PURCHASE AGREEMENT
AGREEMENT made the 16 day of August, 1997 between Xxxxxx Drug, Inc.
having an office at 0000 Xxxxxxxx Xxxxxx, Xxxxx, XX 00000 (hereinafter
referred to as the "seller"), and HORIZON PHARMACIES, INC., a Texas
Corporation, having offices located at 000 X. Xxxxxxxxx Xxxxx, Xxxxxxxxx
Xxxxx, 00000 (hereinafter referred to as the "Buyer").
W I T N E S S E T H
WHEREAS, the Seller and the Buyer have reached an agreement, in
accordance with the terms and conditions hereinbelow set forth, with respect
to the sale by the Seller and the purchase by the Buyer of certain of the
assets of the Seller utilized in connection with and as part of the retail
drug store operations of the Seller known as Xxxxxx Drug (hereinafter
referred to as the "DRUG STORE") and desire to reduce said agreement in
writing;
NOW, THEREFORE, THE PARTIES AGREE:
1. SALE OF ASSETS.
1.1 For the purpose of this Agreement, Seller agrees to sell to Buyer
certain assets of the Drug Store (hereinafter referred to as the "Drug
Store Assets"), which the Buyer hereby agrees to purchase. Such assets
include and are hereby limited to:
A. INVENTORY. All of the marketable inventory (as defined in
Exhibit A attached hereto) held for retail sale by the Seller
and located at the Drug Store; and
B. PRESCRIPTION FILES INCLUDING ALL CUSTOMER AND PATIENT LISTS AND
PATIENT PROFILES. All prescription files and patient profiles
of Seller located at and pertaining to prescription customers
of the Drug Store.
C. ALL FIXTURES AND EQUIPMENT. All Rx, OTC, and DME fixtures and
equipment owned and leased by Seller (computer/peripherals,
registers, refrigerator, typewriter, Microfiche, fax, copier,
Pitney Xxxxx, sound of music and alarm system, etc.) located at
the Drug Store,; and all telephone equipment, and all
miscellaneous shelving, counters and supplies belonging to
Seller as listed on Exhibit B attached hereto and made a
part hereof.
D. STORE TELEPHONE NUMBER(S). All telephone numbers of the Drug
Store location shall be transferred to Buyer.
E. SUPPLIES. All bottles, vials, ointment jars, and other usable
supplies of Seller located at the Drug Store location and at
Seller cost.
F. ASSETS NOT PURCHASED. Buyer shall not purchase any consigned
merchandise or layaway items.
G. All outstanding business transactions prior to the closing date
are credited to the Buyer. All the business acquired after
the closing date belong to the HORIZON
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Pharmacies, Inc. including any insurance payments made to the
existing NABP, State Welfare number(s), and/or contract(s) as
long as the date of service is on or after the closing date.
2. PURCHASE PRICE.
2.1 The total purchase price to be paid by the Buyer for the Drug
Stores Assets shall be computed, but not allocated, as follows:
Furniture, Fixtures and Equipment, Prescription Files, Patient
Profiles, Customer List, Telephone System/Numbers, $130,000.00
2.2 An amount equal to the aggregate value of the marketable inventory
(as defined in Exhibit A attached hereto) as determined in the
physical inventory described in paragraph 5 below and as valued in
accordance with Exhibit A attached hereto and made a part hereof.
For the purpose of the purchase Buyer will pay 100% of the inventory
evaluation on the first $550,000 and 80% thereafter.
2.3 Buyer will purchase accounts receivable based on the following
evaluation:
(a) Third Party Insurance Receivable All at 100%
(b) Individual Charge Accounts
0-30 days balances at 100%
31-60 days balances at 80%
61-90 days balances at 60%
>90 days balances at 0%
ALLOCATION OF PURCHASE PRICE.
The Purchase Price shall be allocated based on the attached closing
statement, signed by both buyer and seller.
PAYMENT OF PURCHASE PRICE.
4.1 Subject to the following provisions, the purchase price hereafter
shall be paid as follows:
4.1 (a) Cash at the closing equal to $150,000.00 less $5,000 escrow
deposit.
4.1 (b) A note payable at closing to Xxxxx Xxxxxx at 0000 Xxxx
Xxxxxxxx, Xxxxx, XX 00000, for $135,000 which will bear
interest at the rate of eight (8) percent per annum for 60
months starting September 1, 1997.
(c) A note payable at closing to Xxx Xxxxxx at 000 Xxxx, Xxxxx,
XX 00000, for $135,000 which will bear interest at the rate
of eight (8) percent per annum for 60 months starting
September 1, 1997.
(d) A note at closing equal to the purchase price less section
4.1 (a, b, & c) above. The note will bear interest at the
rate of eight (8) percent per annum for 84 months starting
September 1, 1997. The note will be executed by buyer and
payable to the order of Xxxxxx Drug, Inc. It will be secured
by the inventory, furniture, fixtures, and equipment of said
Drug Store.
4.2 Security Instruments including Security Agreement and Financing
Statements covering the property being purchased by this
Agreement.
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INVENTORY.
A physical inventory shall be taken at the Drug Store by RGIS INVENTORY
SPECIALISTS on the closing date. Each party shall pay one-half of the
inventory expense. Seller portion will be deducted from Closing
Statement.
REPRESENTATIONS AND WARRANTIES BY SELLER.
6.1 The Seller does hereby represent and warrant as follows:
A. AUTHORITY. The execution, delivery and performance of this
Agreement by Sellerhas been duly authorized by all necessary entity
action and constitutes a legal, valid, and binding obligation on
Seller enforceable in accordance with its terms.
B. TITLE TO PROPERTIES. The Seller has good and marketable title
to all of the Drug Store assets to be transferred hereunder, free
and clear of all mortgages, liens,encumbrances, pledges, or security
interests of any nature whatsoever, except for secured debts, if any,
listed on Exhibit C attached hereto which shall be satisfied and
released at or prior to closing. The Seller has received no notice of
violation of any applicable law, regulation or requirement relating
to the retail Drug Store business operation or Drug Store assets to
be transferred hereunder; and as far as known to the Seller, no such
violation exists.
C. CONTRACTS. Seller is not party to any contract, understanding or
commitment whether in the ordinary course of business or not,
relating to the conduct ofbusiness by Seller from the Drug Store
which contract, understanding or commitment shall extend beyond the
Closing Date for the Pharmacy Location except the contracts the
real estate lease Seller is not party to any contractual agreement
or commitment to individual employees which may not be terminated at
the will of Seller.
D. LITIGATION. To the best of Seller's current actual knowledge
there is no suit, action, proceeding, investigation, claim, complaint
or accusation pending or, threatened against or affecting Seller or
the Assets or to which Seller is a party, in any court or before any
arbitration panel of any kind or before or by any federal, state,
local, foreign, or other governmental agency, department, commission,
board, bureau, instrumentality or body which would have a materially
adverse affect on the financial condition of Seller, and to the best
knowledge and belief of Seller, there is no basis for any such suit,
action, litigation, proceeding, investigation, claim, complaint or
accusation.
There is no outstanding order, writ, injunction, decree, judgment or
award by any court, arbitration panel or governmental body against or
affecting Seller with which Seller is not currently in compliance.
E. EMPLOYEES.
(a) To the best of Seller's actual knowledge, the Seller is in full
compliance with all wage and hour laws, and is not engaged in any
unfair labor practice or discriminatory employment practice and no
complaint of any such practice against Seller is filed or threatened
to be filed with or by the National Labor Relations Board, the Equal
Employment Opportunity Commission or any other administrative agency,
federal or state, that regulates labor or employment practices, nor
is any grievance filed or
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threatened to be filed against Seller by any employee pursuant to
any collect bargaining or other employment agreement to which Seller
is a party. To the Seller's best knowledge and belief it is in
compliance with all applicable federal and state laws and
regulations regarding occupational safety and health standards and
has received no material complaints from any federal or state
agency or regulatory body alleging violations of any such laws and
regulations.
(b) The employment of all persons and officers employed by Seller
is terminable at will without any penalty or severance obligation of
any kind on the part of the employer. All sums due for employee
compensation and benefits and all vacation time owing to any
employees of Seller have been duly and adequately accrued and
reflected in the accounting records of Seller. All benefits such as
vacation accrued and earned by employees up to the Closing Date is
responsibility of the Seller. All benefits accrued and earned after
the Closing Date will become the financial responsibilities of the
Buyer. To the Seller's best knowledge, all employees of Seller are
either United States citizens or resident aliens specifically
authorized to engage in employment in the United States in accordance
with all applicable laws.
F. TAXES.
(a) Seller has duly filed all required federal, state, local, foreign
and other tax returns, notices, and reports (including, but not
limited to, income, property, sales, use, franchise, capital, stock,
excise, added value, employees' income withholding, social security
and unemployment tax returns) heretofore due; and to Seller's best
knowledge all such returns, notices, and reports are correct,
accurate, and complete.
(b) All deposits required to be made by Seller with respect to any
tax (including but not limited to, estimated income, franchise,
sales, use, and employee withholding taxes) have been duly made.
(c) All taxes, assessments, fees, penalties, interest and other
governmental charges which have become due and payable have been
paid in full by Seller or adequately reserved against on its books of
account and the amounts reflected on such books are to the best
belief and knowledge of Seller sufficient for the payment of all
unpaid federal, state, local, foreign, and other taxes, fees, and
assessments, and all interest and penalties thereon with respect to
the periods then ended and or all periods prior thereto. Seller
hereby agrees to indemnify and hold harmless Buyer from and against
any and all liability, claims, or causes of action for any unpaid
taxes, or other assessments due and owing to any federal, state, or
local governmental entity arising out of the business of Seller prior
to the Closing Date.
(d) Buyer shall pay any and all Sales, Use, and Transfer Taxes, if
any, arising out of the assets which are the subject of this sale.
(e) Seller shall pay any and all personal property taxes for prior
years attributable to the property being transferred hereby prior to
Closing Date.
(f) The parties shall pro rate at Closing anticipated personal
property taxes as of the date of Closing based upon last year's tax
renditions, and personal property tax bills and rent.
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CONDITIONS PRECEDENT.
7.1 All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or at the closing, of each of the following
conditions (unless waived in writing by Buyer).
A. REPRESENTATIONS. The representations and warranties of Seller
contained in this Agreement shall not only have been true and
complete as of date of this Agreement, but shall also be true
and complete as though again made as of the Closing Date.
B. COMPLIANCE. The Seller shall have performed and complied with all
terms and conditions required by this Agreement to be performed
or complied with by it prior to or on the Closing Date.
C. CONSENTS. All necessary consents to the transfer of the Drug Store
assets have been obtained from vendors and partners if any.
D. UNION CONTRACT. Buyer acknowledges Seller has a union contract
covering a portion of its employees. As a condition to
closing, Buyer needs to evaluate said contract and Seller's
status as a union employer. It is Buyer's intent to separately
hire all its own employees for operations starting August
18, 1997, and not be bound by Sellers prior employment practices
or union obligations. As a result, on or before May 30, 1997,
Buyer will notify Seller of its intent to close on or before
August 30, 1997. Seller will then terminate all its employees
with two (2) weeks notice on July 30, 1997. Buyer shall hire
its own work force for its start of business on August 18,
1997. Seller will fully cooperate with Buyer in this
transition. Failure by Buyer to notify Seller by August 30,
1997 of its intent to close, shall terminate all obligations of
Seller to sell as provided hereunder. Once Buyer notifies
Seller of its intent to close on August 30,1997, it will be
obligated to close in conformity with this agreement.
LIABILITIES NOT ASSUMED BY BUYER.
8.1 It is expressly understood and agreed that Buyer shall not, by
virtue of this Agreement, the consummation of the transactions
contemplated herein or otherwise, assume any liabilities or
obligations of the Seller or any liabilities or obligations
constituting a charge, lien, encumbrance or security interest upon
the Drug Store assets to be transferred hereunder, regardless of
whether such liabilities or obligations are absolute or contingent,
liquidated or unliquidated or otherwise except the Security
interest securing Buyer's Note to Seller.
8.2 Seller hereby indemnifies the Buyer, its officers, directors, and
controlling persons against any liability for any fee or commission
payable to any broker, agent or finder retained by Seller with
respect to any transaction contemplated by this Agreement.
9. CLOSING.
9.1 The closing shall take place on or before August 30, 1997 at Buyer's
discretion, but in no event later than August 30, 1997, at the Drug
Store location.
A. TO BE DELIVERED TO BUYER. The Seller shall deliver to Buyer a Xxxx
of Sale, which shall be effective to vest in Buyer good and
marketable title to the Drug Store Assets, free and clear of all
mortgages, security interest, liens, encumbrances, pledges and
hypothecation of every nature and description, except the Security
interest securing Buyer's Note to the Seller.
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B. TO BE DELIVERED TO SELLER. The Buyer shall deliver to the Seller a
Cashier's check for the cash portion of the purchase price less
$1,000 Escrow amount, and Buyer's promissory note described in
Paragraph 4.1 hereof, and the Security instruments required by
section 4.1 (b).
INDEMNITY BY SELLER.
10.1 The Seller hereby agrees to indemnify and hold harmless Buyer against
and in respect of:
A. LIABILITY OF THE SELLER. With the exception of liabilities
expressly assumed, all liabilities and obligations of the Seller,
of every kind and description, regardless of whether such
liabilities or obligations are absolute or contingent, liquidated
or unliquidated, accrued or otherwise, and regardless of now and
when the same may have arisen, which are asserted against Buyer as
a result of this Agreement or the consummation of the transaction
contemplated herein.
B. CLAIMS UPON ASSETS. All claims against, or claims of any interest
in, or of a lien or encumbrance or the like upon any or all of the
Drug Store assets to be transferred hereunder by the Seller to Buyer
which are caused or created by indemnifying party, with the exception
of Seller's interest, lien, or encumbrance resulting from Seller's
security interest.
C. The Buyer will indemnify the Seller for all claims against the
Assets for any period after the closing date. The Buyer further
indemnifies the Seller for break of leases and dissatisfied
customer claims caused by HORIZON for any period after the closing
date.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES & INDEMNIFICATIONS.
11.1 All of the covenants, representations, warranties and indemnification
of the parties set forth in this Agreement shall survive the Closing
Date hereof.
12. RISK OF LOSS.
12.1 The risk of loss of damage of Drug Store assets to be conveyed
hereunder shall be upon Seller until the closing hereof.
13. NON-COMPETE COVENANT OF SELLER.
13.1 In partial consideration of the Purchase Price hereinabove stated in
paragraph 2 and other consideration $270,000 ($135,000 for each
individual, includes 8% interest) will be paid to this covenant
not to compete. Xxx Xxxxxx and Xxx Xxxxxx hereby agree that for a
period of five (5) years after the date of closing hereunder will
not directly or indirectly, through a subsidiary, joint venture
arrangement or otherwise, conduct or assist another party other
than the Buyer in conducting or managing any operation which has
its own purpose what is generally known as a retail pharmacy, or
Nursing Home or IV operation or DME operation within Butte-Silver
Bow County, Montana, or have any equity investment in such
operation. This non-compete entitles Xxx Xxxxxx and Xxx Xxxxxx to
perform work at 40 hours a week as employees of HORIZON
Pharmacies, Inc. Furthermore, this non-compete clause does not
prohibit Xxx Xxxxxx and Xxx Xxxxxx from performing duties such as
relief pharmacist at other pharmacies. Any additional relief work
days in a month will require written approval of the Buyer. The
parties hereby
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recognize and acknowledge that the territorial and time
limitations contained in this paragraph are reasonable and
properly required for the adequate protection of the business to
be conducted by Buyer with the assets and properties to be
transferred hereunder and cannot be changed except by written
permission of Buyer. Said $135,000 to each Xxx and Xxx Xxxxxx
shall be paid monthly at $2,250.00 each over a period of five (5)
years starting one month after closing. Seller will allow Buyer
and Buyers accountant access to financial information to prepare
and audit for 1996, and up to closing date in 1997 to be paid at
Buyers expense.
13.2 The parties recognize that, in the event of a breach by Seller of any
of the provisions of this paragraph, the remedy of law alone would
be inadequate and, accordingly, Buyer,(in addition to damages),
shall be entitled to an injunction restraining Seller from
violating the covenants herein contained.
13.3 It is the intention of the Seller and the Buyer that the execution of
these covenants not to compete be considered as materially
significant and essential to the closing of this Agreement, and
that such covenants are a material portion of the purchase price
set forth herein above.
14. GOVERNING LAW.
14.1 This agreement shall be governed and construed in accordance with the
laws of the State of Montana.
15. ENTIRE AGREEMENT.
15.1 This Agreement contains the entire agreement between the parties, and
no representations, warranties or promises, unless contained herein,
shall be binding upon the parties hereto, their successors and
assigns.
15.2 It is stipulated that this agreement is null and void if HORIZON
Pharmacies, Inc:
(a) can not secure a valid Montana License under its own merit for
the said DRUG STORE location to conduct business as a retail
pharmacy operation. HORIZON Pharmacies, Inc. commits that it will
exercise due diligent effort to secure the Montana License.
(b) can not secure a lease for $4,000.00 per month for three (3)
years with one (1) three (3) year option @ $4,300.00 per month and
one (1) four (4) year option @ $4,500.00 per month.
16. XXXXXXX MONEY.
16.1 To bind this Agreement, Buyer herewith deposits with Xxxxx X. Xxxxx
as Escrow Agent, the sum of $5,000 (Five Thousand Dollars), which
sum shall be applied to the cash portion of the Purchase Price
upon the closing of the transaction contemplated herein. However,
in the event Seller fails to perform each and every covenant and
condition required hereunder, Buyer may cancel this Agreement and
have the Xxxxxxx Money returned to it. If the Buyer fails to
perform each and every obligation hereunder, Seller shall retain
the Xxxxxxx Money as liquidated damages each party's remedy
provided in
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this Section is that party's exclusive remedy.
17. ASSIGNMENT
17.1 This agreement may not be assigned by Buyer without written consent
of Seller. Consent will not be unreasonably withheld.
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IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
BUYER:
HORIZON PHARMACIES, INC.
-----------------------------------------
Xxxx XxXxxx, President
THE STATE OF )
COUNTY OF )
THIS INSTRUMENT was acknowledged before me on this the __________ day
of __________ , 19_____, by XXXX XXXXXX, who holds the office of President of
HORIZON PHARMACIES, INC., a Texas Corporation on behalf of such corporation.
-----------------------------------------
SEAL
Notary Public, State of Texas
My commission Expires:
-------------------
SELLER:
Xxxxxx Drug, Inc.
-----------------------------------------
Xxx Xxxxxx, President
-----------------------------------------
Xxx Xxxxxx, Vice-President
THE STATE OF )
COUNTY OF )
THIS INSTRUMENT was acknowledged before me on this the _________day of
__________, 19___ by Xxx Xxxxxx, who holds the office of President of Xxxxxx
Drug, Inc. and by Xxx Xxxxxx who holds the office of Vice-President of Xxxxxx
Drug, Inc. on behalf of such corporation.
-----------------------------------------
SEAL
Notary Public, State of Texas
My commission Expires:
-------------------
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EXHIBIT A
1. DEFINITION OF MARKETABLE INVENTORY. For purposes of this Agreement,
marketable inventory is all of Seller's inventory except the following:
(a) DAMAGED MERCHANDISE. Damaged merchandise, including but not limited
to, items which are shopworn, faded (including faded labels) or
subject to visible deterioration; and
(b) UNSALABLE MERCHANDISE. Unsalable merchandise, that is items which are
obsolete, or which have an expired expiration date or which have been
discontinued by the manufacturer; and
(c) PRESCRIPTION MERCHANDISE AND OVER-THE COUNTER DRUGS. The following
exclusions, in addition to the exclusions set forth above, shall be
applicable to prescription merchandise and over-the-counter drugs:
(i) Any partial container with expired dating within thirty (30)
days;
(ii) Any full, sealed containers (aa) with expired dating,
(iii) Filled prescriptions over one month old;
(d) The buyer has the right of refusal to exclude seasonal merchandise
from the evaluation of inventory other than Halloween, Thanksgiving,
and Christmas.
VALUATION OF INVENTORY. The marketable inventory shall be valued, for purposes
of this Agreement, as follows
(a) The marketable prescription inventory will be taken at acquisition
cost OR AWP less 16%. Special deal prescription items and/or generic
items will be at acquisition cost.
(b) Non-prescription merchandise will be taken at acquisition cost. If no
acquisition cost exists, then the following formula will apply to the
merchandise.
CATEGORY COST (% OF RETAIL)
HBA Retail price less 25%
OTC( Health aids) Retail price less 25%
Gifts Retail price less 50%
Cards Retail price less 50%
Cosmetics Retail price less 40%
Watches/Cameras Retail price less 50%
Fragrances Retail price less 25%
Candy (box) Retail price less 40%
Candy (loose) Retail price less 30%
Jewelry Retail price less 50%
Miscellaneous Retail price less 50%
Seasonal Merchandise Retail price less 50%
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EXHIBIT B
1. LIST OF ASSETS (FURNITURE, FIXTURES, AND EQUIPMENT, ETC.).
STORE:
1-7 ft. GONDOLA/SHELVES
1-15 ft GONDOLA/SHELVES
1-21 ft GONDOLA/SHELVES
1-30 ft GONDOLA/SHELVES
2-36 ft GONDOLA/SHELVES
10-40 ft GONDOLA/SHELVES
9-4 ft GLASS CASES
9-6 ft GLASS CASES
9-8 ft GLASS CASES
19-ENDCAPS
75-OTC WALL SHELVES
5-GIFT DISPLAYS
5-COSMETIC DISPLAYS
2-GLASS DISPLAYS
1-GIFT WRAP DISPLAY-HOLDER
5-GLASS OAK WALL DISPLAY (32 FT)
20-RX WALL SHELVES (3 ft SECTIONS)
1-RX COUNTER 36 ft W/DRAWS ETC.
1-AUTOMATIC PILL COUNTER
1-RX REFRIGERATOR
1-CIGAR CASE
1-REF. CANDY CASE
3-CHECK OUT COUNTERS
1-COOLER VET. SECTIONS
5-REGISTERS
4-DESKS
5-LOCKERS
4-FILE CABINETS
3-VACUUMS
1-COPIER
1-FAX MACHINE
13-SHELVES (8 ft) STORE ROOM/UPSTAIRS
WOOD SHELVES (STORE ROOMS)
2-SAFES-NOT FOR SALE, BUT MAY BE USED WITH LEASE ON BLDG.
1-RX BALANCE-NOT FOR SALE, MAY BE USED UNTIL REPLACED.
EXHIBIT C
1. LIST OF SECURED DEBTS.
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