG will be accounted for as required under the purchase method of accounting. Results of operations of DrugMax will be included in the financial statements from November 12, 2004, the effective date of the merger.

Prior to the merger, FMG, the accounting acquirer, retained Deloitte & Touche LLP (“D&T”) as its independent accountants. On November 12, 2004, the newly appointed members of the audit committee of the board of directors of DrugMax approved the retention of D&T as the independent accountant of the merged company. During the two years prior to the merger, DrugMax had retained BDO Seidman, LLP (“BDO”) as its independent accountants. As a result of the foregoing, BDO will not continue to serve as the independent accountant of DrugMax.

During the two most recent fiscal years and any subsequent interim period prior to engaging D&T, DrugMax did not consult with D&T regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on DrugMax’s financial statements; or (ii) any matter that was either the subject matter of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-K and related instructions) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-K).

The reports of BDO on DrugMax’s financial statements for the fiscal years ended March 31, 2004 and 2003 did not contain a disclaimer of opinion or an opinion that was adverse or was qualified or modified for uncertainty, audit scope, or accounting principle. Furthermore, during those fiscal years and through the subsequent period ending on November 12, 2004, there were no disagreements with BDO on matters of accounting principle or practice, financial statement disclosure, or audit scope or procedure which, if not resolved to BDO’s satisfaction, would have caused BDO to refer to the subject matter of the disagreements in their report. In addition, during those fiscal years, there have been no reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K), except as follows:

As reported in DrugMax’s annual report on Form 10-K for the year ended March 31, 2004, in connection with the completion of its audit of, and the issuance of an unqualified report on, DrugMax’s consolidated financial statements for the fiscal year ended March 31, 2004, BDO communicated to DrugMax’s Audit Committee that the following matters involving DrugMax’s internal controls and operation were considered to be “reportable conditions,” as defined under standards established by the American Institute of Certified Public Accountants, or AICPA:

• Processes relating to account analysis and reconciliations including lack of timely management review, which contributed to fourth quarter adjustments relating to inventories, accounts receivable and accounts payable; and

• DrugMax’s recognition of accruals in connection with litigation.

Reportable conditions are matters coming to the attention of the independent auditors that, in their judgment, relate to significant deficiencies in the design or operation of internal controls and could adversely affect DrugMax’s ability to record, process, summarize and report financial data consistent with the assertions of management in the financial statements. In addition, BDO has advised DrugMax that they consider these matters, which are listed above, to be “material weaknesses” that, by themselves or in combination, result in a more than remote likelihood that a material misstatement in DrugMax’s financial statements will not be prevented or detected by its employees in the normal course of performing their assigned functions.

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As required by SEC Rule 13a-15(b), for the second quarter ended September 30, 2004, DrugMax once again carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of DrugMax’s disclosure controls and procedures as of September 30, 2004. Although DrugMax continues to make improvements, as of September 30, 2004, DrugMax’s then Chief Executive Officer and Chief Financial Officer determined that deficiencies identified by BDO continue to cause DrugMax’s disclosure controls and procedures not to be effective at a reasonable assurance level. However, the then CEO and CFO noted that DrugMax continues to remedy the deficiencies identified by BDO and did not note any other material weaknesses or significant deficiencies in DrugMax’s disclosure controls and procedures during their evaluation. DrugMax continues to improve and refine its internal controls. This process is ongoing, and includes the following:

1. DrugMax decided to convert its operating divisions to new accounting software and an integrated networked computerized system linking all divisions, which will roll up financial information on a real-time basis. The implementation of that process began during the quarter ended March 31, 2004 and is expected to be completed by December 31. 2004. DrugMax believes this conversion will provide more timely operating information, a more efficient system of checks and balances to assure accurate reporting of detailed transactions, and more efficient month-end closing procedures to provide a comprehensive internal review before financial information is considered final. DrugMax’s accounts payable detailed ledger at Valley Drug Company is not fully integrated to the general ledger system, which has caused large amounts of reconciling items. Management believes this issue will be significantly improved with the conversion to the new integrated accounting system. As a result of the efficiencies of the new system, DrugMax’s controllers will have appropriate time to better analyze cutoff and other detailed transactions in order to assure the proper processing of its accounts payable and other accounting functions.

2. DrugMax has reorganized its credit and collection functions and previously hired a Vice President of Asset Management to assist in the granting of credit to customers or potential customers. Recently, more independent pharmacies, which are a significant part of DrugMax’s core business, have incurred financial difficulties, as indicated by the number of recent bankruptcies by such pharmacies. As a result, DrugMax’s credit policy is being reviewed and restructured.

3. DrugMax improved its control over morgue inventory during the fourth quarter of 2004 in connection with the relocation of Valley Drug Company to its new warehouse facility. In the future DrugMax will be taking frequent physical inventory counts to properly record quantities in the morgue inventory at Valley. In addition, DrugMax has hired a full-time warehouse clerk assigned to manage the movement of the morgue inventory.

4. Management continues to evaluate the number of personnel involved in the accounting and finance function of DrugMax. Due to the acquisitions made by DrugMax over the past three years and pressures on operations resulting from competition, shrinking margins and regulatory matters, management is reassessing its existing personnel and resources to address its internal control and operational requirements. This is an ongoing process.

On November 18, 2004, DrugMax authorized BDO to respond fully to the inquiries of D&T concerning the foregoing matter and requested that BDO provide DrugMax with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the statements made by DrugMax in response to this item and, if not, stating the respects in which it does not agree. BDO’s letter was unavailable at the time this Form 8-K is being filed and will be filed in by an amendment to this Form 8-K within 10 days of the filing of this Form 8-K.

Item 5.01. Changes in Control of Registrant.

See Item 2.01 above.

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Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

See Item 2.01 above.

Item 5.03 Amendments to Articles of Incorporation or Bylaws: Change in Fiscal Year.

On November 12, 2004, the stockholders of DrugMax, Inc. also approved:

• A proposal to adopt an amendment to the DrugMax amended and restated certificate of incorporation to increase the number of authorized shares of DrugMax common stock from 24,000,000 to 45,000,000;

• A proposal to adopt an amendment to the DrugMax amended and restated certificate of incorporation to increase the number of authorized shares of DrugMax preferred stock from 2,000,000 to 5,000,000;

• A proposal to adopt an amendment to the DrugMax amended and restated certificate of incorporation to provide for mandatory indemnification by DrugMax of its directors and officers and permissive indemnification of its employees and agents; and

• A proposal to adopt an amendment to the DrugMax amended and restated certificate of incorporation to limit the personal liability of a director to DrugMax or its stockholders for monetary damages for a breach of duty as a director to the amount of compensation, if any, received by the director for serving DrugMax as a director during the year in which the breach of duty occurred.

Accordingly, also on November 12, 2004, DrugMax filed Amended and Restated Articles of Incorporation with the Nevada Secretary of State to effect the foregoing amendments to DrugMax’s articles of incorporation. Also on November 12, 2004, DrugMax adopted amended and restated bylaws, in the form attached hereto as Exhibit 3.2.

Also on November 12, 2004, the board of directors of DrugMax converted DrugMax’s fiscal year end from March 31 to a 52-53 week fiscal year ending on the Saturday closest to December 31.

Item 9.01 Financial Statements and Exhibits.

(a) Financial Statements.

As of the date of filing of this current report on Form 8-K, it is impracticable for DrugMax to provide the financial statements of FMG required by this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K, such financial statements shall be filed by amendment to this Form 8-K no later than 71 days after the date that this Form 8-K was required to be filed.

(b) Pro Forma Financial Information.

As of the date of the filing of this current report on Form 8-K, it is impracticable for DrugMax to provide the updated pro forma financial information required by this Item 7(b). In accordance with Item 7(b) of Form 8-K, such financial information shall be filed by amendment to this Form 8-K no later than 71 days after the date that this Form 8-K was required to be filed.

(c) Exhibits.

The exhibits to this report are listed in the Exhibit Index set forth elsewhere herein.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.

DRUGMAX, INC.
By:	/s/ Edgardo Mercadante
	Edgardo Mercadante, Chief Executive Officer

Dated: November 18, 2004

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EXHIBIT INDEX

Exhibit Number	Exhibit Description
3.1	Amended and Restated Articles of Incorporation of DrugMax dated November 12, 2004.
3.2	Amended and Restated Bylaws of DrugMax dated November 12, 2004.
10.1	Sixth Amendment and Waiver to Loan and Security Agreement by and between Congress Financial Corporation (Florida) and DrugMax, Inc., together with its subsidiaries, Valley Drug Company, Valley Drug Company South, and Discount Rx, Inc.

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EX-3.1

AMENDED AND RESTATED

ARTICLES OF INCORPORATION

OF

DRUGMAX, INC.

DrugMax, Inc. (the “Corporation”), a corporation organized and existing under the Nevada Revised Statutes (“NRS”), of the State of Nevada does hereby certify:

I. The Corporation, pursuant to the provisions of NRS 78.403, hereby adopts these Amended and Restated Articles of Incorporation which accurately restate and integrate the Articles of Incorporation filed on October 18, 1993, and all amendments thereto that are in effect to date as permitted by NRS 78.385.

II. Each amendment made by these Amended and Restated Articles of Incorporation (the “Restated Articles”) has been effected in conformity with the provisions of the NRS. The Restated Articles and each amendment thereto were duly approved and adopted by the unanimous written consent of the Corporation’s Board of Directors and by the written consent of stockholders holding at least a majority of the voting power on November 12, 2004, and the consents given for the amendments contained herein were sufficient for approval of such amendments.

III. The original Articles of Incorporation and all amendments and supplements thereto are hereby superseded by the Restated Articles which are as follows:

ARTICLE ONE

The name of the corporation is DrugMax, Inc.

ARTICLE TWO

The purpose or purposes for which this corporation is organized are:

To engage, without qualification, in any lawful act or activity for which corporations may be organized under the laws of the State of Nevada.

ARTICLE THREE

Section 3.01. AUTHORIZED CAPITAL STOCK. The total number of shares of capital stock the corporation is authorized to issue is Fifty Million (50,000,000) shares, each having a par value of $0.001, of which (i) Forty-Five Million (45,000,000) shares shall be designated as “Common Stock” and (ii) Five Million (5,000,000) shares shall be designated as “Preferred Stock.”

Section 3.02. COMMON STOCK. Each share of Common Stock issued and outstanding shall be entitled to one vote on all matters. Dividends shall be declared and paid only out of funds legally available therefor. Shares of such Common Stock may be issued for such consideration and for such corporate purposes as the Board of Directors may from time to time determine. Fully paid shares of Common Stock of this corporation shall not be liable to any further call or assessment.

Section 3.03. PREFERRED STOCK. The Board of Directors shall have the authority to authorize the issuance of the Preferred Stock from time to time in one or more classes or series, and to state in the resolution or resolutions from time to time adopted providing for the issuance thereof the following:

(a) Whether or not the class or series shall have voting rights, full or limited, or will be without voting rights;

(b) The number of shares to constitute the class or series and the designation thereof;

(c) The preferences and relative, participating, optional or other special rights, if any, and the qualifications, limitations, or restrictions thereof, if any, with respect to any class or series;

(d) Whether or not the shares of any class or series shall be redeemable and, if redeemable, the redemption price or prices, and the time or times at which, and the terms and conditions upon which, such shares shall be redeemable and the manner of redemption;

(e) Whether or not the shares of a class or series shall be subject to the operation of retirement or sinking funds to be applied to the purchase or redemption of such shares for retirement, and if such retirement or sinking funds shall be established, the annual amount thereof and the terms and provisions relative to the operation thereof;

(f) The dividend rate, whether dividends are payable in cash, stock of the corporation, or other property, the conditions upon which and the times when such dividends are payable, the preference to or the relation to the payment of dividends payable on any other class or classes or series of stock, whether or not such dividend shall be cumulative or noncumulative, and if cumulative, the date or dates from which such dividends shall accumulate;

(g) The preferences, if any, and the amounts thereof which the holders of any class or series thereof are entitled to receive upon the voluntary or involuntary dissolution of, or upon any distribution of the assets of, the corporation;

(h) Whether or not the shares of any class or series is convertible into, or exchangeable for, the shares of any other class or classes or of any other series of the same or any other class or classes of stock of the corporation and the conversion price or prices or ratio or ratios or the rate or rates at which such exchange may be made, with such adjustments, if any, as shall be stated and expressed or provided for in such resolution or resolutions; and

(i) Such other rights and provisions with respect to any class or series as may to the Board of Directors seem advisable.

The shares of each class or series of the Preferred Stock may vary from the shares of any other class or series thereof in any respect. The Board of Directors may increase the number of shares of the Preferred Stock designated for any existing class or series by a resolution adding to such class or series authorized and unissued shares of the Preferred Stock not designated for any other class or series. The Board of Directors may decrease the number of shares of the Preferred Stock designated for any existing class or series of the Preferred Stock and the shares so subtracted shall become authorized, unissued and undesignated shares of the Preferred Stock.

ARTICLE FOUR

The governing board of this corporation shall be known as directors, and the number of directors may from time to time be increased or decreased in such manner as shall be provided by the bylaws of this corporation,

provided that the number of directors shall not be reduced to less than three (3) nor increased to more than nine (9). Directors of the corporation need not be residents of the State of Nevada and need not own shares of the corporation’s stock.

ARTICLE FIVE

The Capital stock of the corporation, after the amount of the subscription price has been paid in money, property, or services, as the directors shall determine, shall not be subject to assessment to pay the debts of the corporation, nor for any other purpose and no stock issued as fully paid up shall ever be assessable or assessed, and the Articles of Incorporation shall not be amended in this particular.

ARTICLE SIX

The corporation is to have perpetual existence.

ARTICLE SEVEN

In furtherance and not in limitation to the powers conferred by statute, the board of directors is expressly authorized:

Subject to the bylaws, if any, adopted by the stockholders, to make, alter or amend the bylaws of the corporation.

To fix the amount to be reserved as working capital over and above its capital stock paid in, to authorize and to cause to be executed mortgages and liens upon the real and personal property of this corporation.

By resolution passed by a majority of the whole board, to designate one or more committees, each committee to consist of one or more of the directors of the corporation, which, to the extent provided in the resolution or in the bylaws of the corporation, shall have and may exercise the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be stated in the bylaws of the corporation or as may be determined from time to time by resolution adopted by the board of directors.

When and as authorized by the affirmative vote of stockholders holding stock entitling them to exercise at least a majority of the voting power given at a stockholders meeting called for that purpose, or when authorized by the written consent of the holders of at least a majority of the voting stock issued and outstanding, the board of directors shall have power and authority at any meeting to sell, lease or exchange all of the property and assets of the corporation, including its good will and its corporate franchises, upon such terms and conditions as its board of directors deems expedient and for the best interests of the corporation.

ARTICLE EIGHT

Meetings of the stockholders may be held at such place within or without the State of Nevada, if the bylaws so provide. The books of the corporation may be kept (subject to any provision contained in the statutes) outside the State of Nevada at such place or places as may be designated from time to time by the board of directors or in the bylaws of the corporation.

ARTICLE NINE

This corporation reserves the right to amend, alter, change or repeal any provision contained in the Articles of Incorporation, in the manner now or hereafter prescribed by statute, or by the Articles of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reference.

ARTICLE TEN

No stockholder shall be entitled as a matter of right to subscribe for or receive additional shares of any class of stock of the corporation, whether now or hereafter authorized, or any bonds, debentures or other securities convertible into stock, but such additional shares of stock or other securities convertible into stock may be issued or disposed of by the board of directors to such persons and on such terms as in its discretion it shall deem advisable.

ARTICLE ELEVEN

The Corporation shall, to the full extent permitted by Nevada law, indemnify any person who is or was a director or officer of the Corporation or was serving at the request of the Corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise. The Corporation may, to the full extent permitted by Nevada Law, indemnify any person who is or was an employee or agent of the Corporation or was serving at the request of the Corporation as an employee or agent of another corporation, partnership, joint venture, trust or other enterprise.

ARTICLE TWELVE

To the extent permitted by Nevada Revised Statutes, the personal liability of a director to the Corporation or its shareholders for monetary damages for a breach of duty as a director shall be limited to the amount of compensation, if any, received by the director for serving the Corporation as a director during the year in which the breach of duty occurred. This provision shall apply to the acts and omissions of each director of the Corporation occurring on and after the date of filing of these amended and restated articles of incorporation with the Office of the Secretary of State of Nevada. No amendment to these amended and restated articles of incorporation shall adversely affect any right or protection of a director that exists at the time of such amendment.

IN WITNESS WHEREOF, the undersigned President has executed these Restated Articles of Incorporation as of November     , 2004.

DRUGMAX, INC.
By:
	Name: Title:

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED

BYLAWS

OF

DRUGMAX, INC.

a Nevada corporation

(Adopted November 12, 2004)

ARTICLE I - OFFICES

1. Business Offices. DrugMax, Inc. (hereinafter referred to as the “Corporation”), may have such offices, either within or without the State of Nevada, as the Board of Directors may designate from time to time. The Corporation shall designate an office as its “principal office” in accordance with Nevada law.

2. Registered Office. The Corporation shall have and continuously maintain a registered office in the State of Nevada, which may be changed from time to time by the Board of Directors or by an Officer of the Corporation so authorized by the Board of Directors.

ARTICLE II - SHAREHOLDERS

1. Annual Meeting. The Corporation shall hold an Annual Meeting of the Shareholders for the election of Directors and for the transaction of any proper business. The Annual Meeting of Shareholders shall be held at such time and on such date as the Corporation’s Board of Directors shall determine from time to time but not later than thirteen (13) months after the last Annual Meeting of Shareholders. The failure to hold it at the designated time does not affect the validity of any corporate action and shall not work as a forfeiture of or dissolution of the Corporation.

2. Special Meetings. Special meetings of the Shareholders may be called by the Chief Executive Officer or the Board of Directors and shall be called if the holders of not less than Ten Percent (10%) of the votes entitled to be cast on any issue proposed to be considered at the proposed meeting sign, date and deliver a written demand or several such written demands for the special meeting describing the purpose or purposes for the meeting to the Corporation’s Secretary. Only business within the purpose or purposes described in the special meeting notice may be conducted at such special meeting.

3. Place of Meeting. The Board of Directors may designate any place either within or without the State of Nevada as the place of meeting for any Annual Meeting or for any special meeting of the Shareholders. If no designation is made, then the place of the meeting shall be the principal office of the Corporation.

4. Notice of Meeting. Written notice stating the place, date, and time of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting, either personally or by first class mail, by or at the direction of the President or the Secretary of the Corporation or the persons calling the meeting to each Shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed delivered upon deposit in the United States mail, with postage prepaid, addressed to the Shareholder at the address specified in the Corporation’s stock transfer records.

5. Notice of Adjourned Meeting. Notice of an adjourned meeting is necessary only if the new place, date and time are not announced at the meeting from which the adjournment is taken or a new record date is fixed for the reconvening of the meeting. At the adjourned meeting, any business may be transacted that might have been transacted on the original date of the meeting.

6. Waiver of Notice. A Shareholder may waive any notice required by statute, the Articles of Incorporation, or Bylaws before or after the date and time stated in the notice. The waiver must be in writing, be signed by the Shareholder entitled to the notice, and be delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Neither the business to be transacted at nor the purpose of any regular or special meeting of the Shareholders need be specified in any written waiver of notice. A Shareholder’s attendance at a meeting waives

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objection to (a) lack of notice or defective notice of the meeting, unless the Shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting or (b) consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the Shareholder objects to considering the matter when it is presented.

7. Record Date Determinations. The Board of Directors may fix the record date for one or more voting groups in order to determine the Shareholders entitled (a) to notice of or to vote at any meeting of Shareholders or any adjournment thereof, (b) to demand a special meeting, (c) to receive any distribution or (d) to take any other action. Such a record date must be a date after the date upon which the Board of Directors made the record date determination. The record date cannot be more than seventy (70) days before the meeting or action requiring a determination of Shareholders. A determination of Shareholders entitled to notice of or to vote at a Shareholders’ meeting is effective for any adjournment of the meeting unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than one hundred twenty (120) days after the date fixed for the original meeting.

8. Quorum. Unless otherwise required in the Articles of Incorporation, one-third of the outstanding shares entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of Shareholders. When a specified item of business is required to be voted on by a class, series of stock, or voting group, one-third of the shares of such class, series or voting group shall constitute a quorum for the transaction of such item of business by that class, series or voting group. This quorum requirement can be changed only by an amendment to the Corporation’s Articles of Incorporation. After a quorum has been established, the subsequent withdrawal of Shareholders, so as to reduce the shares represented at the meeting below the number required for the original quorum, does not affect the validity of any action taken at the meeting.

9. Voting. Each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at a meeting of Shareholders. If a quorum exists at a meeting of Shareholders, (a) action on a matter, other than the election of Directors, is approved if the votes cast by the holders of the shares represented at the meeting and entitled to vote on the subject matter favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes or voting by classes is required by law; and (b) action on a matter, other than the election of Directors, by a voting group is approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes is required by law.

10. Proxies. A Shareholder, other person entitled to vote on behalf of a Shareholder pursuant to law, or a Shareholder’s attorney-in-fact may vote the Shareholder’s shares in person or by proxy. A Shareholder may appoint a proxy to vote or otherwise act for him by signing an appointment form, either personally or by his attorney-in-fact. An executed telegram or cablegram appearing to have been transmitted by such person, or a photographic, photostatic or equivalent reproduction of an appointment form, is a sufficient appointment form. An appointment of a proxy is effective when received by the corporate officer or agent authorized to tabulate votes. An appointment is valid for up to eleven (11) months unless a longer period is expressly provided in the appointment form. An appointment of a proxy is revocable by the Shareholder, except as otherwise provided by law.

11. Action by Shareholders Without a Meeting. Any action required or permitted to be taken at any meeting of Shareholders may be taken without a meeting, without prior notice, and without a vote, if the action is taken by the holders of shares of each voting group entitled to vote thereon having not less than the minimum number of votes with respect to each voting group that would be necessary to authorize or take such action at a duly constituted meeting. In order to be effective, the action must be evidenced by one or more written consents describing the action taken, dated and signed by approving Shareholders having the requisite number of votes of each voting group entitled to vote thereon, and delivered to the Corporation’s principal office in Nevada, its principal place of business or its officer or agent having custody of the book in which proceedings of meetings of Shareholders are recorded. No written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the date of the earliest dated consent delivered in the manner required by this section, written consents signed by the number of holders required to take action are delivered to the Corporation in the manner required by this section. Such a written consent has the effect of a meeting vote.

Any written consent, once given, may be revoked prior to the date that the Corporation receives the required number of consents to authorize the proposed action. No revocation is effective unless in writing and until received by the Corporation at its principal office in Nevada or its principal place of business, or received by the corporate officer or agent having custody of the book in which proceedings of meetings of Shareholders are recorded.

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Notice of such action must be given to those Shareholders who have not consented in writing or who are not entitled to vote on the action within ten (10) days after obtaining such authorization by written consent. The notice shall fairly summarize the material features of the authorized action and, if the action be such for which dissenter’s rights are provided by law, the notice shall contain a clear statement of the right of the Shareholders dissenting therefrom to be paid the fair value of their shares upon compliance with the provisions of Nevada law regarding the rights of dissenting shareholders.

12. Shareholders’ List for Meeting. After fixing a record date for a meeting, the Corporation shall prepare an alphabetical list of the names of all its Shareholders who are entitled to notice of a Shareholders’ meeting, arranged by voting group with the address of, and the number and class and series, if any, of shares held by each. The Shareholders’ list must be available for inspection by any Shareholder for a period of ten (10) days prior to the meeting or such shorter time as exists between the record date and the meeting and continuing through the meeting at the Corporation’s principal office, at a place identified in the meeting notice in the city where the meeting will be held, or at the office of the Corporation’s transfer agent or registrar. A Shareholder or his agent or attorney is entitled on written demand to inspect the list, during regular business hours and at his expense, during the period it is available for inspection; provided that such demand is made in good faith and for a proper purpose, the purpose is described with reasonable particularity and the list is directly connected with the purpose.

The Corporation shall make the Shareholders’ list available at the meeting, and any Shareholder or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment. The Shareholders’ list is prima facie evidence of the identity of Shareholders entitled to examine the Shareholders’ list or to vote at a meeting of Shareholders.

ARTICLE III - DIRECTORS

1. Powers. All corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation managed under the direction of, its Board of Directors, subject to any limitation set forth by law or in the Corporation’s Articles of Incorporation.

2. Number, Tenure and Qualifications. The number of Directors on the Board of Directors shall be seven (7). Each Director shall hold office until the next Annual Meeting of Shareholders and until his successor shall have been duly elected and qualified, or until his earlier resignation, removal by Shareholders or death. Directors must be natural persons who are eighteen (18) years of age or older. Directors need not be residents of Nevada or Shareholders of the Corporation.

3. General Standards for Directors. A Director shall discharge his duties as a Director, including his duties as a member of any committee of the Board of Directors upon which he may serve, (a) in good faith, (b) with such care as an ordinarily prudent person in a like position would use under similar circumstances, and (c) in a manner he reasonably believes to be in the best interests of the Corporation. In discharging his duties a Director shall be entitled to rely upon information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by: (i) one or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent in the matters presented; (ii) legal counsel, public accountants, or other persons as to matters that the Director reasonably believes are within the person’s professional or expert competence; or (iii) a committee of the Board of Directors of which he is not a member if the Director reasonably believes the committee merits confidence.

In discharging his duties, a Director may consider such factors as the Director deems relevant, including but not limited to the long-term prospects and interests of the Corporation and its Shareholders, and the social, economic, legal, or other effects of any action on the employees, suppliers, customers of the Corporation or its subsidiaries, the communities and society in which the Corporation or its subsidiaries operate, and the economy of the state and the nation.

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A Director is not acting in good faith if he has knowledge concerning the matter in question that makes reliance otherwise permitted by this section unwarranted.

A Director is not liable for any action taken as a Director, or any failure to take any action, if he performed the duties of his office in compliance with this section.

4. Election of Directors. At the Annual Meeting of Shareholders, Directors shall be elected by a plurality of the votes cast by the shares represented at the meeting and entitled to vote for the election of Directors. If the election of Directors is not held on a day designated in these Bylaws for any Annual Meeting of Shareholders, or at any adjournment thereof, the Board of Directors may cause the election to be held at a special meeting of Shareholders specifically called for that purpose. Between Annual Meetings of the Shareholders, the Board of Directors may elect additional persons to serve as members of the Board of Directors from time to time, as it determines advisable.

5. Regular Annual and Quarterly Meetings. The annual meeting of the Board of Directors shall be held without notice immediately after, and at the same place as, the annual election of Directors. The Board of Directors shall, from time to time, by resolution appoint the time and place, either within or without the State of Nevada, for holding regular quarterly meetings of the Board, and other regular meetings of the Board if by it deemed advisable; and such regular meetings shall thereupon be held at the time and place so appointed, without the giving of any notice with regard thereto. In case the day appointed for a regular meeting shall fall upon a Saturday, Sunday or legal holiday in the State of Nevada, such meeting shall be held on the next succeeding day not a Saturday, Sunday or legal holiday in the State of Nevada, at the regularly appointed hour.

6. Special Meeting. Special meetings of the Board of Directors shall be held whenever called by the Chief Executive Officer or any two Directors. Special meetings may be held within or without the State of Nevada. Notice of a special meeting must be given at least two (2) days prior to the date of the meeting by written notice delivered personally, by mail, telegram, telecopy or nationally recognized overnight courier service (such as Federal Express, Airborne, UPS, Emory or Purolator) to each Director at his address. Such notice shall be effective upon the earliest of (a) receipt, (b) five days after its deposit in the United States mail, as evidenced by the postmark, if mailed postpaid and correctly addressed, or (c) the date shown on the return receipt or other evidence of delivery, if sent by registered or certified mail, return receipt requested, or overnight courier service, and the delivery receipt is signed by or on behalf of the addressee. Such written notice shall include the date, time and place of the meeting. The notice of a special meeting need not describe the purpose of the special meeting.

7. Notice of Adjourned Meeting. Notice of any adjourned meeting shall be given to the Directors who were not present at the time of the adjournment and, unless the date, time and place of the adjourned meeting are announced at the time of the adjournment, to the other Directors also.

8. Waiver of Notice. A Director can waive the requirement of notice of a meeting of the Board of Directors by signing a waiver of notice either before or after the meeting. The attendance of a Director at a meeting constitutes a waiver of notice of such meeting and a waiver of any and all objections to the time or place of the meeting or the manner in which it has been called or convened, except when a Director states, at the beginning of the meeting or promptly upon arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened.

9. Quorum and Voting. Except as may be otherwise specifically provided by law, the Articles of Incorporation or these Bylaws, at all meetings of the Board of Directors, a majority of the number of Directors prescribed by the Articles of Incorporation or these Bylaws shall constitute a quorum for the transaction of business at such meeting. A majority of the Directors present at a meeting, whether or not a quorum exists, may adjourn the meeting to another time and place. Except as may be otherwise specifically provided by law, the Articles of Incorporation or these Bylaws, the affirmative vote of a majority of the Directors present at any meeting, if a quorum is present at the time of such vote, shall be the act of the Board of Directors; provided, however, that the following actions may only be taken by the Board if two-thirds of the total Directors serving at such time (rounded up in the case of a fraction) approve of the action:

(i) amend, alter or repeal this Article III Section 9 of the Bylaws;

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(ii) issue any shares of stock of the Company, other than (A) shares issued in connection with the exercise of options and warrants that existed on or prior to June     , 2004, (B) shares issued in connection with the exercise of options and warrants that were issued in connection with the Company’s merger with Familymeds Group, Inc., a Connecticut corporation, (C) shares issued in connection with the exercise of options issued under the Company’s 1999 Stock Option Plan and (D) restricted shares issued under the Company’s Restricted Stock Plan;

(iii) pay or declare any dividend on any stock of the Company;

(iv) merge or consolidate the Company with or into any other person, or sell substantially all of its assets or business to any other person;

(v) acquire the assets or stock of any other business with a value in excess of $5,000,000; or

(vi) enter into any transaction involving a liquidation, dissolution, winding up or similar reorganization of the Company.

The Board of Directors may permit any or all Directors to participate in a regular special meeting by, or conduct the meeting through any use of, any means of communication by which all Directors participating may simultaneously hear each other during the meeting. A Director participating in a meeting by this means is deemed to be present in person at the meeting.

11. Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors at a meeting may be taken without a meeting if the action is taken by all the Directors. The action must be evidenced by one or more written consents describing the action taken and signed by each Director. The action is effective when the last Director signs a consent, unless the consent specifies a different effective date. Such a consent has the effect of a meeting vote.

12. Director Conflicts of Interest. No contract or other transaction between the Corporation and one or more of its Directors or any other corporation, firm, association, or entity in which one or more of its Directors are directors or officers or are financially interested shall be either void or voidable because of such relationship or interest, because such Director or Directors are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction, or because his or their votes are counted for such purpose, if: (a) the fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested Directors; (b) the fact of such relationship or interest is disclosed or known to the Shareholders entitled to vote to authorize, approve or ratify the contract or transaction under this Section 12 and they authorize, approve or ratify such contract or transaction by vote or written consent; or (c) the contract or transaction is fair and reasonable as to the Corporation at the time it is authorized by the Board of Directors, a committee, or the Shareholders.

For the purposes of Director action pursuant to this Section 12, a conflict of interest transaction is authorized, approved or ratified if it receives the affirmative vote of a majority of the Directors on the Board of Directors who have no relationship or interest in such transaction, but a transaction may not be authorized, approved or ratified under this Section 12 by a single Director. If a majority of the Directors who have no such relationship or interest in the transaction vote to authorize, approve or ratify the contract or transaction, a quorum is present for the purpose of authorizing, approving or ratifying the contract or transaction for purposes of this Section 12.

For the purposes of Shareholder action pursuant to this Section 12, shares owned by or voted under the control of a Director who has a relationship or interest in the contract or transaction may not be counted in a vote of Shareholders to determine whether to authorize, approve or ratify a contract or transaction under this Section 12. A majority of the shares, whether or not present, that are entitled to be counted in the vote on the contract or transaction constitutes a quorum for the purpose of taking action under this Section 12.

Notwithstanding approval pursuant to the provisions of this Section 12, unless otherwise provided by law, the Articles of Incorporation or these Bylaws, the authorization, approval or ratification of a contract or transaction by the Board of Directors also must comply with Section 9 of these Bylaws, including the requirements for determining a quorum under such Section.

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13. Compensation of Directors. The Board of Directors may fix the compensation of Directors. Each Director may be paid a stated salary as such or a fixed sum for the attendance at meetings of the Board of Directors or any committee thereof, or both, and may be reimbursed for his expenses of attendance at each such meeting. The Board of Directors may also pay to each Director rendering services to the Corporation not ordinarily rendered by Directors, as such, special compensation appropriate to the value of such services, as determined by the Board of Directors from time to time. None of these payments shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefore. The Board of Directors may determine the compensation of a Director who is also an Officer for service as an Officer as well as for service as a Director.

14. Resignations. A Director may resign at any time by delivering written notice to the Board of Directors or its Chairman or to the Corporation. A resignation is effective when the notice is delivered unless the notice specifies a later effective date. If a resignation is made effective at a later date, the Board of Directors or Shareholders may elect a successor of such Director before the effective date if the Board of Directors provides that the successor does not take office until the effective date.

15. Removal of Directors. The Shareholders may remove one or more Directors with or without cause. If a Director is elected by a voting group of Shareholders, only the Shareholders of that voting group may participate in the vote to remove him. A Director may be removed only if the number of votes cast to remove him exceeds the number of votes not to remove him. A Director may be removed by the Shareholders at a meeting of the Shareholders, provided the notice of the meeting states that the purpose, or one of the purposes, of the meeting is removal of the Director.

ARTICLE IV - COMMITTEES

1. Creation. The Board of Directors may, by resolution adopted by a majority of the full Board of Directors, designate from among its members an Executive Committee and one or more other committees each of which, to the extent provided in such resolution, shall have and may exercise all the authority of the Board of Directors, except that no such committee shall have the authority to: (a) approve or recommend to Shareholders actions or proposals required by law to be approved by the Shareholders; (b) fill vacancies on the Board of Directors or any committee thereof; (c) adopt, amend or repeal the Bylaws; (d) authorize or approve the reacquisition of shares unless pursuant to a general formula or method specified by the Board of Directors; (e) authorize or approve the issuance or sale or contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a voting group except that the Board of Directors may authorize a committee to do so within the limits specifically prescribed by the Board of Directors.

Each committee must have two or more members who serve at the pleasure of the Board of Directors. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate one or more Directors as alternate members of any such committee who may act in the place and stead of any absent member or members at any meeting of such committee.

2. Operation. The sections of these Bylaws that govern meetings, notice and waiver of notice, quorum and voting, and action without a meeting requirements of the Board of Directors apply to committees and their members as well.

ARTICLE V - OFFICERS

1. Officers. The Officers of the Corporation shall include a Chief Executive Officer; Chief Operating Officer and President; Chief Financial Officer and Senior Vice President and Treasurer; and Secretary. Other Officers may be elected by the Board of Directors from time to time. A duly elected Officer may appoint one or more Officers or assistant officers, if authorized to do so by the Board of Directors. The same individual may simultaneously hold more than one office in the Corporation.

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2. Election and Term of Office. As far as practicable, the Officers of the Corporation shall be elected at the regular meeting of the Board of Directors following the annual election of Directors. If the election of Officers is not held at such meeting, the election shall be held as soon thereafter as conveniently may be. Each Officer shall hold office until the regular meeting of the Board of Directors following the annual election of Directors in the next subsequent year and until his successor shall have been duly elected and shall have qualified, or until his earlier resignation, removal from office or death.

3. Resignation and Removal. An Officer may resign at any time by delivering notice to the Corporation. A resignation is effective when the notice is delivered unless the notice specifies a later effective date. If a resignation is made effective at a later date and the Corporation accepts the future effective date, the Board of Directors may fill the pending vacancy before the effective date if the Board of Directors provides that the successor does not take office until the effective date.

The Board of Directors may remove any Officer at any time with or without cause. Any Officer or assistant officer, if appointed by another Officer, may likewise be removed by such Officer.

The appointment of an Officer does not itself create contract rights. An Officer’s removal does not affect the Officer’s contract rights, if any, with the Corporation. An Officer’s resignation does not affect the Corporation’s contract rights, if any, with the Officer.

4. Vacancies. A vacancy in any office because of resignation, removal, death or otherwise, may be filled by the Board of Directors for the unexpired portion of the term.

5. Chief Executive Officer. The Chief Executive Officer shall be the chief executive officer of the Corporation, and, under the direction of the Board of Directors, shall have general responsibility for the overall management, strategic plan and direction of the business, properties, assets and affairs of the Corporation. He shall have general executive powers, including all powers required by law to be exercised by a president of a corporation as such, as well as the specific powers conferred by these Bylaws or by the Board of Directors.

6. Chief Operating Officer and President. The Chief Operating Officer and President shall have general charge of the operations of the Corporation, subject to the direction of the Chief Executive Officer and Board of Directors. In the absence of the Chief Executive Officer or in the event of his death, inability or refusal to act, the Chief Operating Officer and President, shall perform the duties of the Chief Executive Officer and, when so acting, shall have all the powers of, and be subject to all the restrictions upon, the Chief Executive Officer.

7. Chief Financial Officer and Senior Vice President and Treasurer. The Chief Financial Officer and Senior Vice President and Treasurer shall be the chief financial officer of the Corporation and (a) have charge and custody of, and be responsible for, all funds and securities of the Corporation; (b) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as the Board of Directors may select; and (c) in general perform all of the duties as from time to time may be assigned to him by the Chief Executive Officer or by the Board of Directors. If required by the Board of Directors, the Chief Financial Officer and Senior Vice President and Treasurer shall give a bond for the faithful discharge of his duties as Treasurer in such sum and with such surety or sureties as the Board of Directors shall determine.

8. Secretary. The Secretary shall (a) prepare minutes of meetings of the Board of Directors and Shareholders; (b) authenticate records of the Corporation; (c) keep the minutes of the proceedings of the Board of Directors and the Shareholders in one or more books provided for that purpose; (d) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (e) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (f) be the registrar of the Corporation and keep a register of the post office addresses of all Shareholders that shall be furnished to the Secretary by the Shareholders; (g) have general charge of the stock transfer books of the Corporation; and (h) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the Board of Directors.

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9. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a Director of the Corporation.

ARTICLE VI - SHARES AND THEIR TRANSFER

1. Certificates for Shares. Shares may but need not be represented by certificates. Unless otherwise provided by law, the rights and obligations of Shareholders are identical whether or not their shares are represented by certificates. Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board of Directors. Each certificate for shares shall be consecutively numbered or otherwise identified. Each share certificate must state on its face (a) the name of the Corporation and that the Corporation is organized under the laws of Nevada; (b) the name of the person to whom issued; and (c) the number and class of shares and the designation of the series, if any, the certificate represents. Each share certificate (i) must be signed either manually or in facsimile by the Chairman of the Board of Directors, if any, the President or a Vice President and the Secretary, Treasurer or an assistant Secretary or Treasurer and (ii) may bear the corporate seal or its facsimile.

If the Corporation is authorized to issue different classes of shares or different series within a class, the designations, relative rights, preferences, and limitations applicable to each class and the variations in rights, preferences, and limitations determined for each series must be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the Corporation will furnish the Shareholder a full statement of this information on request and without charge.

Any certificate representing shares that are restricted as to the sale, disposition, or other transfer of such shares, shall also state that such shares are restricted as to transfer and shall set forth or fairly summarize on the front or back of the certificate, or shall state that the Corporation will furnish to any Shareholder on request and without charge, a full statement of such restrictions.

2. Transfer of Shares. If a certificated security in registered form is presented to the Corporation with a request to register transfer or an instruction is presented to the Corporation with a request to register transfer, pledge, or release, the Corporation shall register the transfer, pledge, or release as requested if: (a) the security is indorsed or the instruction was originated by the appropriate person or persons; (b) reasonable assurance is given that those indorsements or instructions are genuine and effective; (c) the Corporation has no duty as to adverse claims or has discharged the duty; (d) any applicable law relating to the collection of taxes has been complied with; and (e) the transfer, pledge, or release is in fact rightful or is to a bona fide purchaser.

3. Lost, Destroyed or Stolen Certificated Securities. If a certificated security has been lost, apparently destroyed, or wrongfully taken, and the owner fails to notify the Corporation of that fact within a reasonable time after he has notice of it and the Corporation registers a transfer of the security before receiving notification, the owner is precluded from asserting against the Corporation any claim for registering the transfer or any claim to a new security.

If the owner of a certificated security claims that the security has been lost, destroyed, or wrongfully taken, the Corporation shall issue a new certificated security or, at the option of the Corporation, an equivalent uncertificated security in place of the original security if the owner (a) so requests before the Corporation has notice that the security has been acquired by a bona fide purchaser; (b) files with the Corporation a sufficient indemnity bond; and (c) satisfies any other reasonable requirements imposed by the Corporation.

ARTICLE VII - BOOKS, RECORDS AND REPORTS

1. Books and Records. The Corporation shall keep as permanent records minutes of all meetings of its Shareholders and Board of Directors, a record of all actions taken by the Shareholders or Board of Directors without a meeting, and a record of all actions taken by a committee of the Board of Directors in place of the Board of Directors on behalf of the Corporation. The Corporation shall maintain accurate accounting records. The Corporation or its agent shall maintain a record of its Shareholders in a form that permits preparation of a list of the names and addresses of all Shareholders in alphabetical order by class of shares showing the number and series of shares held by each. The Corporation shall maintain its records in written form or in another form capable of conversion into written form within a reasonable time.

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The Corporation shall keep a copy of the following records: (a) its Articles or Restated Articles of Incorporation and all amendments to them currently in effect; (b) its Bylaws or Restated Bylaws and all amendments to them currently in effect; (c) resolutions adopted by its Board of Directors creating one or more classes or series of shares and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding; (d) the minutes of all Shareholders’ meetings and records of all action taken by Shareholders without a meeting for the past three (3) years; (e) written communications to all Shareholders generally or all Shareholders of a class or series within the past three (3) years, including the financial statements furnished for the past three (3) years; (f) a list of the names and business street addresses of its current Directors and Officers; and (g) its most recent annual report delivered to the Nevada Department of State.

2. Shareholder’s Inspection Rights. If a Shareholder gives the Corporation written notice of his demand at least five (5) business days before the date on which he wishes to inspect and copy, he is entitled to inspect and copy, during regular business hours at the Corporation’s principal office, any of the following records: (a) the Corporation’s Articles or Restated Articles of Incorporation and all amendments to them currently in effect; (b) the Corporation’s Bylaws or Restated Bylaws and all amendments to them currently in effect; (c) resolutions adopted by the Board of Directors creating one or more classes or series of shares and fixing their relative rights, preferences, and limitations, if shares issued pursuant to those resolutions are outstanding; (d) the minutes of all Shareholders’ meetings and records of all action taken by Shareholders without a meeting for the past three (3) years; (e) written communications to all Shareholders generally or all Shareholders of a class or series within the past three (3) years, including the financial statements furnished for the past three (3) years; (f) a list of the names and business addresses of the Corporation’s current Directors and Officers; and (g) the Corporation’s most recent annual report delivered to the Nevada Department of State.

If (a) a Shareholder makes a demand for inspection in good faith and for a proper purpose, (b) he describes with reasonable particularity his purpose and the records he desires to inspect, (c) the records are directly connected with his purpose, and (d) he gives the Corporation written notice of his demand at least five (5) business days before the date on which he wishes to inspect and copy, he is entitled to inspect and copy, during regular business hours at a reasonable location specified by the Corporation, any of the following records of the Corporation: (i) excerpts from minutes of any meeting of the Board of Directors, records of any action of a committee of the Board of Directors while acting in place of the Board of Directors on behalf of the Corporation, minutes of any meeting of the Shareholders, and records of action taken by the Shareholders or Board of Directors without a meeting, to the extent not otherwise subject to inspection pursuant to this section; (ii) accounting records of the Corporation; (iii) the record of Shareholders; and (iv) any other books and records.

If a Shareholder gives the Corporation written notice of his demand at least fifteen (15) business days before the date on which he wishes to inspect and copy, he is entitled to inspect and copy, during regular business hours at a reasonable location in Nevada specified by the Corporation, (a) the Corporation’s Bylaws or Restated Bylaws and all amendments to them currently in effect and (b) a list of the names and business street addresses of the Corporation’s current Directors and Officers.

3. Annual Reports. On or after January 1 and on or before May 1 of each year, the Corporation shall deliver to the Nevada Department of State for filing a sworn annual report, on such forms as the Department of State may prescribe and containing such information as is prescribed by law. Similar reports shall be filed as required by law in those jurisdictions other than the State of Nevada where the Corporation may be authorized to transact business.

4. Financial Statements. Unless modified by resolution of the Shareholders within 120 days of the close of each fiscal year, the Corporation shall furnish its Shareholders annual financial statements, which may be consolidated or combined statements of the Corporation and one or more of its subsidiaries, as appropriate, that include a balance sheet as of the end of the fiscal year, an income statement for that year, and a statement of cash flows for that year. If financial statements are prepared for the Corporation on the basis of generally accepted accounting principles, the annual financial statements must also be prepared on that basis.

If the annual financial statements are reported upon by a public accountant, his report must accompany them. If not, the statements must be accompanied by a statement of the President or the person responsible for the Corporation’s accounting records (a) stating his reasonable belief whether the statements were prepared on the basis of generally accepted accounting principles and, if not, describing the basis of preparation; and (b) describing any respects in which the statements were not prepared on a basis of accounting consistent with the statements prepared for the preceding year.

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The Corporation shall mail the annual financial statements to each Shareholder within 120 days after the close of each fiscal year or within such additional time thereafter as is reasonably necessary to enable the Corporation to prepare its financial statements if, for reasons beyond the Corporation’s control, it is unable to prepare its financial statements within the prescribed period. Thereafter, on written request from a Shareholder who was not mailed the statements, the Corporation shall mail him the latest annual financial statements.

5. Other Reports to Shareholders. If the Corporation indemnifies or advances expenses of defense to any Director, Officer, employee, or agent otherwise than by court order or action by the Shareholders or by an insurance carrier pursuant to insurance maintained by the Corporation, the Corporation shall report the indemnification or advance in writing to the Shareholders with or before the notice of the next Shareholders’ meeting, or prior to such meeting if the indemnification or advance occurs after the giving of such notice but prior to the time such meeting is held, which report shall include a statement specifying the persons paid, the amounts paid, and the nature and status at the time of such payment of the litigation or threatened litigation.

If the Corporation issues or authorizes the issuance of shares for promises to render services in the future, the Corporation shall report in writing to the Shareholders the number of shares authorized or issued, and the consideration received by the Corporation, with or before the notice of the next Shareholders’ meeting.

ARTICLE VIII - MISCELLANEOUS

1. Distributions to Shareholders. The Board of Directors may authorize and the Corporation may make distributions to its Shareholders subject to restriction by the Articles of Incorporation and the limitations provided by law. Dividends may be paid in cash, in property, or in shares of stock, subject to the provisions of the Articles of Incorporation and applicable law.

2. Corporate Seal. The Board of Directors may provide for a corporate seal, which may be altered at will and used itself or by a facsimile thereof, by impressing or affixing it or in any other manner reproducing it.

3. Execution of Instruments. All bills, notes, checks, other instruments for the payment of money, agreements, indentures, mortgages, deeds, conveyances, transfers, certificates, declarations, receipts, discharges, releases, satisfactions, settlements, petitions, schedules, accounts, affidavits, bonds, undertakings, proxies, and other instruments or documents may be signed, executed, acknowledged, verified, delivered, or accepted on behalf of the Corporation by such Officers, employees, or agents of the Corporation as the Board of Directors may from time to time direct.

4. Indemnification. The Corporation shall indemnify any person who is or was a Director, Officer, employee, or agent of the Corporation or was serving at the request of the Corporation as a Director, Officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise, to the full extent permitted by law.

The Corporation may purchase and maintain insurance on behalf of any person who is or was a Director, Officer, employee, or agent of the Corporation or is or was serving at the request of the Corporation as a Director, Officer, employee, or agent of another corporation, partnership, joint venture, trust, or other enterprise against any liability asserted against him and incurred by him in any such capacity or arising out of his status as such, whether or not the Corporation would have the power to indemnify him against such liability under the provisions of this section.

ARTICLE IX - AMENDMENTS

The Corporation’s Board of Directors may, by majority vote except as otherwise specifically provided herein, amend or repeal the Corporation’s Bylaws unless: (a) the Articles of Incorporation or law reserves the power to amend the Bylaws generally or a particular Bylaw provision exclusively to the Shareholders; or (b) the Shareholders, in amending or repealing the Bylaws generally or a particular Bylaw provision, provide expressly that the Board of Directors may not amend or repeal the Bylaws or that Bylaw provision.

The Corporation’s Shareholders may amend or repeal the Corporation’s Bylaws even though the Bylaws may also be amended or repealed by its Board of Directors.

19

EX-10.1

Exhibit 10.1

[CONFIDENTIAL TREATMENT HAS BEEN REQUESTED BY DRUGMAX, INC.

CONFIDENTIAL PORTIONS OF THIS DOCUMENT HAVE BEEN REDACTED AND

HAVE BEEN SEPARATELY FILED WITH THE SECURITIES AND EXCHANGE COMMISSION.]

SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND CONSENT

BY AND BETWEEN

CONGRESS FINANCIAL CORPORATION (FLORIDA)

AND

DRUGMAX, INC., TOGETHER WITH ITS SUBSIDIARIES,

VALLEY DRUG COMPANY, VALLEY DRUG COMPANY SOUTH,

AND DISCOUNT Rx, INC.

THIS SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT AND CONSENT (this “Amendment”) is entered into effective as of November     , 2004 (the “Effective Date”), by and between DRUGMAX, INC., a Nevada corporation (“DrugMax” and, together with its subsidiaries, VALLEY DRUG COMPANY, an Ohio corporation, VALLEY DRUG COMPANY SOUTH, a Louisiana corporation, and DISCOUNT Rx, INC., a Louisiana corporation, collectively, the “Borrower”) and CONGRESS FINANCIAL CORPORATION (FLORIDA), a Florida corporation (“Lender”).

W I T N E S S E T H:

WHEREAS, Borrower and Lender heretofore entered into the Loan and Security Agreement, dated effective April 15, 2003, as amended by Amendment No. 1 to Loan and Security Agreement, dated as of August 19, 2003, Amendment No. 2 to Loan and Security Agreement, dated as of March 31, 2004, Amendment No. 3 to Loan and Security Agreement, dated as of June 30, 2004, Amendment No. 4 and Waiver to Loan and Security Agreement, dated as of August 5, 2004 and Forbearance Agreement and Fifth Amendment to Loan and Security Agreement, dated as of November 5, 2004 (as the same now exists and may hereafter be further amended, modified, supplemented, extended, renewed, restated or replaced, the “Loan Agreement”) pursuant to which Lender agreed to make loans and provide other financial accommodations to Borrower; and

WHEREAS, Borrower has requested certain amendments to and consents under the Loan Agreement to permit the merger of Familymeds Group, Inc., a Connecticut corporation (together with its successors and assigns, “Familymeds”) with and into DrugMax with DrugMax as the surviving corporation and Lender is willing to agree to such amendments and consents, subject to the terms and conditions set forth herein.

NOW, THEREFORE, for and in consideration of the above premises, the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Borrower and Lender agree as follows:

1. Definitions.

(a) Additional Definitions. As used herein, the following terms shall have the respective meanings given to them below and the Loan Agreement shall be deemed and is hereby amended to include, in addition and not in limitation, each of the following definitions:

(i) “Familymeds Affiliate” shall mean as to Familymeds Holdings, Inc., each direct and indirect Subsidiary of Familymeds Holdings, Inc., together with their respective successors and assigns.

(ii) “Familymeds Credit Agreement” shall mean the Amended and Restated Credit Agreement, dated as of August 19, 2002 among Familymeds, Inc., a Connecticut corporation, the other credit parties signatory thereto and General Electric Capital Corporation, a Delaware corporation, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(iii) “Familymeds Financing Agreements” shall mean, collectively, the Familymeds Credit Agreement, together with all other agreements, documents and instruments executed and/or delivered in connection therewith or related thereto, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(iv) “Familymeds Merger” shall mean the merger of Familymeds Group, Inc. with and into DrugMax, Inc., with DrugMax, Inc. as the surviving corporation, pursuant to the terms of the Familymeds Merger Agreements.

(v) “Familymeds Merger Agreements” shall mean, individually and collectively, the Agreement and Plan of Merger, dated as of March 19, 2004, by and among Familymeds Group, Inc., Jugal K. Taneja, Edgardo A. Mercadante and DrugMax, Inc., and all agreements, documents and instruments executed and/or delivered in connection therewith or related to the foregoing, as the same now exist or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(vi) “Forbearance Agreement” shall mean the Forbearance Agreement and Fifth Amendment to Loan and Security Agreement, dated as of November 5, 2004, as the same now exists or may hereafter be amended, modified, supplemented, extended, renewed, restated or replaced.

(b) Amendment to Definitions.

(i) The definition of “Affiliate” is hereby amended by deleting the first sentence thereof in its entirety and substituting the following therefor:

“Affiliate” shall mean, with respect to a specified Person any other Person which directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with such Person, and without limiting the generality of the foregoing, includes (a) any Person which beneficially owns or holds five (5%) percent or more of any class of Voting Stock of such Person or other equity interests in such Person, (b) any Person of which such Person beneficially owns or holds five (5%) percent or more of any class of Voting Stock or in which such Person beneficially owns or holds five (5%) or more of the equity interests and (c) any director or executive officer or such Person; provided, that, in any instance in which such term is being applied to an Affiliate of Borrower, it shall be deemed to exclude any Familymeds Affiliate.”

(ii) The definition of “Cash Equivalents” is hereby amended by deleting the phrase “(except an Affiliate of Borrower)” contained in clause (c) thereof and substituting “(except an Affiliate of Borrower or any Familymeds Affiliate)” therefor.

(iii) The definition of “Eligible Accounts” is hereby amended by deleting the phrase “Affiliate of Borrower” contained in clause (j) thereof and substituting “Affiliate of Borrower or any Familymeds Affiliate” therefor.

(iv) Notwithstanding anything to contrary contained in the Loan Agreement or any of the other Financing Agreements, Eligible Accounts shall not include Accounts with respect to which Cajun Pharmaceuticals, C’s Discount Pharmacy, or any of their respective Affiliates is the account debtor.

(v) The definition of “Forbearance Maturity Date” is hereby amended by deleting the reference to “November 19, 2004” and substituting “December 10, 2004” therefor.

(c) Interpretation. For purposes of this Amendment, unless otherwise defined herein, all terms used herein, including, but not limited to, those terms used and/or defined in the recitals above, shall have the respective meanings ascribed to such terms in the Loan Agreement.

2. Amendments.

(a) Permitted Holders. Schedule 1.55 to the Loan Agreement is hereby amended and restated in its entirety in the form of Schedule 1.55 attached hereto.

(b) Subsidiaries; Affiliates; Capitalization; Solvency. Schedule 8.12 to the Information Certificate is hereby amended and restated in its entirety in the form of Schedule 8.12 attached hereto.

(c) Transactions with Affiliates. Section 9.12 of the Loan Agreement is hereby amended by deleting the phrase “or other Affiliate of Borrower” and by substituting “or other Affiliate of Borrower or any Familymeds Affiliate” therefor.

(d) Familymeds Affiliate. Sections 8.14, 9.3(a), 9.4, 9.5, 9.8, 9.9 and 9.10 of the Loan Agreement are hereby amended by deleting the word “Subsidiary” in each instance in which it appears and in each case by substituting “Subsidiary (other than any Familymeds Affiliate)” therefor.

(e) Events of Default. Section 10.1 of the Loan Agreement is hereby amended by adding a new clause (p) thereto to read as follows:

[Omitted as confidential]

(f) Notices. Section 12.3 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

“Notices. All notices, requests and demands hereunder shall be in writing and deemed to have been given or made: if delivered in person, immediately upon delivery; if by telex, telegram or facsimile transmission, immediately upon sending and upon confirmation of receipt; if by nationally recognized overnight courier service with instructions to deliver the next Business Day, one (1) Business Day after sending; and if by certified mail, return receipt requested, five (5) days after mailing. All notices, request and demands upon the parties are to be given to the following addresses (or to such other address as any party may designate by notice in accordance with this Section):

If to Borrower:	DrugMax, Inc. 25400 U.S. Highway 19 North, Suite 137 Clearwater, Florida 33763 Attention: Jugal K. Taneja Telephone No.: (727) 533-0431 Telecopy No.: (727) 531-1280
with a courtesy (and not mandatory) copy to:	Shumaker, Loop & Kendrick, LLP 101 East Kennedy Blvd., Suite 2800 Tampa, Florida 33602-5151 Attention: Julio C. Esquivel, Esq. Telephone No.: (813) 229-7600 Telecopy No.: (813) 229-1660
If to Lender	Congress Financial Corporation (Florida) 110 East Broward Boulevard, Suite 2050 Fort Lauderdale, FL 33301 Attention: Portfolio Manager Telephone No.: (954) 467-2262 Telecopy No.: (954) 467-5520

(g) Section 5.5 of the Forbearance Agreement is hereby deleted in its entirety and the following substituted therefor:

“Section 5.5 [Reserved]”

3. Consent. Subject to the terms and conditions contained herein, Lender hereby confirms and agrees that it consents to the Familymeds Merger and the execution and delivery by the parties thereto of the Familymeds Merger Agreements (as in effect on the date hereof).

4. Amendment Fee. In consideration of the amendments set forth herein, Borrower agrees to pay to Lender or Lender may, at its option, charge any account of Borrower maintained by Lender, a fee in the amount of $120,000 (the “Amendment Fee”), which shall be fully earned as of the date hereof and shall constitute part of the Obligations, $100,000 of which amount shall be applied as a partial reduction to the amount otherwise payable pursuant to Section 12.1(c) of the Loan Agreement upon termination thereof in accordance with Section 12.1 of the Loan Agreement; provided, that, all Obligations are fully and finally repaid and satisfied on or prior to December 10, 2004 and the Financing Agreements are terminated in accordance with such Section 12.1.

5. Representations, Warranties and Covenants. In addition to the continuing representations, warranties and covenants heretofore or hereafter made by Borrower to Lender pursuant to the other Financing Agreements, Borrower hereby represents, warrants and covenants with and to Lender as follows (which representations, warranties and covenants are continuing and shall survive the execution and delivery hereof and shall be incorporated into and made a part of the Financing Agreements):

(a) The failure of Borrower to comply with the covenants, conditions and agreements contained herein or in any other agreement, document or instrument at any time executed and/or delivered by Borrower with, to or in favor of Lender shall constitute an Event of Default under the Financing Agreements.

(b) This Amendment has been duly executed and delivered by Borrower and is in full force and effect as of the date hereof, and the agreements and obligations of Borrower contained herein constitute legal, valid and binding obligations of Borrower enforceable against Borrower in accordance with their respective terms.

(c) Other than the Existing Defaults, as of the date hereof, no other Default or Event of Default has occurred or is continuing (after giving effect to the amendments set forth in this Amendment).

(d) The Familymeds Merger is valid and effective in accordance with the Familymeds Merger Agreements, and DrugMax shall be the surviving corporation pursuant to the Familymeds Merger.

(e) All actions and proceedings required by the Familymeds Merger Agreements, applicable law and regulation (including, but not limited to, compliance with Hart-Scott-Rodino Anti-Trust Improvement Act of 1976 as amended) have been taken and the transactions required thereunder have been duly and validly taken and consummated.

(f) No court of competent jurisdiction has issued any injunction, restraining order or other order which prohibits consummation of the transactions described in the Familymeds Merger Agreements and no government action or proceeding has been threatened or commenced seeking any injunction, restraining order or other order which seeks to void or otherwise modify the transactions described in the Familymeds Merger Agreements.

(g) The security interests in and liens upon the assets and properties of Borrower in favor of Lender shall continue upon such assets, and such security interests and liens and their

perfection and priority shall continue in all respects in full force and effect. Without limiting the generality of the foregoing, the Familymeds Merger shall in no way limit, impair or adversely affect the Obligations, howsoever arising, or any security interests or liens securing the same.

(h) The Familymeds Merger and the other arrangements contemplated herein do not violate any law or regulation or any order or decree of any court or governmental instrumentality in any respect and do not and will not conflict with or result in the breach of, or constitute a default in any respect under, any agreement, document or instrument to which Borrower or Familymeds or any of its Affiliates is a party or may be bound, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property of Borrower, Familymeds or any of their respective Affiliates or violate any provision of the Certificate of Incorporation or By-Laws of Borrower, Familymeds or any of their respective Affiliates.

(i) Borrower has delivered, or caused to be delivered, to Lender, true, correct and complete copies of the Familymeds Merger Agreements, each in form and substance satisfactory to Lender.

(j) Borrower has delivered a pro forma consolidated and consolidating balance sheet of Borrower and its subsidiaries (including in this case Familymeds Group, Inc. and its affiliates) reflecting the consummation of the Familymeds Merger and the other transactions contemplated by the Familymeds Merger Documents, accompanied by a certificate, dated of even date herewith, of the chief financial officer of Borrower stating that such pro forma balance sheets represent the reasonable, good faith opinion of such officer as to the subject matter thereof as of the date of such certificate.

(k) Neither the execution and delivery of this Amendment, nor the modifications to the Financing Agreements contemplated by this Amendment nor the consents and releases contained herein shall violate any applicable law or regulation, or any order or decree of any court or any governmental instrumentality in any respect or does or shall conflict with or result in the breach of, or constitute a default in any respect under, any indenture, or any material mortgage, deed of trust, security agreement, agreement or instrument to which Borrower, or Familymeds is a party or may be bound, or violate any provision of the organizational documents of Borrower or Familymeds.

(l) At all times during the period from the date hereof, through and including the Renewal Date, the business and operations of Borrower and its Affiliates (immediately prior to giving effect to the Familymeds Merger) including, without limitation, with respect to generating accounts receivable, identifying and segregating inventory and other assets, accounts payable practices, invoicing, payroll, administration and similar matters, shall at all times be conducted and maintained as if the Familymeds Merger had not taken place.

(m) All of the representations and warranties set forth in the Loan Agreement as amended hereby, and the other Financing Agreements, are true and correct in all material respects, except to the extent any such representation or warranty is made as of a specified date, in which case such representation or warranty shall have been true and correct as of such date.

(n) At all times during the period from the date hereof, through and including the Renewal Date, the Borrower shall not, and shall not permit any Subsidiary to, amend, modify, supplement, extend, renew, restate or replace any of the Familymeds Financing Agreements, as amended by the amendment contemplated by Section 7(h) hereof, without the prior written consent of Lender.

(o) At all times during the period from the date hereof through and including the Renewal Date, Borrower shall collect in cash in advance (prior to the shipment of Inventory to Familymeds, Inc. and/or its Subsidiaries) all amounts payable from time to time from Familymeds, Inc. and its Subsidiaries to Borrower.

(p) If at any time from the date hereof through and including the effective date of the New Financing (as hereinafter defined) Borrower receives all or any portion of the capital contribution referred to in Section 7(h)(ii) hereof, the amount shall only be (i) used to pay or repay the Obligations (it being understood that any such repayment shall result in a permanent reduction of any amounts otherwise available pursuant to the Borrowing Base, in an amount equal to all such repayments) and/or (ii) deposited in a deposit account or an investment account subject to a Deposit Account Control Agreement or an Investment Property Control Agreement, as applicable, in either case pursuant to which Borrower shall not be permitted to withdraw any amounts or otherwise exercise any authority or powers.

(q) At all times during the period from the date hereof through and including the effective date of the New Financing, the capitalization of the entities set forth on revised Schedule 8.12 to the Information Certificate referred to in Section 2(b) hereof shall not be revised or amended in any respect without the prior written consent of Lender.

6. Effect of this Amendment. Except as modified pursuant hereto, no other changes, modifications or waivers to or under the Loan Agreement or the other Financing Agreements are intended or implied and in all other respects the Financing Agreements are hereby specifically ratified and confirmed by the parties hereto as of the Effective Date. This Amendment represents the entire agreement and understanding concerning the subject matter hereof between the parties hereto, and supersedes all other prior agreements, understandings, negotiations and discussions, representations, warranties, commitments, proposals, offers and contracts concerning the subject matter hereof, whether oral or written. To the extent of any conflict between the terms of this Amendment and the other Financing Agreements, the terms of this Amendment shall control. The Loan Agreement and this Amendment shall be read and construed as one agreement.

7. Conditions to Effectiveness of this Amendment. The effectiveness of this Amendment shall be subject to the satisfaction of the following conditions:

(a) Lender shall have received, in form and substance satisfactory to Lender, an original of this Amendment, duly authorized, executed and delivered by Borrower;

(b) Lender shall have received the Amendment Fee in immediately available funds;

(c) Lender shall have received, in form and substance satisfactory to Lender, true, correct and complete copies of the Familymeds Merger Agreements.

(d) Lender shall have received, in form and substance satisfactory to Lender, evidence that all amounts payable from Familymeds, Inc. and its affiliates to Borrower have been paid in full.

(e) Lender shall have received such opinions of counsel to Borrower with respect to the Familymeds Merger and related matters as Lender may require.

(f) Lender shall have received any and all such further instruments and documents as Lender may require to obtain the full benefits of this Amendment and to protect, preserve and maintain Lender’s rights in the Collateral; and

(g) Lender shall have received, in form and substance satisfactory to Lender, a true, complete and correct copy of an Amendment to the Amended and Restated Credit Agreement, dated as of August 19, 2002 among Familymeds, Inc., as Borrower, the other credit parties signatory thereto, and General Electric Capital Corporation, as Lender.

(h) Lender shall have received, in form and substance satisfactory to Lender, evidence that Borrower has received a written commitment issued by one or more independent third-party lenders satisfactory to Lender (“New Lender”) to provide DrugMax, Inc. and certain of its direct and indirect Subsidiaries (including, without limitation, Familymeds, Inc.), with replacement working capital financing (“New Financing”) in an amount not less than the amount necessary to pay in cash in full absolutely and unconditionally, all of the Obligations due Lender by each Borrower and Guarantor (“Commitment”), which Commitment shall be valid and effective for a period through and including December 10, 2004 and shall provide for the repayment of such Obligations as described above. [Omitted as Confidential]

(i) The Consulting Agreement shall be in full force and effect for a term through and including the last day of the Forbearance Period and Lender shall have received a true, complete and correct copy of the Consulting Agreement.

(j) Other than the Existing Defaults, no other Default or Event of Default has occurred or is continuing (after giving effect to the amendments set forth in this Amendment).

8. Release.

(a) In consideration of the agreements of Lender contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Borrower, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably releases, remises and forever discharges the Lender and its successors and assigns, and their present and former shareholders, affiliates, subsidiaries, divisions, predecessors, directors, officers, attorneys, employees, agents and other representatives (Lender and all such other Persons being hereinafter referred to collectively as the “Releasees” and individually as a “Releasee”), of and from all demands, actions, causes of action, suits, covenants, contracts, controversies, agreements, promises, sums of money, accounts, bills, reckonings, damages and any and all other claims, counterclaims, defenses, rights

of set-off, demands and liabilities whatsoever (individually, a “Claim” and collectively, “Claims”) of every name and nature, known or unknown, suspected or unsuspected, both at law and in equity, which Borrower or any of its successors, assigns, or other legal representatives may now or hereafter own, hold, have or claim to have against the Releasees or any of them for, upon, or by reason of any circumstance, action, cause or thing whatsoever which arises at any time on or prior to the day and date of this Amendment, including, without limitation, for or on account of, or in relation to, or in any way in connection with the Loan Agreement or any of the other Financing Agreements or transactions thereunder or related thereto.

(b) Borrower understands, acknowledges and agrees that its release set forth above may be pleaded as a full and complete defense and may be used as a basis for an injunction against any action, suit or other proceeding which may be instituted, prosecuted or attempted in breach of the provisions of such release.

(c) Borrower agrees that no fact, event, circumstance, evidence or transaction which could now be asserted or which may hereafter be discovered shall affect in any manner the final, absolute and unconditional nature of the release set forth above.

9. Covenant Not to Sue. Borrower, on behalf of itself and its successors, assigns, and other legal representatives, hereby absolutely, unconditionally and irrevocably, covenants and agrees with and in favor of each Releasee that it will not sue (at law, in equity, in any regulatory proceeding or otherwise) any Releasee on the basis of any Claim released, remised and discharged by Borrower pursuant to Section 8 above. If Borrower or any of its successors, assigns or other legal representations violates the foregoing covenant, Borrower, for itself and its successors, assigns and legal representatives, agrees to pay, in addition to such other damages as any Releasee may sustain as a result of such violation, all attorneys’ fees and costs incurred by any Releasee as a result of such violation.

10. Governing Law. The rights and obligations hereunder of each of the parties hereto shall be governed by and interpreted and determined in accordance with the laws of the State of Florida without regard to principals of conflicts of laws, but excluding any rule of law that would cause the application of the law of any jurisdiction other that the laws of the State of Florida.

11. Binding Effect. This Amendment shall be binding upon and inure to the benefit of each of the parties hereto and their respective successors and assigns.

12. Counterparts. This Amendment may be executed in any number of counterparts, but all of such counterparts shall together constitute but one and the same agreement. In making proof of this Amendment, it shall not be necessary to produce or account for more than one counterpart thereof signed by each of the parties hereto. This Amendment may be executed and delivered by telecopier with the same force and effect as if it were a manually executed and delivered counterpart.

13. Further Assurances. The parties hereto shall execute and deliver such additional documents and take such additional action as may be necessary or reasonably desirable to effectuate the provisions and purposes of this Amendment.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

IN WITNESS WHEREOF, Lender and Borrower have caused these presents to be duly executed as of the day and year first written above.

BORROWER
DRUGMAX, INC.
By:	/s/ William LaGamba
Name:	William LaGamba
Title:	COO
VALLEY DRUG COMPANY
By:	/s/ William LaGamba
Name:	William LaGamba
Title:	COO
VALLEY DRUG COMPANY SOUTH
By:	/s/ William LaGamba
Name:	William LaGamba
Title:	COO
DISCOUNT Rx, INC.
By:	/s/ William LaGamba
Name:	William LaGamba
Title:	COO
LENDER
CONGRESS FINANCIAL CORPORATION (FLORIDA)
By:	/s/ Pat Cloninger
Name:	Pat Cloninger
Title:	Vice President

[SIGNATURE PAGE CONTINUED FROM PREVIOUS PAGE]

The undersigned Guarantor hereby agrees and consents to the foregoing Amendment No. 6 and Consent to the Loan and Security Agreement and ratifies and affirms his guarantee of the Obligations of Borrower under the Financing Agreements as amended through and including the date hereof, pursuant to the Guarantee, dated April 15, 2003, by Guarantor in favor of Lender.

GUARANTOR:

/s/ Jugal K. Taneja

Jugal K. Taneja

SCHEDULE 1.55

to

LOAN AND SECURITY AGREEMENT

Permitted Holders

SCHEDULE 8.12

to

INFORMATION CERTIFICATE

Subsidiaries; Affiliates; Capitalization; Solvency