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 DEFINITIONS.....................................................................................1
ARTICLE II PURCHASE AND SALE OF SECURITIES.................................................................2
ARTICLE III SECURITIES PURCHASE AGREEMENT...................................................................2
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................................................4
ARTICLE V PURCHASERS' CONDITIONS TO CLOSING...............................................................4
ARTICLE VI COMPANY CONDITIONS TO CLOSING...................................................................5
ARTICLE VII 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").
WITNESSETH
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 1, (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 Appendix "B" attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
3.01 ORGANIZATION AND QUALIFICATIONS. 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 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
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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 exercised and delivered by the Company and
constitute the legal, valid and binding obligations 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 3, 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 omission? to state a material fact necessary in order to
make the statement 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 to the
Purchasers of which the Company is aware which materially and adversely
affects or could materially and adversely affect the business, prospects,
financial conditions, 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 recordholder 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.
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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 forms 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 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 settlement 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.
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 automatically.
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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 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 and
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 other.
7.05 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas;
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7.06 ENTIRE AGREEMENT. This Agreement, including the Schedules
hereto, constitutes the sale 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 counterpart.
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: /s/ Xxxxx X. XxXxxx
-----------------------------------
Xxxxx X. XxXxxx, President
PURCHASER: QUANTUM PARTNERS INC.
By:
-----------------------------------
Xxxxxx X. Xxxxxx
XXXXXXX CAPITAL DIVERSIFIED FUND, L.P.
By:
-----------------------------------
Xxxxxx X. Xxxxxx
WHITE ROCK CAPITAL PARTNERS, L.P.
By:
-----------------------------------
Xxxxxx X. Xxxxxx
WHITE ROCK CAPITAL OFFSHORE, LTD.
By:
-----------------------------------
Xxxxxx X. Xxxxxx
LEGION STRATEGIES LIMITED
By:
-----------------------------------
Xxxxxx X. Xxxxxx
CAXTON INTERNATIONAL LIMITED
By:
-----------------------------------
Xxxxxx X. Xxxxxx
WHITEROCK CAPITAL MANAGEMENT, L.P.
By:
-----------------------------------
Xxxxxx X. Xxxxxx
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SCHEDULE I
PURCHASERS
NUMBER OF NUMBER OF AGGREGATE
PURCHASER SHARES WARRANTIES 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
Canton International Limited 116,000 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
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into
this 15th day of June, 1998, by and among HORIZON Pharmacies, Inc., a Texas
corporation (the "Corporation"), and Quantum Partners LDC, Xxxxxxx Capital
Diversified Fund, L.P., White Rock Capital Partners, L.P., White Rock Capital
Offshore, Ltd., Legion Strategies Limited Caxton International Limited and
White Rock Capital Management, L.P. (#10) (collectively, the "Selling
Shareholders").
W I T N E S S E T H:
WHEREAS, the Selling Shareholders have agreed to purchase an
aggregate 736,838 shares (the "Shares") of the Corporation's common stock,
$.01 par value (the "Common Stock"), and an aggregate 41,000 Common Stock
purchase warrants (the "Warrants") pursuant to that certain Securities
Purchase Agreement of even date herewith (the "Securities Purchase
Agreement"), by and among the Corporation and the Selling Shareholders; and
WHEREAS, pursuant to the terms of the Securities Purchase Agreement,
the Corporation has granted to the Selling Shareholders certain registration
rights with regard to the Securities;
NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange
Commission, or any other Federal agency at the time administering the
Securities Act.
"COMMON STOCK" shall mean the Corporation's common stock,
$.01 par value, as constituted as of the date of this Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
as amended, or any similar Federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"REGISTRABLE SHARES" shall mean the Shares and/or Warrant
Shares, as the context requires.
"REGISTRATION EXPENSES" shall mean the expenses as described
in Section 4.
"SHARES" shall have the meaning set forth in the recitals
hereto and as adjusted for events under Section 6, but excluding
Shares which have been (a) registered under the Securities Act
pursuant to an effective registration statement filed thereunder and
disposed of in accordance with the registration statement covering
them; or (b) publicly sold pursuant to Rule 144 under the Securities
Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar Federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at
the time.
"SELLING EXPENSES" shall mean the expenses so described in
Section 4.
"SELLING SHAREHOLDERS" shall have the meaning set forth in the
preamble to this Agreement.
"WARRANTS" shall have the meaning set forth in the recitals
hereto and as adjusted for events under Section 6.
"WARRANT SHARES" shall have the meaning given such term in
Section 2.
2. REQUIRED REGISTRATION. (a) The Corporation shall promptly
within 75 days following the date of this Agreement, file a registration
statement on Form S-3 under the Securities Act for all of the Shares held by
the Selling Shareholders, on the terms set forth herein. The Corporation shall
be obligated to register Shares pursuant to this Section 2(a) on one occasion
only; provided, however, that such obligation shall be deemed satisfied only
when a registration statement covering all such Shares shall have become and
remain effective as contemplated in Section 3(a).
3. REGISTRATION PROCEDURES. For any registration statement the
Corporation is required to file under Section 2 above, the Corporation will:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective until such time as
all Shares (and Warrant Shares, as applicable) have been sold under such
registration statement or may be freely sold in the public market without
registration in reliance upon Rule 144(k);
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Shares covered by such registration statement in accordance with
the Selling Shareholders' intended method of disposition set forth in such
registration statement for such period.
(c) furnish to the Selling Shareholders and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including such preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Registrable Shares covered by such registration statement;
(d) use its best efforts to register or qualify the
securities covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the Selling Shareholders provided,
however, that the Corporation shall not for any such purpose be required to
qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to list the Registrable Shares
covered by such registration statement with any securities exchange on which
the Common Stock of the corporation is then listed;
(f) immediately notify the Selling Shareholders at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Corporation has
knowledge as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and use its best efforts to prepare and file post-effective
amendment(s) to such prospectus disclosing the occurrence of such event and
correcting such untrue or misleading statement; and
(g) make available for inspection by the Selling
Shareholders and any attorney, accountant or other agent retained by the
Selling Shareholders all financial and other records, pertinent corporate
documents and properties of the Corporation and cause the Corporation's
officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement.
In connection with each registration hereunder, the Selling
Shareholders will furnish to the Corporation in writing such information with
respect to them and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with Federal and applicable state
securities laws.
4. EXPENSES. All expenses incurred by the Corporation in
complying with Section 3 including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Corporation, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of
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transfer agents and registrars ad costs of insurance, but excluding any
Selling Expenses, are called "Registration Expenses."
The Corporation will pay all Registration Expenses in connection with
such registration statement under Section 3. all Selling Expenses in
connection with each registration statement under Section 3 shall be borne by
the Selling Shareholders in proportion to the number of Registrable Shares
sold by them to the number of shares sold by participating sellers other than
the Corporation (except to the extent the Corporation shall be a seller) as
they may agree.
5. INDEMNIFICATION AND CONTRIBUTION. (a) In the event of a
registration of any of the Registrable Shares under the Securities Act
pursuant to Section 3, the Corporation will indemnify and hold harmless the
Selling Shareholders, each underwriter within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which such seller, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Registrable Shares was registered
under the Securities Act pursuant to Section 3, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading and will reimburse the Selling Shareholders,
each such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided,
however, that the Corporation will not be liable in any such case if and to
the extent that any such loss, claim damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by the
Selling Shareholders, any such underwriter or any such enrolling person in
writing specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the
Registrable Shares under the Securities Act pursuant to Section 3, the Selling
Shareholders will indemnify and hold harmless the Corporation, each person, if
any, who controls the corporation within the meaning of the Securities Act,
each officer of the Corporation who signs the registration statement, each
director of the Corporation, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Corporation or
such officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such leases, claims damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such securities were
registered under the Securities Act pursuant to Section 3, any preliminary
prospectus or fiscal prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
the Corporation and each such officer, director, underwriter and controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Selling Shareholders will be
liable hereunder in any such case if and only to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to the Selling
Shareholders, as sellers, furnished in writing to the Corporation by the
Selling Shareholders specifically for use in such registration statement or
prospectus, and provided, further, however, that the liability of the Selling
Shareholders hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expenses which is equal to the proportion that the
public offering price of the shares sold by the Selling Shareholders under
such registration statement bears to the total public offering price of all
securities from the sale of the Registrable Shares covered by such
registration statement.
(c) Promptly after receipt by the indemnified party of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to such indemnified party other than under this Section 5
and shall only relieve it from any liability which it may have to such
indemnified party under this Section 5 if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such indemnified party,
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and, after notice form the indemnifying party to such indemnified party of its
election so to assure and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 5 for
any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected, provided, however,
that, if the defendants in any such action included both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or
if the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party shall have
the right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) the Selling Shareholders, or any controlling person thereof, makes
a claim for indemnification pursuant to this Section 5 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to approve or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be required on
the part of the Selling Shareholder or pay such controlling person in
circumstances for which indemnification is provided under this Section 5;
then, and in each such case, the Corporation and the Selling Shareholders will
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so
that the Selling Shareholders are responsible for the portion represented by
the percentage that the public offering price of their Shares offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, and the Corporation is responsible for
the remaining portion; provided, however, that, in any such case, (A) the
Selling Shareholders will not be required to contribute any amount in excess
of the public offering price of all such Registrable Shares offered by it
pursuant to such registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
6. CHANGES IN CAPITAL STOCK. If, and as often as, there is any
change in the Common Stock of the Corporation by way of a stock split, stock
dividend, combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock as
so changed.
7. RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Shares to the public without
registration, at all times after 90 days after any registration statement
covering a public offering of securities of the Corporation under the
Securities Act shall have become effective, the Corporation agrees to:
(a) take and keep public information available, as those
terms are understood and defined in Rule 144 and under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Corporation
under the Securities Act and the Exchange Act; and
(c) furnish to the Selling Shareholders forthwith upon
request a written statement by the Corporation as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Corporation, and rush other reports and documents so filed by the Corporation
as such holder may reasonably request in availing itself of any rule or
regulations of the Commission allowing the Selling Shareholders to sell any
securities without registration.
8. REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation represents and warrants to the Selling Shareholders as follows:
(a) The execution, delivery and performance of this
Agreement by the Corporation have been duly authorized by all requisite
corporate action and will not violate any provisions of law, any order of any
court or other agency of government, the Articles of Incorporation or Bylaws
of the Corporation or any provision of any
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indenture, agreement or other instrument to which it or any of its properties
or assets is bound, 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 of encumbrance of any nature whatsoever upon any of the
properties or assets of the Corporation.
(b) This Agreement has been executed and delivered by the
Corporation and constitutes the legal, valid and binding obligation of the
Corporation, enforceable in accordance with its terms.
9. MISCELLANEOUS.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Shares or Warrant Shares),
whether so expressed or not
(b) Any notice relating to this Agreement shall be deemed
sufficiently given and served for all purposes if given by a telegram filed,
charges prepaid, or a writing deposited in the United States mail, postage
prepaid and registered or certified within the Continental United States,
addressed as follows:
If to the Corporation:
Horizon Pharmacies, Inc.
Attention: Xxxxx X. XxXxxx, President
000 X. Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxx 00000
with copies to:
Xxxxxxxx XxXxxx XxXxxxxxx XxXxx & Xxxxxx, P.C.
Attention: B. Xxx Xxxxxx, Esq.
12th Floor, 000 X. Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
If to the Selling Shareholders:
c/o White Rock Capital, Inc.
0000 Xxxxxx Xxxxx Xxxx.
Xxxxx 000?
Xxxxxx, Xxxxx 00000
Any notice so duly sent by mail shall be deemed given two (2) days
after deposit in a proper governmental mailing facility and nay notice given
by telegram shall be deemed given on the day such notice is delivered to the
telegram company, charges paid.
(c) This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
(d) This Agreement may not be amended or modified, and no
provisions hereof may be waived, without the written consent of the
Corporation and the Selling Shareholders.
(e) This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(f) Notwithstanding the provisions of Section 3(a), the
Corporation's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
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period not to exceed 60 days in any 24-month period if there exists at the
time material non-public information relating to the Corporation which, in the
reasonable opinion of the Corporation, should not be disclosed.
(g) The Corporation shall not grant to any third party
any registration rights more favorable than or inconsistent with any of those
contained herein, so long as any of the registration rights under this
Agreement remain in effect.
(h) If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provisions
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first written above.
CORPORATION: HORIZON PHARMACIES, INC.,
a Texas corporation
By:
-----------------------------------
Xxxxx X. XxXxxx, President
SELLING SHAREHOLDERS: QUANTUM PARTNERS INC.
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:
-----------------------------------
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CAXTON INTERNATIONAL LIMITED
By:
-----------------------------------
WHITEROCK CAPITAL MANAGEMENT, L.P. (#10)
By:
-----------------------------------
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