PURCHASE AGREEMENT
AGREEMENT made the 31st day of July , 1998 between CCB Consulting,
Inc. a Nebraska corporation ("Seller"), and HORIZON Pharmacies, Inc., a
Delaware Corporation ("Buyer").
W I T N E S S E T H
WHEREAS, Seller operates a retail pharmacy doing business as Xxxx
Pharmacy, Xxxxx Medical Supply and Xxxx Long Term Care Pharmacy (the "Drug
Store") located at 1651 and 0000 0/0 Xxxxxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx
00000 (the "Retail Location").
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
certain assets utilized in connection with and as part of Seller's operation
of the Drug Store upon the terms and conditions stated herein:
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby the acknowledged, the parties agree as follows:
1. SALE OF ASSETS.
1.1 ASSETS TO BE PURCHASED Seller hereby agrees to convey, transfer,
assign, and deliver to Buyer on a going concern basis, and Buyer
hereby agrees to purchase from Seller all of Seller's assets
located at or used in connection with Seller's operation of the
Drug Store including but not limited to:
A. MARKETABLE INVENTORY. All marketable pharmaceutical and
retail inventory of Seller held for retail sale by the Drug
Store; and
B. PRESCRIPTION FILES AND PATIENT PROFILES. All prescription
files, patient profiles and customer list, telephone
numbers.
C. FURNITURE, FIXTURES AND EQUIPMENT. Supplies and all
furniture, fixtures, equipment described in Exhibit "A"
attached hereto and made a part hereof, including but not
limited to computers, peripherals, cash registers,
refrigerators, typewriters, microfiche, fax machines,
copiers, postage meters, sound system, alarm system,
telephone equipment, shelving, counters, bottles, vials,
ointment jars and other usable supplies.
D. COPYRIGHTS, TRADE NAMES, AND TRADEMARKS. All copyrights,
trade names and trademarks associated with the Pharmacy
Location (s) including, but not limited to as Xxxx Pharmacy
and Xxxxx Medical Equipment and all variations thereof.
1.2 ASSETS NOT PURCHASED BY BUYER Unless otherwise agreed by the
parties in writing, Buyer shall not purchase the following: (i)
consigned merchandise; (ii) merchandise held in layaway; (iii)
merchandise which is damaged, shopworn, faded (including faded
labels) or subject to visible deterioration; (iv) merchandise
which, in Buyer's reasonable opinion, is unsalable because it is
obsolete, its expiration date has expired or it has been
discontinued by the manufacturer; (v) seasonal merchandise; or
(vi) prescription merchandise expiring within 30 days or
prescription merchandise or over-the-counter drugs which are
(a) in a
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partially filled container with a date which will expire
within 90 days of the closing date; or (b) in a full, sealed
container with a date which is expired; (vii) all third party
insurance receivables for services rendered on or before Closing
Date, (viii) all individual charge account receivable for
services rendered on or before Closing Date.
1.3 TELEPHONE NUMBERS. Seller agrees to use all reasonable efforts
and take all action necessary to assure that all telephone
numbers used at the Drug Store shall be transferred without
interruption to Buyer.
2. PURCHASE PRICE.
2.1 COMPUTATION. The purchase price to be paid by the Buyer for the
Drug Stores Assets shall be computed as follows: (i) $520,000.00
for prescription files, patient profiles, furniture, fixtures,
equipment, goodwill, and non-compete agreement; PLUS (ii) the
discounted fair market value of all inventory constituting a part
of the Drug Store Assets determined in accordance with
Section 2.6, below
2.2 ALLOCATION. The total purchase price described in Section 2.1,
above, shall be allocated as set forth in Exhibit "B" attached
hereto and made a part hereof.
2.3 PAYMENT OF THE PURCHASE PRICE. Buyer shall cause the purchase
price to be paid to Seller as follows:
(a) $300,000 on the Closing Date by certified or cashier's
check (less of the Xxxxxxx Money Deposit as such term is
defined in Section 2.4, below);
(b) Shares of Buyer's common stock, par value $ .01 per share
(the "HORIZON Common Stock"), equivalent to $180,000
based upon the average closing price for the HORIZON common
stock as reported in the Wall Street Journal for the ten
(10) business days immediately preceding the Closing Date,
as such term is defined in Section 7.1, below; and.
(c) The balance in a negotiable promissory note in the form
attached in Exhibit "C" attached hereto secured by the
inventory of the Drug Store in amount sufficient to cover
the outstanding principal plus accrued interest due thereon;
(d) Buyer shall deduct from the purchase price payable at
Closing an amount equal to the sum of (i) Seller's pro rata
share of personal property taxes as described in Section
2.5.2, below, and (ii) one half of the fee charged by the
third party inventory service.
2.4 XXXXXXX MONEY DEPOSIT. Buyer herewith deposits with n/a (the
"Escrow Agent"), the sum of $1,000 (the "Xxxxxxx Money
Deposit")), which sum shall be applied to the cash portion of the
purchase price at Closing. In the event Seller fails to perform
each and every covenant and condition required hereunder, Buyer
may terminate this Agreement by giving Seller written notice and
Seller shall return the Xxxxxxx Money to Buyer within three (3)
days of Seller's receipt of such notice. In the event Buyer
fails to perform each and every obligation hereunder, Seller may
terminate this Agreement and retain the Xxxxxxx Money as
liquidated damages. The remedies provided in this Section shall
be the exclusive remedies for a breach of this Section.
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2.5 TAXES
2.5.1 SALES, USE, AND TRANSFER TAXES Buyer shall pay any and
all sales, use, and transfer taxes arising out of the
sale of the Drug Store Assets pursuant to this
Agreement.
2.5.2 PERSONAL PROPERTY TAXES. Seller shall pay all personal
property taxes attributable to the Drug Store Assets
for the period up to and including the Closing Date,
and Buyer shall pay all personal property taxes
attributable to the Drug Store Assets for the period
following the Closing Date. The parties shall, using
last year's tax returns, estimate as of the Closing
Date the personal property taxes anticipated to be owed
on the Drug Store Assets for the current calendar year,
and Seller's pro rata portion of such estimated taxes
shall be withheld by Buyer from the purchase price
described in Section 2.3, above.
2.6 INVENTORY EVALUATION A physical inventory of the Drug Store
Assets shall be performed on the Closing Date by an
independent third party inventory service. Each party shall
pay one-half of the fee charged by the service company, with
Seller's pro rata share of such costs to be deducted from
the purchase price payable by Buyer at Closing. For
purposes of calculating that portion of the purchase price
attributed to inventory under Section 2, above, the
marketable inventory shall be valued as follows, except as
otherwise provided herein:
Marketable Inventory Method of Valuation
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Prescription inventory Acquisition cost or AWP less 16%
except for special deal prescription
items or generic items which shall be
valued at acquisition cost
Non-Prescription inventory Acquisition cost
In the event Seller is unable to establish the acquisition cost of any
non-prescription inventory, the following formula shall be applied in
valuing such inventory.
Category of Merchandise Method of Valuation
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HBA Retail price less 25%
OTC 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%
3. REPRESENTATIONS AND WARRANTIES.
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3.1. The Seller does hereby represent and warrant to Buyer as follows:
3.1.1 ORGANIZATION. Seller is a corporation duly organized
and existing in good standing under the laws of its
state of incorporation and is entitled to own and lease
its properties and to carry on its business as and in
the places where such properties are now owned, leased
or operated and such business is conducted.
3.1.2 AUTHORITY. The execution, delivery and performance of
this agreement by Seller has been duly authorized by
all necessary corporate action and constitutes a legal,
valid, and binding obligation on Seller enforceable in
accordance with its terms.
3.1.3 TITLE TO PROPERTIES. The Seller has good and
marketable title to all of the Drug Store assets, 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 "D" attached hereto which shall be satisfied
and released at or prior to closing.
3.1.4 BOOKS AND RECORDS. Seller's books and records which
have been provided to Buyer for inspection are true,
correct and complete, and contain no material omission
with respect to Seller's business, operation or status.
3.1.5 STATEMENTS NOT MISLEADING. No representation, warranty
or other information disclosed to Buyer in connection
with this Agreement omits or will omit to state the
material facts necessary to make such representation,
warranty or information not misleading.
3.1.6 COMPLIANCE WITH APPLICABLE LAWS. Seller has received
no notice of violation of any applicable law,
regulation or requirement relating to the operation of
the Drug Store, the Drug Store Assets or the Retail
Location, and Seller has no knowledge of or reason to
believe any such violation exists. Seller is in full
compliance with all wages and hour laws, and to the
best of its knowledge 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 Relation Board, the Equal Employment Opportunity
Commission or any other administrative agency, Federal
or state, that regulates labor or employment practices,
nor is any grievances filed or 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 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.
3.1.7 CONTRACTS. Seller is not party to any contract,
understanding or commitment whether in the ordinary
course of business or not, relating to Seller's
operation of the Drug Store which extends beyond the
Closing Date.
3.1.8 EMPLOYMENT CONTRACTS. Seller is not a party to any
oral or written contract of employment between Seller
and any officer or other employee, and the employment
of
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each of Seller's officers and all the Drug Store's
employees is terminable at will without any penalty or
severance obligation of any kind.
3.1.9 LITIGATION. Seller is not a party to and has no
knowledge of any suit, action, proceeding,
investigation, claim, complaint or accusation pending
or threatened against or affecting Seller or the Drug
Store Assets, in any court or before any arbitration
panel of any kind or before or by any Federal, state,
local, foreign or other government agency, department,
commission, board, bureau, instrumentality or body, 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 government body against or
affecting Seller, Drug Store, the Drug Store Assets or
the Retail Location.
3.1.10 EMPLOYEE BENEFITS 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. Seller shall be responsible for all
employee benefits, including but not limited to payment
for accrued vacation, to the Closing Date. 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.
3.1.11 TAXES.
(a) Seller has 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, employee's 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) Seller has made all deposits required to be made
in connection with any tax including but not
limited to, estimated income, franchise, sales,
use, and employee withholding taxes.
(c) Seller has paid or made adequate reserves on its
books of account for all taxes, assessments, fees,
penalties, interest and other governmental charges
which have become due and payable,, and the
amounts reflected on such books are to Seller's
best knowledge sufficient for the payment of all
unpaid Federal, state, local, foreign, and other
taxes, fees, and assessment and all interest and
penalties thereon with respect to the periods then
added and or all periods prior thereto.
3.1.12 INVESTMENT PURPOSE. Seller is acquiring the HORIZON
Common Stock for investment, and not with a view to the
sale or distribution thereof. Seller understands and
acknowledges that the transfer of the HORIZON Stock
issuable hereunder will be restricted and that Seller
may not sell or otherwise dispose of such shares unless
and until a registration statement under the Security
Act of 1933, as amended (the "Securities Act"), is in
effect with respect thereto and Seller has fully
complied with the Securities Act and all applicable
regulations thereunder, or Seller has received an
opinion from Buyer's counsel that the contemplated sale
or other disposition of the HORIZON Common Stock will
not require registration under the Security Act.
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3.1.13 INSURANCE. All inventories, buildings and fixed assets
owned or leased by Seller are and will be adequately
insured against fire to the Closing Date, valid
policies therefor are and will be outstanding and in
force, and the premiums will be paid before the Closing
Date.
3.1.14 NO CHANGES. Until the Closing Date, Seller will not,
except with Buyer's prior written consent: (i) conduct
its business except in the regular and ordinary course;
(ii) increase the amount of compensation currently
being paid to employee or agent, or make any bonus
arrangement with any employee or agent; (iii) enter
into any transaction other than in the ordinary course
of business; or (iv) pay out assets being sold to
Buyer any debt, obligation or liability which Buyer has
not agreed to assume under the terms of this Agreement.
3.2 Buyer does hereby represent and warrant to Seller as follows:
3.2.1 ORGANIZATION. Buyer is a corporation duly organized
and existing in good standing under the laws of
Delaware, and is entitled to own or lease properties
and carry on its business as and in the places where
such properties are now owned, leased or operated and
such business is now conducted.
3.2.2 COMMON STOCK. Buyer has authorized 14,000,000 shares
of HORIZON Common Stock of which approximately
5,400,000 shares are currently issued and outstanding,
and 1,000,000 share of preferred stock, par value $0.01
per share, none of which are currently issued and
outstanding.
4. CONDITIONS TO CLOSING.
4.1. BUYER'S CONDITIONS TO CLOSING. All obligations of Buyer under
this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions (unless waived in
writing by Buyer).
4.1.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller contained in this Agreement
shall be true and complete at the Closing Date as if
they were made at such time.
4.1.2 COMPLIANCE. 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.
4.1.3 CONSENTS. All necessary consents to the transfer of
the Drug Store Assets have been obtained from vendors
and other third party, if any.
4.1.4 NO CASUALTY. The Drug Store's business and property
shall not have been adversely affected in any material
way as a result of any strike, lock-out, accident or
other casualty or act of God of the public enemy, or
any judicial, administrative or governmental
proceeding.
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4.1.5 LEASE OF RETAIL LOCATION. Buyer shall have executed a
lease covering the Retail Location.
4.1.6 LICENSE TO OPERATE RETAIL PHARMACY. Buyer shall have
obtained a valid license to operate a retail pharmacy
under the HORIZON Pharmacies, Inc. name in the state of
Nebraska.
4.2 SELLER'S CONDITIONS TO CLOSING. All obligations of Seller under
this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions (unless waived in
writing by Seller).
4.2.1 REPRESENTATIONS. The representations and warranties of
Buyer contained in this Agreement shall be true and
complete at the Closing Date as if they were made at
such time.
4.2.2 COMPLIANCE. Buyer 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.
5. LIABILITIES NOT ASSUMED BY BUYER. The parties expressly agree and
acknowledge that Buyer shall not, by virtue of this Agreement, the
consummation of the transactions contemplated herein or otherwise,
assume any liabilities or obligations of Seller or any liabilities or
obligations constituting a charge, lien, encumbrance or security interest
upon the Drug Store Assets, regardless of whether such liabilities or
obligations are absolute or contingent, liquidated or unliquidated or
otherwise.
6. INDEMNIFICATION.
6.1 SELLER'S INDEMNIFICATION OF BUYER. Seller and Xxxx Xxxx shall
indemnify and hold harmless Buyer against and in respect of any
and all liabilities concerning or otherwise connected to the
conduct or operation of the Drug Store as of or prior to the
Closing Date, and with the exception of liabilities expressly
assumed by Buyer, 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 how and
when the same may have arisen, which are asserted against Buyer
as a result of this Agreement or the consummation of the
transactions contemplated herein.
6.2 BUYER'S INDEMNIFICATION OF SELLER. Buyer shall indemnify and
hold harmless Seller against and in respect of any and all
liabilities concerning or otherwise connected to the conduct or
operation of the Drug Store following the Closing Date.
7. CLOSING.
7.1 CLOSING DATE. The closing shall take place at the Retail
Location on or before July 31, 1998 (the "Closing Date") but in
no event later than August 7th, 1998, unless otherwise agreed by
the parties in writing.
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7.2 SELLER'S OBLIGATIONS AT CLOSING. Seller shall deliver to Buyer
at closing of this Agreement a Xxxx of Sale 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 and all other instruments and documents that are
necessary or appropriate to the sale and delivery of the Drug
Store Assets.
7.3 BUYER'S OBLIGATIONS AT CLOSING. Buyer shall deliver to Seller at
closing: (I) a company or certified or cashier's check for the
cash portion of the purchase price provided for in Section 2.3;
(ii) the Note and security Agreement provided for in Section 2.3;
and (iii) evidence of the shares of Common Stock provided for in
Section 2.3.
8. MISCELLANEOUS.
8.1 SURVIVAL OF REPRESENTATION, WARRANTIES AND INDEMNIFICATIONS. All
of the representations, warranties and indemnifications of the
parties set forth in this Agreement shall survive the Closing
hereof.
8.2 RISK OF LOSS. The risk of loss of damages of Drug Store Assets
shall be upon Seller until the closing hereof.
8.3 COVENANT NOT TO COMPETE. Except as otherwise herein, Xxxx Xxxx
shall not, for a period of six (6) years after the Closing Date,
directly or indirectly own an equity interest in, operate, manage
or assist any person or entity other than Buyer in operating or
managing, any business which includes a retail pharmacy, nursing
home or home health care company, or which offers for sale or
lease durable medical equipment within the city limits of Blair,
Nebraska. The parties expressly agree that Xxxx Xxxx may
serve no more than one (1) day per week as a relief pharmacist at
retail pharmacies not owned or operated by Buyer. The parties
acknowledge that the territorial and time limitations contained
in the 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 can not
be changed except by written permission of Buyer.
8.3.1 EMPLOYMENT. The parties agree that Xxxxx Xxxx shall be
employed as the store manager at an annual salary of
$50,000. Furthermore, the parties agree that Xxxx Xxxx
shall be employed at a minimum rate of $35.00 per hour
for a maximum of ten (10) hours per week. Additionally
the parties agree and understand that such employment
is "at will" employment.
8.4 RIGHT TO ENJOIN BREACH. The parties agree that in the event of a
breach by Seller of any provision of this paragraph, monetary
damages alone would be inadequate and Buyer shall, in addition to
all other legal remedies, be entitled to obtain an order
enjoining Seller from violating the covenants set forth herein.
8.5 ACCESS TO RECORDS. Seller shall give Buyer, its counsel,
accountants and representatives, reasonable access during normal
business hours to all of Seller's books, contracts, commitments
and records and furnish Buyer with all information which Buyer
reasonably may request to conduct a financial audit of the last
two (2)
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fiscal years and unaudited financial data up to Closing
Date at Buyer's expense. The Buyer's audit will be conducted
after the Closing Date.
8.6 GOVERNING LAW. This agreement shall be governed and construed in
accordance with the laws of the state of Nebraska.
8.7 ENTIRE AGREEMENT MODIFICATION. 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. This
Agreement may not be amended or terminated except by an
instrument executed by both parties.
8.8 ASSIGNMENT. This agreement may not be assigned by Buyer without
written consent of Seller, which consent will not be unreasonably
withheld.
8.9 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
BUYER: HORIZON Pharmacies, Inc.
Witness:
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Xxxx X. Xxxxxxx, Treasurer
SELLER: CCB Consulting, Inc.
Witness:
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Xxxx Xxxx, President
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