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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): January 1, 1998
HORIZON PHARMACIES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 0-22403 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 January 1, 1998, the registrant, HORIZON Pharmacies, Inc.
("Registrant"), acquired substantially all of the assets of Gerald Ray d/b/a
Health Call Equipment Rental/Nurse Mates, a sole proprietorship ("Health
Call"), comprising primarily durable medical equipment ("DME") inventory held
for rent and/or retail sale, all business and other files, patient profiles
and customer lists, all furniture, fixtures and equipment, and all supplies
used in the operation of Health Call's business. The Registrant acquired the
assets through arm's-length negotiations with Gerald Ray.
Prior to this transaction, no material relationships existed between Mr.
Ray or Health Call 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) $117,419.86 cash;
and (ii) a promissory note in the amount of $145,000 payable over 84 months
in equal monthly installments bearing interest at 81/2% 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 operations of Health Call under
the HORIZON Pharmacies, Inc. name. In connection therewith, the Registrant
has secured a real estate lease covering Health Call's current retail
location and has secured a valid Colorado license to operate a DME 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 January 1, 1998 by and between
Gerald Ray d/b/a Health Call Equipment Rental/Nurse
Mates, 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: January 6, 1998 By: /s/Ricky D. McCord
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Ricky D. McCord, President
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INDEX TO EXHIBITS
Exhibit
Number Description
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2 Purchase Agreement dated January 1, 1998 by and between Gerald Ray
d/b/a Health Call Equipment Rental/Nurse Mates and HORIZON Pharmacies,
Inc.
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PURCHASE AGREEMENT
AGREEMENT made the 1 day of JANUARY 1998 between GERALD RAY, d/b/a
HEALTH CALL 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 HEALTH CALL
EQUIPMENT RENTAL (the Store") located at 1032 ROYAL GORGE BLVD., CANON CITY,
CO 81212 (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 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 except
Account Receivable balances located at or used in connection with
Seller's operation of the Store including but not limited to:
A. MARKETABLE INVENTORY. All marketable rental and retail inventory
of Seller held for retail sale by the Store; and
B. PRESCRIPTION FILES AND PATIENT PROFILES. All 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 other usable supplies, and two vehicles
(1991 Mitsubishi Truck, 1994 Mitsubishi Truck)
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 Store shall be transferred without interruption to Buyer.
BUYER INITIAL ______ 1 SELLER INITIALS ______
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2. PURCHASE PRICE.
2.1 COMPUTATION. The purchase price to be paid by the Buyer for the
Stores Assets shall be computed as follows: (i) $110,000 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 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) $ 117,419.86 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 a negotiable promissory note in the form attached
in Exhibit "C" attached hereto secured by the inventory of the
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
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 EARNEST MONEY DEPOSIT. Buyer herewith deposits with GERALD RAY
(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 Store Assets pursuant to this Agreement.
2.5.2 PERSONAL PROPERTY TAXES. Seller shall pay all personal
property taxes attributable to the Store Assets for the
period up to and including the Closing Date, and Buyer shall
pay all personal property taxes attributable to the 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 Store Assets for the current calendar year,
and Seller's pro rata portion of such estimated taxes shall
be withheld by Buyer from the purchase price described in
Section 2.3, above.
2.6 INVENTORY EVALUATION A physical inventory of the 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
BUYER INITIAL ______ 2 SELLER INITIALS ______
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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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DME Rental @ Store Actual Cost less 40%
DME Rental @ other locations Will be agreed upon by Buyer and
Seller
DME New @ Store Actual Cost
DME Retail @ Store Actual Cost Less 50%
Total inventory evaluation shall not exceed $175,000.00
3. REPRESENTATIONS AND WARRANTIES.
3.1. The Seller does hereby represent and warrant to Buyer as follows:
3.1.1 ORGANIZATION. Seller is a sole proprietorship duly organized
and existing in good standing.
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 Store assets, free and clear of all mortgages, liens,
encumbrances, pledges, or security interests of any nature whatsoever,
except for secured debts, if any, listed on Exhibit "D" attached
hereto which shall be satisfied and released at or prior to closing.
3.1.4 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 Store, the 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
sate 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.
BUYER INITIAL ______ 3 SELLER INITIALS ______
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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 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 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 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, Store, the 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.
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 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.
3.1.13 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)
BUYER INITIAL ______ 4 SELLER INITIALS ______
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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.
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 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 "STORE". Buyer shall have obtained a valid
license to operate a DME operation under the HORIZON Pharmacies, Inc.
name in the state of COLORADO.
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.
BUYER INITIAL ______ 5 SELLER INITIALS ______
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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 GERALD RAY 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 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
Store following the Closing Date.
7. CLOSING.
7.1 CLOSING DATE. The closing shall take place at the Retail Location on
or before JANUARY 1, 1998 (the "Closing Date") but in no event later
than JANUARY 1, 1998 unless otherwise agreed by the parties in
writing.
7.2 SELLER'S OBLIGATIONS AT CLOSING. Seller shall deliver to Buyer at
closing of this Agreement a Bill of Sale effective to vest in Buyer
good and marketable title to the 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 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; and (ii) the Note and
security Agreement 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 Store Assets shall be
upon Seller until the closing hereof.
8.3 COVENANT NOT TO COMPETE. Except as otherwise herein, GERALD RAY
shall not, for a period of five (5) 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
BUYER INITIAL ______ 6 SELLER INITIALS ______
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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
CANON CITY, COLORADO. The parties expressly agree that GERALD
RAY may serve no more than one (1) day per week at a location 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 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 conductede after Closing Date.
8.6 GOVERNING LAW. This agreement shall be governed and construed in
accordance with the laws of the state of COLORADO.
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:
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Rick McCord, President
SELLER: Gerald Ray, d/b/a Health Call
BUYER INITIAL ______ 7 SELLER INITIALS ______
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Witness:
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Gerald Ray, Owner
BUYER INITIAL ______ 8 SELLER INITIALS ______
