SECURITIES PURCHASE AGREEMENT
BY AND AMONG
HORIZON PHARMACIES, INC.
AND
THE SEVERAL PURCHASERS NAMED IN SCHEDULE I
DATED AS OF JUNE 15, 1998
TABLE OF CONTENTS
Page
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ARTICLE I. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
PURCHASE AND SALE OF SECURITIES . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE III. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . . . . . . 2
ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS. . . . . . . . . . . . . . . 4
ARTICLE V. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
PURCHASERS' CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMPANY CONDITIONS TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE VII. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SCHEDULES:
Schedule I - Purchasers
Schedule II - Financial Statements
ANNEXES:
Annex "A" - Warrant
Annex "B" - Registration Rights Agreement
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of June 15,
1998, by and among HORIZON Pharmacies, Inc., a Texas corporation (the
"Company"), and the several purchasers named in the attached Schedule I
(collectively, the "Purchasers").
W I T N E S S E T H:
WHEREAS, the Company wishes to sell and issue to the Purchasers for an
aggregate purchase price of $7,000,000, 736,838 shares of Common Stock (as
hereinafter defined) at a price of $9.50 per share, and 41,000 Warrants (as
hereinafter defined) at a price of $.001 per share (collectively, the
"Securities"); and
WHEREAS, the Purchasers wish to purchase the Securities on the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
For purposes hereof, the following terms shall have the meanings set forth
below:
1.01. "ARTICLES OF INCORPORATION" shall have the meaning given such
term in Section 3.02.
1.02. "AUDITED BALANCE SHEET" shall have the meaning given such term in
Section 3.05.
1.03. "BEST KNOWLEDGE" OR "BEST OF ITS KNOWLEDGE" shall mean the due
inquiry of the person making such statement of its officers, directors and
appropriate employees and advisors who would reasonably be anticipated to
have knowledge of such matter.
1.04. "CLOSING" shall have the meaning set forth in Section 2.02.
1.05. "CLOSING DATE" shall be the date of the Closing, which will be
held at such time or times as provided in Section 2.02.
1.06. "COMMISSION" shall mean the Securities and Exchange Commission.
1.07. "COMMON STOCK" shall mean the common stock of the Company, par
value $0.01 per share.
1.08. "COMPANY" shall mean HORIZON Pharmacies, Inc., a Texas
corporation.
1.09. "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended.
1.10. "FINANCIAL STATEMENTS" shall have the meaning given such term
in Section 3.05.
1.11. "PERSON" shall mean an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government agency or
any agency or political subdivision thereof, or other entity.
1.12. "PURCHASERS" shall have the meaning given in the preamble to
this Agreement.
1.13. "SEC REPORTS" shall have the meaning given such term in
Section 3.06.
1.14. "SECURITIES" shall mean the Common Stock and Warrants to be
purchased by the Purchasers.
1.15. "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
1.16. "WARRANTS" shall mean warrants to purchase shares of the
Common Stock on the terms set forth herein.
ARTICLE II
PURCHASE AND SALE OF SECURITIES
2.01. SALE OF SECURITIES. Subject to all of the terms and conditions
herein stated, the Company agrees to sell, assign, transfer and deliver to
the Purchasers and the Purchasers agree to purchase from the Company on the
Closing Date, the Securities at an aggregate purchase price of $7,000,000.
2.02. TERMS OF WARRANTS. Each Warrant shall entitle the Purchasers
to purchase one share of Common Stock at a purchase price of $9.50 per share,
upon terms and conditions substantially the same as those set forth in the
Warrant attached hereto as Annex "A".
2.03. CLOSING. The closing of the sale (the "Closing") referred to
in Section 2.01 of this Agreement shall take place at 1:00 p.m. at the
offices of Xxxxxxxx XxXxxx XxXxxxxxx XxXxx & Xxxxxx, P.C., 000 X. Xxxxxxxx,
00xx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000, on June 15, 1998 (the "Closing
Date"), or at such time or place as the parties hereto shall by written
instrument designate.
2.04. CLOSING DELIVERIES. At Closing, the Company shall issue and
deliver to the Purchasers certificates in definitive form registered in the
name of such Purchasers and representing the Common Stock and Warrants. As
payment in full for the Securities, and against delivery of the certificates
therefor as aforesaid, on the Closing Date each of the Purchasers shall: (i)
deliver to the Company a check, payable to the order of HORIZON Pharmacies,
Inc., in the amount set forth opposite the name of such Purchaser on Schedule
I; (ii) transfer such sum to the account of the Company by wire transfer; or
(iii) deliver or transfer such sum to the Company by any combination of such
methods of payments.
2.05. BROKERS' FEE. The Company agrees to pay at Closing and out of
the proceeds of the sale of the Securities hereunder, to any broker agreed
upon by the parties, a brokers' fee of no more than $150,000.
2.06. REGISTRATION RIGHTS. At the Closing, the Company and each
Purchaser shall enter into a Registration Rights Agreement having
substantially the terms set forth in Annex "B" attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Purchasers as follows:
3.01. ORGANIZATION AND QUALIFICATION. The Company (i) has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of the jurisdiction of its organization; and (ii) is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the ownership or leasing of its properties or the conduct of its
business requires such qualification except where
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the failure to be so qualified or to be in good standing would not have a
material adverse effect on the Company's condition (financial or otherwise),
earnings, operations, business or business prospects.
3.02. AUTHORIZATION. The execution and delivery by the Company of
this Agreement and the performance by the Company of its obligations
hereunder, including but not limited to the execution and delivery by the
Company of the Warrant and the Registration Rights Agreement and the
issuance, sale and delivery of the Securities, have been duly authorized by
all requisite corporate action and will not violate any provision of law, any
order of any court or other agency of government, the Articles of
Incorporation of the Company, as amended (the "Articles of Incorporation"),
or the Bylaws of the Company, as amended, or any provision of any indenture,
agreement or other instrument to which the Company or any of its properties
or assets is bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument, or result in the creation or
imposition of any lien, charge, restriction, claim or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.
3.03. VALIDITY. This Agreement, the Warrant and the Registration
Rights Agreement have been duly executed and delivered by the Company and
constitute the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws
affecting enforcement of creditors' rights generally and by general
principles of equity.
3.04. AUTHORIZED CAPITAL STOCK. The authorized capital stock of the
Company consists of: (i) 14,000,000 shares of Common Stock, $.01 par value,
of which 4,517,387 shares were outstanding at June 1, 1998; and (ii)
1,000,000 shares of Preferred Stock, none of which were outstanding
immediately prior to Closing. The designations, powers, preferences, rights,
qualifications, limitations and restrictions in respect of each class and
series of authorized capital stock of the Company are as set forth in the
Articles of Incorporation and all such designations, powers, preferences,
rights, qualifications, limitations and restrictions are valid, binding and
enforceable and in accordance with all applicable laws. Upon receipt of
payment for the Securities, such Securities will be validly issued, fully
paid and nonassessable and shall not be subject to any preemptive rights.
3.05. FINANCIAL STATEMENTS. The Company has furnished to the
Purchasers the audited consolidated balance sheet (the "Audited Balance
Sheet") of the Company as of December 31, 1997 and the related audited
consolidated statements of income, shareholders' equity and cash flows of the
Company for the years ended December 31, 1996 and 1997, and the unaudited
consolidated balance sheet of the Company as of March 31, 1998 and the
related unaudited consolidated statements of income, shareholders' equity and
cash flows of the Company for the three months ended March 31, 1998
(collectively, the "Financial Statements"). All such Financial Statements
have been prepared in accordance with generally accepted accounting
principles consistently applied (except that such unaudited financial
statements do not contain all of the required footnotes) and fairly present
the financial position of the Company as of December 31, 1996 and 1997,
respectively, and the results of the Company's operations and cash flows for
the years ended December 31, 1996 and 1997 and the three months ended March
31, 1998, respectively.
3.06. NO MATERIAL MISREPRESENTATIONS. The Company has filed all
reports (the "SEC Reports") required to be filed under the Exchange Act, and
the SEC Reports, as of their respective dates, contained no untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements made therein, in light of the circumstances under which
they were made, not misleading. None of the written statements, documents or
certificates delivered to the Purchasers in connection with the transactions
contemplated hereby contains an untrue statement of a material fact or omits
a material fact necessary to make the statements contained therein not
misleading. There is no fact which the Company has not disclosed
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to the Purchasers of which the Company is aware which materially and
adversely affects or could materially and adversely affect the business,
prospects, financial condition, operations, property or affairs of the
Company. Except as disclosed on the Company's quarterly report on Form
10-QSB for the period ended March 31, 1998, there have been no material
developments with the Company since December 31, 1997.
3.07. RECORD DATE. Since April 7, 1998, the record date for the
Company's annual meeting of shareholders, the Company has not established any
record date for a dividend or other corporate action, and the Company will
not establish such a record date as of a date prior to the date each
Purchaser becomes a record holder of the Securities.
3.08. FIRPTA. Collectively, the Company and its subsidiary are not
a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Internal Revenue Code of 1986, as amended.
3.09. NO RESTRICTIONS. There are no restrictions in the Company's
Articles of Incorporation or Bylaws, nor any contractual restrictions or
other legal restrictions that would adversely affect any Purchaser in any
manner different from any other security holder of the Company which owns
less than 15% of the total number of shares of Common Stock outstanding.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
4.01. SUITABILITY. Each Purchaser represents and warrants to the
Company that:
(a) it is an "accredited investor" within the meaning of Rule 501
under the Securities Act and was not organized for the specific purpose of
acquiring the Securities or an investment company as defined in the
Investment Company Act of 1940, as applicable;
(b) it has sufficient knowledge and experience in investing in
companies similar to the Company in terms of the Company's stage of
development so as to be able to evaluate the risks and merits of an
investment in the Securities and it is able financially to bear the risks
thereof;
(c) it has had access to the SEC Reports and has been provided an
opportunity to discuss the Company's business, management and financial
affairs with the Company's management;
(d) the Securities being issued to it are being acquired for its own
account for the purpose of investment and not with a view to or for sale in
connection with any distribution thereof in violation of the Securities
Act; and
(e) it understands that (i) the Securities have not been registered
under the Securities Act by reason of their issuance in a transaction
exempt from the registration requirements of the Securities Act pursuant to
Section 4(2) thereof or Rule 505 or 506 promulgated under the Securities
Act; (ii) the Securities must be held a minimum of one year unless a
subsequent disposition thereof is registered under the Securities Act or is
exempt from such registration; (iii) the Securities will bear a legend to
such effect; and (iv) the Company will make a notation on its transfer
books to such effect.
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ARTICLE V
PURCHASERS' CONDITIONS TO CLOSING
The obligation of each Purchaser to purchase the Securities under
Article II is, at its option, subject to the satisfaction, on or before the
Closing Date of the following conditions:
5.01. DOCUMENTS AND PROCEEDINGS. All documents and instruments to
be delivered by the Company and all corporate and other proceedings in
connection with this transaction shall have been so delivered and performed
and shall be reasonably satisfactory to the Purchasers and their legal
counsel.
5.02. REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article III shall be true,
complete and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date.
5.03. PERFORMANCE. The Company shall have performed and complied
with all agreements contained herein required to be performed or complied
with by it prior to or at the Closing Date.
5.04. SIMULTANEOUS TRANSACTIONS. The obligations of each of the
Purchasers hereunder are subject to all of the transactions contemplated
hereby closing simultaneously.
ARTICLE VI
COMPANY CONDITIONS TO CLOSING
The obligations of the Company to consummate the Closing hereunder and
sell the Securities shall be subject to the satisfaction at or before the
Closing of the following conditions:
6.01. DOCUMENTS AND PROCEEDINGS. All documents and instruments to
be delivered by the Purchasers and all corporate and other proceedings in
connection with this transaction shall have been so delivered and performed
and shall be reasonably satisfactory to the Company and its legal counsel.
6.02. PERFORMANCE OF AGREEMENT. The Purchasers shall have performed
and complied with all agreements contained herein required to be performed or
complied with by them prior to or at the Closing Date.
6.03. REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Purchasers contained in Article IV of
this Agreement shall be true, complete and correct on and as of the Closing
Date with the same effect as though such representations and warranties had
been made on and as of such date.
ARTICLE VII
MISCELLANEOUS
7.01. EXPENSES. Except as provided in Section 2.05(d), each party
hereto will pay its own expenses in connection with the transactions
contemplated hereby, whether or not such transactions shall be consummated.
7.02. SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein or in any instrument delivered to
the Purchasers pursuant to or in connection with this Agreement shall survive
the execution and delivery of this Agreement, the issuance, sale and delivery
of the Securities, and
5
all statements contained in any instrument delivered by the Company hereunder
or thereunder or in connection herewith or therewith shall be deemed to
constitute representations and warranties made by the Company.
7.03. PARTIES IN INTEREST. All representations, covenants and
agreements contained in this Agreement by or on behalf of either of the
parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
Without limiting the generality of the foregoing, all representations,
covenants and agreements benefiting the Purchasers shall inure to the benefit
of any and all subsequent holders from time to time of the Securities.
7.04. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in
person, mailed by certified or registered mail, return receipt requested, or
sent by telecopier or telex, addressed as follows:
(a) if to the Company, at 000 Xxxx Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xxxxx
00000, Attention: Xxxxx X. XxXxxx, President, with a copy to B. Xxx Xxxxx,
Esq., Xxxxxxxx XxXxxx XxXxxxxxx XxXxx & Xxxxxx, P.C., 000 Xxxxx Xxxxxxxx,
00xx Xxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000; and
(b) if to the Purchasers, c/o White Rock Capital, Inc., at 0000
Xxxxxx Xxxxx Xxxx., Xxxxx 000, Xxxxxx, Xxxxx 00000;
or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the others.
7.05. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas.
7.06. ENTIRE AGREEMENT. This Agreement, including the Schedules
hereto, constitutes the sole and entire agreement of the parties with respect
to the subject matter hereof. All Schedules are hereby incorporated herein by
reference.
7.07. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
7.08. AMENDMENTS. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company.
7.09. SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority,
the validity of any other provision and of the entire Agreement shall not be
affected thereby.
7.10. TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing
or interpreting any term or provision of this Agreement.
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IN WITNESS WHEREOF, the Company and each of the Purchasers have executed
this Agreement as of the day and year first above written.
COMPANY: HORIZON PHARMACIES, INC.
a Texas corporation
By:
-----------------------------------------
Xxxxx X. XxXxxx, President
PURCHASERS: QUANTUM PARTNERS LDC
By:
-----------------------------------------
XXXXXXX CAPITAL DIVERSIFIED FUND, L.P.
By:
-----------------------------------------
WHITE ROCK CAPITAL PARTNERS, L.P.
By:
-----------------------------------------
WHITE ROCK CAPITAL OFFSHORE, LTD.
By:
-----------------------------------------
LEGION STRATEGIES LIMITED
By:
-----------------------------------------
CAXTON INTERNATIONAL LIMITED
By:
-----------------------------------------
WHITE ROCK CAPITAL MANAGEMENT, L.P.
By:
-----------------------------------------
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SCHEDULE I
PURCHASERS
NUMBER OF NUMBER OF AGGREGATE
PURCHASER SHARES WARRANTS PURCHASE PRICE
--------- ------ -------- --------------
Quantum Partners LDC 206,300 11,500 $1,959,860
White Rock Capital
Partners, L.P. 117,900 6,600 1,120,060
White Rock Capital
Offshore, Ltd. 184,300 10,000 1,750,860
Caxton International
Limited 114,000 6,400 1,083,000
Legion Strategies Limited 81,200 4,500 771,400
White Rock Capital
Management, L.P. (#10) 11,138 700 105,820
Xxxxxxx Capital Diversified
Fund, L.P. 22,000 1,300 209,000
------- ------ ----------
Total 736,838 41,000 $7,000,000
SCHEDULE II
FINANCIAL STATEMENTS
Attached.
ANNEX "A"
WARRANT
ANNEX "B"
REGISTRATION RIGHTS AGREEMENT
