PURCHASE AGREEMENT
AGREEMENT made the 23rd day of JANUARY 1998 between Steelville Drug a sole
proprietorship ("Seller"), and HORIZON Pharmacies, Inc., a Texas Corporation
("Buyer").
W I T N E S S E T H
WHEREAS, Seller operates a retail pharmacy doing business as Steelville
Drug (the Drug Store") located at ▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Retail Location").
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
certain assets utilized in connection with and as part of Seller's operation
of the Drug Store upon the terms and conditions stated herein:
NOW, THEREFORE, for good, and valuable consideration, the receipt and
adequacy of which are hereby the acknowledged, the parties agree as follows:
1. SALE OF ASSETS.
1.1. ASSETS TO BE PURCHASED. Seller hereby agrees to convey,
transfer, assign, and deliver to Buyer on a going concern basis,
and Buyer hereby agrees to purchase from Seller all of Seller's
assets located at or used in connection with Seller's operation
of the Drug Store including but not limited to:
A. MARKETABLE INVENTORY. All marketable pharmaceutical and
retail inventory of Seller held for retail sale by the Drug
Store; and
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.
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which, in Buyer's reasonable opinion, is unsalable because it is
obsolete, its expiration date has expired or it has been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; (v) seasonal merchandise; or
(vi) prescription merchandise more than 30 days old or
prescription merchandise or over-the-counter drugs which are (a)
in a partially filled container with a date which will expire
within 90 days of the closing date; or (b) in a full, sealed
container with a date which is expired; (vii) all third party
insurance receivables for services rendered on or before Closing
Date.
1.3 TELEPHONE NUMBERS. Seller agrees to use all reasonable efforts
and take all action necessary to assure that all telephone
numbers used at the Drug Store shall be transferred without
interruption to Buyer.
BUYER INITIAL R.D.M. 1 SELLER INITIALS ▇.▇.
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2. PURCHASE PRICE.
2.1. COMPUTATION. The purchase price to be paid by the Buyer for the
Drug Stores Assets shall be computed as follows: (1) $330,000.00
for prescription files, patient profiles, furniture, fixtures,
equipment, goodwill, and non-compete agreement; PLUS (ii) the
discounted fair market value of all inventory consulting 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) $150,000.00 on the closing Date by certified or cashier's
check (less of the ▇▇▇▇▇▇▇ Money Deposit as such term
in defined in Section 2.4, below);
(b) $100,000.00 payment in two equal amount payments on first
of the month 30 days and 60 days after the Closing Date.
(c) Shares of Buyer's common stock, par value $.01 per share
(the "HORIZON Common Stock"), equivalent to $50,000.00,
based upon the average closing price for the HORIZON common
stock as reported in the Wall Street Journal for the ten
(10) business days immediately preceding the Closing Date,
as such term is defined in Section 7.1, below; and
(d) The balance in a negotiable promissory note in the form
attached in Exhibit "C" attached hereto secured by the
inventory of the Drug Store;
(e) 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.
2.4. ▇▇▇▇▇▇▇ MONEY DEPOSIT. Buyer herewith deposits with Steelville
Drug (the "Escrow Agent"), the sum of $1,000 (the "▇▇▇▇▇▇▇ Money
Deposit")), which sum shall be applied to the cash portion of
the purchase price at Closing. In the event Seller fails to
perform each and every covenant and condition required
hereunder, Buyer may terminate this Agreement by giving Seller
written notice and Seller shall return the ▇▇▇▇▇▇▇ Money to
Buyer within three (3) days of Seller's receipt of such notice.
In the event Buyer fails to perform each and every obligation
hereunder, Seller may terminate this Agreement and retain the
▇▇▇▇▇▇▇ Money as liquidated damages. The remedies provided in
this Section shall be the exclusive remedies for a breach of this
Section.
2.5 TAXES
2.5.1 SALES, USE, AND TRANSFER TAXES. Buyer shall pay any and all
sales, use, and transfer taxes arising out of the sale of
the Drug Store Assets pursuant to this Agreement.
2.5.2 PERSONAL PROPERTY TAXES. Seller shall pay all personal
property taxes attributable to the Drug Store Assets for
the period up to and including the Closing Date, and Buyer
shall pay all personal property taxes attributable to the
Drug Store Assets for the period following the Closing
Date. The parties shall, using last year's tax returns,
estimate as of the Closing Date the personal property taxes
anticipated to be owed on the Drug Store Assets for the
current calendar year, and Seller's pro rata portion of
such estimated taxes shall be withheld by Buyer from the
purchase price described in Section 2.3,
BUYER INITIAL R.D.M. 2 SELLER INITIALS ▇.▇.
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2.6 INVENTORY EVALUATION. A physical inventory of the Drug Store Assets
shall be performed on the Closing Date by an Independent third party
inventory service. Each party shall pay one-half of the fee charged
by the service company, with Seller's pro rata share of such costs to
be deducted from the purchase price payable by Buyer at Closing. For
purposes of calculating that portion of the purchase price attributed
to inventory under Section 2, above, the marketable inventory shall
be valued as follows, except as otherwise provided herein:
Marketable Inventory Method of Valuation
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Prescription inventory Acquisition cost or AWP less 16%
except for special deal prescription
items or generic items which shall
be valued at acquisition cost
Non-Prescription inventory Acquisition cost
In the event Seller is unable to establish the acquisition cost of any
non-prescription inventory, the following formula shall be applied in
valuing such inventory.
Category of Merchandise Method of Valuation
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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 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.
BUYER INITIAL R.D.M. 3 SELLER INITIALS ▇.▇.
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3.1.4 BOOKS AND RECORDS. Seller's books and records which have
been provided to Buyer for inspection are true, correct and
complete, and contain no material omission with respect to Seller's
business, operation or status.
3.1.5 STATEMENTS NOT MISLEADING. No representation, warranty or
other information disclosed to Buyer in connection with this
Agreement omits or will omit to state the material facts necessary
to make such representation, warranty or information not misleading.
3.1.6 COMPLIANCE WITH APPLICABLE LAWS. Seller has received no notice
of violation of any applicable law, regulation or requirement relating
to the operation of the Drug Store, the Drug Store Assets or the
Retail Location, and Seller has no knowledge of or reason to believe
any such violation exists. Seller is in full compliance with all
wages and hour laws, and to the best of its knowledge is not engaged
in any unfair labor practice or discriminatory employment practice
and no complaint of any such practice against Seller is filed or
threatened to be filed with or by the National Labor Relation Board,
the Equal Employment Opportunity Commission or any other
administrative agency, Federal or state, that regulates labor or
employment practices, nor is any grievances filed or threatened to
be filed against Seller by any employee pursuant to any collect
bargaining or other employment agreement to which Seller is a party.
To the Seller's best knowledge it is in compliance with all
applicable Federal and state laws and regulations regarding
occupational safety and health standards and has received no
material complaints from any Federal or state agency or regulatory
body alleging violations of any such laws and regulations.
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 Store which extends
beyond the Closing Date.
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 Store's 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, Drug Store, the Drug Store Assets or the 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.
BUYER INITIAL R.D.M. 4 SELLER INITIALS ▇.▇.
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3.1.11 TAXES.
(a) Seller has filed all required Federal, state, local,
foreign and other tax returns, notices and reports
(including, but not limited to, income, property, sales,
use, franchise, capital, stock, excise, added value,
employee's income withholding, social security and
unemployment tax returns) heretofore due; and to Seller's
best knowledge all such returns, notices, and reports are
correct, accurate, and complete.
(b) Seller has made all deposits required to be made in
connection with any tax including but not limited to,
estimated income, franchise, sales, use, and employee
withholding taxes.
(c) Seller has paid or made adequate reserves on its books
of account for all taxes, assessments, fees, penalties,
interest and other governmental charges which have become
due and payable, and the amounts reflected on such books
are to Seller's best knowledge sufficient for the payment
of all unpaid Federal, state, local, 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 Security 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 Security 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.
3.2 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 Texas, 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 4,500,000 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.
BUYER INITIAL R.D.M. 5 SELLER INITIALS ▇.▇.
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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 Store's business and property 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 executed a lease
covering the Retail Location.
4.1.6 LICENSE TO OPERATE RETAIL PHARMACY. Buyer shall have obtained
a valid license to operate a retail pharmacy under the HORIZON
Pharmacies, Inc. name in the state of Missouri.
4.2 SELLER'S CONDITIONS TO CLOSING. All obligations of Seller under this
Agreement are subject to the fulfillment, prior to or at Closing, of
each of the following conditions (unless waived in writing by Seller).
4.2.1 REPRESENTATIONS. The representations and warranties of Buyer
contained in this Agreement shall be true and complete at the
Closing Date as if they were made at such time.
4.2.2 COMPLIANCE. Buyer shall have performed and complied with all
terms and conditions required by this Agreement to be
performed or complied with by it prior to or on the Closing
Date.
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.
6. INDEMNIFICATION.
6.1 SELLER'S INDEMNIFICATION OF BUYER. Seller and ▇▇▇▇ ▇▇▇▇▇▇
shall indemnify and hold harmless Buyer against and in
respect of any and all liabilities concerning or otherwise
connected to the conduct or operation of the Drug Store
as of or prior to the Closing Date, and with the exception
of liabilities expressly assumed by Buyer, 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
BUYER INITIAL R.D.M. 6 SELLER INITIALS ▇.▇.
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unliquidated, accrued or otherwise, and regardless of how
and when the same may have arisen, which are asserted
against Buyer as a result of this Agreement or the
consummation of the transactions contemplated herein.
6.2 BUYER'S INDEMNIFICATION OF SELLER. Buyer shall indemnify
and hold harmless Seller against and in respect of any and
all liabilities concerning or otherwise connected to the
conduct or operation of the Drug Store following the
Closing Date.
7. CLOSING.
7.1 CLOSING DATE. The closing shall take place at the Retail
Location on or before 2/28/98 (the "Closing Date") but in
no event later than 3/15/98 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 ▇▇▇▇ 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.
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. Except as otherwise herein,
▇▇▇▇ ▇▇▇▇▇▇ shall not, for a period of six (6) years
after the Closing Date, 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 which includes a retail pharmacy, nursing
home or home health care company, or which offers for
sale or lease durable medical equipment within the city
limits of Steelville, Missouri. The parties expressly
agree that ▇▇▇▇ ▇▇▇▇▇▇ may serve no more than one (1)
day per week as a relief pharmacist at retail pharmacies
not owned or operated by Buyer. 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
BUYER INITIAL R.D.M. 7 SELLER INITIALS ▇.▇.
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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. The Buyer's
audit will be conducted after the Closing Date.
8.6 GOVERNING LAW. This agreement shall be governed and construed in
accordance with the laws of the state of MISSOURI.
8.7 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.
8.8 ASSIGNMENT. This agreement may not be assigned by Buyer 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.
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/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, President
SELLER:
Steelville Drugs, Inc.
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Witness:
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇ /s/ ▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇, President
BUYER INITIAL R.D.M. 8 SELLER INITIALS ▇.▇.
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