Document:

Exhibit 10.5 Form of Guaranty Agreement

    Exhibit
      10.5 

    

      UNLIMITED

      GUARANTY
        AGREEMENT

    THIS
      GUARANTY AGREEMENT
      ("Guaranty")
      is
      made as of the 20th
      day of
      February, 2007, by Guarantor (as hereinafter defined) for the benefit of Lender
      (as hereinafter defined).

    

    1. Definitions.
      As used
      in this Guaranty, the following terms shall have the meanings indicated
      below:

    

    (a) The
      term
      "Lender"
      shall
      mean AMEGY BANK NATIONAL ASSOCIATION, a national banking association, whose
      address for notice purposes is the following: 1807 Ross Avenue, Suite 400,
      Dallas, Dallas County, Texas 75201.

    

    (b) The
      term
      "Borrower"
      shall
      mean the following (whether one or more): DOUGHERTY’S PHARMACY, INC., a Texas
      corporation, ALVIN MEDICINE MAN, LP, a Texas limited partnership, ANGLETON
      MEDICINE MAN, LP, a Texas limited partnership, and SANTA FE MEDICINE MAN, LP,
      a
      Texas limited partnership.

    

    (c) The
      term
      "Guaranteed
      Indebtedness"
      shall
      mean (i) all principal indebtedness owing by Borrower to Lender now existing
      or
      hereafter, (ii) all accrued but unpaid interest on any of the indebtedness
      owing
      under the instrument described in (i) above, (iii) all obligations and other
      indebtedness of Borrower to Lender under
      any
      documents, instruments and/or agreements evidencing, securing, governing and/or
      pertaining to all or any part of the indebtedness described in (i) and (ii)
      above (collectively, the "Loan
      Documents"),
      (iv)
      all costs and expenses incurred by Lender in connection with the collection
      and
      administration of all or any part of the indebtedness and obligations described
      in (i), (ii) and (iii) above or the protection or preservation of, or
      realization upon, the collateral securing all or any part of such indebtedness
      and obligations, including without limitation all reasonable attorneys' fees,
      and (v) all renewals, extensions, modifications and rearrangements of the
      indebtedness and obligations described in (i), (ii), (iii) and (iv)
      above.

    

    (d) The
      term
      "Guarantor"
      shall
      mean _______________, a  __________(Entity), whose address for notice
      purposes is the following: 16250 Dallas Parkway, Suite 100, Dallas, Texas
      75248-2622.

    

    2. Obligations.
      As an
      inducement to Lender to extend or continue to extend credit and other financial
      accommodations to Borrower, Guarantor, for value received, does hereby
      unconditionally and absolutely guarantee the prompt and full payment and
      performance of the Guaranteed Indebtedness when due or declared to be due and
      at
      all times thereafter. 

    

    3. Character
      of Obligations.
      

    

    (a) This
      is
      an absolute, continuing and unconditional guaranty of payment and not of
      collection and if at any time or from time to time there is no outstanding
      Guaranteed Indebtedness, the obligations of Guarantor with respect to any and
      all Guaranteed Indebtedness incurred thereafter shall not be affected. This
      Guaranty and the Guarantor's obligations hereunder are irrevocable. All of
      the
      Guaranteed Indebtedness shall be conclusively presumed to have been made or
      acquired in acceptance hereof. Guarantor shall be liable, jointly and severally,
      with Borrower and any other guarantor of all or any part of the Guaranteed
      Indebtedness.

    

    (b) Lender
      may, at its sole discretion and without impairing its rights hereunder, apply
      any payments on the Guaranteed Indebtedness that Lender receives to that portion
      of the Guaranteed Indebtedness, if any, not guaranteed hereunder.

    

    (c) Guarantor
      agrees that its obligations hereunder shall not be released, diminished,
      impaired, reduced or affected by the existence of any other guaranty or the
      payment by any other guarantor of all or any part of the Guaranteed
      Indebtedness.

    

    (d) Guarantor's
      obligations hereunder shall not be released, diminished, impaired, reduced
      or
      affected by, nor shall any provision contained herein be deemed to be a
      limitation upon, the amount of credit which Lender may extend to Borrower,
      the
      number of transactions between Lender and Borrower, payments by Borrower to
      Lender or Lender's allocation of payments by Borrower.

    

    
      
        
        

      

      
        -46-

        
          

        

      

      
        
        

      

    

    4. Representations
      and Warranties.
      Guarantor hereby represents and warrants the following to Lender:

    

    (a) This
      Guaranty may reasonably be expected to benefit, directly or indirectly,
      Guarantor; and

    

    (b) Guarantor
      is familiar with, and has independently reviewed the books and records
      regarding, the financial condition of Borrower and is familiar with the value
      of
      any and all collateral intended to be security for the payment of all or any
      part of the Guaranteed Indebtedness; provided, however, Guarantor is not relying
      on such financial condition or collateral as an inducement to enter into this
      Guaranty; and

    

    (c) Guarantor
      has adequate means to obtain from Borrower on a continuing basis information
      concerning the financial condition of Borrower and Guarantor is not relying
      on
      Lender to provide such information to Guarantor either now or in the future;
      and

    

    (d) Guarantor
      has the power and authority to execute, deliver and perform this Guaranty and
      any other agreements executed by Guarantor contemporaneously herewith, and
      the
      execution, delivery and performance of this Guaranty and any other agreements
      executed by Guarantor contemporaneously herewith do not and will not violate
      (i)
      any agreement or instrument to which Guarantor is a party, or (ii) any law,
      rule, regulation or order of any governmental authority to which Guarantor
      is
      subject; and

    

    (e) Neither
      Lender nor any other party has made any representation, warranty or statement
      to
      Guarantor in order to induce Guarantor to execute this Guaranty;
      and

    

    (f) The
      financial statements and other financial information regarding Guarantor
      heretofore and hereafter delivered to Lender are and shall be true and correct
      in all material respects and fairly present the financial position of Guarantor
      as of the dates thereof, and no material adverse change has occurred in the
      financial condition of Guarantor reflected in the financial statements and
      other
      financial information regarding Guarantor heretofore delivered to Lender since
      the date of the last statement thereof; and

    

    (g) As
      of the
      date hereof, and after giving effect to this Guaranty and the obligations
      evidenced hereby, (i) Guarantor is and will be solvent, (ii) the fair saleable
      value of Guarantor's assets exceeds and will continue to exceed its liabilities
      (both fixed and contingent), and (iii) Guarantor is and will continue to be
      able
      to pay its debts as they mature. 

    

    5. Covenants.
      Guarantor hereby covenants and agrees with Lender as follows:

    

    (a) Guarantor
      shall not, so long as its obligations under this Guaranty continue, transfer
      or
      pledge any material portion of its assets for less than full and adequate
      consideration; and

    

    (b) Guarantor
      shall promptly furnish to Lender on a timely basis the financial statements
      and
      other financial information of Guarantor as set forth in that certain Loan
      Agreement of even date herewith, by and between Borrowers and Lenders, as the
      same may be amended from time to time; and

    

    (c) Guarantor
      shall comply with all terms and provisions of the Loan Documents that apply
      to
      Guarantor; and

    

    (d) Guarantor
      shall promptly inform Lender of (i) any litigation or governmental investigation
      against Guarantor or affecting any security for all or any part of the
      Guaranteed Indebtedness or this Guaranty which, if determined adversely, might
      have a material adverse effect upon the financial condition of Guarantor or
      upon
      such security or might cause a default under any of the Loan Documents, (ii)
      any
      claim or controversy which might become the subject of such litigation or
      governmental investigation, and (iii) any material adverse change in the
      financial condition of Guarantor. 

    
      
        
        

      

      
        -47-

        
          

        

      

      
        
        

      

    

    6. Consent
      and Waiver.
      

    

    (a) Guarantor
      waives (i) promptness, diligence and notice of acceptance of this Guaranty
      and
      notice of the incurring of any obligation, indebtedness or liability to which
      this Guaranty applies or may apply and waives presentment for payment, notice
      of
      nonpayment, protest, demand, notice of protest, notice of intent to accelerate,
      notice of acceleration, notice of dishonor, diligence in enforcement and
      indulgences of every kind, (ii) the taking of any other action by Lender,
      including without limitation giving any notice of default or any other notice
      to, or making any demand on, Borrower, any other guarantor of all or any part
      of
      the Guaranteed Indebtedness or any other party, and (iii) to the maximum extent
      allowed by law the provisions of §51.003 of the Texas Property Code, as in
      effect on the date of this Guaranty or as it may be amended from time to
      time.

    

    (b) Guarantor
      waives any rights Guarantor has under, or any requirements imposed by, Chapter
      34 of the Texas Business and Commerce Code, as in effect on the date of this
      Guaranty or as it may be amended from time to time. 

    

    (c) Lender
      may at any time, without the consent of or notice to Guarantor, without
      incurring responsibility to Guarantor and without impairing, releasing, reducing
      or affecting the obligations of Guarantor hereunder: (i) change the manner,
      place or terms of payment of all or any part of the Guaranteed Indebtedness,
      or
      renew, extend, modify, rearrange or alter all or any part of the Guaranteed
      Indebtedness; (ii) sell, exchange, release, surrender, subordinate, realize
      upon
      or otherwise deal with in any manner and in any order any collateral for all
      or
      any part of the Guaranteed Indebtedness or this Guaranty or setoff against
      all
      or any part of the Guaranteed Indebtedness; (iii) neglect, delay, omit, fail
      or
      refuse to take or prosecute any action for the collection of all or any part
      of
      the Guaranteed Indebtedness or this Guaranty or to take or prosecute any action
      in connection with any of the Loan Documents, including, but not limited to,
      the
      Other Guaranty; (iv) exercise or refrain from exercising any rights against
      Borrower or others, or otherwise act or refrain from acting; (v) settle or
      compromise all or any part of the Guaranteed Indebtedness and subordinate the
      payment of all or any part of the Guaranteed Indebtedness to the payment of
      any
      obligations, indebtedness or liabilities which may be due or become due to
      Lender or others; (vi) apply any deposit balance, fund, payment, collections
      through process of law or otherwise or other collateral of Borrower to the
      satisfaction and liquidation of the indebtedness or obligations of Borrower
      to
      Lender not guaranteed under this Guaranty; and (vii) apply any sums paid to
      Lender by Guarantor, Borrower or others to the Guaranteed Indebtedness in such
      order and manner as Lender, in its sole discretion, may determine. 

    

    (d) Notwithstanding
      any provision in this Guaranty to the contrary, Guarantor hereby waives and
      releases, until payment in full of the Guaranteed Indebtedness, (i) any and
      all
      rights of subrogation, reimbursement, indemnification or contribution which
      it
      may have after payment in full or in part of the Guaranteed Indebtedness against
      others liable on all or any part of the Guaranteed Indebtedness, (ii) any and
      all rights to be subrogated to the rights of Lender in any collateral or
      security for all or any part of the Guaranteed Indebtedness after payment in
      full or in part of the Guaranteed Indebtedness, and (iii) any and all other
      rights and claims of Guarantor against Borrower as a result of Guarantor's
      payment of all or any part of the Guaranteed Indebtedness.

    

    (e) Should
      Lender seek to enforce the obligations of Guarantor hereunder by action in
      any
      court or otherwise, Guarantor waives any requirement, substantive or procedural,
      that (i) Lender first enforce any rights or remedies against Borrower or any
      other person or entity liable to Lender for all or any part of the Guaranteed
      Indebtedness, including without limitation that a judgment first be rendered
      against Borrower or any other person or entity, or that Borrower or any other
      person or entity should be joined in such cause, or (ii) Lender first enforce
      rights against any collateral which shall ever have been given to secure all
      or
      any part of the Guaranteed Indebtedness or this Guaranty. Such waiver shall
      be
      without prejudice to Lender's right, at its option, to proceed against Borrower
      or any other person or entity, whether by separate action or by joinder.

    

    (f) IN
      ADDITION TO ANY OTHER WAIVERS, AGREEMENTS AND COVENANTS OF GUARANTOR SET FORTH
      HEREIN, GUARANTOR HEREBY FURTHER WAIVES AND RELEASES ALL CLAIMS, CAUSES OF
      ACTION, DEFENSES AND OFFSETS FOR ANY ACT OR OMISSION OF LENDER, ITS DIRECTORS,
      OFFICERS, EMPLOYEES, REPRESENTATIVES OR AGENTS IN CONNECTION WITH LENDER'S
      ADMINISTRATION OF THE GUARANTEED INDEBTEDNESS, EXCEPT FOR LENDER'S WILLFUL
      MISCONDUCT AND GROSS NEGLIGENCE.

    

    
      
        
        

      

      
        -48-

        
          

        

      

      
        
        

      

    

    7. Obligations
      Not Impaired.
      

    

    (a) Guarantor
      agrees that its obligations hereunder shall not be released, diminished,
      impaired, reduced or affected by the occurrence of any one or more of the
      following events: (i) the lack of corporate power of Borrower, Guarantor or
      any
      other guarantor of all or any part of the Guaranteed Indebtedness, (ii) any
      receivership, insolvency, Bankruptcy or other proceedings affecting Borrower,
      Guarantor or any other guarantor of all or any part of the Guaranteed
      Indebtedness, or any of their respective property; (iii) the partial or total
      release or discharge of Borrower or any other guarantor of all or any part
      of
      the Guaranteed Indebtedness, or any other person or entity from the performance
      of any obligation contained in any instrument or agreement evidencing, governing
      or securing all or any part of the Guaranteed Indebtedness, whether occurring
      by
      reason of law or otherwise; (iv) the taking or accepting of any collateral
      for
      all or any part of the Guaranteed Indebtedness or this Guaranty; (v) the taking
      or accepting of any other guaranty for all or any part of the Guaranteed
      Indebtedness; (vi) any failure by Lender to acquire, perfect or continue any
      lien or security interest on collateral securing all or any part of the
      Guaranteed Indebtedness or this Guaranty; (vii) the impairment of any collateral
      securing all or any part of the Guaranteed Indebtedness or this Guaranty; (viii)
      any failure by Lender to sell any collateral securing all or any part of the
      Guaranteed Indebtedness or this Guaranty in a commercially reasonable manner
      or
      as otherwise required by law; (ix) any invalidity or unenforceability of or
      defect or deficiency in any of the Loan Documents; or (x) any other circumstance
      which might otherwise constitute a defense available to, or discharge of,
      Borrower or any other guarantor of all or any part of the Guaranteed
      Indebtedness. 

    

    (b) This
      Guaranty shall continue to be effective or be reinstated, as the case may be,
      if
      at any time any payment of all or any part of the Guaranteed Indebtedness is
      rescinded or must otherwise be returned by Lender upon the insolvency,
      Bankruptcy or reorganization of Borrower, Guarantor, any other guarantor of
      all
      or any part of the Guaranteed Indebtedness, or otherwise, all as though such
      payment had not been made.

    

    (c) In
      the
      event Borrower is a corporation, joint stock association or partnership, or
      is
      hereafter incorporated, none of the following shall affect Guarantor's liability
      hereunder: (i) the unenforceability of all or any part of the Guaranteed
      Indebtedness against Borrower by reason of the fact that the Guaranteed
      Indebtedness exceeds the amount permitted by law; (ii) the act of creating
      all
      or any part of the Guaranteed Indebtedness is ultra vires; or (iii) the officers
      or partners creating all or any part of the Guaranteed Indebtedness acted in
      excess of their authority. Guarantor hereby acknowledges that withdrawal from,
      or termination of, any ownership interest in Borrower now or hereafter owned
      or
      held by Guarantor shall not alter, affect or in any way limit the obligations
      of
      Guarantor hereunder.

    

    8. Actions
      against Guarantor.
      In the
      event of a default in the payment or performance of all or any part of the
      Guaranteed Indebtedness when such Guaranteed Indebtedness becomes due, whether
      by its terms, by acceleration or otherwise, Guarantor shall, without notice
      or
      demand, promptly pay the amount due thereon to Lender, in lawful money of the
      United States, at Lender's address set forth in Subsection 1(a) above. One
      or
      more successive or concurrent actions may be brought against Guarantor, either
      in the same action in which Borrower is sued or in separate actions, as often
      as
      Lender deems advisable. The exercise by Lender of any right or remedy under
      this
      Guaranty or under any other agreement or instrument, at law, in equity or
      otherwise, shall not preclude concurrent or subsequent exercise of any other
      right or remedy. The books and records of Lender shall be admissible in evidence
      in any action or proceeding involving this Guaranty and shall be prima facie
      evidence
      of the payments made on, and the outstanding balance of, the Guaranteed
      Indebtedness.

    

    9. Payment
      by Guarantor.
      If
      reasonably requested by Lender, whenever Guarantor pays any sum which is or
      may
      become due under this Guaranty, written notice must be delivered to Lender
      contemporaneously with such payment. Such notice shall be effective for purposes
      of this paragraph when contemporaneously with such payment Lender receives
      such
      notice either by: (a) personal delivery to the address and designated department
      of Lender identified in Subsection 1(a) above, or (b) United States mail,
      certified or registered, return receipt requested, postage prepaid, addressed
      to
      Lender at the address shown in subparagraph 1(a) above. In the absence of such
      notice to Lender by Guarantor in compliance with the provisions hereof, any
      sum
      received by Lender on account of the Guaranteed Indebtedness shall be
prima facie
      evidence
      of payment by Borrower. 

    

    10. Omitted.
      

    

    11. Waiver
      by Lender.
      No
      delay on the part of Lender in exercising any right hereunder or failure to
      exercise the same shall operate as a waiver of such right. In no event shall
      any
      waiver of the provisions of this Guaranty be effective unless the same be in
      writing and signed by an officer of Lender, and then only in the specific
      instance and for the purpose given.

    

    
      
        
        

      

      
        -49-

        
          

        

      

      
        
        

      

    

    12. Successors
      and Assigns.
      This
      Guaranty is for the benefit of Lender, its successors and assigns. This Guaranty
      is binding upon Guarantor and Guarantor's heirs, executors, administrators,
      personal representatives and successors, including without limitation any person
      or entity obligated by operation of law upon the reorganization, merger,
      consolidation or other change in the organizational structure of
      Guarantor.

    

    13. Costs
      and Expenses.
      Guarantor shall pay on demand by Lender all costs and expenses, including
      without limitation all reasonable attorneys' fees, incurred by Lender in
      connection with the enforcement and/or collection of this Guaranty. This
      covenant shall survive the payment of the Guaranteed Indebtedness.

    

    14. Severability.
      If any
      provision of this Guaranty is held by a court of competent jurisdiction to
      be
      illegal, invalid or unenforceable under present or future laws, such provision
      shall be fully severable, shall not impair or invalidate the remainder of this
      Guaranty and the effect thereof shall be confined to the provision held to
      be
      illegal, invalid or unenforceable.

    

    15. No
      Obligation.
      Nothing
      contained herein shall be construed as an obligation on the part of Lender
      to
      extend or continue to extend credit to Borrower.

    

    16. Amendment.
      No
      modification or amendment of any provision of this Guaranty, nor consent to
      any
      departure by Guarantor therefrom, shall be effective unless the same shall
      be in
      writing and signed by an officer of Lender, and then shall be effective only
      in
      the specific instance and for the purpose for which given. 

    

    17. Cumulative
      Rights.
      All
      rights and remedies of Lender hereunder are cumulative of each other and of
      every other right or remedy which Lender may otherwise have at law or in equity
      or under any instrument or agreement, and the exercise of one or more of such
      rights or remedies shall not prejudice or impair the concurrent or subsequent
      exercise of any other rights or remedies.

    

    18. GOVERNING
      LAW.
      THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
      OF
      THE STATE OF TEXAS AND APPLICABLE FEDERAL LAWS. 

    

    19. Venue.
      This
      Guaranty has been entered into in the county in Texas where Lender's address
      for
      notice purposes is located, and it shall be performable for all purposes in
      such
      county. Courts within the State of Texas shall have jurisdiction over any and
      all disputes arising under or pertaining to this Guaranty and venue for any
      such
      disputes shall be in the county or judicial district where the Lender's address
      for notice purposes is located.

    

    20. Compliance
      with Applicable Usury Laws.
      Notwithstanding any other provision of this Guaranty or of any instrument or
      agreement evidencing, governing or securing all or any part of the Guaranteed
      Indebtedness, Guarantor and Lender by its acceptance hereof agree that Guarantor
      shall never be required or obligated to pay interest in excess of the maximum
      nonusurious interest rate as may be authorized by applicable law for the written
      contracts which constitute the Guaranteed Indebtedness. It is the intention
      of
      Guarantor and Lender to conform strictly to the applicable laws which limit
      interest rates, and any of the aforesaid contracts for interest, if and to
      the
      extent payable by Guarantor, shall be held to be subject to reduction to the
      maximum nonusurious interest rate allowed under said law.

    

    21. Descriptive
      Headings.
      The
      headings in this Guaranty are for convenience only and shall not define or
      limit
      the provisions hereof.

    

    22. Gender.
      Within
      this Guaranty, words of any gender shall be held and construed to include the
      other gender.

    

    23. Entire
      Agreement.
      This
      Guaranty contains the entire agreement between Guarantor and Lender regarding
      the subject matter hereof and supersedes all prior written and oral agreements
      and understandings, if any, regarding same; provided, however, this Guaranty
      is
      in addition to and does not replace, cancel, modify or affect any other guaranty
      of Guarantor now or hereafter held by Lender that relates to Borrower or any
      other person or entity.

    

    
      
        
        

      

      
        -50-

        
          

        

      

      
        
        

      

    

    EXECUTED
      as of the date first above written.

    

    

    GUARANTOR:

    

    (Guarantor)       

                         a________________(Entity)
      

    

    

    By:
       /s/
      David E. Bowe    

    Name: David
      E.
      Bowe

    Title:
      President and Chief Executive Officer

    

     

     
-51-Exhibit 10.6 Pledge Agreement

                                                                        Exhibit
    10.6
    PLEDGE
      AGREEMENT

    

    THIS
      PLEDGE AGREEMENT dated as of February 20, 2007 (this “Agreement”), is executed
      by and between DOUGHERTY’S HOLDINGS, INC., a Texas corporation (the "Pledgor")
      in favor of AMEGY BANK NATIONAL ASSOCIATION, a national banking association
      (the
      "Secured Party").

                                        R E C I T A L S:

    

    A. Secured
      Party and Borrowers have entered into that certain Loan Agreement of even date
      herewith (such Loan Agreement, as the same may be amended or modified from
      time
      to time, being hereinafter referred to as the "Loan Agreement"). All capitalized
      terms used, but not defined herein, shall have the meanings given to them in
      the
      Loan Agreement.

    

    B. Pledgor
      has agreed to guaranty the obligations of Borrowers pursuant to that certain
      Unlimited Guaranty Agreement dated of even date herewith (the
“Guaranty”).

    

    C. Secured
      Party has conditioned its obligations under the Loan Agreement upon the
      execution and delivery of this Agreement by Pledgor.

    

    NOW
      THEREFORE, in consideration of the premises and other good and valuable
      consideration, the receipt and sufficiency of which are hereby acknowledged,
      the
      parties hereto agree as follows:

    

    ARTICLE
      I

     

    Security
      Interest and Pledge

    

    Section
      1.01. Security
      Interest and Pledge.
      Pledgor
      hereby pledges and grants to Secured Party a first priority security interest
      in
      the following property (such property being hereinafter sometimes called the
      "Collateral"):

    

    (a) all
      of
      Pledgor's shares of common capital stock of Dougherty’s Pharmacy, Inc., a Texas
      corporation (“Pharmacy”), now owned or hereafter acquired, including, without
      limitation, 9,622.1807 shares of common capital stock of Pharmacy evidenced
      by
      certificate number 15; and

    

    (b) all
      products and proceeds of the foregoing capital stock, including, without
      limitation, all revenues, distributions, dividends, stock dividends, securities,
      and other property, rights, and interests that Pledgor is at any time entitled
      to receive on account of the same. 

    

    Section
      1.02. Obligations.
      The
      Collateral shall secure the following obligations, indebtedness, and liabilities
      (all such obligations, indebtedness, and liabilities being hereinafter sometimes
      called the "Obligations"):

    

    (a) the
      obligations and indebtedness of Borrowers to Secured Party evidenced by that
      certain Promissory Note (Revolving) dated of even date herewith, executed by
      Borrowers and payable to the order of Secured Party in the original principal
      amount of Two Million and No/100 Dollars ($2,000,000.00) and that certain
      Promissory Note (Term) dated of even date herewith, executed by Borrowers and
      payable to the order of Secured Party in the original principal amount of Two
      Million Two Hundred Thousand and No/100 Dollars ($2,200,000.00);

    

    (b) the
      obligations and indebtedness of Borrowers to Secured Party under the Loan
      Agreement;

    

    (c) all
      future advances by Secured Party to Borrowers;

    

    (d) the
      obligations and indebtedness of Pledgor to Secured Party under the
      Guaranty;

    

    (e) all
      costs
      and expenses incurred by Secured Party to preserve and maintain the Collateral,
      collect the obligations herein described, and enforce this
      Agreement;

    

    (f) all
      other
      obligations, indebtedness, and liabilities of Pledgor and Borrowers to Secured
      Party, now existing or hereafter arising, regardless of whether such
      obligations, indebtedness, and liabilities are similar, dissimilar, related,
      unrelated, direct, indirect, fixed, contingent, primary, secondary, joint,
      several, or joint and several; and

     

    (g) all
      extensions, renewals, and modifications of any of the foregoing.

     

    
      -52-

      
        

      

    

    
    

    ARTICLE
      II

                                Representations
      and Warranties

     

                Pledgor
      represents
      and warrants to Secured Party that:

    

    Section
      2.01. Title.
      Pledgor
      owns, and with respect to Collateral acquired after the date hereof, Pledgor
      will own, legally and beneficially, the Collateral free and clear of any lien,
      security interest, pledge, claim, or other encumbrance or any right or option
      on
      the part of any third person to purchase or otherwise acquire the Collateral
      or
      any part thereof, except for the security interest granted hereunder. The
      Collateral is not subject to any restriction on transfer or assignment except
      for compliance with applicable federal and state securities laws and regulations
      promulgated thereunder. Pledgor has the unrestricted right to pledge the
      Collateral as contemplated hereby. All of the Collateral has been duly and
      validly issued and is fully paid and nonassessable.

    

    Section
      2.02. Organization
      and Authority.
      Pledgor
      is a corporation duly organized, validly existing, and in good standing under
      the laws of its state of incorporation. Pledgor has the corporate power and
      authority to execute, deliver, and perform this Agreement, and the execution,
      delivery, and performance of this Agreement by Pledgor have been authorized
      by
      all necessary corporate action on the part of Pledgor and do not and will not
      violate any law, rule, or regulation or the articles of incorporation,
      certificate of formation, or bylaws of Pledgor and do not and will not conflict
      with, result in a breach of, or constitute a default under the provisions of
      any
      indenture, mortgage, deed of trust, security agreement, or other instrument
      or
      agreement or any judgment, decree, order, law, statute, or other governmental
      rule or regulation applicable to Pledgor or any of its property.

    

    Section
      2.03. Principal
      Place of Business.
      The
      principal place of business and chief executive office of Pledgor, and the
      office where Pledgor keeps its books and records, is located at the address
      of
      Pledgor shown at the beginning of this Agreement.

    

    Section
      2.04. Litigation.
      There
      is no litigation, investigation, or governmental proceeding pending or
      threatened against Pledgor or any of its properties which if adversely
      determined would have a material adverse effect on the Collateral or the
      financial condition, operations, or business of Pledgor.

    

    Section
      2.05. Percentage
      of Stock.
      The
      Collateral constitutes one hundred percent (100%) of the issued and outstanding
      shares of common capital stock of Pharmacy.

    

    Section
      2.06. First
      Priority Perfected Security Interest.
      This
      Agreement creates in favor of Secured Party a first priority perfected security
      interest in the Collateral.

     

    ARTICLE
      III

     

    Affirmative
      and Negative Covenants

    

    Pledgor
      covenants and agrees with Secured Party that until the Obligations are satisfied
      and performed in full:

    

    Section
      3.01. Delivery.
      Prior
      to or concurrently with the execution and delivery of this Agreement, Pledgor
      shall deliver to Secured Party all certificate(s) identified in Section 1.01(a)
      hereof, accompanied by undated stock powers duly executed in blank.

    

    Section
      3.02. Encumbrances.
      Pledgor
      shall not create, permit, or suffer to exist, and shall defend the Collateral
      against, any lien, security interest, or other encumbrance on the Collateral
      except the pledge and security interest of Secured Party hereunder, and shall
      defend Pledgor's rights in the Collateral and Secured Party's security interest
      in the Collateral against the claims of all persons and entities.

     

    Section
      3.03. Sale
      of Collateral.
      Pledgor
      shall not sell, assign, or otherwise dispose of the Collateral or any part
      thereof without the prior written consent of Secured Party.

    

    
      
        
        

      

      
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    Section
      3.04. Distributions.
      If
      Pledgor shall become entitled to receive or shall receive any stock certificate
      (including, without limitation, any certificate representing a stock dividend
      or
      a distribution in connection with any reclassification, increase, or reduction
      of capital or issued in connection with any reorganization), option or rights,
      whether as an addition to, in substitution of, or in exchange for any Collateral
      or otherwise, Pledgor agrees to accept the same as Secured Party's agent and
      to
      hold the same in trust for Secured Party, and to deliver the same forthwith
      to
      Secured Party in the exact form received, with the appropriate endorsement
      of
      Pledgor when necessary and/or appropriate undated stock powers duly executed
      in
      blank, to be held by Secured Party as additional Collateral for the Obligations,
      subject to the terms hereof. Any sums paid upon or in respect of the Collateral
      upon the liquidation or dissolution of the issuer thereof shall be paid over
      to
      Secured Party to be held by it as additional Collateral for the Obligations
      subject to the terms hereof; and in case any distribution of capital shall
      be
      made on or in respect of the Collateral or any property shall be distributed
      upon or with respect to the Collateral pursuant to any recapitalization or
      reclassification of the capital of the issuer thereof or pursuant to any
      reorganization of the issuer thereof, the property so distributed shall be
      delivered to the Secured Party to be held by it, as additional Collateral for
      the Obligations, subject to the terms hereof. All sums of money and property
      so
      paid or distributed in respect of the Collateral that are received by Pledgor
      shall, until paid or delivered to Secured Party, be held by Pledgor in trust
      as
      additional security for the Obligations.

    

    Section
      3.05. Further
      Assurances.
      At any
      time and from time to time, upon the reasonable request of Secured Party, and
      at
      the sole expense of Pledgor, Pledgor shall promptly execute and deliver all
      such
      further instruments and documents and take such further action as Secured Party
      may deem necessary or desirable to preserve and perfect its security interest
      in
      the Collateral and carry out the provisions and purposes of this Agreement,
      including, without limitation, the execution and filing of such financing
      statements as Secured Party may require. A carbon, photographic, or other
      reproduction of this Agreement or of any financing statement covering the
      Collateral or any part thereof shall be sufficient as a financing statement
      and
      may be filed as a financing statement. In the event any Collateral is ever
      received by Pledgor, Pledgor shall promptly transfer and deliver to Secured
      Party such Collateral so received by Pledgor (together with any necessary
      endorsements in blank or undated stock powers duly executed in blank), which
      Collateral shall thereafter be held by Secured Party pursuant to the terms
      of
      this Agreement.

    

    Section
      3.06. Inspection
      Rights.
      Pledgor
      shall permit Secured Party and its representatives to examine, inspect, and
      copy
      Pledgor's books and records at any reasonable time and as often as Secured
      Party
      may desire. Unless an Event of Default has occurred and is continuing, Secured
      Party shall give Pledgor two (2) business days notice of any such inspection
      and
      no more than two (2) such inspections shall be made in any calendar
      year.

    

    Section
      3.07. Taxes.
      Pledgor
      agrees to pay or discharge prior to delinquency all taxes, assessments, levies,
      and other governmental charges imposed on it or its property, except Pledgor
      shall not be required to pay or discharge any tax, assessment, levy, or other
      governmental charge if (i) the amount or validity thereof is being contested
      by
      Pledgor in good faith by appropriate proceedings diligently pursued, (ii) such
      proceedings do not involve any risk of sale, forfeiture, or loss of the
      Collateral or any interest therein, and (iii) adequate reserves therefor have
      been established in conformity with generally accepted accounting principles.
      

    

    Section
      3.08. Obligations.
      Pledgor
      shall duly and punctually pay and perform the Obligations.

    

    Section
      3.09. Notification.
      Pledgor
      shall promptly notify Secured Party of (i) any lien, security interest,
      encumbrance, or claim made or threatened against the Collateral, (ii) any
      material change in the Collateral, including, without limitation, any material
      decrease in the value of the Collateral, and (iii) the occurrence or existence
      of any Event of Default (hereinafter defined) or the occurrence or existence
      of
      any condition or event that, with the giving of notice or lapse of time or
      both,
      would be an Event of Default.

    

    Section
      3.10. Books
      and Records; Information.
      Pledgor
      shall keep accurate and complete books and records of the Collateral and
      Pledgor's business and financial condition in accordance with generally accepted
      accounting principles consistently applied. Pledgor shall from time to time
      deliver to Secured Party such information regarding the Collateral and Pledgor
      as Secured Party may reasonably request. Pledgor shall mark its books and
      records to reflect the security interest of Secured Party under this
      Agreement.

    

    Section
      3.11. Compliance
      with Agreements.
      Pledgor
      shall comply in all material respects with all mortgages, deeds of trust,
      instruments, and other agreements binding on it or affecting its properties
      or
      business.

    

    Section
      3.12. Compliance
      with Laws.
      Pledgor
      shall comply with all applicable laws, rules, regulations, and orders of any
      court or governmental authority.

    

    Section
      3.13. Additional
      Securities.
      Pledgor
      shall not consent to or approve the issuance of any additional shares of any
      class of capital stock of the issuer of the Collateral, or any securities
      convertible into, or exchangeable for, any such shares or any warrants, options,
      rights, or other commitments entitling any person or entity to purchase or
      otherwise acquire any such shares.

    

    
      
        
        

      

      
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    ARTICLE
      IV

    Rights
      of Secured Party and Pledgor

    

    Section
      4.01. Power
      of Attorney.
      Pledgor
      hereby irrevocably constitutes and appoints Secured Party and any officer or
      agent thereof, with full power of substitution, as its true and lawful
      attorney-in-fact with full irrevocable power and authority in the place and
      stead and in the name of Pledgor or in its own name, from time to time in
      Secured Party's discretion, to take any and all action and to execute any and
      all documents and instruments which may be necessary or desirable to accomplish
      the purposes of this Agreement and, without limiting the generality of the
      foregoing, hereby gives Secured Party the power and right on behalf of Pledgor
      and in its own name to do any of the following, without notice to or the consent
      of Pledgor:

    

    (i) to
      demand, sue for, collect, or receive in the name of Pledgor or in its own name,
      any money or property at any time payable or receivable on account of or in
      exchange for any of the Collateral and, in connection therewith, endorse checks,
      notes, drafts, acceptances, money orders, or any other instruments for the
      payment of money under the Collateral;

    

    (ii) to
      pay or
      discharge taxes, liens, security interests, or other encumbrances levied or
      placed on or threatened against the Collateral;

    

    (iii) (A)
      to
      direct account debtors and any other parties liable for any payment under any
      of
      the Collateral to make payment of any and all monies due and to become due
      thereunder directly to Secured Party or as Secured Party shall direct; (B)
      to
      receive payment of and receipt for any and all monies, claims, and other amounts
      due and to become due at any time in respect of or arising out of any
      Collateral; (C) to sign and endorse any drafts, assignments, proxies, stock
      powers, verifications, notices, and other documents relating to the Collateral;
      (D) to commence and prosecute any suit, actions or proceedings at law or in
      equity in any court of competent jurisdiction to collect the Collateral or
      any
      part thereof and to enforce any other right in respect of any Collateral; (E)
      to
      defend any suit, action, or proceeding brought against Pledgor with respect
      to
      any Collateral; (F) to settle, compromise, or adjust any suit, action, or
      proceeding described above and, in connection therewith, to give such discharges
      or releases as Secured Party may deem appropriate; (G) to exchange any of the
      Collateral for other property upon any merger, consolidation, reorganization,
      recapitalization, or other readjustment of the issuer thereof and, in connection
      therewith, deposit any of the Collateral with any committee, depositary,
      transfer agent, registrar, or other designated agency upon such terms as Secured
      Party may determine; (H) to add or release any guarantor, endorser, surety,
      or
      other party to any of the Collateral or the Obligations; (I) to renew, extend,
      or otherwise change the terms and conditions of any of the Collateral or
      Obligations; (J) to insure any of the Collateral; (K) to sell, transfer, pledge,
      make any agreement with respect to or otherwise deal with any of the Collateral
      as fully and completely as though Secured Party were the absolute owner thereof
      for all purposes, and to do, at Secured Party's option and Pledgor's expense,
      at
      any time, or from time to time, all acts and things which Secured Party deems
      necessary to protect, preserve, or realize upon the Collateral and Secured
      Party's security interest therein.

    

    This
      power of attorney is a power coupled with an interest and shall be irrevocable.
      Secured Party shall be under no duty to exercise or withhold the exercise of
      any
      of the rights, powers, privileges, and options expressly or implicitly granted
      to Secured Party in this Agreement, and shall not be liable for any failure
      to
      do so or any delay in doing so. Secured Party shall not be liable for any act
      or
      omission or for any error of judgment or any mistake of fact or law in its
      individual capacity or in its capacity as attorney-in-fact except acts or
      omissions resulting from its willful misconduct. This power of attorney is
      conferred on Secured Party solely to protect, preserve, and realize upon its
      security interest in the Collateral.

    

    Section
      4.02. Voting
      Rights.
      So long
      as no Event of Default shall have occurred and be continuing, Pledgor shall
      be
      entitled to exercise any and all voting rights relating or pertaining to the
      Collateral or any part thereof.

    

    Section
      4.03. Dividends
      and Restricted Payments.
      Pledgor
      will not declare or pay any dividends or make any other payment or distribution
      (in cash, property, or obligations) on account of any Collateral, or redeem,
      purchase, retire, or otherwise acquire any of the Collateral, or set apart
      any
      money for a sinking or other analogous fund for any dividend or other
      distribution on the Collateral or for any redemption, purchase, retirement,
      or
      other acquisition of any of the Collateral, or grant or issue any Collateral
      or
      any warrant, right, or option pertaining to the Collateral, or issue any
      security convertible into Collateral, or permit any of its subsidiaries to
      purchase any Collateral.

    

    Section
      4.04. Performance
      by Secured Party.
      If
      Pledgor fails to perform or comply with any of its agreements contained herein,
      Secured Party itself may, at its sole discretion, cause or attempt to cause
      performance or compliance with such agreement and the expenses of Secured Party,
      together with interest thereon at the maximum nonusurious per annum rate
      permitted by applicable law, shall be payable by Pledgor to Secured Party on
      demand and shall constitute Obligations secured by this Agreement.
      Notwithstanding the foregoing, it is expressly agreed that Secured Party shall
      not have any liability or responsibility for the performance of any obligation
      of Pledgor under this Agreement.

    

    
      
        
        

      

      
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    Section
      4.05. Setoff;
      Property Held by Secured Party.
      Secured
      Party shall have the right to set off and apply against the Obligations, at
      any
      time and without notice to Pledgor during the continuance of an Event of
      Default, any and all deposits (other than special deposits such as payroll
      and
      tax deposits) or other sums at any time credited by or owing from Secured Party
      to Pledgor whether or not the Obligations are then due. As additional security
      for the Obligations, Pledgor hereby grants Secured Party a security interest
      in
      all money, instruments, and other property of Pledgor now or hereafter held
      by
      Secured Party, including, without limitation, property held in safekeeping.
      In
      addition to Secured Party's right of setoff and as further security for the
      Obligations, Pledgor hereby grants Secured Party a security interest in all
      deposits (other than special deposits such as payroll and tax deposits) and
      other accounts of Pledgor now or hereafter maintained with Secured Party and
      all
      other sums at any time credited by or owing from Secured Party to Pledgor.
      The
      rights and remedies of Secured Party hereunder are in addition to other rights
      and remedies (including, without limitation, other rights of setoff) which
      Secured Party may have.

     

            Section
      4.06.
Secured
      Party's Duty of Care.
      Other
      than the exercise of reasonable care in the physical custody of the Collateral
      while held by Secured Party hereunder, Secured Party shall have no
      responsibility for or obligation or duty with respect to all or any part of
      the
      Collateral or any matter or proceeding arising out of or relating thereto,
      including, without limitation, any obligation or duty to collect any sums due
      in
      respect thereof or to protect or preserve any rights against prior parties
      or
      any other rights pertaining thereto, it being understood and agreed that Pledgor
      shall be responsible for preservation of all rights in the Collateral. Without
      limiting the generality of the foregoing, Secured Party shall be conclusively
      deemed to have exercised reasonable care in the custody of the Collateral if
      Secured Party takes such action, for purposes of preserving rights in the
      Collateral, as Pledgor may reasonably request in writing, but no failure or
      omission or delay by Secured Party in complying with any such request by
      Pledgor, and no refusal by Secured Party to comply with any such request by
      Pledgor, shall be deemed to be a failure to exercise reasonable
      care.

    

    Section
      4.07. Assignment
      by Secured Party.
      Secured
      Party may from time to time assign the Obligations and any portion thereof
      and/or the Collateral and any portion thereof in accordance with the Loan
      Agreement, and the assignee shall be entitled to all of the rights and remedies
      of Secured Party under this Agreement in relation thereto.

    

    ARTICLE
      V

     

    Default

    

    Section
      5.01. Events
      of Default.
      Each of
      the following shall be deemed an "Event of Default":

    

    (a) The
      occurrence of an “Event of Default” under the Loan Agreement.

    

    (b) This
      Agreement shall cease to be in full force and effect or shall be declared null
      and void or the validity or enforceability thereof shall be contested or
      challenged by Pledgor or any of its shareholders, or Pledgor shall deny that
      it
      has any further liability or obligation under this Agreement.

    

    (c) The
      failure of the Collateral pledged to Secured Party hereunder to constitute
      one
      hundred percent (100%) of the issued and outstanding common capital stock of
      Pharmacy.

    

    Section
      5.02. Rights
      and Remedies.
      Upon
      the occurrence of an Event of Default, Secured Party shall have the following
      rights and remedies:

    

    (i) In
      addition to all other rights and remedies granted to Secured Party in this
      Agreement and in any other instrument or agreement securing, evidencing, or
      relating to the Obligations, Secured Party shall have all of the rights and
      remedies of a secured party under the Uniform Commercial Code as adopted by
      the
      State of Texas. Without limiting the generality of the foregoing, Secured Party
      may (A) without demand or notice to Pledgor, collect, receive, or take
      possession of the Collateral or any part thereof, (B) sell or otherwise dispose
      of the Collateral, or any part thereof, in one or more parcels at public or
      private sale or sales, at Secured Party's offices or elsewhere, for cash, on
      credit, or for future delivery, and/or (C) bid and become a purchaser at any
      sale free of any right or equity of redemption in Pledgor, which right or equity
      is hereby expressly waived and released by Pledgor. Upon the request of Secured
      Party, Pledgor shall assemble the Collateral and make it available to Secured
      Party at any place designated by Secured Party that is reasonably convenient
      to
      Pledgor and Secured Party. Pledgor agrees that Secured Party shall not be
      obligated to give more than ten (10) days written notice of the time and place
      of any public sale or of the time after which any private sale may take place
      and that such notice shall constitute reasonable notice of such matters. Pledgor
      shall be liable for all expenses of retaking, holding, preparing for sale,
      or
      the like, and all attorneys' fees and other expenses incurred by Secured Party
      in connection with the collection of the Obligations and the enforcement of
      Secured Party's rights under this Agreement, all of which expenses and fees
      shall constitute additional Obligations secured by this Agreement. Secured
      Party
      may apply the Collateral against the Obligations in such order and manner as
      Secured Party may elect in its sole discretion. Pledgor shall remain liable
      for
      any deficiency if the proceeds of any sale or disposition of the Collateral
      are
      insufficient to pay the Obligations. Pledgor waives all rights of marshalling
      in
      respect of the Collateral.

    

    
      
        
        

      

      
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    (ii) Secured
      Party may cause any or all of the Collateral held by it to be transferred into
      the name of Secured Party or the name or names of Secured Party's nominee or
      nominees.

     

    (iii) Secured
      Party shall be entitled to receive all cash dividends payable in respect of
      the
      Collateral.

    

    (iv) Secured
      Party shall have the right, but shall not be obligated to, exercise or cause
      to
      be exercised all voting rights and corporate powers in respect of the
      Collateral, and Pledgor shall deliver to Secured Party, if requested by Secured
      Party, irrevocable proxies with respect to the Collateral in form satisfactory
      to Secured Party.

     

    (v) Pledgor
      hereby acknowledges and confirms that Secured Party may be unable to effect
      a
      public sale of any or all of the Collateral by reason of certain prohibitions
      contained in the Securities Act of 1933, as amended, and applicable state
      securities laws and may be compelled to resort to one or more private sales
      thereof to a restricted group of purchasers who will be obligated to agree,
      among other things, to acquire any shares of the Collateral for their own
      respective accounts for investment and not with a view to distribution or resale
      thereof. Pledgor further acknowledges and confirms that any such private sale
      may result in prices or other terms less favorable to the seller than if such
      sale were a public sale and, notwithstanding such circumstances, agrees that
      any
      such private sale shall be deemed to have been made in a commercially reasonable
      manner, and Secured Party shall be under no obligation to take any steps in
      order to permit the Collateral to be sold at a public sale. Secured Party shall
      be under no obligation to delay a sale of any of the Collateral for any period
      of time necessary to permit any issuer thereof to register such Collateral
      for
      public sale under the Securities Act of 1933, as amended, or under applicable
      state securities laws.

    

    (vi) On
      any
      sale of the Collateral, Secured Party is hereby authorized to comply with any
      limitation or restriction with which compliance is necessary, in the view of
      Secured Party's counsel, in order to avoid any violation of applicable law
      or in
      order to obtain any required approval of the purchaser or purchasers by any
      applicable governmental authority.

    

    ARTICLE
      VI

     

    Miscellaneous

    

    Section
      6.01. Expenses:
      Indemnification.
      Pledgor
      agrees to pay on demand all reasonable costs and expenses incurred by Secured
      Party in connection with the preparation, negotiation, and execution of this
      Agreement and any and all amendments, modifications, and supplements hereto.
      Pledgor agrees to pay and to hold Secured Party harmless from and against all
      fees and all excise, sales, stamp, and other taxes payable in connection with
      this Agreement or the transactions contemplated hereby. Pledgor hereby
      indemnifies and agrees to hold harmless Lender, and its officers, directors,
      employees, agents and representatives (each an "Indemnified
      Person")
      from
      and against any and all liabilities, obligations, claims, losses, damages,
      penalties, actions, judgments, suits, costs, expenses or disbursements of any
      kind or nature (collectively, the "Claims")
      which
      may be imposed on, incurred by, or asserted against, any Indemnified Person
      (whether or not caused by any Indemnified Person's sole, concurrent or
      contributory negligence) arising in connection with this Agreement, the
      Obligations or the Collateral (including without limitation, the enforcement
      of
      the Loan Documents and the defense of any Indemnified Person's actions and/or
      inactions in connection with this Agreement), except to the limited extent
      the
      Claims against an Indemnified Person are proximately caused by such Indemnified
      Person's gross negligence or willful misconduct. If Pledgor or any third party
      ever alleges such gross negligence or willful misconduct by any Indemnified
      Person, the indemnification provided for in this Section shall nonetheless
      be
      paid upon demand, subject to later adjustment or reimbursement, until such
      time
      as a court of competent jurisdiction enters a final judgment as to the extent
      and effect of the alleged gross negligence or willful misconduct. The
      indemnification provided for in this Section shall survive the termination
      of
      this Agreement and shall extend and continue to benefit each individual or
      entity who is or has at any time been an Indemnified Person
      hereunder.

    

    Section
      6.02. No
      Waiver; Cumulative Remedies.
      No
      failure on the part of Secured Party to exercise and no delay in exercising,
      and
      no course of dealing with respect to, any right, power, or privilege under
      this
      Agreement shall operate as a waiver thereof, nor shall any single or partial
      exercise of any right, power, or privilege under this Agreement preclude any
      other or further exercise thereof or the exercise of any other right, power,
      or
      privilege. The rights and remedies provided for in this Agreement are cumulative
      and not exclusive of any rights and remedies provided by law.

    

    Section
      6.03. Successors
      and Assigns.
      This
      Agreement shall be binding upon and inure to the benefit of Pledgor and Secured
      Party and their respective heirs, successors, and assigns, except that Pledgor
      may not assign any of its rights or obligations under this Agreement without
      the
      prior written consent of Secured Party.

    

    Section
      6.04. AMENDMENT;
      ENTIRE AGREEMENT.
      THIS
      AGREEMENT EMBODIES THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
      SUPERSEDES ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
      UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
      AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
      OR
      SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE
      NO
      ORAL AGREEMENTS AMONG THE PARTIES HERETO. The provisions of this Agreement
      may
      be amended or waived only by an instrument in writing signed by the parties
      hereto.

    

    
      
        
        

      

      
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    Section
      6.05. Notices.
      All
      notices and other communications provided for in this Agreement shall be given
      or made by telex, telegraph, telecopy, cable, or in writing and telexed,
      telecopied, telegraphed, cabled, mailed by certified mail return receipt
      requested, or delivered to the intended recipient at the "Address for Notices"
      specified below its name on the signature pages hereof; or, as to any party
      at
      such other address as shall be designated by such party in a 

    notice
      to
      the other party given in accordance with this Section. Except as otherwise
      provided in this Agreement, all such communications shall be deemed to have
      been
      duly given when transmitted by telex or telecopy, subject to telephone
      confirmation of receipt, or delivered to the telegraph or cable office, subject
      to telephone confirmation of receipt, or when personally delivered or, in the
      case of a mailed notice, when duly deposited in the mails, in each case given
      or
      addressed as aforesaid.

    

    Section
      6.06. Applicable
      Law; Venue; Service of Process.
      This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Texas and the applicable laws of the United States of America. This
      Agreement has been entered into in Dallas County, Texas, and it shall be
      performable for all purposes in Dallas County, Texas. Any action or proceeding
      against Pledgor under or in connection with this Agreement or any other
      instrument or agreement securing, evidencing, or relating to the Obligations
      or
      any part thereof may be brought in any state or federal court in Dallas County,
      Texas. Pledgor hereby irrevocably (i) submits to the nonexclusive jurisdiction
      of such courts, and (ii) waives any objection it may now or hereafter have
      as to
      the venue of any such action or proceeding brought in such court or that such
      court is an inconvenient forum. Pledgor agrees that service of process upon
      it
      may be made by certified or registered mail, return receipt requested, at its
      address specified or determined in accordance with the provisions of Section
      6.05 of this Agreement. Nothing in this Agreement or any other instrument or
      agreement securing, evidencing, or relating to the Obligations or any part
      thereof shall affect the right of Secured Party to serve process in any other
      manner permitted by law or shall limit the right of Secured Party to bring
      any
      action or proceeding against Pledgor or with respect to any of the Collateral
      in
      any state or federal court in any other jurisdiction. Any action or proceeding
      by Pledgor against Secured Party shall be brought only in a court located in
      Dallas County, Texas.

    

    Section
      6.07. Headings.
      The
      headings, captions, and arrangements used in this Agreement are for convenience
      only and shall not affect the interpretation of this Agreement.

    

    Section
      6.08. Survival
      of Representations and Warranties.
      All
      representations and warranties made in this Agreement or in any certificate
      delivered pursuant hereto shall survive the execution and delivery of this
      Agreement, and no investigation by Secured Party shall affect the
      representations and warranties or the right of Secured Party to rely upon
      them.

    

    Section
      6.09. Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed an original, but all of which together shall constitute one and the
      same
      instrument.

    

    Section
      6.10. Severability.
      Any
      provision of this Agreement which is prohibited or unenforceable in any
      jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
      such prohibition or unenforceability without invalidating the remaining
      provisions of this Agreement, and any such prohibition or unenforceability
      in
      any jurisdiction shall not invalidate or render unenforceable such provision
      in
      any other jurisdiction.

    

    Section
      6.11. Construction.
      Pledgor
      and Secured Party acknowledge that each of them has had the benefit of legal
      counsel of its own choice and has been afforded an opportunity to
      review
      this Agreement with its legal counsel and that this Agreement shall be construed
      as if jointly drafted by Pledgor and Secured Party.

    

    Section
      6.12. Obligations
      Absolute.
      The
      obligations of Pledgor under this Agreement shall be absolute and unconditional
      and shall not be released, discharged, reduced, or in any way impaired by any
      circumstance whatsoever, including, without limitation, any amendment,
      modification, extension, or renewal of this Agreement, the Obligations, or
      any
      document or instrument evidencing, securing, or otherwise relating to the
      Obligations, or any release, subordination, or impairment of collateral, or
      any
      waiver, consent, extension, indulgence, compromise, settlement, or other action
      or inaction in respect of this Agreement, the Obligations, or any document
      or
      instrument evidencing, securing, or otherwise relating to the Obligations,
      or
      any exercise or failure to exercise any right, remedy, power, or privilege
      in
      respect of the Obligations.

    

    Section
      6.13. Waiver
      of Jury Trial.
      TO THE
      FULLEST EXTENT PERMITTED BY APPLICABLE LAW, PLEDGOR HEREBY IRREVOCABLY AND
      EXPRESSLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
      COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT
      OF OR
      RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
      ACTIONS OF SECURED PARTY IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT
      THEREOF.

    

    
      
        
        

      

      
        -58-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
      the
      day and year first written above.

    

    PLEDGOR:

    

    DOUGHERTY’S
      HOLDINGS, INC.,

    a
      Texas
      corporation

    

    By: /s/
      David E. Bowe 

    David
      E.
      Bowe

    President
      and Chief Executive Officer

    

    Address
      for Notices:

    16250
      Dallas Parkway, Suite 100

    Dallas,
      Texas 75248-2622

    Fax
      No.:
      (972) 250-0934

    Telephone
      No.: (972) 250-0903

    
      	 	
              Attention:
                

            	 David
              E. Bowe

    

    

    Secured
      Party’s Address for Notices:

    1807
      Ross
      Avenue, Suite 400

    Dallas,
      Texas 75201

    Fax
      No.:
      (214) 754-6613

    Telephone
      No.: (214) 754-9434

    Attention:
      Commercial Lending

    

    
      -59-

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