Exhibit 10.11
                          FIRST MODIFICATION AGREEMENT

                  This FIRST MODIFICATION AGREEMENT (hereinafter the
                  "Modification") dated as of May 28, 2004, by and between

     FIVE STAR GROUP,  INC.,  a  corporation  of the State of Delaware  with its
principal  corporate place of business at 903 Murray Road, East Hanover,  Morris
County,  New Jersey 07936 with its mailing  address at 903 Murray Road, P.O. Box
1960, East Hanover,  Morris County, New Jersey 07936 (hereinafter referred to as
"BORROWER")

                                       and

     FLEET CAPITAL CORPORATION,  a corporation  organized and existing under the
laws of the State of Rhode  Island with  offices at Mail Stop NJ RP 46703E,  750
Walnut  Avenue,  Third Floor,  Cranford,  New Jersey  07016  (being  hereinafter
referred to as "LENDER")


                                 WITNESSES THAT:


     (1) WHEREAS,  on June 30, 2003,  BORROWER and LENDER entered into a certain
Loan and Security  Agreement  (such  certain Loan and Security  Agreement  being
hereinafter referred to as the "Loan Agreement");

     (2) WHEREAS, pursuant to the Loan Agreement,  BORROWER received approval to
borrow up to $25,000,000 from LENDER in the form of a revolving loan (called the
"Revolving Loan" in the Loan Agreement and, except as hereby amended,  such term
to have the same meaning herein that it has in the Loan Agreement);

     (3) WHEREAS,  the Loan Agreement matures on June 30, 2008,  BORROWER having
heretofore selected the Extended Maturity Date described in the Loan Agreement;

     (4)  WHEREAS,  in  order  to  secure  BORROWER's  payment  and  performance
obligations  under the Loan Agreement,  BORROWER provided LENDER with Collateral
as more fully defined and set forth in the Loan Agreement (such Collateral being
hereinafter referred to as the "Collateral",  such term to have the same meaning
herein that it has in the Loan Agreement);

     (5) WHEREAS,  BORROWER has requested  that LENDER modify the Loan Agreement
so that: (a) the maximum amount that can be borrowed under the Revolving Loan be
increased from $25,000,000 to $28,000,000; and

        (b) the Inventory sublimit be increased from $14,600,000 to $16,500,000;
            and

        (c) LENDER memorialize the aforesaid change by a written modification of
            the Loan Agreement;

     (6)  WHEREAS,  LENDER  is  willing  to do the  foregoing,  but  only if the
conditions  contained in this Modification are satisfied;

     (7)  WHEREAS,  in order to induce  LENDER to enter into this  Modification,
BORROWER is willing to execute this  Modification and comply with the provisions
hereof;

     (8) WHEREAS,  BORROWER  represents that its execution of this  Modification
and its  performance of the covenants and terms  contained  herein will inure to
its economic benefit and will be in furtherance of its corporate purposes;


     NOW,  THEREFORE,  in  consideration  of  the  premises  and  the  covenants
contained in this  Modification  and for other good and valuable  consideration,
BORROWER and LENDER do hereby agree as follows:

<PAGE>

                                   ARTICLE I

                        AMENDMENT OF THE LOAN AGREEMENT

     1.1 Unless  otherwise  specifically  defined  herein,  all terms defined in
Article I of the Loan  Agreement  shall have the same  meanings  herein as those
given therein.

     1.2 The  definition  of  "Agreement"  set forth in Section  1.8 of the Loan
Agreement is hereby amended as follows (it being intended that any time the term
"Agreement" appears in the Loan Agreement, that term shall collectively mean all
of the following):

        (a) the Loan Agreement; as amended by

        (b) this Modification; as amended by

        (c) all  extensions,   modifications   (including   without   limitation
            modifications  increasing or decreasing  the amount of the Revolving
            Loan  or  any  other  financial  accommodation  or  facility  now or
            hereafter    provided    hereunder),     refinancings,     renewals,
            substitutions, replacements and/or redatings thereof.

     1.3 The  definition  of "Lending  Formula" set forth in Section 1.40 of the
Loan  Agreement is hereby  amended as follows (it being  intended to reflect the
facts  that (1) the  maximum  amount  of the  Revolving  Loan  has  been  hereby
increased from $25,000,000 to $28,000,000 and (2) BORROWER did in fact elect the
Extended Maturity Date and executed a Master Agreement and (3) any time the term
"Lending  Formula"  appears  in the Loan  Agreement,  that term  shall  mean the
Lending Formula set forth below):


        1.40"LENDING  FORMULA".40  "LENDING  FORMULA  means the  lesser  of: (a)
            $28,000,000  LESS in all cases the "Swap Reserve" (i.e.,  the amount
            approximating  the  marked to market  exposure  from time to time of
            LENDER or LENDER's Affiliate under the Master Agreement), such "Swap
            Reserve" to be instituted  only if BORROWER's  Fixed Charge Coverage
            (as  defined  in Article V below) is less than 1.13 to 1.0 as at any
            testing date which said Article V fixes for such covenant; or

        (b) the total of the "loan value" of Eligible Receivables PLUS the "loan
            value" of Eligible Inventory.

     1.4 The  definition  of "Loan  Value" set forth in Section 1.45 of the Loan
Agreement  is hereby  amended as follows (it being  intended to reflect the fact
that  (1)  the  Inventory  sublimit  has  been  increased  from  $14,600,000  to
$16,500,000  and  (2) any  time  the  term  "Loan  Value"  appears  in the  Loan
Agreement, that term shall collectively mean all of the following):

        1.45"LOAN  VALUE".40  "LENDING  FORMULA  means:

        (a) As it relates to Eligible  Receivables:  Eligible  Receivables shall
            normally  have a  "loan  value"  of  eighty  percent  (80%)  of such
            Eligible Receivables,  provided,  however, that LENDER in good faith
            and in the  exercise of its  reasonable  commercial  judgment may on
            prior  notice to BORROWER  fix the  aforesaid  advance  rate at some
            lesser percentage; or

        (b) As it  relates  to  Eligible  Inventory:  Eligible  Inventory  shall
            normally have a "loan value" of up to the lesser of  $16,500,000  or
            55% of the value of  Eligible  Inventory,  provided,  however,  that
            LENDER  in  good  faith  and  in  the  exercise  of  its  reasonable
            commercial  judgment  may  on  prior  notice  to  BORROWER  fix  the
            aforesaid "loan value" at some lesser amount or percentage.



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<PAGE>

     1.5 The definition of "Maturity Date" set forth in Section 1.49 of the Loan
Agreement  is hereby  amended as follows (it being  intended to reflect the fact
that BORROWER did in fact select the option for the Extended Maturity Date):

        1.49 "MATURITY DATE" shall mean June 30, 2008.

     1.6 Section  2.9(d) of the Loan  Agreement is hereby amended as follows (it
being  intended  to make the  provisions  of this  Section  consistent  with the
increase in the Revolving Loan from  $25,000,000  to $28,000,000  and to reflect
the fact that BORROWER did in fact select the Extended Maturity Date):

        2.9(d) Termination Charges. At the effective date of termination of this
            Agreement  for any reason  (and  whether by LENDER or by  BORROWER),
            BORROWER  shall pay to LENDER (in  addition to the then  outstanding
            principal,  accrued interest and other charges owing under the terms
            of  this  Agreement  and  any of the  other  Loan  Documents  and in
            addition to any amounts  payable under Section 2.10) as a premium or
            liquidated damages for the loss of the bargain and not as a penalty,
            the following amount:

        (1) If  termination  occurs  during  the period  commencing  on the date
            hereof and ending on June 30, 2006,  BORROWER shall pay a prepayment
            premium  equal to 1% of the maximum  potential  amount that could be
            borrowed under the Revolving Loan (i.e., 1% of $28,000,000.

        (2) If termination  occurs during the period commencing on July 1, 2006,
            and ending on June 30, 2007, BORROWER shall pay a prepayment premium
            equal to $210,000 (i.e., 3/4% of $28,000,000).

        (3) If termination  occurs during the period commencing on July 1, 2007,
            and ending on June 29, 2008, BORROWER shall pay a prepayment premium
            equal to $140,000 (i.e., 1/2% of $28,000,000).

     1.7 Section  2.11(a) of the Loan Agreement is hereby amended as follows (it
being  intended to reflect the fact that the June 20,  2003  "master"  Revolving
Note has been  restated and amended and replaced by a note dated as of even date
herewith in the face amount of $28,000,000):

        (a) The  Revolving  Loan  is  evidenced  by  BORROWER's  certain  master
            restated and amended  promissory  revolving note dated as of May 28,
            2004, and made payable to the order of LENDER. The amounts due under
            such note shall be payable as provided in this Agreement.

     1.8 Section  5.21(c)(1) of the Loan  Agreement is hereby amended as follows
(it being  intended to reflect  the fact that the  definition  of "Fixed  Charge
Coverage"  has been  amended  to take into  account  BORROWER's  repurchases  of
stock):

                           For purposes of this covenant, "Fixed Charge
          Coverage" means the following ratio (calculated on a rolling
                                12 month basis):

                   BORROWER's earnings before interest, taxes,
          depreciation and amortization and before the income statement
          component of any change in valuation arising under the Master
                                    Agreement
                 LESS BORROWER's "Unfunded Capital Expenditures"
                   LESS cash payment of income tax liabilities
                     LESS cash distributions to stockholders
                  LESS all scheduled principal payments paid as
          allowed by the Subordinated Seller Note (at the present time
                there being no scheduled payments allowed by the
                                  Subordinated


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<PAGE>

                                  Seller Note)
               LESS cash used by BORROWER to repurchase its stock
                                 --divided by--

                        interest expense PLUS the current
                   maturities of long term debt as reported in
                 BORROWER's annual financial statements for its
                      fiscal year immediately preceding the
                             applicable test period
                    PLUS current maturities of Capital Lease
             Obligations as reported in BORROWER's annual financial
            statements for its fiscal year immediately preceding the
                             applicable test period

                                   ARTICLE II
              RESTATEMENT/SUBSTITUTION OF "MASTER" REVOLVING NOTE

     2.1 BORROWER  agrees to execute on the date hereof a "master"  restated and
amended  Revolving  Note,  such note to be dated as of even date herewith and be
entitled (in part)  "Restated  and Amended  Promissory  Note" and be in the face
amount of $28,000,000 so as to evidence the amendments to the Revolving Loan and
the Loan  Documents  which  are  made and  effected  by this  Modification.  2.2
BORROWER  foregoing  $28,000,000  "master"  Restated and Amended  Revolving Note
restates,  replaces and substitutes for the "master"  Revolving Note executed by
BORROWER and dated as of June 20, 2003.

     2.3 BORROWER's  foregoing  "master"  Restated and Amended  Revolving  Note,
together  with  all  extensions,  modifications  (including  without  limitation
modifications  increasing  or  decreasing  the amount  thereof or any  financial
accommodation  provided  thereunder),   refinancings,  renewals,  substitutions,
replacements and/or redatings thereof,  together with the Loan Agreement and the
records  of  LENDER  described  in the Loan  Agreement,  constitute  and are the
"REVOLVING NOTE" as such term is used in the Loan Agreement.

                                  ARTICLE III
                                  MISCELLANEOUS

     3.1 All of the Loan  Documents  described and defined in the Loan Agreement
shall be deemed  to be  amended  in  manner  consistent  hereto  and  conforming
herewith.

     3.2 On and after the date hereof,  the rights and obligations of LENDER and
BORROWER  shall be determined  by reference to the Loan  Agreement and the other
aforementioned  Loan  Documents as amended by this  Modification  and as amended
from time to time hereafter.

     3.3 (a) In order to induce  LENDER to enter into this  Modification  and to
perform its obligations hereunder, BORROWER reaffirms all of the representations
and warranties  which  BORROWER made in the Loan  Agreement and BORROWER  hereby
makes and gives each and all such  representations  and  warranties  directly to
LENDER.

        (b) All such  representations and warranties remain true and accurate as
            of the date hereof.

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<PAGE>

        (c) All such  representations and warranties shall survive the execution
            and delivery of this Modification.

     3.4 As a condition of this Modification, BORROWER shall deliver to LENDER:

        (a) this Modification;

        (b) BORROWER's  "master" Restated and Amended Revolving Note dated as of
            even date  herewith  and entitled  (in part)  "Restated  and Amended
            Promissory Note" and in the face amount of $28,000,000;

        (c) enabling corporate resolutions of BORROWER;  (d) the consent of FIVE
            STAR PRODUCTS,  INC. (formerly known as AMERICAN DRUG COMPANY, INC.,
            and the "Guarantor" named in the Loan Agreement;;

        (e) the consent of JL DISTRIBUTORS, INC. (the "Seller" named in the Loan
            Agreement);

        (f) enabling corporate resolutions of the aforesaid "Guarantor"; and (g)
            enabling corporate resolutions of the aforesaid "Seller".

3.5 (a) BORROWER agrees that, as of the opening of business on May 27, 2004,
there was now due and outstanding on the Revolving Loan the principal sum of
$17,749,243.65 in direct and attributed Revolving Loan borrowings (accrued
interest, if any, for the month of April 2004, having been paid in full).

        (b) BORROWER agrees that there exist no defenses, recoupments,  setoffs,
            counterclaims or any other claims or charges against the amounts due
            to LENDER under the Revolving Loan or the Loan Agreement.

        (c) BORROWER  agrees that there  exist no claims or charges  against any
            actions or inactions of LENDER in extending the Loan Agreement or in
            making  disbursements  under  the  Loan  Agreement  or in  otherwise
            administering the Loan Agreement.

     3.6 EXCEPT AS SPECIFICALLY SET FORTH IN THIS MODIFICATION,  NOTHING IN THIS
MODIFICATION  IS INTENDED TO IN ANY WAY ALTER OR AFFECT THE TERMS AND PROVISIONS
OF THE LOAN  AGREEMENT,  INCLUDING  BUT NOT  LIMITED TO  BORROWER'S  PAYMENT AND
PERFORMANCE OF THE REVOLVING LOAN.

     3.7  NOTHING IN THIS  MODIFICATION  IS  INTENDED  TO IN ANY WAY  RELEASE OR
LESSEN THE  COLLATERAL  GIVEN TO SECURE THE PAYMENT AND THE  PERFORMANCE  OF THE
LOAN AGREEMENT,  THE REVOLVING LOAN AND THE OTHER LIABILITIES (AS DEFINED IN THE
LOAN AGREEMENT) OF BORROWER TO LENDER.


     3.8 (a) BORROWER shall pay the legal expenses of LENDER for the preparation
of this Modification, plus disbursements.


        (b) BORROWER  shall  promptly  pay  such  expenses  within  7 days  from
            BORROWER's  receipt  of the  bill  therefor  and,  if  not so  paid,
            BORROWER hereby authorizes LENDER to effect payment of such expenses
            in the manner specified in the  Authorization to Charge set forth in
            the Loan  Agreement.  3.9 This  Modification  may be executed in any
            number of counterparts  and by different  parties hereto in separate
            counterparts,  each of which when so executed  shall be deemed to be
            an original and all of which taken together shall constitute one and
            the  same  agreement.  Delivery  of  an  executed  counterpart  of a
            signature  page  to  this  Modification  by  facsimile  shall  be as
            effective  as delivery of a manually  executed  counterpart  of this
            Modification.


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<PAGE>


     IN WITNESS  WHEREOF,  BORROWER  and LENDER have  caused  this  Modification
Agreement to be executed by their respective duly authorized  officers as of the
date and year first above written.



ATTEST:                                 FIVE STAR GROUP, INC.


                                        By:
---------------------------------        -------------------------------------
Lydia DeSantis, Corporate Secretary        Steve Schilit, Exec. Vice President



                                        FLEET CAPITAL CORPORATION


                                        By:
                                            ------------------------------------
                                            James M. Jordan, Vice President