PURCHASE AGREEMENT
AGREEMENT made the 2 day of August, 1997 between Sun Country Drug, Inc.,
a New Mexico Corporation d/b/a Sun Country Drug having an office at 000 Xxxxx
00 Xxx., Xxxxxxxx, Xxx Xxxxxx 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 Sun Country 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 AS
IS certain assets of the Drug Store (hereinafter referred to as the
"Drug Store Assets"), which the Buyer hereby agrees 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 (, 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. ASSETS NOT PURCHASED. Buyer shall not purchase
any consigned merchandise or layaway items.
G. All business transactions belong to the HORIZON Pharmacies, Inc.
including any insurance payments made to the existing NABP, State
Welfare number for all business transactions 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, NDC computer, POS system, phone system,
Equipment, Prescription Files, Patient Profiles, Customer List,
Patient Phone Numbers, Telephone System/Numbers,
Individual charge accounts, and Non-compete Covenant $152,000.00
2.2 Plus 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. The Buyer has the
right of refusal on any inventory in excess of $260,000.00
evaluation as specified in Section 5.1 and item #2 in
Exhibit A.
3. ALLOCATION OF PURCHASE PRICE.
The purchase price shall be allocated.
4. 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 $175,000.00
less $3,000 escrow deposit.
4.1 (b) Payment to creditors;
(i) $ 53,555.13 to Bergen Xxxxxxxx as the payoff amount as of
8/10/97 for the outstanding debt that Sun Country Drug owes
to said company.
The payoff amount was provided by Bergen Xxxxxxxx.
(ii) Technology Sales & Leasing in the amount of $8,857.35 for
payoff amount as of 8/15/97 on two accounts with National
Data corp.
4.1 (c) A note at the closing equal to the purchase price less cash
in Sections 4.1(a) and Section 4.1 (b) bearing interest at
the rate of nine percent. The note is due and payable in 60
equal consecutive monthly installments, the first
installment will be thirty days after closing date. The Note
will be executed by Buyer and payable to the order of
Seller. It will be secured by the inventory of the said
DRUG STORE.
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. Seller's expense will be capped at
$500.00.
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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 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.
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.
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(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 on the accounting records of Seller. 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
(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 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.
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C. CONSENTS. All necessary consents to the transfer of the Drug
Store assets have been obtained.
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.
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 2 , 1997 at Buyer's
discretion, but in no event later than August 3, 1997, at the Drug
Store locations.
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 Cashier's check for the cash portion of the purchase
price less $3,000 Escrow amount, proof of payment to Bergen for
the amount owed to Bergen by Sun Country Drug, and Buyer's
promissory note described in Paragraph 4.1 hereof, and the
Security instruments required by section 4.1 (c).
10. 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. 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
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.
. 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 or 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
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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 consideration of the purchase price hereinabove stated in paragraph
2 of which up to $50,000.00 (for each individual) is allocated to
this covenant not to compete , Xxxx Xxxxxx hereby agrees that for a
period of seven (7) 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 as its
purpose what is generally known as a retail pharmacy, or Nursing Home
or IV operation or DME operation within twenty (20) miles of the city
limits of Moriarty, New Mexico, or have any equity investment in such
operation. This non-compete entitles Xxxx Xxxxxx to perform work as
employee of HORIZON Pharmacies, Inc. Furthermore, This non-compete
clause does not prohibit Xxxx Xxxxxx from performing duties such as
relief pharmacist at other pharmacies. The parties hereby 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.
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 New Mexico.
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. This document is null and
void if the Purchase Agreement is not signed by both parties within 10
days from date the Buyer has received the Purchase Agreement document.
15.2 It is stipulated that this agreement is null and void if HORIZON
Pharmacies, Inc.
A) can not secure a real estate lease for DRUG STORE location at
$4,000.00 per
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month;
B) can not secure a valid New Mexico license under its own merit for
the said DRUG STORE location to conduct business as a retail
pharmacy operation within 120 days of the execution of this
Agreement.
16. XXXXXXX MONEY.
16.1 To bind this Agreement, Buyer herewith deposits with XXXX XXXXXX, ESQ.
as Escrow Agent, the sum of $3,000 (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.
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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.
/s/ Xxxxx X. XxXxxx, President
--------------------------------------------
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
My commission Expires:
------------
SELLER:
Sun Country Drug, Inc.
/s/ Xxxx Xxxxxx, President
----------------------------------------
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 Sun
Country Drug, Inc.
-----------------
SEAL
Notary Public, State of
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 visibledeterioration; 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 ninety (90)
days;
(ii) Any full, sealed containers (aa) with expired dating, or (bb) any
such item in excess of three (3) years of age as of the date of
the inventory, or (cc) any such item which has been purchased
from a jobber and is unmarketable and unreturnable;
(iii) Filled prescriptions over thirty days old;
(d) The buyer has the right of refusal to exclude seasonal merchandise
from the evaluation of inventory in excess of $3,000.00.
(e) Dispute Resolution. Representatives of the Buyer shall indicate the
non-prescription inventory which they consider not to be marketable
inventory in accordance with the above criteria. In the event the
Seller or his representative disagree, the disputed items shall be
placed in a "Dispute Box" at the respective drug store. (The first
$1000.00 of such items valued at cost, as hereinafter provided for,
shall not be included in the marketable inventory). All of the
remaining items in the Dispute Box shall be included in marketable
inventory, but its retail price shall be deemed to be one-half of
Seller's everyday retail price. The cost of such inventory shall
then be determined by applying the appropriate category cost
percentage provided in paragraph 2 hereof to the retail price. If the
purchase price of the non-prescription inventory is less than 95% of
the value-at-cost of the inventory, Seller may, at Seller's option
terminate this contract. If Seller terminates this contract, Seller
will refund the Xxxxxxx money to Buyer, and the parties shall have no
further obligations under this contract.
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2. 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. 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)
OTC (Non-Health aids) Retail price less 37%
OTC (Health aids) Retail price less 40%
Gifts Retail price less 50%
Cards Retail price less 50%
Cosmetics Retail price less 30%
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 60%
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EXHIBIT B
1. LIST OF ASSETS (FURNITURE, FIXTURES, AND EQUIPMENT,ETC).
RX DEPT:
1 NDC Computer
2 Micro line Okidata printers
1 Northwest microfilm viewer
1 typewriter
1 HP fine jet fax machine
all Rx fixtures
1 file cabinet
1 refrigerator
1 Rx balance
1 Panasonic Telephone system
1 Xxxxxxx radio system
FRONT-END AREA:
3 TEC 2300 cash registers
all fixtures and equipment
1 NDC POS system
STORAGE AREA:
1 all fixtures
1 check-in roller system
1 trailer parked in back of the store containing fixtures
1 Major Chef microwave
OFFICE AREA:
2 file cabinets
1 desk and 1 chair
1 adding machine and assorted desk supplies
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EXHIBIT C
1. LIST OF SECURED DEBTS.
NONE
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