LIMITED WAIVER AND CONSENT
This LIMITED WAIVER AND CONSENT (this "LIMITED WAIVER") is
dated as of March 30, 2000 between HORIZON Pharmacies, Inc., a Delaware
corporation ("BORROWER"), and McKesson HBOC, Inc., a Delaware corporation
formerly known as McKesson Corporation ("MCKESSON").
RECITALS
WHEREAS, Borrower and McKesson are parties to that certain
Credit Agreement dated as of July 2, 1998, as amended from time to time (the
"CREDIT AGREEMENT"). Capitalized terms used herein without definition shall have
the same meanings herein as set forth in the Credit Agreement.
WHEREAS, Borrower has requested that McKesson grant Borrower a
one-time limited waiver of certain covenants set forth in the Credit Agreement
and in certain related documents and that McKesson consent to certain
transactions by Borrower, and McKesson is willing to do so upon the terms and
conditions set forth herein.
NOW, THEREFORE, in consideration of the promises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION 1. LIMITED WAIVER AND CONSENT
X. XxXxxxxx hereby gives a limited one-time waiver as to
Borrower's failure to comply with:
(i) Section 5.9(b) of the Credit Agreement for the fiscal
quarter ending December 31, 1999, provided that the ratio of Consolidated EBITDA
to Consolidated Interest Expense for such quarter is not less than a negative
11.5 to 1.0 (for the avoidance of any doubt, a negative 13.0 to 1.0 is less than
a negative 12.0 to 1.0);
(ii) Section 5.9(c) of the Credit Agreement for the fiscal
quarter ending December 31, 1999, provided that Net Worth as of the end of such
quarter is not less than $15,250,000;
(iii) Section 5.9(d) of the Credit Agreement for the fiscal
quarter ending December 31, 1999, provided that the ratio of Debt of Borrower
and its Subsidiaries on a consolidated basis to Capital for such quarter is not
greater than 0.8 to 1.0;
1.
(iv) Section 5.9(f) of the Credit Agreement for the fiscal
quarter ending December 31, 1999, provided that the ratio of Consolidated EBIT
to Consolidated Interest Expense for such quarter is not less than a negative
12.3 to 1.0;
(v) Section 5.9(g) of the Credit Agreement for the fiscal
quarter ending December 31, 1999, provided that the ratio of Consolidated EBITDA
to Sales for such quarter is not less than a negative 1.9 to 1.0; and
(vi) Section 6.6 of the Credit Agreement resulting from the
Borrower's loans to Xxxx XxXxxx, Xxxxxxx Xxxx and Xxxxxx Xxxxxxx on or about
September 30, 1999 in the aggregate amount of approximately $107,000 , provided
that all such loans were repaid to Borrower on or before November 15, 1999.
X. XxXxxxxx hereby consents to the Borrower's incurrence of
$5,000,000 in principal amount of indebtedness under that certain Convertible
Debenture Purchase Agreement (the "Debenture Agreement") dated on or about the
date hereof among Borrower, Advantage Fund II Ltd. and Xxxx Investment Group
Ltd. (the "Debenture Investors") and as anticipated by that certain letter
agreement dated on or about the date hereof among the parties to the Debenture
Agreement. Nothing in this Limited Waiver shall amend or waive McKesson's rights
under any provisions protecting against dilution in any Warrants issued to
McKesson (including but not limited to rights under Section 3 of the Warrants)
resulting from the issuance of the Debentures or the operation of any adjustment
to the Conversion Price (as those terms are defined in the Debenture Agreement).
X. XxXxxxxx hereby grants a limited one-time waiver under
Section 7.1(d) of the Credit Agreement with respect to Borrower's failure to pay
certain of the amounts due to McKesson under the Supply Agreement for periods
prior to March 15, 2000, provided that all such amounts due on or prior to March
15, 2000 are paid on or prior to June 1, 2000 (except for amounts subject to
disputes submitted to McKesson in writing prior to March 26, 2000) and that all
other amounts incurred under the Supply Agreement prior to the date hereof are
not delinquent as of the date hereof (except for amounts subject to disputes
submitted to McKesson in writing prior to March 26, 2000).
X. XxXxxxxx hereby waives its rights under Section 7.5 of the
Amended and Restated Warrant Purchase Agreement dated as of May 14, 1999 between
Borrower and McKesson (the "Warrant Purchase Agreement") to participate in the
offering of Borrower's Securities contemplated by Section 2 of the Registration
Rights Agreement among Borrower and the Debenture Investors dated as of even
date herewith (the "Debenture Registration Rights Agreement").
X. XxXxxxxx hereby gives a limited one-time waiver as to
Borrower's failure to comply with Section 7.9 of the Warrant Purchase Agreement
with respect to warrants issued to 5Net5 Corp., Xxxxxxxx.xxx, Inc. and K-2
Financial Corp. on or prior to March 15, 2000 (the last sentence of Section
7.9).
2.
SECTION 2. CONDITIONS TO EFFECTIVENESS
This Limited Waiver shall become effective as of the first date upon
which the following conditions have been satisfied:
(i) Borrower and McKesson shall have delivered to one another
duly executed counterparts of this Limited Waiver;
(ii) all the representations and warranties in Section 3 below
(after giving effect to any amendments to the last Representation Certificate
delivered to McKesson prior to the date of this Limited Waiver) shall be true
and correct as of the date of this Limited Waiver;
(iii) no Default shall have occurred and be continuing on the
date of this Limited Waiver (other than Defaults which are the subject of the
waiver in Section 1 above);
(iv) Borrower and McKesson shall have executed and delivered
to one another a First Amendment to the Amended and Restated Warrant Purchase
Agreement as well as other ancillary documents related thereto in form and
substance satisfactory to McKesson;
(v) Borrower shall have issued to McKesson a Warrant for
10,000 shares of Borrower's Common Stock in addition to those described in
clause 4.3(c) of the Credit Agreement as set forth in the Warrant Purchase
Agreement;
(vi) Borrower shall have paid to McKesson a waiver fee in the
amount of $17,600; and
(vii) Borrower and McKesson shall have delivered to one
another a duly executed counterpart of an amendment to the Supply Agreement
substantially in the form of Exhibit A hereto.
SECTION 3. BORROWER'S REPRESENTATIONS AND WARRANTIES
In order to induce McKesson to enter into this Limited Waiver, Borrower
represents and warrants to McKesson that the following statements are true,
correct and complete:
A. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Article III of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the date of this Limited Waiver to the same extent as
though made on and as of such date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case they were
true, correct and complete in all material respects on and as of such earlier
date.
B. ABSENCE OF DEFAULT. No Event of Default has occurred and is
continuing as of the date of this Limited Waiver (other than Defaults which are
the subject of the waiver in Section 1 above).
3.
SECTION 4. RESERVATION OF RIGHTS
Borrower acknowledges and agrees that the execution and delivery by
McKesson of this Limited Waiver shall not be deemed to create a course of
dealing or otherwise obligate McKesson to forebear or execute similar waivers
under the same or similar circumstances in the future.
SECTION 5. MISCELLANEOUS
A. Reference to and effect on the Credit Agreement and the
Other Loan Agreements.
(i) Except as specifically modified by this Limited Waiver,
the Credit Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.
(ii) The execution, delivery and performance of this Limited
Waiver shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of
McKesson under, the Credit Agreement or any of the other Loan Documents nor to
create any course of dealing or otherwise obligate McKesson to forebear or
execute similar waivers or any waivers in similar circumstances in the future.
B. COSTS AND EXPENSES. The Company covenants to pay to or
reimburse McKesson, upon demand, for all costs, out-of-pocket expenses and
reasonable attorneys' fees expended or incurred by McKesson in connection with
the development, preparation, negotiation, execution and delivery of this
Limited Waiver and the documents and transactions contemplated hereby.
C. HEADINGS. Section and subsection headings in this Limited
Waiver are included herein for convenience of reference only and shall not
constitute a part of this Limited Waiver for any other purpose or be given any
substantive effect.
D. APPLICABLE LAW. THIS LIMITED WAIVER SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
E. COUNTERPARTS. This Limited Waiver may be executed in any
number of counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each of
the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by a party of a facsimile transmitted document purportedly bearing
the signature of the other party shall bind the other party with the same force
and effect as the delivery of a hard copy original. Any failure by a party to
receive the hard copy executed original of such document shall not
4.
diminish the binding effect of receipt of the facsimile transmitted executed
original of such document of the other party.
IN WITNESS WHEREOF, the parties hereto have caused this
Limited Waiver to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
HORIZON PHARMACIES, INC.
By: /s/ Xxxxx X. XxXxxx
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Title: CEO & President
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McKESSON HBOC, INC.
By: /s/ Xxxx Xxxxxx
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Title: Senior Vice President and Financial Services
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