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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): December 10, 1997
HORIZON PHARMACIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 333-25257 75-2441557
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
275 W. PRINCETON DRIVE
PRINCETON, TEXAS 75407
(Address of Principal Executive Offices) (Zip Code)
(972) 736-2424
(Registrant's telephone number, including area code)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 10, 1997, the registrant, HORIZON Pharmacies, Inc.
("Registrant"), acquired substantially all of the assets of Mart Super Drugs, a
Missouri partnership (the "Pharmacy"), comprising primarily pharmacy files,
equipment, inventory and supplies. The Registrant acquired the assets through
arm's-length negotiations with Scott Spencer and Jacques C. Jett, the Pharmacy's
sole partners.
Prior to this transaction, no material relationships existed between the
Pharmacy and the Registrant or any of its affiliates, any director or officer of
the Registrant, or any associate of such director or officer.
The consideration for the acquisition consisted of (i) $120,000 cash; (ii)
two promissory notes each in the amount of $103,120.09 payable over 84 months in
equal monthly installments bearing interest at 8% per annum. The cash portion
of the purchase price was derived from proceeds of the Registrant's initial
public offering which closed July 11, 1997.
The Registrant intends to continue the retail pharmacy operations of the
Pharmacy under the HORIZON Pharmacies, Inc. name. In connection therewith, the
Registrant has secured a real estate lease covering the current retail location
of the Pharmacy and has secured a valid Missouri license to do business at that
location under the HORIZON Pharmacies, Inc. name.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is impracticable at this time to provide the required financial
statements of the acquired business described in Item 2. This information will
be provided within 60 days by an amendment to this report.
(b) PRO FORMA FINANCIAL INFORMATION.
See (a) above.
(c) EXHIBITS.
The following exhibits are filed with this report:
Exhibit No. Name of Exhibit
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2 Purchase Agreement dated December 1, 1997 by and
between Mart Super Drugs, a Missouri partnership, and
HORIZON Pharmacies, Inc. Omitted from this Agreement,
as filed, are the exhibits thereto. The Registrant
will furnish supplementally a copy of any such omitted
exhibits to the Commission upon request.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
REGISTRANT:
HORIZON PHARMACIES, INC.
Date: December 16, 1997 By: /s/Ricky D. McCord
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Ricky D. McCord, President
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INDEX TO EXHIBITS
Appears at
Exhibit Sequentially
Number Description Numbered Page
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2 Purchase Agreement dated December 1, 5
1997 by and between Mart Super Drugs,
a Missouri partnership, and HORIZON
Pharmacies, Inc. Omitted from this
Agreement, as filed, are the exhibits
thereto. The Registrant will furnish
supplementally a copy of any such omitted
exhibits to the Commission upon request.
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PURCHASE AGREEMENT
AGREEMENT made the 1 day of December, 1997 between Mart Super Drugs, a
Missouri partnership ("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 Mart Super
Drugs (the "Drug Store") located at 206 N. Main, Brookfield, MO 64628 (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 be 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 lists, 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, and a 1993 Chevy
Corsica, and 10 Med carts.
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 /s/ [ILLEGIBLE] Seller Initial /s/ [ILLEGIBLE]
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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: (i) $ $90,000 for
prescription files, patient profiles, furniture, fixtures,
equipment, goodwill, and non-compete agreement; PLUS (ii) the
discounted fair market value of all inventory constituting a part of
the Drug Store Assets determined in accordance with Section 2.6,
below; PLUS (iii) an amount equal to the cash value of all
individual accounts receivable on the Closing Date discounted as
follows:
Age of Account Balance Percentage Payable
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0-30 days 100%
31-60 days 80%
61-90 days 60%
91+days -0-
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) $ 120,000 on the Closing Date by certified or cashier's check
(less of the Earnest Money Deposit as such term is defined in
Section 2.4, below);
(b) The balance in negotiable promissory notes in the form attached
in Exhibit "C" (50% to Scott Spencer and 50% to Jacque C.
Jett) attached hereto secured by the inventory of the Drug
Store;
(c) Buyer shall deduct from the purchase price payable at Closing
an amount equal to the sum of (i) Seller's pro rata share of
any outstanding personal property taxes as described in Section
2.5.2, below; (ii) one half of the fee charged by the third
party inventory service.
2.4 EARNEST MONEY DEPOSIT. Buyer herewith deposits with James Duffy
(the "Escrow Agent"), the sum of $1,000 (the "Earnest 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 Earnest 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 Earnest 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 cash portion of the purchase price
described in Section 2.3, above.
Buyer Initial /s/ [ILLEGIBLE] Seller Initial /s/ [ILLEGIBLE]
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2.6 INVENTORY VALUATION. 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%
All liquor inventory are excluded in the inventory evaluation and will not be a
part of this purchase.
3. REPRESENTATIONS AND WARRANTIES.
3.1. Seller does hereby represent and warrant to Buyer as follows:
3.1.1 ORGANIZATION. Seller is a partnership duly organized and
existing in good standing under the laws of its state of
(organization) and is entitled to own and lease RDM JJ SS 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. 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 /s/ [ILLEGIBLE] Seller Initial /s/ [ILLEGIBLE]
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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,
operations 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 wage 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 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 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 governmental body against or affecting
Seller, the Drug Store, the Drug Store Assets or the Retail Location.
3.1.10 EMPLOYEE BENEFIT PLANS. 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 /s/ [ILLEGIBLE] Seller Initial /s/ [ILLEGIBLE]
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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, employees' 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 ended and or all periods
prior thereto.
3.1.1 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.
3.1.2 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 any officer, employee or agent,
or make any bonus arrangement with any officer, 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.
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
parties, if any.
Buyer Initial /s/ [ILLEGIBLE] Seller Initial /s/ [ILLEGIBLE]
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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 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
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 December 10, 1997 (the "Closing Date") but in no event
later than December 10, 1997 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 Bill of Sale effective to vest in
Buyer good and marketable title to the
Buyer Initial /s/ [ILLEGIBLE] Seller Initial /s/ [ILLEGIBLE]
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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 of transfer 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;
8. MISCELLANEOUS
8.1 SURVIVAL OF REPRESENTATIONS, 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 damage of Drug Store Assets shall
be upon Seller until the closing hereof.
8.3 Covenant Not to Compete. Except as otherwise provided herein, Scott
Spencer and Jacques C. Jett 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 Brookfield, MO. The parties expressly agree that
Scott Spencer and Jacques C. Jett 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 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.
8.4 RIGHT TO ENJOIN BREACH. The parties agree that in the event of a
breach by Seller of any provision of this paragraph, monetary damages
alone would be inadequate and Buyer shall, in addition to all other
legal remedies, be entitled to obtain an order enjoining Seller from
violating the covenants set forth herein.
8.5 ACCESS TO RECORDS. Seller shall give Buyer, its counsel, accountants
and representatives, reasonable access during normal business hours to
all of Seller's books, contracts, commitments and records and furnish
Buyer with all information which Buyer reasonably may request to
conduct a financial audit of the last two (2) fiscal years at Buyer's
expense.
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.
Buyer Initial /s/ [ILLEGIBLE] Seller Initial /s/ [ILLEGIBLE]
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IN WITNESS WHEREOF, the parties hereto have set their hands the day and
year first above written.
BUYER: HORIZON PHARMACIES, INC.
Witness:
/s/ Elizabeth F. Duffy /s/ Rick McCord, President
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Rick D. McCord, President
SELLER: Scottt Spencer & Jacques C. Jett
d/b/a Mart Super Drugs
Witness:
[illegible] /s/ Scott Spencer
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Scott Spencer, Partner
Witness:
/s/ [illegible] /s/ Jacques Jett
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Jacques C. Jett, Partner
Buyer Initial Seller Initial
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