--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
AGREEMENT made the 4 day of March 1997 between True Quality Pharmacies,
Inc., having an office at 000 X. Xxxxxxxx, XxXxxxxx, Xxxxx 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").
WITNESSETH
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 assets of
the Seller utilized in connection with and as part of the retail drug store
operations of the Seller known as VISTA Pharmacy in MT. XXXXXX, MINEOLA, and
MCKINNEY, Texas (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
as is 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 by Seller (computer/peripherals, registers,
refrigerator, typewriter, Microfiche, 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. ACCOUNTS RECEIVABLE. Buyer shall purchase individual charge
accounts (per evaluation in Section 2.4 (a)) and the Mineola
MHMR accounts. Buyer shall not purchase any third party
receivable.
G. ASSETS NOT PURCHASED. Buyer shall not purchase any consigned
merchandise or layaway items.
H. All outstanding cash and pending transactions (excluding
receipts on Accounts Receivable accounts) prior to the closing
date are credited to the Seller. All business acquired after
the closing date belong to the HORIZON 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
1
shall be computed, but not allocated, as follows:
Furniture, Fixtures and Equipment, 1978 FORD VAN $ 60,000.00
2.2 Prescription Files. Patient Profiles, Customer List,
Telephone Numbers $390,000.00
2.3 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.
2.4 Buyer will purchase accounts receivable based on the following
evaluation:
(a) Individual Charge Accounts
0-30 days from date of first statement balances at 100%
31-60 days from date of first statement balances at 80%
61-90 days from date of first statement balances at 60%
GREATER THAN 90 days from date of first statement balances at 0%
(b) Mineola MHMR at 100%
3. ALLOCATION OF PURCHASE PRICE.
*See Closing Statement
4. PAYMENT OF PURCHASE PRICE.
Subject to the following provisions, the purchase price hereafter shall
be paid as follows:
4.1 Cash in the amount of $100,000.00 on March 5 & 6, 1997 after
inventory of all locations
4.2 Balance in the form of a note at 8 1/2% interest payable monthly,
with a principal reduction of $325,000.00 on the earliest of
September 1, 1997 or 10 days following the funding of the initial
public offering, and the balance in equal monthly installment on
the 25th day of each month thereafter through December 25th, 1997,
when all outstanding principal and accrued and unpaid interest shall
be due in full.
4.3 The note shall be secured by the assets purchased and shall be
personally guaranteed by Xxxx XxXxxx, Sy Shahid, Xxxxxxx Xxxx,
Xxxx Xxxxxxxxx, and Xxxxxx Xxxxxxx.
5. INVENTORY.
5.1 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.
6. 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 Seller has 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
2
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 of business by Seller from the Drug Store
which contract, understanding or commitment shall extend beyond
the closing date for the Pharmacy Location except 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. Notwithstanding the
foregoing, Seller is a plaintiff in a multiple party lawsuit
against certain pharmaceutical manufacturers; and all recoveries
in any way related thereto shall remain the property of Seller
and all costs and expenses related thereto shall be for the
account of Seller.
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 threatened to
be filed against Seller by any employee pursuant to any collective
bargaining or other employment agreement to which Seller is a
party. To the Seller's best knowledge and belief 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
the accounting records of Seller. All benefits such as vacation
accrued and earned by employees up to the closing date is the
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,
3
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
(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.
7. 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 the date of this Agreement, but shall also be
true and complete as though again made as of the date of closing.
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 at the closing.
C. CONSENTS. All necessary consents to the transfer of the Drug
Store assets have been obtained from vendors and partners if any.
8. 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, unless
expressly stated herein.
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.
4
9. CLOSING.
9.1 The closing shall take place on or before March 5 and 6, 1997 the
parties mutual agreement 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.
B. TO BE DELIVERED TO SELLER. The Buyer shall deliver to the
Seller a promissory note described in Paragraph 4.2 and the
security document reasonably required by Seller and personal
guarantees.
10. INDEMNITY BY SELLER.
10.1 The Seller hereby agrees to indemnify and hold harmless Buyer
against and in respect of:
A. CONTINGENT & UNDISCLOSED CLAIMS. Seller will indemnify and
hold Buyer harmless for any contingent and/or undisclosed
claims including but not limited to costs, expenses, and
attorney fees relating to Seller's ownership of the purchased
assets and/or Seller's conduct of the business prior to the
closing.
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.
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 operation of
business 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. GOVERNING LAW.
13.1 This agreement shall be governed and construed in accordance with
the laws of the State of Texas and venue for purposes hereof shall
be in Collin County, Texas.
14. ENTIRE AGREEMENT.
14.1 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. This document
is null and void if:
a) the Purchase Agreement is not signed by both parties within 10
days from date the Buyer has received the Purchase Agreement
document.
5
b) can not secure the following leases:
Mineola AT 1,500.00 per month for five (5) years plus
two (2) five 5 years options
MT Xxxxxx AT 1,800.00 per month for five (5) years plus
two (2) five 5 years options
McKinney AT 1,250.00 per month for one (1) year plus
three (3) three 3 years options
All option years for Mineola and Mt Xxxxxx will be based on CPI
increases. Mckinney location option years will be based on:
1st 3 years option will be based on $10.00 per sq ft
2nd 3 years option will be based on $12.00 per sq ft
3rd 3 years option will be based on $14.00 per sq ft
15. XXXXXXX MONEY.
15.1 To bind this Agreement, Buyer herewith deposits with
_____________________________ as Escrow Agent, the sum of $1,000
(one 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 this Section is that party's exclusive remedy.
6
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
BUYER:
HORIZON PHARMACIES, INC.
/s/ XXXX XXXXXX
------------------------------------
Xxxx XxXxxx, President
THE STATE OF )
COUNTY OF )
THIS INSTRUMENT was acknowledged before me on the 4th day of March, 1997
by XXXX XXXXXX, who holds the office of President of HORIZON PHARMACIES, INC.,
a Texas Corporation on behalf of such corporation.
/s/ XXXX XXXXXX
------------------------------------
SEAL Xxxx Xxxxxx
Notary Public, State of Texas
My commission Expires: June 23, 1999
SELLER:
True Quality Pharmacies, Inc.
/s/ XXXXXXX XXXX
------------------------------------
Xxxxxxx Xxxx, President
THE STATE OF )
COUNTY OF )
THIS INSTRUMENT was acknowledged before me on the 4th day of March, 1997
by XXXXXXX XXXX, who holds the office of President of True Quality Pharmacies,
Inc.
/s/ XXXX XXXXXX
------------------------------------
SEAL Xxxx Xxxxxx
Notary Public, State of Texas
My commission Expires: June 23, 1999
7
