<PAGE>
PROMISSORY NOTE
$7,000,000.00 July 31, 1999
FOR VALUE RECEIVED, on or before July 31, 2000 ("MATURITY DATE"), the
undersigned HORIZON PHARMACIES, INC., a Delaware corporation ("BORROWER"),
promises to pay to the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION
("BANK") at its offices in Dallas County, Texas at 1717 Main Street, 3rd
Floor, Dallas, Texas 75201, the principal amount of SEVEN MILLION AND NO/100
DOLLARS ($7,000,000.00) ("TOTAL PRINCIPAL AMOUNT"), or such amount less than
the Total Principal Amount which has been advanced to Borrower if the total
amount advanced under this Promissory Note ("NOTE") is less than the Total
Principal Amount, together with interest on such portion of the Total
Principal Amount which has been advanced to Borrower from the date advanced
until paid at a fluctuating rate per annum which shall from day to day be
equal to the lesser of (a) the Maximum Rate (as hereinafter defined), or (b)
a rate ("CONTRACT RATE"), calculated on the basis of the actual days elapsed
but computed as if each year consisted of three hundred sixty (360) days,
equal to the sum of (i) the Prime Rate of interest ("PRIME RATE") as
established from time to time by Bank (which may not be the lowest, best or
most favorable rate of interest which Bank may charge on loans to its
customers) LESS (ii) two percent (2%), each change in the rate to be charged
on this Note to become effective without notice to Borrower on the effective
date of each change in the Maximum Rate or the Prime Rate, as the case may
be; provided, however, that if at any time the Contract Rate shall exceed the
Maximum Rate, thereby causing the interest on this Note to be limited to the
Maximum Rate, then any subsequent reduction in the Prime Rate shall not
reduce the rate of interest on this Note below the Maximum Rate until the
total amount of interest accrued on this Note equals the amount of interest
which would have accrued on this Note if the Contract Rate had at all times
been in effect.
Interest shall be due and payable monthly as it accrues, commencing
on the 1st day of September, 1999, and continuing on the 1st day of each
successive month thereafter during the term of this Note; and the outstanding
principal balance of this Note, together with all accrued but unpaid
interest, shall be due and payable on the Maturity Date.
If a payment is ten (10) or more days late, Borrower will pay a
delinquency charge in an amount equal to the greater of (i) five percent (5%)
of the amount of the delinquent payment up to the maximum amount of $250.00,
or (ii) $25.00. Upon an Event of Default, including failure to pay upon
final maturity, Bank, at its option, may also, if permitted under applicable
law, do one or both of the following: (a) increase the Contract Rate three
(3.00) percentage points, and (b) ADD any unpaid accrued interest to
principal and such sum will bear interest therefrom until paid at the rate
provided in this Note (including any increased Contract Rate).
Borrower may from time to time prepay all or any portion of the
principal of this Note without premium or penalty. Unless otherwise agreed to
in writing, or otherwise required by applicable law, payments will be applied
first to unpaid accrued interest, then to principal, and any remaining amount
to any unpaid collection costs, delinquency charges and other charges;
provided, however, upon delinquency or other Event of Default, Bank reserves
the right to apply payments among principal, interest, delinquency charges,
collection costs and other charges, at its discretion. All prepayments shall
be applied to the indebtedness owing hereunder in such order and manner as
1
<PAGE>
Bank may from time to time determine in its sole discretion. All payments
and prepayments of principal of or interest on this Note shall be made in
lawful money of the United States of America in immediately available funds,
at the address of Bank indicated above, or such other place as the holder of
this Note shall designate in writing to Borrower. If any payment of
principal of or interest on this Note shall become due on a day which is not
a Business Day (as hereinafter defined), such payment shall be made on the
next succeeding Business Day and any such extension of time shall be included
in computing interest in connection with such payment. As used herein, the
term "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or any
other day on which national banking associations are authorized to be closed.
The books and records of Bank shall be PRIMA FACIE evidence of all
outstanding principal of and accrued and unpaid interest on this Note.
This Note has been executed and delivered pursuant to that certain
Loan Agreement dated of even date herewith by and between Borrower and Bank
("LOAN AGREEMENT"). This Note, the Loan Agreement and all other documents
evidencing, securing, governing, guaranteeing and/or pertaining to this Note,
including, but not limited to, those documents described above, are
hereinafter collectively referred to as the "LOAN DOCUMENTS". The holder of
this Note is entitled to the benefits and security provided in the Loan
Documents.
Borrower agrees that no advances under this Note shall be used for
personal, family or household purposes, and that all advances hereunder shall
be used solely for business, commercial, investment, or other similar
purposes.
Borrower agrees that upon the occurrence of any one or more of the
following events of default ("EVENT OF DEFAULT"):
(a) Failure of Borrower to pay any installment of principal
of or interest on this Note or on any other indebtedness of Borrower to
Bank when due if such failure shall continue for ten (10) days; or
(b) The occurrence of any event of default specified in any
of the other Loan Documents; or
(c) The bankruptcy or insolvency of, the assignment for the
benefit of creditors by, or the appointment of a receiver for any of
the property of, or the liquidation, termination, dissolution or death
or legal incapacity of, any party liable for the payment of this Note,
whether as maker, endorser, guarantor, surety or otherwise;
the holder of this Note may, at its option, without further notice or demand,
(i) declare the outstanding principal balance of and accrued but unpaid
interest on this Note at once due and payable, (ii) refuse to advance any
additional amounts under this Note, (iii) foreclose all liens securing
payment hereof, (iv) pursue any and all other rights, remedies and recourses
available to the holder hereof, including, but not limited to, any such
rights, remedies or recourses under the Loan Documents, at law or in equity,
or (v) pursue any combination of the foregoing.
The failure to exercise the option to accelerate the maturity of this
Note or any other right, remedy or recourse available to the holder hereof
upon the occurrence of an Event of Default
2
<PAGE>
hereunder shall not constitute a waiver of the right of the holder of this
Note to exercise the same at that time or at any subsequent time with respect
to such Event of Default or any other Event of Default. The rights, remedies
and recourses of the holder hereof, as provided in this Note and in any of
the other Loan Documents, shall be cumulative and concurrent and may be
pursued separately, successively or together as often as occasion therefore
shall arise, at the sole discretion of the holder hereof. The acceptance by
the holder hereof of any payment under this Note which is less than the
payment i full of all amounts due and payable at the time of such payment
shall not (i) constitute a waiver of or impair, reduce, release or extinguish
any right, remedy or recourse of the holder hereof, or nullify any prior
exercise of any such right, remedy or recourse, or (ii) impair, reduce,
release or extinguish the obligations of any party liable under any of the
Loan Documents as originally provided herein or therein.
This Note and all of the other Loan Documents are intended to be
performed in accordance with, and only to the extent permitted by, all
applicable usury laws. If any provision hereof or of any of the other Loan
Documents or the application thereof to any person or circumstance shall, for
any reason and to any extent, be invalid or unenforceable, neither the
application of such provision to any other person or circumstance nor the
remainder of the instrument in which such provision is contained shall be
affected thereby and shall be enforced to the greatest extent permitted by
law. It is expressly stipulated and agreed to be the intent of the holder
hereof to at all times comply with the usury and other applicable laws now or
hereafter governing the interest payable on the indebtedness evidenced by
this Note. If the applicable law is ever revised, repealed or judicially
interpreted so as to render usurious any amount called for under this Note or
under any of the other Loan Documents, or contracted for, charged, taken,
reserved or received with respect to the indebtedness evidenced by this Note,
or if Bank's exercise of the option to accelerate the maturity of this Note,
or if any prepayment by Borrower results in Borrower having paid any interest
in excess of that permitted by law, then it is the express intent of Borrower
and Bank that all excess amounts theretofore collected by Bank be credited on
the principal balance of this Note (or, if this Note and all other
indebtedness arising under or pursuant to the other Loan Documents have been
paid in full, refunded to Borrower), and the provisions of this Note and the
other Loan Documents immediately be deemed reformed and the amounts
thereafter collectable hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the then
applicable law, but so as to permit the recovery of the fullest amount
otherwise called for hereunder or thereunder. All sums paid, or agreed to be
paid, by Borrower for the use, forbearance, detention, taking, charging,
receiving or reserving of the indebtedness of Borrower to Bank under this
Note or arising under or pursuant to the other Loan Documents shall, to the
maximum extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of such indebtedness until payment in
full so that the rate or amount of interest on account of such indebtedness
does not exceed the usury ceiling from time to time in effect and applicable
to such indebtedness for so long as such indebtedness is outstanding. To the
extent federal law permits Bank to contract for, charge or receive a greater
amount of interest, Bank will rely on federal law instead of the Texas
Finance Code, as supplemented by Texas Credit Title, for the purpose of
determining the Maximum Rate. Additionally, to the maximum extent permitted
by applicable law now or hereafter in effect, Bank may, at its option and
from time to time, implement any other method of computing the Maximum Rate
under the Texas Finance Code, as supplemented by Texas Credit Title, or under
other applicable law, by giving notice, if required, to Borrower as provided
by applicable law now or hereafter in effect. Notwithstanding anything to
the contrary contained herein
3
<PAGE>
or in any of the other Loan Documents, it is not the intention of Bank to
accelerate the maturity of any interest that has not accrued at the time of
such acceleration or to collect unearned interest at the time of such
acceleration.
In no event shall Chapter 346 of the Texas Finance Code (which
regulates certain revolving loan accounts and revolving tri-party accounts)
apply to this Note. To the extent that Chapter 303 of the Texas Finance
Code, is applicable to this Note, the "WEEKLY CEILING" specified in such
Chapter 303 is the applicable ceiling; provided that, if any applicable law
permits greater interest, the law permitting the greatest interest shall
apply.
If this Note is placed in the hands of an attorney for collection, or
is collected in whole or in part by suit or through probate, bankruptcy or
other legal proceedings of any kind, Borrower agrees to pay, in addition to
all other sums payable hereunder, all costs and expenses of collection,
including, but not limited to reasonable attorneys' fees.
Borrower and any and all endorsers and guarantors of this Note
severally waive presentment for payment, notice of nonpayment, protest,
demand, notice of protest, notice of intent to accelerate, notice of
acceleration and dishonor, diligence in enforcement and indulgences of every
kind and without further notice hereby agrees to renewals, extensions,
exchanges or releases of collateral, taking of additional collateral,
indulgences or partial payments, either before or after maturity.
THIS NOTE HAS BEEN EXECUTED UNDER, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS, EXCEPT AS SUCH
LAWS ARE PREEMPTED BY APPLICABLE FEDERAL LAWS.
BORROWER:
HORIZON PHARMACIES, INC.,
a Delaware corporation
By: /s/ John N. Stogner
------------------------------------
Printed Name: John N. Stogner
--------------------------
Title: CFO
---------------------------------
4
