Exhibit 2.1
PURCHASE AGREEMENT
AGREEMENT made the 2nd day of June, 1999 between Xxxxxx Drugs, Inc.
d/b/a Medicap Pharmacy and "Xxxxx Scripts" a Ohio Corporation ("Seller"), and
HORIZON Pharmacies, Inc., a Delaware Corporation ("Buyer").
WITNESSETH
WHEREAS, Seller operates a retail pharmacy doing business as Medicap
Pharmacy and a prescription mail order and internet web site business d/b/a
"Xxxxx Scripts" (the Drug Stores) located at 0000 00xx Xxxxxx, Xxxxxx, Xxxx
00000-0000 (the "Retail Locations").
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 and prescription mail order business 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 and prescription mail order
business including but not limited to the following
(collectively, the "Drug Store Assets"):
A. MARKETABLE INVENTORY. All pharmaceutical and retail
inventory of Seller held for resale by the Drug Store
(and attached as Exhibit A-1) except for those items
not to be purchased by Buyer Pursuant to Section 1.2
below.
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. INTELLECTUAL PROPERTY. All "Intellectual Property"
wherein the term "Intellectual Property" means all of
Seller's right, title and interest in and to (i) the
trademarks "XXXXX SCRIPTS" and "XXXXXX DRUGS," and
all variations thereof, worldwide and in any country,
and the goodwill associated therewith, (ii) the
internet domain name "xxxxxxxxxxxx.xxx", (iii) all
software that is used to operate the web site found
at the domain name "xxxxxxxxxxxx.xxx", and (iv) all
other trademarks, trade dress, trademark
registrations and trademark applications, service
marks, internet domain names, registered designs,
registered design applications, patent and patent
applications, if any, trade secrets, technology,
know-how, processes, formula, product formulations,
specifications, copyrights, copyright registrations
owned or possessed by Seller that are associated with
the Retail Location(s) or are otherwise used or
associated with the Drug Store Assets. The "MEDICAP"
trademark is not included in the definition of
"Intellectual Property."
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Seller initial Buyer Initial
E. THIRD PARTY CONTRACTS. The assignment of all third
Party prescription mail order contracts and
prescription drug market share contracts.
F. INDIVIDUAL ACCOUNTS RECEIVABLE. All individual
accounts receivable as of the closing date, subject
to a put back to Seller (as a deduction from the Note
Payable) for any accounts which have not been
collected in full within 120 days as depicted on
Exhibit "B."
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; or (v) prescription
merchandise expiring within 30 days or prescription
merchandise or over-the-counter drugs which are (a) in a
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; (vi) all third party
insurance receivables for services rendered on or before
Closing Date, and (vii) cash on hand at the 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 Store Assets shall be computed as follows: (i)
$2.900,000 for prescription files, patient profiles, PBM
contracts and goodwill, plus (ii) $40,000 for furniture,
fixtures and equipment, plus (iii) $100,000 for the
non-compete agreement; plus (iv) the discounted fair market
value of all inventory constituting a part of the Drug Store
Assets determined in accordance with Section 2.6, below, plus
the value of the individual accounts receivable at the date of
closing.
2.2 ALLOCATION. The total purchase price described in Section 2.1,
above, shall be allocated as set forth in Exhibit "C." (i.e.
the Closing Statement) 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) $1,000,000 on the Closing Date by certified or
cashier's check:
(b) Shares of Buyer's common stock, par value $.01 per
share (the "HORIZON Common Stock"), equivalent to
$1,000,000 based on the average closing price for the
HORIZON common stock as reported by America On Line
Stock Quotes for the thirty (30) business days
immediately preceding the Closing Date, as such term
is defined in Section 7.1, below. Buyer will deliver
to Seller appropriate stock certificates evidencing
the Horizon Common Stock to be issued to Seller no
later than twenty-five (25) days after the Closing
Date; and
(c) The balance in a negotiable promissory note in the
form attached in Exhibit "D" attached hereto (the
Notes) secured by the inventory, furniture, fixtures
and equipment of the Drug Store;
(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.
(e) Buyer shall add to the purchase price payable at
Closing such period expenses that have been prepaid
by Seller, and for which Buyer shall obtain a
post-closing benefit.
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Seller initial Buyer Initial
2.4 XXXXXXX MONEY DEPOSIT. this Section intentionally left blank.
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
----------------------- -------------------
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%
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Seller initial Buyer Initial
3. REPRESENTATIONS AND WARRANTIES.
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,
(including any leases for equipment used in the
business) listed on Exhibit "E" attached hereto which
shall be satisfied and released at or prior to
closing.
3.1.4 FINANCIAL STATEMENTS: BOOKS AND RECORDS. Seller has
heretofore delivered to Buyer true and correct copies
of certain of the Seller's unaudited balance sheets
and related statements of operations, retained
earnings and cash flows (collectively, the Financial
Statements). The Financial Statements: (A) have been
prepared in accordance with the books and records of
Seller; (B) in all material respects present fairly
the financial condition of the Seller at the
indicated dates and the results of operations and
cash flows of the xxxxxx for the indicated periods.
In addition, Seller has heretofore delivered to Buyer
true, correct and complete copies of certain of
Seller's books and records for inspection by Buyer.
Such books and records do not contain any material
omission or error with respect to Seller's business,
operation or status.
3.1.5 STATEMENTS NOT MISLEADING. The information provided
by Seller to Buyer in this Agreement or in the
Schedules or in any other writing pursuant hereto
(including, without limitation, the representations
and warranties contained in this Section 3) does not
contain any untrue statement of a material fact and
does not omit to state a material fact required to be
stated herein or therein or necessary to make the
statements contained herein or therein, in light of
the circumstances in which they are made, not false
or 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. To the best of Seller's
knowledge the Drug Stores and the use and operation
thereof are currently in compliance with all
applicable laws, ordinances, rules and regulations
relating to public health and safety and protection
of the environment. Seller has not released,
generated, discharged, manufactured, treated,
transported or disposed of hazardous material on, in,
under or from
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Seller initial Buyer Initial
the Drug Stores or placed or stored any hazardous
material on the property. To the best of Seller's
knowledge, (a) no release, generation, discharge,
manufacture, treatment, transportation or disposal
of hazardous material has occurred on, in, under
or from the Drug Stores, (b) no hazardous material
is or has been stored or otherwise located on, in
or under the Drug Stores, and (c) there are no
underground storage tanks on either of the Drug
Store premises. There are no pending or to the
best of Seller's knowledge threatened requests for
information, action or proceedings from or by any
governmental agency or any other person or entity
regarding the condition or use of the Drug Stores
or the release, generation, discharge,
manufacture, treatment, transportation or
discharge of hazardous material on, in, under or
from the Drug Stores.
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 Stores which extends beyond the
Closing Date except as described on Exhibit "F".
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 each of Seller's officers and all the Drug Stores'
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, the Drug
Store, the Drug Store Assets or either Retail
Location.
3.1.10 EMPLOYMENT 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,
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Seller initial Buyer Initial
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 Securities 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 Securities Act.
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.
3.1.15 BROKER'S OR FINDER'S FEES. No agent's, broker's or
finder's fee or commission shall be payable by the
Buyer in connection with the transactions
contemplated hereby by virtue of or resulting from
any action or agreement by the Seller.
3.1.16 PBM CONTRACTS. Seller has obtained the necessary
consents to assign these contracts (See Exhibit "G")
to buyer at closing.
3.1.17 REBATE PROGRAMS & MARKET SHARE CONTRACTS. Seller has
identified all rebate agreements and market share
agreements currently in effect on Exhibit "H".
3.1.18 INTELLECTUAL PROPERTY.
a. There are no contracts with any
third party currently in effect
which limit or restrict the right
of Seller to use, sell, license,
assign, dispose, or register, as
the case may be, any of the
Intellectual Property in any
manner, and Seller is not a
defendant to any action, suit,
investigation or proceeding
relating to, or otherwise has been
notified of any claim that Seller's
use of the Intellectual Property in
connection with the Drug Store
Assets infringes the proprietary
rights of any third person.
b. Seller has not licensed or in any
other way authorized any third
party to use in manner any of the
Intellectual Property, and to
Seller's knowledge, there is no
unauthorized use of any
Intellectual Property (except the
Intellectual Property to which the
Seller only has a non-exclusive
license, e.g., publicly available
software package) by any third
party.
c. Seller owns or has a valid right to
use, sell, license, assign, and
dispose of each of the items of
Intellectual Property. All
registrations in the United States
for the Intellectual Property are
valid and in good standing and
there are no pending or, to
Seller's knowledge, threatened
oppositions, cancellation
proceedings, disputes or litigation
with respect thereto. Seller
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Seller initial Buyer Initial
has taken or caused to be taken
reasonable and prudent steps to
protect Seller's rights in and
to the Intellectual Property. To
Seller's knowledge, (i) no third
party has any right to use any
of the trademarks included in
the Intellectual Property either
in identical form or in such
near resemblance thereto as to
be likely, when applied to the
goods and services of any such
third party to cause confusion
as to the source of such goods,
and (ii) the use of any of the
trademarks included in the
Intellectual Property in
connection with the goods and
services to which the trademarks
are currently associated does
not constitute an infringement
of, conflict with, or otherwise
violate, the valid rights of any
third party.
d. All working requirements and all
affidavits, declarations, fees,
annuities, and other payments that
are due on or before a date three
months after the effective date of
this Agreement for any foreign or
domestic patents, patent
applications, trademark
registrations, copyright
registrations and any applications
for any of the preceding have been
submitted, met, or paid.
e. Seller has no commitments or legal
obligations, absolute or contingent,
to any person or entity other than
to Buyer to sell, assign, transfer
or effect a sale of any of the
Intellectual Property, or to enter
into any contract or cause the
entering into of a contract with
respect to the foregoing.
f. Seller will take all reasonable
actions requested by the Buyer to
properly transfer, assign, and
register the change in ownership of
the Intellectual Property.
g. Seller has obtained a full and
complete release from any Obligation
to Medicap Pharmacies, Inc.
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 canny 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
5,700,000 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.
3.2.3 AUTHORITY. The execution, delivery and performance of
this agreement by Buyer has been duly authorized by
all necessary corporate action and constitutes a
legal, valid and binding obligation of the Buyer
enforceable in accordance with its terms.
3.2.4 BROKER'S OR FINDER'S FEES. No agent's, broker's or
finder's fee or commission shall be payable by the
Seller in connection with the transactions
contemplated hereby by virtue of or resulting from
any action or agreement by the Buyer.
4. CONDITIONS TO CLOSING.
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Seller initial Buyer Initial
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, including the PBM Contracts,
have been obtained from vendors and other third
parties, if any.
4.1.4 NO CASUALTY. The Drug Stores' businesses and
properties 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.
4.1.5 LEASE OF RETAIL LOCATION. Buyer shall have entered
into a new lease with respect to the Retail Location
which shall be executed at Closing.
4.1.6 LICENSE TO OPERATE RETAIL PHARMACY. Buyer shall have
obtained valid licenses to operate retail pharmacies
under the HORIZON Pharmacies, Inc. name in the state
of Ohio. Buyer shall diligently pursue obtaining such
licenses.
4.1.7 PBM CONTRACTS. Buyer and Seller shall have agreed to
a method for adjusting the purchase price should the
acquired PBM contracts not be retained at comparable
sales levels for three years (See Exhibit "I").
4.1.8 REBATE PROGRAMS & MARKET SHARE CONTRACTS. Buyer and
Seller shall have agreed to a method of adjusting the
purchase price should such rebate programs and/or
market share contracts be canceled as a result of
this transaction (See Exhibit "I").
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.
4.2.3 LEASE OF RETAIL LOCATIONS. Buyer shall have entered
into a new lease with respect to the Retail Locations
at the time of Closing.
4.2.4 EMPLOYMENT OF XXX AND XXXX XXXXX. To be addressed in
a separate document (See Exhibit "J").
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
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Seller initial Buyer Initial
obligations are absolute or contingent, liquidated or unliquidated
or otherwise. Notwithstanding anything contained in this Agreement
to the contrary, on the Closing Date, Buyer shall assume and agree
to pay, perform and discharge as and when due: (i) all liabilities
and obligations of Seller pursuant to those open purchase orders for
inventory in the ordinary course of business not yet received as of
the Closing Date, which are set forth on Schedule 5 hereto; and (ii)
Buyer's obligations under the new lease with respect to the Retail
Location. Buyer specifically assumes no responsibility or liability
for Seller's termination of the Medicap Franchise.
6. INDEMNIFICATION.
6.1 INDEMNIFICATION BY SELLER AND XXX AND XXXX XXXXX. Seller and
Xxx and Xxxx Xxxxx each hereby agree to indemnify and hold
harmless Buyer against and in respect of the following:
(a) any and all debts, liabilities, or obligations
incurred in the operation of the Drug Store before
the Closing Date, including, but not limited to, any
liabilities arising out of any act, transaction,
circumstance, state of facts, or violation of law
that occurred or existed before the Closing Date,
except with regard to the liabilities assumed by
Buyer hereunder:
(b) any and all loss, liability, deficiency, or damage
suffered or incurred by Buyer by reason of any untrue
representation, breach of warranty, or nonfulfillment
of any covenant or agreement by Seller contained in
this Agreement or in any certificate, document, or
instrument delivered to Buyer pursuant hereto or in
connection herewith;
(c) any and all loss, liability deficiency, or damage
suffered or incurred by Buyer as a result of Seller's
failure to discharge any of the liabilities retained
by Seller hereunder;
(d) any and all actions, suits, proceedings, claims,
demands, assessments, judgements, costs, and
expenses, including, without limitation, legal fees
and expenses, incident to any of the foregoing or
incurred in enforcing this indemnity.
(e) Buyer may withhold form Seller any payment otherwise
due to Seller Pursuant to the note in accordance with
the provisions of Section 6.7 hereof, upon final
determination of any claim for indemnification
hereunder, Buyer may offset the full amount of such
claim for indemnification against the amount due to
Seller pursuant to the Note in accordance with
Section 6.7 hereof. For purposes of this Section 6.1,
the term "final determination" shall mean a
non-appealable order by a court of competent
jurisdiction, or an arbitration board, with respect
to any claim for indemnification hereunder.
6.2 BUYER'S INDEMNIFICATION OF SELLER. Buyer hereby agrees to
indemnify and hold harmless Seller against and in respect of:
(a) any and all debts, liabilities, or obligations of
Buyer, direct or indirect, fixed, contingent, or
otherwise accruing after the Closing Date, relating
to the business of the Drug Store;
(b) any and all loss, liability, deficiency, or damage
suffered or incurred by Seller resulting from any
untrue representation, breach of warranty, or
nonfulfillment of any covenant or agreement by Buyer
contained in this Agreement or in any certificate,
document, or instrument delivered to Seller pursuant
hereto or in connection herewith;
(c) any and all loss, liability, deficiency, or damage
suffered or incurred by Seller as a result of Buyer's
failure to discharge the liabilities of Seller
assumed by Buyer hereunder;
(d) any and all actions, suits, proceedings, claims,
demands, assessments, judgements, costs, and
expenses, including without limitation, legal fees
and expenses, incident to any of the forgoing or
incurred in enforcing this indemnity;
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6.3 NOTICE. Upon becoming aware of any claim for indemnification
hereunder the party claiming indemnification (the "Indemnified
Party" shall give the other party (the "Indemnifying Party")
prompt notice of such claim setting forth in such notice all
essential facts then known to the Indemnified Party in
connection therewith; provided, however, that failure to give
such prompt notice or specify all known facts shall not
absolve the Indemnifying Party from its liabilities hereunder.
6.4 THIRD-PARTY CLAIMS.
(a) In order for Buyer or Seller, as the case may be, to
be entitled to any indemnification provided for under
Sections 6.1 or 6.2 hereof, in respect of, arising
out of, or involving a claim made by any person,
firm, governmental authority, or corporation other
than Buyer or Seller or their assigns, or affiliates,
against the Indemnified Party, the Indemnified Party
must notify the Indemnifying Party in writing of this
third-party claim promptly after receiving receipt by
the Indemnified Party of written notice of the
third-party claim within the claims period.
Thereafter, the Indemnified Party shall deliver to
the Indemnifying Party, within 7 days after receipt
by the Indemnified Party, copies of all notices
relating to the third-party claim.
(b) If a third-party claim as set forth in subsection (a)
hereof is made against an Indemnified Party, the
Indemnifying Party will be entitled to participate in
the defense thereof and, if it so chooses, to assume
the defense thereof with counsel selected by the
Indemnifying Party, provided such counsel is not
reasonably objected to by the Indemnified Party.
Should the Indemnified Party elect to assume the
defense of such third-party claim, the Indemnifying
Party would not be liable to the Indemnified Party
for any legal expenses subsequently incurred by the
Indemnified Party in connection with the defense
thereof. If the Indemnifying Party elects to assume
the defense of such third-party claim, the
Indemnified Party will cooperate with the
Indemnifying Party in connection with such defense.
(c) If the Indemnifying Party assumes the defense of a
third-party claim, then in no event will the
Indemnified Party admit any liability with respect
to, or settle, compromise, or discharge, any
third-party claim without the Indemnifying Party's
prior written consent, and the Indemnified Party will
agree to any settlement, compromise, or discharge of
a third-party claim that the Indemnifying Party may
recommend that releases the Indemnified Party
completely in connection with the third-party claim.
(d) In the event the Indemnifying Party shall assume the
defense of any third party claim, the Indemnified
Party shall be entitled to participate in, but not
control, the defense with its own counsel at its own
expense. If the Indemnifying Party does not assume
the defense of any such third-party claim, the
Indemnified Party may defend the claim in a manner as
it may deem appropriate, including, but not limited
to, settling the claim or litigation after giving
notice of it to the Indemnifying Party on such terms
as the Indemnified Party may deem appropriate, and
the Indemnifying Party will reimburse the Indemnified
Party promptly in accordance with the provisions of
this Section 6.
6.5 SURVIVAL. All of the respective representations and warranties
contained in this Agreement or in any other document or
instrument delivered by or on behalf of any party hereunder or
pursuant hereto, shall survive the Closing subject to the
following limitation:
(a) No party hereto shall be liable to any other party
for any breach or alleged breach of any
representation or warranty contained in this
Agreement unless, no later than two (2) years after
the Closing Date, the party alleging such breach has
notified the other party(s) in writing of such
alleged breach; and
(b) Notwithstanding the foregoing, the representations in
Section 3.1.11 hereunder shall survive for as long as
any governmental authority may assert a tax
deficiency and the representations
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Seller initial Buyer Initial
in Sections 3.1.3 and 3.1.6 hereunder shall have
no limitation. The covenants and agreements of the
parties hereto set forth in this Agreement or in
any other document or instrument delivered by or
on behalf of any party hereunder or pursuant
hereto shall not be affected by the expiration or
any representation or warranty pursuant to this
Section 6.5 and shall survive indefinitely.
6.6 LIMITATION ON INDEMNIFICATION OBLIGATIONS. An Indemnified
Party shall not be entitled to indemnification under this
Section 6 except to the extent that the aggregate amount of
the indemnification to which such party is entitled hereunder
shall exceed the sum of $5,000.00: provided, that, at such
time the Indemnified Party shall be entitled to recover the
entire indemnifiable amount (including the initial $5,000.00
liability).
6.7 OFFSET. In the event that Buyer shall exercise its right to
offset provided in Section 6.1 any such offset shall be
collected by reducing the amount owed by Buyer to Seller in
the following manner (i) first, to the extent of the principal
amount outstanding on the Note, then (ii) to the extent of any
accrued interest on the Note.
7. CLOSING.
7.1 CLOSING DATE. The closing shall take place at the Retail
Location on or before June 5, 1999 (the "Closing Date") but in
no event later than June 30, 1999 unless otherwise agreed by
the parties in writing.
7.2 SELLER'S OBLIGATIONS AT CLOSING. Seller shall deliver to Buyer
at closing of this Agreement a Xxxx of Sale (Exhibit "K")
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 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.
Subject to the provisions of Section 6.5 hereof, 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. During the period commencing on the
Closing Date and ending on the fifth (5th) year anniversary
thereof, except as specifically permitted by this Section 8.3,
Xxx and Xxxx Xxxxx shall not, without the prior written
consent of Buyer, 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
competitive with the Buyer's Business or any portion thereof
in the Restricted Area. For purposes, of this Agreement, the
term Buyer's Business shall mean the development, management
and/or operation of any retail pharmacy, prescription mail
order business, nursing home, or health care company or any
business which offers for sale or lease durable medical
equipment. Also, for purposes of this agreement, the term
"Restricted Area" shall mean anywhere within twenty five (25)
miles of the Retail Location with the exception of the
prescription mail order business, the parties expressly agree
that the Restricted Area shall mean the United States of
America. The parties acknowledge that the territorial and time
limitations contained in the paragraph are reasonable and
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Seller initial Buyer Initial
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.
8.4 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 enioinina 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) fiscal years and unaudited financial
data up to Closing Date at Buyer's expense. Seller and Xxx
Xxxxx agree and certify that they are aware that the
post-Closing audit by Buyer is required in order to satisfy
Buyer's regulatory reporting and disclosure requirements and
for Buyer's general business purposes, that their prompt and
complete cooperation and compliance with the provisions of
this Section are required in order for such audit to be
completed on a thorough and timely basis and that their
failure to cooperate and comply could subject them to a claim
to be indemnified, defended and held harmless or for other
remedies available under this agreement or pursuant to
applicable law or regulation.
8.6 DEA APPLICATION. Buyer shall diligently pursue its DEA
Application for the Retail Location and shall cease its use of
Seller's DEA permits as soon as practicable, but no later than
60 days following the Closing.
8.7 GOVERNING LAW. This agreement shall be governed and construed
in accordance with the laws of the state of Ohio.
8.8 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.
8.9 ASSIGNMENT. Buyer may not assign this agreement without
written consent of Seller, which consent will not be
unreasonably withheld.
8.10 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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SELLER Xxxxxx Drugs, Inc.
Witness:
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Seller initial Buyer Initial
Witness:
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Xxxxxx Xxxxx, Individually
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Xxxx Xxxxx, Individually
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Seller initial Buyer Initial
