PURCHASE AGREEMENT
AGREEMENT made the 12th day of August, 1997 between Revco, Inc. d/b/a
Northridge Pharmacy having an office at 0000 X. Xxxxxxxx, Xxxxxxxx,
Xxxxx (hereinafter referred to as the "seller"), and HORIZON PHARMACIES,
INC., a Texas Corporation, having offices located at 000 X. Xxxxxxxxx Xxxxx,
Xxxxxxxxx Xxxxx, 00000 (hereinafter referred to as the "Buyer").
W I T N E S S E T H
WHEREAS, the Seller and the Buyer have reached an agreement, in accordance
with the terms and conditions hereinbelow set forth, with respect to the sale by
the Seller and the purchase by the Buyer of certain of the assets of the Seller
utilized in connection with and as part of the retail drug store operations of
the Seller known as Revco, Inc. d/b/a Northridge Pharmacy (hereinafter referred
to as the "DRUG STORE") and desire to reduce said agreement in writing;
NOW, THEREFORE, THE PARTIES AGREE:
1. SALE OF ASSETS.
1.1 For the purpose of this Agreement, Seller agrees to sell to Buyer AS
IS certain assets of the Drug Store (hereinafter referred to as the
"Drug Store Assets"), which the Buyer hereby agrees to purchase. Such
assets include and are hereby limited to:
A. INVENTORY. All of the marketable inventory (as defined in
Exhibit A attached hereto) held for retail sale by the Seller
and located at the Drug Store; and
B. PRESCRIPTION FILES INCLUDING ALL CUSTOMER AND PATIENT LISTS AND
PATIENT PROFILES. All prescription files and patient profiles of
Seller located at and pertaining to prescription customers of
the Drug Store.
C. ALL FIXTURES AND EQUIPMENT. All Rx, OTC, and DME fixtures and
equipment owned by Seller (computer/peripherals, registers,
refrigerator, typewriter, Microfiche, etc.) located at the Drug
Store,; and all telephone equipment, and all miscellaneous
shelving, counters and supplies belonging to Seller as listed on
Exhibit B attached hereto and made a part hereof.
D. STORE TELEPHONE NUMBER(S). All telephone numbers of the Drug
Store location shall be transferred to Buyer.
E. SUPPLIES. All bottles, vials, ointment jars, and other usable
supplies of Seller located at the Drug Store location and at
Seller cost.
F. ASSETS NOT PURCHASED. Buyer shall not purchase any consigned
merchandise or layaway items.
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2. PURCHASE PRICE.
2.1 The total purchase price to be paid by the Buyer for the Drug Stores
Assets shall be computed, but not allocated, as follows:
Furniture, Fixtures and Equipment, Prescription Files, Patient
Profiles, Customer List, Telephone System/Numbers, $120,000.00
0000 X-00 Xxxxxx, XXX Computer hardware/software, and Non-compete
Covenant, Store's name "Northridge Pharmacy"
2.2 An amount equal to the aggregate value of the marketable inventory (as
defined in Exhibit A attached hereto) as determined in the physical
inventory described in paragraph 5 below and as valued in accordance
with Exhibit A attached hereto and made a part hereof.
2.3 Buyer will purchase active accounts receivable for the individual
Charge Accounts (as determined on 7/25/97) based on the following
evaluation:
0-30 days balances at 100%
31-60 days balances at 80%
61-90 days balances at 60%
> 90 days balances at 0%
ALLOCATION OF PURCHASE PRICE.
The Purchase Price shall be allocated and reflected on the Closing
Statement
PAYMENT OF PURCHASE PRICE.
4.1 Subject to the following provisions, the purchase price hereafter
shall be paid as follows:
4.1 (a) Cash at the closing equal to $150,000.00 less $1,000 escrow
deposit.
4.1 (b) A note at the closing equal to the purchase price less cash
in Sections 4.1(a) bearing interest at the rate of eight and
half (8 1/2) percent. The note is due and payable in seventy
two (72) equal consecutive monthly installments, the first
installment will be 1st of the following month. The Note
will be executed by Buyer and payable to the order of
Seller. It will be secured by the inventory of the said
DRUG STORE.
INVENTORY.
A physical inventory shall be taken at the Drug Store by RGIS INVENTORY
SPECIALISTS on the closing date. Each party shall pay one-half of the
inventory expense. Seller portion will be deducted from Closing
Statement.
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REPRESENTATIONS AND WARRANTIES BY SELLER.
6.1 The Seller does hereby represent and warrant as follows:
A. AUTHORITY. The execution, delivery and performance of this
Agreement by Seller has been duly authorized by all necessary
entity action and constitutes a legal, valid, and binding
obligation on Seller enforceable in accordance with its terms.
B. TITLE TO PROPERTIES. The Seller has good and marketable title
to all of the Drug Store assets to be transferred hereunder, 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 C attached hereto which shall be
satisfied and released at or prior to closing. The Seller
has received no notice of violation of any applicable law,
regulation or requirement relating to the retail Drug Store
business operation or Drug Store assets to be transferred
hereunder; and as far as known to the Seller, no such violation
exists.
C. CONTRACTS. Seller is not party to any contract, understanding
or commitment whether in the ordinary course of business or not,
relating to the conduct of business by Seller from the Drug
Store which contract, understanding or commitment shall
extend beyond the Closing Date for the Pharmacy Location except
the contracts identified in Exhibit "C." Seller is not party to
any contractual agreement or commitment to individual employees
which may not be terminated at the will of Seller.
D. LITIGATION. To the best of Seller's current actual knowledge
there is no suit, action, proceeding, investigation, claim,
complaint or accusation pending or, threatened against or
affecting Seller or the Assets or to which Seller is a party, in
any court or before any arbitration panel of any kind or before
or by any federal, state, local, foreign, or other governmental
agency, department, commission, board, bureau, instrumentality or
body which would have a materially adverse affect on the financial
condition of Seller, 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 governmental body against
or affecting Seller with which Seller is not currently in
compliance.
E. EMPLOYEES.
(a) To the best of Seller's actual knowledge, the Seller is in full
compliance with all wage and hour laws, and 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 Relations
Board, the Equal Employment Opportunity Commission or any other
administrative agency, federal or state, that regulates labor or
employment practices, nor is any grievance filed or threatened to
be filed against Seller by any employee pursuant to any collective
bargaining or other employment agreement to which Seller is a
party. To the best of Seller's current actual knowledge and
belief 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.
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(b) The employment of all persons and officers employed by Seller is
terminable at will without any penalty or severance obligation of
any kind on the part of the employer. 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. All benefits such
as vacation accrued and earned by employees up to the Closing
Date is responsibility of the Seller. All benefits accrued and
earned after the Closing Date will become the financial
responsibilities of the Buyer. To the Seller's best actual
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.
F. TAXES.
(a) Seller has duly 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, employees' income
withholding, social security and unemployment tax returns)
heretofore due; and to Seller's best actual knowledge all such
returns, notices, and reports are correct, accurate, and
complete.
(b) All deposits required to be made by Seller with respect to any
tax (including but not limited to, estimated income, franchise,
sales, use, and employee withholding taxes) have been duly made.
(c) All taxes, assessments, fees, penalties, interest and other
governmental charges which have become due and payable have been
paid in full by Seller or adequately reserved against on its
books of account and the amounts reflected on such books are
to the best belief and knowledge of Seller sufficient for the
payment of all unpaid federal, state, local, foreign, and other
taxes, fees, and assessments, and all interest and penalties
thereon with respect to the periods then ended and or all periods
prior thereto. Seller hereby agrees to indemnify and hold
harmless Buyer from and against any and all liability, claims, or
causes of action for any unpaid taxes, or other assessments due
and owing to any federal, state, or local governmental entity
arising out of the business of Seller prior to the Closing Date.
(d) Buyer shall pay any and all Sales, Use, and Transfer Taxes, if
any, arising out of the sale and transfer of assets which are
the subject of this transaction.
(e) Seller shall pay any and all personal property taxes for prior
years attributable to the property being transferred hereby
prior to Closing Date.
(f) The parties shall pro rate at Closing anticipated personal
property taxes as of the date of Closing based upon last year's
tax renditions, and personal property tax bills and rent and
will be deducted from Seller at closing.
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CONDITIONS PRECEDENT.
7.1 All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or at the closing, of each of the following
conditions (unless waived in writing by Buyer).
A. REPRESENTATIONS. The representations and warranties of Seller
contained in this Agreement shall not only have been true and
complete as of date of this Agreement, but shall also be true and
complete as though again made as of the Closing Date.
B. COMPLIANCE. The 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.
C. CONSENTS. All necessary consents to the transfer of the Drug Store
assets have been obtained from vendors and partners if any.
LIABILITIES NOT ASSUMED BY BUYER.
8.1 It is expressly understood and agreed that Buyer shall not, by virtue
of this Agreement, the consummation of the transactions
contemplated herein or otherwise, assume any liabilities or
obligations of the Seller or any liabilities or obligations
constituting a charge, lien, encumbrance or security interest upon
the Drug Store assets to be transferred hereunder, regardless of
whether such liabilities or obligations are absolute or
contingent, liquidated or unliquidated or otherwise except the
Security interest securing Buyer's Note to Seller.
8.2 Seller hereby indemnifies the Buyer, its officers, directors, and
controlling persons against any liability for any fee or
commission payable to any broker, agent or finder retained by
Seller with respect to any transaction contemplated by this
Agreement.
9. CLOSING.
9.1 The closing shall take place on or before August 12, 1997 at Buyer's
discretion, but in no event later than August 31, 1997, at the Drug
Store location.
A. TO BE DELIVERED TO BUYER. The Seller shall deliver to Buyer a Xxxx
of Sale, which shall be 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, except the
Security interest securing Buyer's Note to the Seller.
B. TO BE DELIVERED TO SELLER. The Buyer shall deliver to the Seller a
Cashier's check for the cash portion of the purchase price less
$1,000 Escrow amount, and Buyer's promissory note described in
Paragraph 4.1 hereof, and the Security instruments required by
section 4.1(b).
INDEMNITY BY SELLER.
10.1 The Seller hereby agrees to indemnify and hold harmless Buyer against
and in respect of:
A. LIABILITY OF THE SELLER. With the exception of liabilities
expressly assumed, all liabilities and obligations of the Seller,
of every kind and description, regardless of whether such
liabilities or obligations are absolute or contingent, liquidated
or unliquidated, accrued or otherwise, and regardless of now and
when the same may have arisen, which are asserted against Buyer as
a result of this Agreement or the
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consummation of the transaction contemplated herein.
B. CLAIMS UPON ASSETS. All claims against, or claims of any interest
in, or of a lien or encumbrance or the like upon any or all of the
Drug Store assets to be transferred hereunder by the Seller to
Buyer which are caused or created by indemnifying party, with the
exception of Seller's interest, lien, or encumbrance resulting
from Seller's security interest.
11. INDEMNITY BY BUYER.
The buyer will indemnify the Seller for all claims against the Assets
for any period after the Closing Date. The Buyer further indemnifies the
Seller for break or leases and dissatisfied customer claims caused by HORIZON
for any period after the Closing Date.
12. SURVIVAL OF REPRESENTATIONS, WARRANTIES & INDEMNIFICATIONS.
12.1 All of the covenants, representations, warranties and indemnification
of the parties set forth in this Agreement shall survive the Closing
Date hereof.
All outstanding business transactions prior to the closing date
are credited to the Seller. All business acquired on or after the
Closing Date belong to the HORIZON Pharmacies, Inc. Including any
insurance payments made to the existing NABP, State Welfare
number(s), and/or contract(s) as long as the date of service is on
or after the Closing Date.
Sellers gives Buyer & Buyer's accountants access to financial
records to conduct an audit for 1996 & through August 12, 1997 at
Buyer's expense.
13. RISK OF LOSS.
13.1 The risk of loss of damage of Drug Store assets to be conveyed
hereunder shall be upon Seller until the closing hereof.
14. NON-COMPETE COVENANT OF SELLER.
14.1 In consideration of the Purchase Price hereinabove stated in
paragraph 2 of which $50,000.00 (for each individual) is allocated
to this covenant not to compete XXX XXXXXXX hereby agrees that for a
period of six (6) years after the Closing Date hereunder will not,
directly or indirectly, through a subsidiary, joint venture
arrangement or otherwise, conduct or assist another party other than
the Buyer in conducting or managing any operation which has as its
purpose what is generally known as a retail pharmacy, or Nursing Home
or IV operation or DME operation within the city limits of Mesquite,
Texas, or have any equity investment in such operation. This
non-compete entitles XXX XXXXXXX to perform work as an employee of
HORIZON Pharmacies, Inc. Furthermore, this non-compete clause does
not prohibit XXX XXXXXXX from performing duties such as relief
pharmacist at other pharmacies within or without Mesquite. The
parties hereby recognize and acknowledge that the territorial and
time limitations contained in this 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 cannot be changed except by written permission of
Buyer.
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14.2 The parties recognize that, in the event of a breach by Seller of any
of the provisions of this paragraph, the remedy of law alone would
be inadequate and, accordingly, Buyer, (in addition to damages),
shall be entitled to an injunction restraining Seller from
violating the covenants herein contained.
14.3 It is the intention of the Seller and the Buyer that the execution of
these covenants not to compete be considered as materially
significant and essential to the closing of this Agreement, and
that such covenants are a material portion of the purchase price
set forth herein above.
15. GOVERNING LAW.
15.1 This agreement shall be governed and construed in accordance with the
laws of the State of Texas.
16. ENTIRE AGREEMENT.
16.1 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. This document is
null and void if the Purchase Agreement is not signed by both
parties within 10 days from date the Buyer has received the
Purchase Agreement document and the deposit of the $1,000.00
escrow.
16.2 It is stipulated that this agreement is null and void if HORIZON
Pharmacies, Inc:
(a) can not secure a valid Texas License under its own merit for the
said DRUG STORE location to conduct business as a retail pharmacy
operation. HORIZON Pharmacies, Inc. commits that it will exercise due
diligent effort to secure the Texas License.
(b) can not secure a lease for:
$2,650.00 per month for 1st year
17. XXXXXXX MONEY.
17.1 To bind this Agreement, Buyer herewith deposits with XXXXXXX XXXXXX
as Escrow Agent, the sum of $1,000 (One Thousand Dollars), which
sum shall be applied to the cash portion of the Purchase Price
upon the closing of the transaction contemplated herein. However,
in the event Seller fails to perform each and every covenant and
condition required hereunder, Buyer may cancel this Agreement and
have the Xxxxxxx Money returned to it. If the Buyer fails to
perform each and every obligation hereunder, Seller shall retain
the Xxxxxxx Money as liquidated damages. each party's remedy
provided in this Section is that party's exclusive remedy.
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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.
---------------------------------------
Xxxx XxXxxx, President
THE STATE OF )
COUNTY OF )
THIS INSTRUMENT was acknowledged before me on this the __________ day of
__________ , 19_____, by XXXX XXXXXX, who holds the office of President of
HORIZON PHARMACIES, INC., a Texas Corporation on behalf of such corporation.
---------------------------------------
SEAL
Notary Public, State of Texas
My commission Expires:
-----------------
SELLER:
Revco, Inc. d/b/a Northridge Pharmacy
---------------------------------------
Xxx Xxxxxxx, President
THE STATE OF )
COUNTY OF )
THIS INSTRUMENT was acknowledged before me on this the _________day of
__________, 19___ by _________________, who holds the office of President of
Revco, Inc.
---------------------------------------
SEAL
Notary Public, State of Texas
My commission Expires:
-----------------
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EXHIBIT A
1. DEFINITION OF MARKETABLE INVENTORY. For purposes of this Agreement,
marketable inventory is all of Seller's inventory except the following:
(a) DAMAGED MERCHANDISE. Damaged merchandise, including but not
limited to, items which are shopworn, faded (including faded labels)
or subject to visible deterioration; and
(b) UNSALABLE MERCHANDISE. Unsalable merchandise, that is items which
are obsolete, or which have an expired expiration date or which have
been discontinued by the manufacturer; and
(c) PRESCRIPTION MERCHANDISE AND OVER-THE COUNTER DRUGS. The following
exclusions, in addition to the exclusions set forth above, shall be
applicable to prescription merchandise and over-the-counter drugs:
(i) Any partial container with expired dating within thirty
(30) days;
(ii) Any full, sealed containers (aa) with expired dating,
(iii) Filled prescriptions over one month old;
(d) The buyer has the right of refusal to exclude seasonal merchandise
from the evaluation of inventory other than Halloween, Thanksgiving,
and Christmas.
VALUATION OF INVENTORY. The marketable inventory shall be valued, for
purposes of this Agreement, as follows
(a) The marketable prescription inventory will be taken at acquisition
cost OR AWP less 16%. Special deal prescription items and/or
generic items will be at acquisition cost.
(b) Non-prescription merchandise will be taken at acquisition cost. If no
acquisition cost exists, then the following formula will apply to
the merchandise.
CATEGORY COST (% OF RETAIL)
HBA Retail price less 25%
OTC( Health aids) 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%
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Seasonal Merchandise Retail price less 50%
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EXHIBIT B
1. LIST OF ASSETS (FURNITURE, FIXTURES, AND EQUIPMENT, ETC.).
Radionic Security System and equipment Proscar/Teleco 6 station telephone system
Diebold safe 2 NDC scanning register TEC
IBM pentium 330 Rx computer/4 work stations 2 Okidata 320 printers
1 IBM printer 3 Backup batteries
Rx balance and weights Assorted compounding utensils
2 Rheen 5ton A/C & Heating units 1 A/C window unit
(new compressor as of 10/96) 1 S-10 Chevy Blazer 1988
20 ft Pharmacy counter unit 16ft Rx counter, cupboard/sink
Rx bays & wall unit 5 metal Rx file cabinets
1 Sears coldspot 12.66 cu ft refrigerator Remington elec. typewriter
24ft check-in counter & base cupboards 1 impulse sign machine
1 coke machine 28ft stock room shelving
1 orbiter floor scrub machine 108ft gondolas with shelves 5ft high
40ft wall shelving 5ft high 52ft wall fixtures with shelves 7ft high
8 end stand units 3ft wide 1 glass showcase 8ft
2 glass shelf gift fixture 5ft 2 glass shelf gift fixture 7ft
2 check-out counters 1 neon "open" sign
1 power-mate answering machine 4 ceiling security mirrors
1 blood pressure machine floor model assorted wood display fixtures
1 wood desk and chair 1 TV/VCR combo for training
1 Toshiba microwave 1 Xxxxx xxxxxx pill counter
1 fax machine 1 unit dose heat seal w/ blister cards
1 metal dolly 2 wheel 2 metal drawer file cabinets
1 metal file cabinet with shelves/Rx dept c-2
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EXHIBIT C
1. LIST OF SECURED DEBTS.
1. Advertising. Southwestern Xxxx Yellow Pages from September 1, 1997
to December 31, 1997. $94.00 per month x 4 months = $376.00
2. Real Estate lease. Real property lease for the store located at 0000
X. Xxxxxxxx Xxxxxxxx, XX 00000 from 91/97 to 12/31/97. $2,650.00 per
month x 4 months = $10,600.00
3. Equipment Leases
Lessor Monthly Pmt Remaining Months Total Due
NDC $297.47 11 $ 3,569.64
NDC-POS $305.57 12 $ 3,972.41
AT & T computer $162.37 45 $ 7,306.65
Total $14,848.70
Buyer and Seller will pay for and be obligated to pay for one-half of each
month's rental payment until the equipment leases are paid in full or otherwise
terminated. If and when Seller and Xxxxxx Xxxxxxx are released from any
obligations which they may have on the leases, Seller will convey fifty percent
(50%) of the remaining balance on the equipment leases to Buyer. Until such
leases are obtained, each party obligates itself to pay 50% of each month's
payment.
EXHIBIT D
1. ALL COLLECTIBLES & ANTIQUES ARE EXCLUDED:
Which include the following:
1 Alchemy clock
1 antique wood wheelchair
1 show globe / ceiling hanging
1 wood desk in office
2 wood show cases filled with pharmacy memorabilia
all items on top of Rx department shelves and cupboards
all tile plaques hanging in Rx department
Pharmacist Bear (hand carved) redwood
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