PURCHASE AGREEMENT
AGREEMENT made the 8TH day of NOVEMBER, 1998 between HOLLAND'S DRUG
STORE, INC. a Delaware Corporation ("Seller"), and HORIZON Pharmacies, Inc., a
Delaware Corporation ("Buyer").
W I T N E S S E T H
WHEREAS, Seller operates a retail pharmacy doing business as HOLLAND'S DRUG
STORE (the Drug Stores") located at 000 XXXXXX XXXXXXX XXXXX, XXXXXXXX, XX
00000 AND 000 X. XXXXXXXX XXXXXXX, XXXXXXXXX, XX 00000 (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 Stores 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 Stores
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 Stores 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. COPYRIGHTS, TRADE NAMES, AND TRADEMARKS. All copyrights, trade
names and trademarks associated with the Retail Location(s)
including, but not limited to HOLLAND'S DRUG STORE and all
variations thereof (it is understood that the Hollands shall be
entitled to use the "Holland" name in the context of any other
business they may operate, except for a "drug store" or other
health care related business.
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
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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, (vii) all individual charge account balances for
goods and/or services rendered on or before Closing Date; (viii)
all assets of the Function Junction business, including without
limitation, all furniture, fixtures and equipment, inventory, a
1996 Ford Taurus station wagon, a 1985 GMC Safari Van and a 1996
Infinity, and (ix) 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 Stores 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) $563,000 for
prescription files, patient profiles and goodwill, plus (ii) $67,000
for furniture, fixtures and equipment, plus (iii) $20,000 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;
2.2 ALLOCATION. The total purchase price described in Section 2.1, above,
shall be allocated as set forth in Exhibit "B" attached hereto and
made a part hereof.
2.3 PAYMENT OF THE PURCHASE PRICE. Buyer shall cause the purchase price
to be paid to Seller as follows:
(a) $ 450,000 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 $300,000. based upon
ninety (90%) percent of the average closing price for the HORIZON
common stock as reported in the Wall Street Journal 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 not later than
fifteen (15) days after the Closing Date; and
(c) The balance in a negotiable promissory note in the form attached
in Exhibit "C" attached hereto (the "Note") secured by the
inventory, furniture, fixtures and equipment of the Drug Stores
in amount sufficient to cover the outstanding principal plus
accrued interest due thereon;
(d) Buyer shall deduct from the purchase price payable at Closing an
amount equal to the sum of (i) Seller's pro rata share of
personal property taxes as described in Section 2.5.2, below, and
(ii) one half of the fee charged by the third party inventory
service.
(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.
2.4 XXXXXXX MONEY DEPOSIT. This Section intentionally left blank.
2.5 TAXES
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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
Prescription inventory Acquisition cost or AWP less 16%
except for special deal
prescription items or generic items
which shall be valued at
acquisition cost
Non-Prescription inventory Acquisition cost
In the event Seller is unable to establish the acquisition cost of any
non-prescription inventory, the following formula shall be applied in valuing
such inventory.
CATEGORY OF MERCHANDISE METHOD OF VALUATION
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HBA Retail price less 25%
OTC Retail price less 25%
Gifts Retail price less 50%
Cards Retail price less 50%
Cosmetics Retail price less 40%
Watches/Cameras Retail price less 50%
Fragrances Retail price less 25%
Candy (box) Retail price less 40%
Candy (loose) Retail price less 30%
Jewelry Retail price less 50%
Miscellaneous Retail price less 50%
Seasonal Merchandise Retail price less 50%
3. REPRESENTATIONS AND WARRANTIES.
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
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lease its properties and to carry on its business as and
in the places where such properties are now owned, leased
or operated and such business is conducted.
3.1.2 AUTHORITY. The execution, delivery and performance of this
agreement by Seller has been duly authorized by all necessary
corporate action and constitutes a legal, valid, and binding
obligation on Seller enforceable in accordance with its terms.
3.1.3 TITLE TO PROPERTIES. The Seller has good and marketable
title to all of the Drug Store Assets, free and clear of all
mortgages, liens, encumbrances, pledges, or security interests
of any nature whatsoever, except for secured debts, if any,
listed on Exhibit "D" attached hereto which shall be satisfied
and released at or prior to closing.
3.1.4 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 Seller 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 Stores,
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
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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 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 ___.
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
Stores, the Drug Store Assets or either Retail Location.
3.1.10 EMPLOYEE BENEFITS. All sums due for employee compensation
and benefits and all vacation time owing to any employees of
Seller have been duly and adequately accrued and reflected
in the accounting records of Seller. Seller shall be
responsible for all employee benefits, including but not
limited to payment for accrued vacation, to the Closing
Date. To the Seller's best knowledge, all employees of
Seller are either United States citizens or resident aliens
specifically authorized to engage in employment in the
United States in accordance with all applicable laws.
3.1.11 TAXES.
(a) Seller has filed all required Federal, state, local, foreign
and other tax returns, notices and reports (including, but
not limited to, income, property, sales, use, franchise,
capital, stock, excise, added value, employee's income
withholding, social security and unemployment tax returns)
heretofore due;
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and to Seller's best knowledge all such returns, notices,
and reports are correct, accurate, and complete.
(b) Seller has made all deposits required to be made in
connection with any tax including but not limited to,
estimated income, franchise, sales, use, and employee
withholding taxes.
(c) Seller has paid or made adequate reserves on its books of
account for all taxes, assessments, fees, penalties,
interest and other governmental charges which have become
due and payable, and the amounts reflected on such books are
to Seller's best knowledge sufficient for the payment of all
unpaid Federal, state, local, foreign, and other taxes,
fees, and assessment and all interest and penalties thereon
with respect to the periods then added and or all periods
prior thereto.
3.1.12 INVESTMENT PURPOSE. Seller is acquiring the HORIZON Common
Stock for investment, and not with a view to the sale or
distribution thereof. Seller understands and acknowledges
that the transfer of the HORIZON Stock issuable hereunder
will be restricted and that Seller may not sell or otherwise
dispose of such shares unless and until a registration
statement under the 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.
3.2 Buyer does hereby represent and warrant to Seller as follows:
3.2.1. ORGANIZATION. Buyer is a corporation duly organized and
existing in good standing under the laws of Delaware, and is
entitled to own or lease properties and carry on its business
as and in the places where such properties are now owned,
leased or operated and such business is now conducted.
3.2.2 COMMON STOCK. Buyer has authorized 14,000,000 shares of
HORIZON Common Stock of which approximately 5,700,000 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.
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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. Specifically, Buyer was not referred to the Seller
by Geneva Companies or any affiliate thereof.
4. CONDITIONS TO CLOSING.
4.1. BUYER'S CONDITIONS TO CLOSING. All obligations of Buyer under
this Agreement are subject to the fulfillment, prior to or at
Closing, of each of the following conditions (unless waived in
writing by Buyer).
4.1.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller contained in this Agreement
shall be true and complete at the Closing Date as if
they were made at such time.
4.1.2 COMPLIANCE. Seller shall have performed and complied
with all terms and conditions required by this Agreement
to be performed or complied with by it prior to or on
the Closing Date.
4.1.3 CONSENTS. All necessary consents to the transfer of
the Drug Store Assets have been obtained from vendors
and other third party, if any.
4.1.4 NO CASUALTY. The Drug 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 each of the Retail
Locations and the Seller's leases with respect to the
Retail Locations shall have been terminated.
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 ILLINOIS. Buyer shall diligently pursue obtaining
such licenses.
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.
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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 each of the Retail Locations and the
Seller's leases with respect to the Retail Locations shall
have been terminated.
4.2.4 EMPLOYMENT OF XXXXXXX AND XXXXXXX XXXXXXX. Buyer and the
Hollands have agreed that the Hollands will be retained to
manage the Drug Stores for a minimum of One Hundred and
Twenty (120) days after the Closing. After said One Hundred
and Twenty (120) day period, either the Buyer or either of
the Hollands may terminate such employment relationship by
providing the other party with not less than thirty (30)
days written notice of such party's intention to terminate
the employment arrangement. Xxxxxxx Xxxxxxx and Xxxxxxx
Xxxxxxx shall receive annual salaries of $72,000 and
$45,000, respectively. As the overall manager of both
Retail Locations, Xxxxxxx Xxxxxxx also shall be eligible for
an annual bonus (beginning in 1999) equal to seven (7%) of
the net earnings of the Drug Stores operations. The
Holland's shall also be entitled to up to twelve (12) weeks
of vacation per year, with pay, provided that the timing of
the taking of such vacation shall be subject to the consent
of the Buyer, which consent shall not be unreasonably withheld.
5. LIABILITIES NOT ASSUMED BY BUYER. The parties expressly agree and
acknowledge that Buyer shall not, by virtue of this Agreement, the
consummation of the transactions contemplated herein or otherwise,
assume any liabilities or obligations of Seller or any liabilities or
obligations constituting a charge, lien, encumbrance or security
interest upon the Drug Store Assets, regardless of whether such
liabilities or obligations are absolute or contingent, liquidated or
unliquidated or otherwise. 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 not yet received as of the Closing Date, which are set forth
on Schedule 5 hereto; and (ii) Buyer's obligations under the new leases
with respect to the Retail Locations.
6. INDEMNIFICATION.
6.1 INDEMNIFICATION BY SELLER AND XXXXXXX XXXXXXX. Seller and
XXXXXXX XXXXXXX, 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 Stores 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;
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(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 inderect, fixed, contingent, or otherwise
accruing after the Closing Date, relating to the business
of the Drug Stores;
(b) any and all loss, liability, deficiency, ro 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;
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
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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 will 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 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
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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 NOVEMBER 8TH, 1998 FOR SANDWICH AND
NOVEMBER 8TH, 1998 FOR YORKVILLE (the "Closing Date") but in
no event later than NOVEMBER 14, 1998 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 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 six (6) year anniversary
thereof, except as specifically permitted by this Section 8.3,
Xxxxxxx Xxxxxxx 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, 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 in the respective
city limits of SANDWICH, IL AND YORKVILLE, IL. The parties
expressly
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agree that XXXXXXX XXXXXXX may serve no more than one (1) day
per week as a relief pharmacist at retail pharmacies not owned
or operated by Buyer and which are located within the city
limits of Sandwich, IL and Yorkville, IL. The parties
acknowledge that the territorial and time limitations
contained in the paragraph are reasonable and properly
required for the adequate protection of the business to be
conducted by Buyer with the assets and properties to be
transferred hereunder and can not be changed except by written
permission of Buyer.
8.4 RIGHT TO ENJOIN BREACH. The parties agree that in the event of a
breach by Seller of any provision of this paragraph, monetary
damages alone would be inadequate and Buyer shall, in addition to
all other legal remedies, be entitled to obtain an order
ENJOINING SELLER FROM VIOLATING THE COVENANTS SET FORTH HEREIN.
8.5 ACCESS TO RECORDS. Seller shall give Buyer, its counsel,
accountants and representatives, reasonable access during
normal business hours to all of Seller's books, contracts,
commitments and records and furnish Buyer with all information
which Buyer reasonably may request to conduct a financial
audit of the last two (2) fiscal years and unaudited financial
data up to Closing Date at Buyer's expense. Seller and
XXXXXXX XXXXXXX 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 each of the Retail Locations and shall cease
its use of Seller's DEA permits as soon as practicable, but no
later than 30 days following the Closing. Buyer acknowledges
that Seller shall terminate such permits promptly after the
said 30 day period.
8.7 GOVERNING LAW. This agreement shall be governed and construed in
accordance with the laws of the state of ILLINOIS.
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.
8.9 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
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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.
Witness:
/s/ (Illegible) /s/ XXX XXXXXXX
------------------------------ ---------------------------------------
Xxx Xxxxxxx, Vice President
SELLER: Holland's Drug Store,Inc.
Witness:
/s/ (Illegible) /s/ XXXXXXX XXXXXXX
------------------------------ ---------------------------------------
Xxxxxxx Xxxxxxx, President
Witness:
/s/ (Illegible) /s/ XXXXXXX XXXXXXX
------------------------------ ---------------------------------------
Xxxxxxx Xxxxxxx, Individually
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