Document:

Exhibit
      10.1

    
 

    
       

      EMPLOYMENT
        AGREEMENT 

      SENIOR
        VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 

       

      Agreement
        made as of this 30th day of March, 2006, by and between James A. Bologa (the
        “Employee”) and DrugMax, Inc. (the “Company”). 

       

      PREAMBLE
        

       

      The
        Company desires to employ the Employee as Senior Vice President and Chief
        Financial Officer and to compensate him therefore. Employee desires to be
        employed by the Company and to commit himself to serve the Company on the
        terms
        herein provided. In connection with his employment, Employee shall be eligible
        to participate in the Company’s stock option programs and stock purchase
        programs which may be in effect from time to time for key employees, and
        performance bonus program in accordance with the terms and conditions adopted
        by
        the Company governing such programs. 

       

      NOW,
        THEREFORE, in consideration of the foregoing and of the respective covenants
        and
        agreement of the parties, the parties agree as follows: 

       

      1.
        Definitions.
        

       

      “Affiliates”
        shall mean any corporation, partnership or other legal entity which is
        controlled by or under common control with the Company. 

       

      “Benefits”
        shall mean all the fringe benefits approved by the Board from time to time
        and
        established by the Company in its discretion for the benefit of the employees
        generally and/or for key employees of the Company as a class, including,
        but not
        limited to, regular holidays, vacations, absences resulting from illness
        or
        accident, health insurance, disability and medical plans (including dental
        and
        prescription drug), group life insurance, automobile allowance, pharmacy
        allowance, un-reimbursed medical allowance, stock option plans and stock
        purchase plans, and pension, profit-sharing or their equivalent. 

       

      “Board”
        shall mean the Board of Directors of the Company, together with an executive
        committee thereof (if any), as the same shall be constituted from time to
        time.

       

      “Cause”
        for termination shall mean (i) Employee’s final conviction of or admission to a
        felony involving a crime of moral turpitude, (ii) acts of Employee which,
        in the
        judgment of the Board, constitute willful fraud on the part of Employee in
        connection with his duties under this Agreement, including but not limited
        to
        misappropriation or embezzlement in the performance of duties as an employee
        of
        the Company, or (iii) intentional or repeated acts of the Employee which
        constitute misfeasance that in the judgment of the Board is materially injurious
        to the Company, including the Employee’s dereliction of duty, and which Employee
        does not correct within a reasonable period of time after Employee is informed
        of the Board’s intent to terminate him for a stated cause under this Subsection
        (iii) and Employee is given an opportunity to discuss his behavior with the
        Board before being terminated for cause hereunder. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Chairman”
        shall mean the person designated by the Board from time to time as its Chairman.
        

       

      “Change
        of Control” shall mean the (i) a merger or consolidation of the Company with or
        into another corporation which is not an affiliate of the Company or a
        recapitalization or reorganization of the Company and, immediately upon the
        consummation of such merger, consolidation, reorganization or recapitalization,
        the persons who were the shareholders of the Company immediately thereafter
        own
        more than fifty percent (50%) of the total voting power of the merged,
        consolidated, reorganized or recapitalized Company’s voting securities entitled
        to vote generally in the election of directors; (ii) the sale of all or
        substantially all of the assets of the Company to another person or entity
        which
        is not an affiliate of the Company; (iii) the acquisition by any person,
        entity
        or “group” (excluding, for this purpose, the Company, any affiliate of the
        Company, or any employee benefit plan of the Company or of any affiliate
        of the
        Company which acquires beneficial ownership of voting securities of the Company)
        within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act, of
        beneficial ownership (within the meaning of Rule 13d-3 promulgated under
        the
        Exchange Act) of either fifty percent (50%) or more of the then outstanding
        shares of Common Stock or fifty percent (50%) or more of the combined voting
        power of the Company’s then outstanding voting securities entitled to vote
        generally in the election of directors, which, in the case of clause (i),
        (ii)
        and (iii) of this definition, such merger, consolidation, reorganization
        or
        recapitalization sale or acquisition is not approved by a vote of at least
        eighty percent (80%) of the directors that constitute the Board immediately
        prior to the effectiveness of such merger, consolidation, reorganization
        or
        recapitalization, sale or acquisition, as the case may be; or (iv) during
        any
        period of two consecutive years, if persons who at the beginning of such
        period
        constitute the Board cease for any reason to constitute at least a majority
        of
        the Board unless the election, or the nomination for election by the Company’s
        shareholders, of each new director was approved by a vote of at least eighty
        percent (80%) of the directors then still in office who were directors at
        the
        beginning of such period. For purposes of this definition, (A) an “affiliate” is
        any person or entity which, directly or indirectly through one or more
        intermediaries, controls, is controlled by or is under common control with
        the
        Company and “control” (including the terms “controlling,” “controlled by” and
“under common control with”) means the possession, direct or indirect, of the
        power to direct or cause the direction of the management and policies of
        a
        person or entity, whether through the ownership of voting securities, by
        contract or otherwise and (B) “Board” means the board of directors of the
        Company as constituted at the time a determination thereof is required to
        be
        made pursuant to this definition. 

       

      “Chief
        Executive Officer” shall mean the individual having responsibility to the Board
        for direction and management of the executive and operational affairs of
        the
        Company and who reports and is accountable only to the Board. 

       

      “Disability”
        shall mean a written determination by a physician mutually agreeable to the
        Company and Employee (or, in the event of Employee’s total physical or mental
        disability, Employee’s legal representative) that Employee is physically or
        mentally unable to perform his duties of Senior Vice President and Chief
        Financial Officer under this Agreement and that such disability can reasonably
        be expected to continue for a period of six (6) consecutive months or for
        shorter periods aggregating one hundred and eighty (180) days in any twelve
        (12)
        month period. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      “Employee”
        shall mean James A. Bologa and, if the context requires, his heirs, personal
        representatives, and permitted successors and assigns. 

       

      “Person”
        shall mean any natural person, incorporated entity, limited or general
        partnership, business trust, association, agency (governmental or private),
        division, political sovereign, or subdivision or instrumentality, including
        those groups identified as “persons” in Section 13(d)(3) and 14(d)(2) of the
        Securities Exchange Act of 1934. 

       

      “Territory”
        shall mean the world wide web and any state of the United States and any
        equivalent section or area of any country in which the Company has operating
        brick and mortar pharmacies or has franchised brick and mortar operations
        at the
        time of the termination of this Agreement. 

       

      “Company”
        shall mean DrugMax, Inc., a Connecticut corporation, together with such
        subsidiaries or Affiliates of the Company as may from time to time exist.
        

       

      2.
        Position,
        Responsibilities and Term of Employment 

       

      2.01
        Position.
        Employee shall be engaged on a full time basis and shall serve as Senior
        Vice
        President and Chief Financial Officer and in such additional management
        position(s) as the Board shall designate. In this capacity, Employee shall
        be
        subject to the bylaws of the Company and to the direction of the Board. Employee
        shall serve the Company and any Affiliates by performing such duties and
        carrying out such responsibilities as are normally related to the position
        of
        Senior Vice President and Chief Financial Officer in accordance with the
        standards of the industry. The Employee shall report to the President and
        Chief
        Executive Officer. The Employee shall have such other responsibilities as
        the
        Company may reasonably determine from time to time, including, without
        limitation, such management duties as may be necessary or desirable to further
        the interests of the Affiliates of the Company. Nevertheless, it is understood
        and agreed that the Employee shall not be given duties or responsibilities
        that
        are inconsistent in any material way with his position as a member of the
        senior
        management of the Company. Employee’s responsibilities and capacities shall
        include, without limitation, the following: 

       

      (a)
        overall responsibility for all financial and accounting facts of the Company,
        including reporting, compliance and asset management; 

      

      (b)
        developing banking and financial investment relationships; 

       

      (c)
        treasury functions and activities; 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (d)
        planning and strategic framework for all financial systems and control
        mechanisms; 

       

      (e)
        handling all banking and financial relationships; 

       

      (f)
        set
        standards for control and audit of Company financial matters; 

       

      (g)
        in
        conjunction with operations store-level and distribution accounting systems
        and
        controls; and 

       

      (h)
        overall supervision and responsibility for all accounting and finance staff.
        

       

      2.02
        Term.
        The
        term of this Agreement shall commence on April 13, 2006 and, unless sooner
        terminated as provided in Section 4 hereof, terminate on April 12, 2009;
        provided, however, that this Agreement shall automatically renew for successive
        one (1) year periods thereafter without the necessity of any action or notice
        by
        either party to the other, except that either party may terminate this Agreement
        following the Initial Term by giving the other party written notice of its
        intention to terminate this Agreement at least ninety (90) days prior to
        the
        proposed termination date. 

       

      2.03
        Best
        Efforts Covenant.
        Employee will, to the best of his ability, devote his full professional and
        business time and commercially reasonable best efforts to the performance
        of his
        duties for the Company and its Affiliates. The Employee shall at all times
        comply with all state and federal laws, rules and regulations with respect
        to
        the operations of the Company, or its Affiliates. 

       

      2.04
        Exclusivity
        Covenant.
        During
        the Agreement’s term, Employee will not undertake or engage in any other
        employment, occupation or business enterprise other than a business enterprise
        in which Employee does not actively participate. Further, Employee agrees
        not to
        acquire, assume, or participate in, directly or indirectly, any position,
        investment, or interest adverse or antagonistic to the Company, its business
        prospects, financial or otherwise, or take any action towards any of the
        foregoing. The provisions of this Section shall not prevent Employee from
        owning
        shares of any competitor of the company as long as such shares (i) do not
        constitute more than 1% of the outstanding equity of such competitor, and
        (ii)
        are regularly traded on a recognized exchange, or listed for trading by NASDAQ
        in the over-the-counter market. 

       

      2.05
        Intentionally
        Omitted.
        

       

      2.06
        Confidential
        Information.
        Employee recognizes and acknowledges that the Company’s trade secrets,
        proprietary information and know-how, as they may exist from time to time
        (“Confidential Information”), are valuable, special and unique assets of the
        Company’s business, and that access to and knowledge of the Confidential
        Information is the term of his employment by the Company, in whole or in
        part,
        disclose such secrets, information or know-how to any Person for any reason
        or
        purpose whatsoever, nor shall Employee make use of any such Confidential
        Information for his own purposes or for the benefit of any Person (except
        the
        Company) under any circumstances during or after the term of his employment.
        Notwithstanding the foregoing, after the term of Employee’s employment the
        foregoing restrictions shall not apply to such secrets, information and know-how
        which are then in the public domain (provided that Employee was not responsible,
        directly or indirectly, for such secrets, information or know-how entering
        the
        public domain without the Company’s consent). Employee shall have no obligation
        hereunder to keep confidential any Confidential Information if and to the
        extent
        its disclosure is specifically required by law; provided, however, that in
        the
        event disclosure is required by applicable law, the Employee shall provide
        the
        Company with prompt notice of such requirement, prior to making any disclosure,
        so that the Company may seek an appropriate protective order. Employee agrees
        to
        hold as the Company’s property all memoranda, books, papers, letters, customer
        lists, processes, computer software, records, financial information, policy
        and
        procedure manuals, training and recruiting procedures and other data, and
        all
        copies thereof and therefrom, in any way relating to the Company’s business and
        affairs, whether made by him or otherwise coming into his possession, and
        on
        termination of his employment, or on demand of the Company at any time, to
        deliver the same to the Company. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      Employee
        shall use his best efforts to prevent any removal of any Confidential
        Information from the premises of the Company, except as required in his normal
        course of employment by the Company. Employee shall use his best efforts
        to
        cause all persons or entities to whom any Confidential Information shall
        be
        disclosed by him hereunder to observe the terms and conditions set forth
        herein
        as though each such person or entity was bound hereby. 

       

      2.07
        Records,
        Files.
        All
        records, file drawings, documents, equipment and the like relating to the
        business of the Company which are prepared or used by Employee during the
        terms
        of this employment under this Agreement shall be and shall remain the sole
        property of the Company. 

       

      2.08
        Hired
        to Invent.
        Employee agrees that every improvement, invention, process apparatus, method,
        design, and any other creation that Employee may invent, discover, conceive,
        or
        originate by himself or in conjunction with any other Person during the term
        of
        Employee’s employment under this Agreement that relates to the business carried
        on by the Company during the term of Employee’s employment under this Agreement
        or contemplated by the Company during the term hereof even if not implemented
        during the term of this Agreement (“Work For Hire”) shall be the exclusive
        property of the Company. Employee agrees to disclose to the Company every
        patent
        application, notice of copyright, or other action taken by Employee or any
        affiliate or assignee to protect intellectual property during the 12 months
        following Employee’s termination of employment at the Company, for whatever
        reason, so that the Company may determine whether to assert a claim under
        this
        Section or any other provision of this Agreement. The Employee does hereby
        assign to the Company all of the Work For Hire and hereby appoints the Company
        as his attorney-in-fact coupled with an interest to execute such documents
        as
        may be required to evidence such assignment. 

      

      2.09
        Equitable
        Relief.
        Employee acknowledges that his services to the Company are of a unique character
        which give them a special value to the Company. Employee further recognizes
        that
        violations by Employee of any one or more of the provisions of this Section
        2
        may give rise to losses or damages for which the Company cannot be reasonably
        or
        adequately compensated in an action at law and that such violations may result
        in irreparable and continuing harm to the Company. Employee agrees that,
        therefore, in addition to any other remedy which the Company may have at
        law and
        equity, including the right to withhold any payment of compensation under
        Section 3 of this Agreement, the Company shall be entitled to injunctive
        relief
        to restrain any violation, actual or threatened, by Employee of the provisions
        of this Agreement. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      3.
        Compensation.
        

       

      3.01
        Minimum
        Annual Compensation.
        The
        Company shall pay to Employee for the services to be rendered herein a base
        salary at the initial annual rate of Two Hundred Forty Thousand ($240,000.00)
        Dollars (“Minimum Annual Compensation”) effective as of the date hereof, which
        base salary shall be subject to annual review and increase to be determined
        by
        the Compensation Committee of the Board. Employee’s salary shall be payable
        bi-weekly. 

       

      3.02
        Incentive
        Compensation.
        In
        addition to Minimum Annual Compensation, Employee shall be entitled to
        participate in, at the discretion of the Board, any bonus or incentive
        compensation plan adopted by the Compensation Committee of the Board for
        key
        employees of the Company, up to fifty percent (50%) of Minimum Annual
        Compensation, provided the Employee attained the goals (the “Performance Goals”)
        which may be set by the Board from time to time. 

       

      3.03
        Participating
        in Benefits.
        Employee shall be entitled to all Benefits made available to similarly situated
        employees of the Company, other than medical and dental benefits, for as
        long as
        such Benefits may remain in effect. In addition, Employee shall be entitled
        to
        any substitute or additional Benefits made available in the future to similarly
        situated employees of the Company. 

      

      Employee’s
        entitlement to the aforementioned Benefits shall be subject to and on a basis
        consistent with the terms, conditions and overall administration of such
        Benefits adopted by the Company and in the discretion of the Company. Benefits
        paid to Employee shall not be deemed to be in lieu of other compensation
        to
        Employee hereunder as described in this Section 3. 

       

      3.04
        Specific
        Benefits.
        During
        the term of this Agreement (and thereafter to the extent this Agreement shall
        require): 

       

      (a)
        Vacation.
        Commencing on April 13, 2006, Employee shall be entitled to three (3) weeks
        of
        paid vacation time per year, to be taken at time mutually acceptable to the
        Company and Employee. 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      (b)
        Insurance
        Policies.
        The
        Company may, at its discretion, and at any time after the execution of this
        Agreement, and for so long as Employee remains employed by the Company, apply
        for and procure, as owner and for its own benefit, insurance on the life
        of the
        Employee, in such amounts and in such form or forms as the Company may choose.
        The Employee shall have no interest whatsoever in the policy or policies,
        but
        the Employee shall, at the request of the Company, subject himself to such
        medical examinations, supply such information, and execute such documents
        as may
        be required by the insurance company or companies to which it has applied
        for
        such insurance. At the termination of employment hereunder either for cause
        or
        otherwise, the Company shall either: (i) surrender such policies to the issuer;
        or (ii) transfer ownership of any policies procured pursuant to this Agreement
        to the Employee who shall thereafter be responsible for the payment of any
        premiums thereunder. It is the intention of the parties that the Company
        shall
        retain no insurance on the life of the Employee after employment hereunder
        has
        been terminated for any reason whatsoever. 

       

      (c)
        Disability.
        If
        Employee is unable to perform his obligations under this Agreement because
        of
        illness and/or disability, Employee shall continue to receive his full
        compensation and benefits under this Agreement for a period not to exceed
        six
        (6) consecutive months; provided, however, Employee’s base salary from the
        Company shall be reduced by the amount, if any, of income payments received
        by
        Employee as a result of group or individual disability insurance coverage
        maintained at the cost of the Company. 

       

      (d)
        Purchasing
        Allowance.
        The
        Company shall reimburse Employee for expenditures made by the Employee at
        any
        Arrow Prescription Center location in an amount not to exceed Two Hundred
        Dollars ($200) per month. 

       

      (e)
        Medical
        Reimbursement.
        The
        Company shall reimburse Employee for medical expenses incurred by Employee
        for
        himself or his immediate family which are not covered expenses pursuant to
        the
        health insurance policies provided by Company pursuant to paragraph (b),
        above,
        in an amount not to exceed Three Thousand Dollars ($3,000) per annum.

       

      (f)
        Expense
        Reimbursement.
        Employee shall be entitled to receive prompt reimbursements for all reasonable
        expenses incurred by him (in accordance with the policies and procedures
        established by the Company or the Board for the similarly situated employees
        of
        the Company) in performing services hereunder. 

       

      (g)
        Automobile
        Allowance.
        Employee shall be entitled to an automobile allowance in an amount not to
        exceed
        five hundred dollars ($500) per month. 

       

      (h)
        Fitness
        or Club Allowance.
        Employee shall be entitled to a fitness or club allowance in an amount not
        to
        exceed two hundred dollars ($200) per month. 

      

      (i) Education
        Allowance. Employee shall be reimbursed for reasonable education expenses,
        approved in advance by the CEO, associated with continuing education fees,
        educational seminars and fees associated with maintaining CPA status.

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      3.05
        Sign
        On Bonus.
        Upon
        date of employment, Employee shall receive 100,000 options to purchase DrugMax,
        Inc. common stock at an exercise price of fair market value on the date of
        grant
        and 100,000 restricted shares of DrugMax, Inc. common stock. Such shares
        and
        options shall vest 1/3 at each anniversary of the grant date and are subject
        to
        the terms and conditions contained in a separate stock option agreement and
        restricted stock agreement. 

      

      4.
        Termination.
        

       

      4.01
        Termination
        by Company for Other Than Cause.
        If
        during the term of this Agreement the Company terminates the employment of
        Employee and such termination is not for Cause then the Company shall pay
        to
        Employee an amount equal to the monthly portion of Employee’s Minimum Annual
        Compensation multiplied by twelve (12) months (the “Severance Period”). If
        during the term of this Agreement there is a Change of Control resulting
        in a
        change of position of Employee’s employment, and if Employee’s annual
        compensation in his new position shall be less than the Minimum Annual
        Compensation, then the difference shall be paid to Employee for the balance
        of
        the Severance Period. If the Employee’s employment in a new position shall
        terminate, then for the purposes of this paragraph 4.01, Employee shall be
        entitled to continuation of the Minimum Annual Compensation until the earlier
        of
        the conclusion of the Severance Period or the date when he shall again become
        reemployed, in which case only the difference shall be payable as aforesaid.
        If
        the Employee’s reemployment in a new position shall terminate, Employee shall
        use his best efforts to become reemployed as soon as reasonable possible
        in a
        position consistent with Employee’s experience and stature. Any amounts due
        hereunder shall be paid at such times and in such manner as the Employee
        had
        previously been paid his Minimum Annual Compensation. The payments provided
        herein are in lieu of any other payments due the Employee hereunder, including
        but not limited to, any claim for breach of contract. 

       

      4.02
        Termination
        by the Company for Cause.
        The
        Company shall have the right to terminate the employment of Employee for
        Cause,
        however, nothing herein shall be deemed to constitute a waiver of the right
        of
        the Employee to challenge the Company’s determination of Cause. Effective as of
        the date that the employment of Employee terminates for Cause, this Agreement,
        except for Sections 2.04 through 2.09, shall terminate and no further payments
        of the Compensation described in Section 3 (except for such remaining payments
        of Minimum Annual Compensation under Section 3.01 relating to periods during
        which Employee was employed by the Company, benefits which are required by
        applicable law to be continued, and reimbursement of prior expenses under
        Section 3.04) shall be made. 

       

      4.03
        Termination
        on Account of Employee’s Death.
        

       

      (a)
        In
        the event of Employee’s death during the term of this Agreement; 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        	
                 

              	
                (1)

              	
                This
                  Agreement shall terminate except as provided in this Section; and
                  

              

      

       

      
        	
                 

              	
                (2)

              	
                The
                  Company shall pay to Employee’s beneficiary or beneficiaries (or to his
                  estate if he fails to make such designation) an amount equal to
                  the
                  Employee’s Minimum Annual Compensation as in effect on the date of his
                  death. This amount shall be paid in one lump sum as soon as practicable
                  after the date of his death. 

              

      

       

      (b)
        Employee may designate one or more beneficiaries for the purposes of this
        Section by making a written designation and delivering such designation to
        the
        Treasurer of the Company. If Employee makes more than one such written
        designation, the designation last received before Employee’s death shall
        control. 

       

      4.04
        Termination
        on Account of Disability.
        The
        Company shall have the right to terminate the employment of Employee in case
        of
        Disability of the Employee. In such case, the provisions of Section 3.04(c)
        of
        this Agreement shall apply and the provisions of Section 4.01 of this Agreement
        shall not apply, notwithstanding the terms of said Section 4.01. 

       

      4.05
        Benefits
        Upon Termination.
        Upon
        the termination of the Employee’s employment hereunder for Cause, the Employee
        shall not receive any other benefits except as required by law. In the case
        of
        termination without Cause, any health insurance, dental insurance, life
        insurance and disability insurance coverage provided under the Company’s benefit
        programs shall be continued for a period of twelve months or such earlier
        date
        that the Employee obtains other employment. 

      

      5.
        Miscellaneous.
        

       

      5.01
        Assignment.
        The
        Company shall have the right to assign all of its rights under this Agreement
        to
        any affiliate or to any purchaser of substantially all of the assets of the
        Company; provided, however, any such assignment shall not release the Company
        from any of its obligations under this Agreement. Upon any such assignment,
        this
        Agreement shall be binding upon and inure to the benefit of such assigns
        and the
        Employee. If any such purchaser of substantially all of the assets of the
        Company is unwilling to accept an assignment of this Agreement and to assume
        the
        obligations hereof, then Company shall remain fully liable hereunder
        notwithstanding the sale of its assets and the resulting cessation of its
        business operations. The Employee shall have no right to assign or delegate
        any
        rights or obligations under this Agreement. 

       

      5.02
        Governing
        Law.
        This
        Agreement shall be construed in accordance with and governed for all purposes
        by
        the laws of the State of Connecticut. 

       

      5.03
        Interpretation.
        In case
        any one or more of the provisions contained in this Agreement shall, for
        any
        reason, be held to be invalid, illegal or unenforceable in any respect, such
        invalidity, illegality or unenforceability shall not affect any other provisions
        of this Agreement, but this Agreement shall be construed as if such invalid,
        illegal or unenforceable provisions had never been contained herein.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      5.04
        Notice.
        Any
        notice required or permitted to be given hereunder shall be effective when
        received and shall be sufficient if in writing and if personally delivered
        or
        sent by prepaid cable, telex or registered air mail, return receipt requested,
        to the party to receive such notice at its address set forth at the end of
        this
        Agreement or at such other address as a party may by notice specify to the
        other. 

       

      5.05
        Amendment
        and Waiver.
        This
        Agreement may not be amended, supplemented or waived except by a writing
        signed
        by the party against which such amendment or waiver is to be enforced. The
        waiver by any party of a breach of any provision of this Agreement shall
        not
        operate to, or be construed as a waiver of, any other breach of that provision
        nor as a waiver of any breach of another provision. 

       

      5.06
        Binding
        Effect.
        This
        Agreement shall be binding on the successors and assigns of the parties hereto.
        

       

      5.07
        Survival
        of Rights and Obligations.
        All
        rights and obligations of Employee or the Company arising during the term
        of
        this Agreement shall continue to have full force and effect after the
        termination of this Agreement unless otherwise provided herein. 

       

      5.08
        Entire
        Agreement.
        This
        Agreement contains the entire understanding of the parties and supersedes
        all
        prior agreements between the parties. There are no oral understandings, terms
        or
        conditions and no party has relied upon any representation, express or implied,
        not contained in this Agreement. The rights and protection afforded by any
        and
        all provisions of this Agreement shall inure to the benefit of (and may be
        fully
        enforced by) any Affiliate of the Company, it being understood such Affiliates
        are intended third party beneficiaries of this Agreement. 

       

      5.09
        Partial
        Invalidity.
        The
        invalidity of one or more of the phrases, sentences, clauses, sections or
        articles contained in the Agreement shall not affect the validity of the
        remaining portions. 

       

      5.10
        Genders.
        Any
        reference to the masculine gender shall be deemed to include the feminine
        and
        neuter genders, and vice versa, and any reference to the singular shall include
        the plural, and vice versa, unless the context otherwise requires. 

       

      5.11
        Company
        Policies.
        The
        Company’s Policies as amended from time to time will govern all terms,
        privileges and conditions of employment of the Employment which are not
        specifically addressed in this Agreement and shall include all rules and
        regulations adopted by the Company from time to time in its sole discretion.
        

      

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      IN
        WITNESS WHEREOF, this Agreement has been duly executed as of the day and
        year
        first written above. 

       

      
        	 	 	 
	 	
                DRUGMAX,
                  INC.

              
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
                

                Edgardo
                  Mercadante

              
	 	
                Its
                  Chairman and Chief Executive
                  Officer

              

      

      
        	 	 	 
	 	EMPLOYEE
	 
 	 
 	 
 
	 	By:  	/s/ 
	 	
                

                James
                  A. BologaPROMISSORY
      NOTE

    (Mortgage
      Loan)

    

    

    

    

      
        	
                $6,035,000.00

              	
                Framingham,
                  Massachusetts 

              
	 	
                February
                  ____, 2006

              

      

    

    FOR
      VALUE
      RECEIVED,
      BAY STATE REALTY HOLDINGS, INC.,
      a
      Massachusetts corporation ("Borrower"), whose address is 1309 South Main Street,
      Waterbury, CT 06706 promises to pay to FORD
      MOTOR CREDIT COMPANY,
      a
      Delaware corporation ("Lender"), or order, at 2nd
      Floor
      Southboro Place, 352 Turnpike Road, Southboro, Massachusetts 01772, or such
      other place as Lender may designate in writing, the principal sum of SIX MILLION
      THIRTY FIVE THOUSAND DOLLARS ($6,035,000.00), together with interest on the
      principal balance outstanding from time to time (the "Principal Balance"),
      in
      accordance with the terms and conditions of this Promissory Note (this
      "Note"):

    

    1.    Definitions.
      Unless
      otherwise specifically defined herein, the capitalized terms used herein shall
      have meanings set forth in the Mortgage (as defined below). The following terms
      shall have the meanings set forth below: 

    

    (a)   The
      term
      "Alternative Applicable Interest Rate" means the interest rate of three percent
      (3%) per annum over the Applicable Interest Rate. 

    

    (b)   The
      term
      "Anniversary Date" means the same month and day as the first Payment Date
      occurring in subsequent calendar years.

    

    (c)   The
      term
      "Applicable Interest Rate" means the interest rate of 2.75% per annum above
      the
      LIBOR Rate in effect from time to time. 

     

    (d)   The
      term
      "LIBOR Rate" means a rate calculated on the last day of each calendar month
      equal to the arithmetic average of the London Interbank Offered Rates (LIBOR)
      (expressed as a percentage per annum and rounded upward, if necessary, to the
      next nearest one thousandth of 1%) for deposits in U.S. dollars, for a one-month
      period, that are quoted
      each Monday for the preceding Friday during that calendar month under the "Money
      Rates Column" of the Wall
      Street Journal,
      or as
      published in such other publications as Lender may designate. In the event
      such
      rate is not quoted on Monday for the previous Friday, the rate quoted on the
      first business day of the week for the last business day of the previous week
      shall be utilized. 

    

    (e)   The
      term
      "Maturity Date" means the Payment Date 5 years after the first Payment Date.
      

    

    (f)   The
      term
      "Mortgage" means the Mortgage, Assignment of Leases and Rents, Security
      Agreement and Fixture Filing dated as of even date with this Note from Borrower
      to Lender, covering the real and personal property described therein situated
      in
      Middlesex County, Massachusetts.

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    

    (g)    The
      term
      "Payment Date" shall mean the first day of each month during the term or until
      the Loan is paid in full.

    

    2.     
      Interest.
      (a)
      Borrower shall pay interest on the Principal Balance at the Applicable Interest
      Rate or the Alternative Applicable Interest Rate, as the case may be, as set
      forth below. Interest will be calculated on the basis of a 360-day year. For
      purposes of computing interest on the Principal Balance, the Applicable Interest
      Rate or Alternative Applicable Interest Rate, as the case may be, shall change
      on the first day of each month during the term hereof, following any month
      in
      which there is a change in the LIBOR Rate. The Applicable Interest Rate or
      Alternative Applicable Interest Rate, as the case may be, in effect on the
      first
      day of a month shall be deemed to be in effect throughout such month. Each
      payment shall be applied first to interest, and the balance to reduction of
      the
      Principal Balance and all other amounts due under the Transaction
      Documents.

    

    (b)    Time
      is
      of the essence hereof. If the Principal Balance, interest or other sum due
      hereunder is not paid within ten (10) days of when due, Borrower shall pay
      to
      Lender a late charge payment equal to five percent (5%) of the amount of such
      installment or the maximum rate permitted by law, whichever is less. Borrower
      shall pay interest on the outstanding Principal Balance at the Alternative
      Applicable Interest Rate (1) upon the occurrence of an Event of Default under
      the Transaction Documents and thereafter until such Event of Default is cured,
      or (2) upon the failure by Borrower to pay the final payment in full under
      this
      Note on the Maturity Date even though Lender does not declare an Event of
      Default, or (3) upon the termination by Lessee of its line of credit with Lender
      for financing Lessee's new motor vehicle inventory.

    

    (c)    Notwithstanding
      any provision of the Transaction Documents, the total liability of Borrower
      under this Note for Interest Payments shall not exceed the Legal Rate. In the
      event the Interest Payments for any month or other interest payment period
      exceed the Legal Rate, Lender shall apply all Interest Payments collected in
      excess of the Legal Rate for the period in question to the outstanding Principal
      Balance as of the date of receipt. Further, upon notice to Borrower, Lender
      may
      waive, reduce or limit the collection of any Interest Payments in excess of
      the
      Legal Rate.

     

    3.    
Amortization
      and Repayment.
      (a)
      From the date hereof to and including the Maturity Date, Borrower shall pay
      Lender the Principal Balance and interest thereon as follows: 

    

    (1)   an
      interest only payment at the Applicable Interest Rate or Alternative Applicable
      Interest Rate, as the case may be, on the unpaid Principal Balance outstanding
      from the date hereof through the last day of the first month of the term hereof,
      payable on the first Payment Date; and 

    

    (2)   59
      unequal, consecutive monthly installments of principal in the amounts set forth
      on Schedule A attached hereto, plus interest at the Applicable Interest Rate
      or
      the Alternative Applicable Interest Rate, as the case may be, on the unpaid
      Principal Balance outstanding, commencing on the second Payment Date, and
      continuing monthly thereafter on each Payment Date; and 

     

    
      
         

      

      
        -2-

        
          

        

      

      
         

      

    

    

    (3)   on
      the
      Maturity Date, a final installment equal to the unpaid Principal Balance,
      accrued and unpaid interest thereon and any and all other payments due under
      this Note and the Transaction Documents. 

    

    (b)   Borrower
      may prepay all or a portion of the Principal Balance upon payment of all
      interest accrued on the outstanding Principal Balance through the day of
      prepayment and all other charges, and a prepayment premium equal to the
      Principal Balance then being prepaid, multiplied by 
      (1)
      3.0%, if such prepayment is made on or before the first Anniversary Date, (2)
      2.0%, if such prepayment is made after the first Anniversary Date, but on or
      before the fourth Anniversary Date, or (3) 1.0%, if such prepayment is made
      after the fourth Anniversary Date, but more than 15 days prior to the Maturity
      Date; provided, however, that Borrower may prepay without premium up to 5.0%
      of
      the original principal amount of this Note during any calendar year. Provided
      that no Event of Default has occurred and is continuing, Borrower will not
      be
      responsible for a prepayment premium if the prepayment of the Principal Balance
      is the result of a Casualty, Condemnation or Taking of the Property. Borrower
      will be responsible for the applicable prepayment premium if the Principal
      Balance is prepaid in whole or in part as a result of an acceleration of the
      Principal Balance upon the occurrence of any Event of Default. Borrower shall
      make all prepayments of the Principal Balance on a Payment Date. Lender shall
      apply all prepayments first to interest and then to principal. 

    

    4.    Security.
      This
      Note is secured by the Mortgage and the other Transaction Documents, which
      state
      the rights and obligations of the parties to the Property and other collateral
      and provides for acceleration of the Principal Balance and other remedies upon
      the occurrence of an Event of Default. The terms and conditions of the Mortgage
      and all other Transaction Documents, other than this Note, are incorporated
      herein by reference. 

    

    5.    Assignment
      and Participation.
      

    

    (a)   Without
      in any way limiting any rights of Lender under the Mortgage or the other
      Transaction Documents, Lender may, without the consent of Borrower, assign
      to
      one or more persons all or a portion of its rights and obligations under this
      Note and the Loan. Upon such assignment, from and after the effective date
      thereof, the assignee thereunder shall be a party hereto and shall have the
      rights and obligations of Lender hereunder, and Lender shall have no further
      obligations or rights hereunder.

    

    (b)   Without
      in any way limiting any rights of Lender under the Mortgage or the other
      Transaction Documents, Lender may, without the consent of Borrower, sell
      participations to one or more persons in or to all or a portion of its rights
      and obligations under this Note and the Loan; provided, however, that (1)
      Lender’s obligations under this Note shall remain unchanged, (2) Lender shall
      remain solely responsible to Borrower for the performance of such obligations,
      (3) Lender shall remain the holder of this Note for all purposes of this Note;
      and (4) Borrower shall continue to deal solely and directly with Lender in
      connection with Lender’s rights and obligations under and in respect of this
      Note, the Mortgage and the other Transaction Documents.

    

    (c)    Without
      in any way limiting any rights of Lender under the Mortgage or the other
      Transaction Documents, Lender may, without the consent of Borrower, in
      connection with any assignment or participation or proposed assignment or
      participation pursuant to this subsection, disclose to the assignee or
      participant or proposed assignee or participant, as the case may be, any
      information relating to Borrower or any of its affiliates or to any aspect
      of
      the Loan or the Property that has been furnished to Lender by or on behalf
      of
      Borrower or any of its affiliates.

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

    

    	 	
          

    

    6.    Miscellaneous.

     

    (a)   This
      instrument shall be governed by and construed according to the laws of the
      Commonwealth of Massachusetts.

    

    (b)   Whenever
      used, the singular shall include the plural, the plural shall include the
      singular, and the words "Lender" and "Borrower" shall be deemed to include
      their
      respective heirs, administrators, executors, successors and
      assigns.

    

    (c)    In
      the
      event any one or more of the provisions hereof shall be invalid, illegal or
      unenforceable in any respect, the validity of the remaining provisions hereof
      shall be in no way affected, prejudiced or disturbed thereby.

    

    (d)   The
      terms
      and conditions of this Note may be changed, waived, discharged or terminated
      only by an instrument in writing signed by the party against which enforcement
      of such change, waiver, discharge or termination is asserted, and then such
      modification, waiver, discharge or termination shall be effective only in the
      specific instance and for the specific purpose given. 

    

    (e)    Borrower
      shall pay all costs and expenses in connection with the preparation, execution,
      delivery and performance of this Note and the other Transaction Documents,
      including without limitation, reasonable fees and expenses of its and Lender's
      counsel, taxes, documentary stamps and recording and filing fees and expenses.
      

    

    (f)    This
      Note
      and the other Transaction Documents constitute the sole and entire agreement
      of
      the parties with respect to the subject matter thereof.

    

    (g)   Borrower
      waives
      (1) presentment and demand for payment of any Indebtedness, except as otherwise
      provided in the Transaction Documents; (2) protest, notice of protest and
      nonpayment, notice of demand and dishonor and notice of acceleration with
      respect to the Indebtedness or the Transaction Documents; (3) notice of costs,
      expenses or losses and interest thereon, and notice of late charges; (4)
diligence
      in taking any action to collect the Indebtedness or in proceeding against the
      Property or any other collateral securing payment of this Note;
      (5)
all
      exemptions, whether homestead or otherwise, as to the Indebtedness and the
      Obligations;
      (6)
any
      right
      to require Lender to proceed against any other party or person or any collateral
      before proceeding against Borrower or any other party;
      and (7)
      all other rights and defenses, the assertion or exercise of which would in
      any
      way diminish the liability of Borrower hereunder. Lender
      may apply all funds made available to it from the proceeds of the disposition
      of
      any collateral or by the exercise of the right of set off either to the
      Indebtedness or the Obligations, as Lender may elect from time to time.

    

    (h)    BORROWER
      ACKNOWLEDGES THAT INTEREST IN THIS NOTE IS TO BE CALCULATED BY LENDER ON THE
      BASIS OF A THREE HUNDRED SIXTY (360) DAY YEAR AND IS FULLY AWARE THAT SUCH
      CALCULATIONS MAY RESULT IN AN ACCRUAL AND/OR PAYMENT OF INTEREST IN AMOUNTS
      GREATER THAN CORRESPONDING INTEREST CALCULATIONS BASED ON A THREE HUNDRED
      SIXTY-FIVE (365) DAY YEAR.

     

     (i)    BORROWER
      AND LENDER WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL
      BY
      JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR
      OTHERWISE, RELATING DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR
      THE
      LOAN, THIS NOTE, THE MORTGAGE OR THE OTHER TRANSACTION DOCUMENTS OR ANY ACTS
      OR
      OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS OR AGENTS IN CONNECTION
      THEREWITH.

    
 

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

    

     (j)    Borrower
      recognizes that the occurrence of an Event of Default, including without
      limitation, its failure to make any payment when due as provided herein or
      in
      any other Transaction Document, will require Lender to incur additional expense
      in servicing and administering the Loan, in loss to Lender of the use of the
      money due and in frustration to Lender in meeting its other financial and loan
      commitments and that the damages caused thereby would be extremely difficult
      and
      impractical to ascertain. Borrower agrees (1) that an amount equal to the late
      charge under Section 2 plus the accrual of interest at the Alternative
      Applicable Interest Rate is a reasonable estimate of the damage to Lender in
      the
      event of a late payment, and (2) that the accrual of interest at the Alternative
      Applicable Interest Rate following any other Event of Default is a reasonable
      estimate of the damage to Lender in the event of such other Event of Default,
      regardless of whether there has been an acceleration of the Loan. Nothing in
      this Note shall be construed as an obligation on the part of Lender to accept,
      at any time, less than the full amount then due hereunder, or as a waiver or
      limitation of Lender's right to compel prompt performance.

    

    (k)    Upon
      notice from Lender to Borrower of the loss, theft, destruction or mutilation
      of
      this Note and, upon receipt of indemnity reasonably satisfactory to Borrower
      from Lender or, in the case of mutilation hereof, upon surrender of the
      mutilated Note, Borrower will make and deliver a new note of like tenor in
      lieu
      of this Note.

    Borrower,
      intending to be legally bound hereby, has duly executed this Note on the day
      and
      year first above written.

    

    
      	 	 	 
	 	BORROWER:
	 	 	 
	 	
              BAY
                STATE REALTY HOLDINGS, INC.,

              a Massachusetts corporation

            
	 
 	 
 	 
 
	 	By:  	Corey
              Shaker, President 
	 	
              

            
	 	By: 	Charles
              Schwartz, Secretary 
	 	 	
              

            

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

    SCHEDULE
      A

    

    Monthly
      Installments of Principal

    

    
      	
               

            	
              Payment

            	
               

            
	
              No.

            	
              Date

            	
              Principal

            
	
              1

            	
              4/1/2006

            	
              11,265.21

            
	
              2

            	
              5/1/2006

            	
              11,333.08

            
	
              3

            	
              6/1/2006

            	
              11,401.37

            
	
              4

            	
              7/1/2006

            	
              11,470.06

            
	
              5

            	
              8/1/2006

            	
              11,539.17

            
	
              6

            	
              9/1/2006

            	
              11,608.69

            
	
              7

            	
              10/1/2006

            	
              11,678.63

            
	
              8

            	
              11/1/2006

            	
              11,749.00

            
	
              9

            	
              12/1/2006

            	
              11,819.78

            
	
              10

            	
              1/1/2007

            	
              11,891.00

            
	
              11

            	
              2/1/2007

            	
              11,962.64

            
	
              12

            	
              3/1/2007

            	
              12,034.72

            
	
              13

            	
              4/1/2007

            	
              12,107.22

            
	
              14

            	
              5/1/2007

            	
              12,180.17

            
	
              15

            	
              6/1/2007

            	
              12,253.56

            
	
              16

            	
              7/1/2007

            	
              12,327.38

            
	
              17

            	
              8/1/2007

            	
              12,401.66

            
	
              18

            	
              9/1/2007

            	
              12,476.38

            
	
              19

            	
              10/1/2007

            	
              12,551.55

            
	
              20

            	
              11/1/2007

            	
              12,627.17

            
	
              21

            	
              12/1/2007

            	
              12,703.25

            
	
              22

            	
              1/1/2008

            	
              12,779.79

            
	
              23

            	
              2/1/2008

            	
              12,856.78

            
	
              24

            	
              3/1/2008

            	
              12,934.25

            
	
              25

            	
              4/1/2008

            	
              13,012.17

            
	
              26

            	
              5/1/2008

            	
              13,090.57

            
	
              27

            	
              6/1/2008

            	
              13,169.44

            
	
              28

            	
              7/1/2008

            	
              13,248.79

            
	
              29

            	
              8/1/2008

            	
              13,328.61

            
	
              30

            	
              9/1/2008

            	
              13,408.92

            
	
              31

            	
              10/1/2008

            	
              13,489.71

            
	
              32

            	
              11/1/2008

            	
              13,570.98

            
	
              33

            	
              12/1/2008

            	
              13,652.75

            
	
              34

            	
              1/1/2009

            	
              13,735.01

            
	
              35

            	
              2/1/2009

            	
              13,817.76

            
	
              36

            	
              3/1/2009

            	
              13,901.01

            
	
              37

            	
              4/1/2009

            	
              13,984.76

            
	
              38

            	
              5/1/2009

            	
              14,069.02

            
	
              39

            	
              6/1/2009

            	
              14,153.79

            
	
              40

            	
              7/1/2009

            	
              14,239.07

            
	
              41

            	
              8/1/2009

            	
              14,324.86

            
	
              42

            	
              9/1/2009

            	
              14,411.16

            
	
              43

            	
              10/1/2009

            	
              14,497.99

            
	
              44

            	
              11/1/2009

            	
              14,585.34

            
	
              45

            	
              12/1/2009

            	
              14,673.22

            
	
              46

            	
              1/1/2010

            	
              14,761.62

            
	
              47

            	
              2/1/2010

            	
              14,850.56

            
	
              48

            	
              3/1/2010

            	
              14,940.04

            
	
              49

            	
              4/1/2010

            	
              15,030.05

            
	
              50

            	
              5/1/2010

            	
              15,120.61

            
	
              51

            	
              6/1/2010

            	
              15,211.71

            
	
              52

            	
              7/1/2010

            	
              15,303.36

            
	
              53

            	
              8/1/2010

            	
              15,395.56

            
	
              54

            	
              9/1/2010

            	
              15,488.32

            
	
              55

            	
              10/1/2010

            	
              15,581.64

            
	
              56

            	
              11/1/2010

            	
              15,675.52

            
	
              57

            	
              12/1/2010

            	
              15,769.96

            
	
              58

            	
              1/1/2011

            	
              15,864.98

            
	
              59

            	
              2/1/2011

            	
              15,960.56

            

    

    

    

    
      
         

      

      
        -6-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00101-of-00352.parquet"}]]