-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M3HFcDNOqywAS+VwZfQNWh9M7PIXil+y0V0dTz0qkQ8jXLjjUOuCPSZPQ/Lh9yku 0Cw0sXvWk/2TWf1dAjNH5g== 0000912057-00-018093.txt : 20000417 0000912057-00-018093.hdr.sgml : 20000417 ACCESSION NUMBER: 0000912057-00-018093 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000406 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 20000414 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HORIZON PHARMACIES INC CENTRAL INDEX KEY: 0001036260 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DRUG STORES AND PROPRIETARY STORES [5912] IRS NUMBER: 752441557 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 000-22403 FILM NUMBER: 601279 BUSINESS ADDRESS: STREET 1: 531 W MAIN STREET STREET 2: SUITE 100 CITY: DENISON STATE: TX ZIP: 75020 BUSINESS PHONE: 9034652397 MAIL ADDRESS: STREET 1: 531 W MAIN STREET STREET 2: SUITE 100 CITY: DENISON STATE: TX ZIP: 75020 8-K 1 FORM 8-K =============================================================================== 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): APRIL 6, 2000 --------------------------- HORIZON PHARMACIES, INC. (Exact name of Registrant as specified in its charter) DELAWARE 000-22403 75-2441557 (State or other (Commission File Number) (I.R.S. Employer jurisdiction of incorporation) Identification Number) 531 W. MAIN STREET SUITE 100 75020 DENISON, TEXAS (Zip code) (Address of principal executive offices) Registrant's telephone number, including area code: (903) 465-2397 NOT APPLICABLE (Former name or former address, if changed since last report) =============================================================================== ITEM 5. OTHER EVENTS On April 6, 2000, HORIZON Pharmacies, Inc., a Delaware corporation ("HORIZON"), entered into a strategic alliance with eGrocery.com, Inc., a Minnesota corporation ("eGrocery"). In connection therewith, HORIZON and eGrocery issued warrants to purchase each other's common stock and executed a Cooperative Marketing Agreement, dated April 6, 2000 (the "Agreement"), pursuant to which HORIZON will offer pharmaceuticals, health and beauty care products and home medical equipment to users of eGrocery's web sites. In addition, pursuant to the Agreement, HORIZON will pay to eGrocery a percentage of certain sales and transaction fees with respect to certain sales, and HORIZON and eGrocery will also each pay to the other a percentage of certain advertising revenues generated by each of HORIZON and eGrocery. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS. (c) EXHIBITS. 4.1 -- Warrant, dated April 5, 2000, between HORIZON Pharmacies, Inc. and eGrocery.com, Inc. 10.1 -- Cooperative Marketing Agreement, dated April 6, 2000, by and between HORIZON Pharmacies, Inc. and eGrocery.com, Inc. 99.1 -- April 13, 2000 Press Release
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this current report to be signed on its behalf by the undersigned thereunto duly authorized. HORIZON PHARMACIES, INC. By: /s/ John N. Stogner ------------------------------------------------ John N. Stogner Chief Financial Officer Date: April 14, 2000 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT TITLE ------- ------------- 4.1 -- Warrant, dated April 5, 2000, between HORIZON Pharmacies, Inc. and eGrocery.com, Inc. 10.1 -- Cooperative Marketing Agreement, dated April 6, 2000, by and between HORIZON Pharmacies, Inc. and eGrocery.com, Inc. 99.1 -- April 13, 2000 Press Release
EX-4.1 2 EXHIBIT 4.1 =============================================================================== THIS WARRANT AND THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED OR QUALIFIED FOR SALE UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED UNLESS SUCH OFFER, SALE OR TRANSFER IS REGISTERED OR QUALIFIED PURSUANT TO THE REGISTRATION REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR IS PRECEDED BY AN OPINION OF COUNSEL ADDRESSED TO HORIZON PHARMACIES, INC. THAT SUCH SALE OR OTHER TRANSFER IS EXEMPT FROM ALL SUCH REGISTRATION REQUIREMENTS. No. WR-2004 WARRANT TO PURCHASE SHARES OF COMMON STOCK OF HORIZON PHARMACIES, INC. ===============================================================================
TABLE OF CONTENTS SECTION 1. EXERCISE OF WARRANT.............................................................................1 SECTION 2. RESERVATION.....................................................................................2 SECTION 3. PROTECTION AGAINST DILUTION.....................................................................2 Section 3.1 Stock Dividends, Subdivisions, and Combinations............................................2 Section 3.2 Issuance of Additional Shares of Common Stock..............................................3 Section 3.3 Issuance of Warrants or Other Rights, Convertible Securities...............................3 Section 3.4 Other Provisions Applicable to Adjustments.................................................4 Section 3.5 Extraordinary Dividends....................................................................5 Section 3.6 Adjustment of Number of Shares Purchasable.................................................5 Section 3.7 Minimum Adjustment.........................................................................6 Section 3.8 Notice of Adjustments......................................................................6 SECTION 4. MERGERS, CONSOLIDATIONS, SALES..................................................................7 SECTION 5. DISSOLUTION OR LIQUIDATION......................................................................7 SECTION 6. NOTICE OF DIVIDENDS.............................................................................7 SECTION 7. FRACTIONAL SHARES...............................................................................8 SECTION 8. FULLY PAID STOCK; TAXES.........................................................................8 SECTION 9. CLOSING OF TRANSFER BOOKS.......................................................................8 SECTION 10. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT.........................................................8 Section 10.1 Partial Exercise...........................................................................8 Section 10.2 Assignment.................................................................................8 SECTION 11. DEFINITIONS.....................................................................................9 SECTION 12. WARRANT HOLDER NOT SHAREHOLDER.................................................................11 SECTION 13. SEVERABILITY...................................................................................11 SECTION 14. GOVERNING LAW..................................................................................12
i Warrant No. WR-2004 WARRANT TO PURCHASE SHARES OF COMMON STOCK OF HORIZON PHARMACIES, INC. THIS IS TO CERTIFY that, for value received and subject to the provisions hereinafter set forth, eGrocery.com, Inc. or its permitted assigns, is entitled to purchase from HORIZON Pharmacies, Inc., a Delaware corporation ("COMPANY"), at any time and from time to time during the Exercise Period, up to 100,000 shares of Common Stock, par value $0.01 per share, of Company, subject to the terms, provisions and conditions hereinafter set forth at a price per share equal to $10.00. The price per share is subject to adjustment as hereinafter provided (such price, or such price as last adjusted, as the case may be, being herein referred to as the "PER SHARE WARRANT PRICE"). The said number of shares purchasable hereunder is likewise subject to adjustment as hereinafter provided. The aggregate price of the Common Stock purchasable hereunder shall at all times be equal to the price per share set forth in the preceding paragraph multiplied by the number of shares initially purchasable hereunder. The aggregate price is herein sometimes referred to as the "Aggregate Warrant Price" and is not subject to adjustment. The terms which are capitalized herein shall have the meanings specified in Section 11 unless the context shall otherwise require. SECTION 1. EXERCISE OF WARRANT. Subject to the conditions hereinafter set forth, this Warrant may be exercised in whole or in part at any time and from time to time during the Exercise Period by the surrender of this Warrant (with the subscription from at the end hereof duly executed) at the principal office of Company in Denison, Texas, and upon payment to Company of a sum equal to the per share Warrant Price multiplied by the number of shares purchased in such exercise, which payment shall be made by the wire transfer or other delivery to Company of one or more types of Permitted Consideration. In the event that Warrants shall be delivered to Company as payment of all or any portion of the purchase price payable hereunder ("Cashless Exercise"), the amount of such purchase price deemed to be paid by means of such delivery shall equal (a) the aggregate number of shares of 1 Warrant Underlying Shares related to that portion of the Warrants so delivered, multiplied by (b) the result, not less than zero, equal to (i) the Current Market Price then in effect (with the date of the exercise of the Warrant being deemed to be the "Issuance Date" for purposes of making determinations under the definition of "Current Market Price") MINUS (ii) the per share Warrant Price then in effect. The number of shares of Common Stock to be issued to eGrocery would equal the result of the previous equation divided by the Current Market Price. If this Warrant is exercised in respect of less than all of the shares of Common Stock at the time purchasable hereunder, following such exercise this Warrant shall be returned to the holder hereof and shall remain exercisable in respect of such number of shares of Common Stock into which the Warrant remains exercisable. This Warrant and all rights and options hereunder shall expire to the extent that it has not been exercised on or before the Expiration Date. Company shall pay all reasonable expenses, stamp, documentary and transfer taxes and other charges payable in connection with the preparation, execution and delivery of stock certificates pursuant to this Section, regardless of the name or names in which such stock certificates shall be registered. SECTION 3. RESERVATION. Company will at all times reserve and keep available such number of authorized shares of its Common Stock, solely for the purpose of issue upon the exercise of the rights represented by this Warrant as herein provided for, as may at any time be issuable (based upon the number of shares of Common Stock outstanding at any such time) upon the exercise of this Warrant. SECTION 4. PROTECTION AGAINST DILUTION. The per share Warrant Price and the number of shares deliverable hereunder shall be adjusted from time to time as hereinafter set forth: SECTION 3.1 STOCK DIVIDENDS, SUBDIVISIONS, AND COMBINATIONS. In case after the date hereof Company shall: (a) take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend and declared to be payable in, or other declared distribution of, Common Stock, or (b) subdivide its outstanding shares of Common Stock into a larger number of shares of Common Stock, or (c) combine its outstanding shares of Common Stock into a smaller number of shares of Common Stock, then the per share Warrant Price shall be adjusted to that price determined by multiplying the per share Warrant Price in effect immediately prior to such event by a fraction (i) the numerator of which shall be the total number of outstanding shares of Common Stock immediately prior to such 2 Warrant event, and (ii) the denominator of which shall be the total number of outstanding shares of Common Stock immediately after such event. SECTION 3.2 ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK. In case after the date hereof Company shall (except as hereinafter provided) issue any Additional Shares of Common Stock for a consideration per share less than the Current Market Price per share, then the per share Warrant Price on each such issuance shall be adjusted to that price determined by multiplying the per share Warrant Price in effect immediately prior to such event by a fraction: (a) the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such Additional Shares of Common Stock plus the number of full shares of Common Stock which the aggregate consideration for the total number of such Additional Shares of Common Stock so issued would purchase at the Current Market Price per share, and (b) the denominator of which shall be the number of shares of Common Stock outstanding immediately prior to the issuance of such Additional Shares of Common Stock plus the number of such Additional Shares of Common Stock so issued. The provisions of this Section 3.2 shall not apply to any Additional Shares of Common Stock which are distributed to holders of Common Stock as a stock dividend or subdivision, for which an adjustment is provided for under Section 3.1. No adjustment of the per share Warrant Price shall be made under this Section 3.2 upon the issuance of any Additional Shares of Common Stock which are issued pursuant to the exercise of any warrants or other subscription or purchase rights or pursuant to the exercise of any conversion or exchange rights in any Convertible Securities, if any such adjustment shall previously have been made upon the issuance of such warrants or other rights or upon the issuance of such Convertible Securities (or upon the issuance of any warrants or other rights therefor) pursuant to Section 3.3. SECTION 3.3 ISSUANCE OF WARRANTS OR OTHER RIGHTS, CONVERTIBLE SECURITIES. In case Company shall issue any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or issue Convertible Securities and the consideration per share for which Additional Shares of Common Stock may at any time thereafter be issuable pursuant to such warrants or other rights or pursuant to the terms of such Convertible Securities shall be less than the Current Market Price per share, then the per share Warrant Price shall be adjusted as provided in Section 3.2 above on the basis that: (a) the maximum number of Additional Shares of Common Stock issuable pursuant to all such warrants or other rights or necessary to effect the conversion or exchange of all such Convertible Securities shall be deemed to have been issued as of the earlier of: (i) the date on which Company shall enter a firm contract or commitment for the issuance of such warrants, other rights or Convertible Securities or (ii) the date of actual issuance of such warrants, other rights or Convertible Securities, and (b) the aggregate consideration for such maximum number of Additional Shares of Common Stock shall be deemed to be the minimum consideration received and receivable 3 Warrant by Company for the issuance of such Additional Shares of Common Stock pursuant To such warrants or other rights or pursuant to the terms OF such Convertible Securities. No adjustment of the per share Warrant Price shall be made under this Section 3.3 upon the issuance of any Convertible Securities which are issued pursuant to the exercise of any warrants or other subscription or purchase rights therefor, to the extent such adjustment shall previously have been made upon the issuance of such warrants or other rights pursuant to this Section 3.3. SECTION 3.4 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS. The following provisions shall be applicable to the making of adjustments in the per share Warrant Price hereinbefore provided in this Section 3: (a) COMPUTATION OF CONSIDERATION. To the extent that any Additional Shares of Common Stock or any Convertible Securities or any warrants or other rights to subscribe for or purchase any Additional Shares of Common Stock or any Convertible Securities shall be issued for a cash consideration, the consideration received by Company therefor shall be deemed to be the amount of the cash received by Company therefor, or, if such Additional Shares of Common Stock or Convertible Securities or warrants or other rights are offered by Company for subscription, the subscription price, or, if such Additional Shares of Common Stock or Convertible Securities or warrants or other rights are sold to underwriters or dealers for public offering without a subscription offering, the offering price, in any such case excluding any amounts paid or receivable for accrued interest or accrued dividends and without deduction of any compensation, discounts or expenses paid or incurred by Company for and in the underwriting thereof, or otherwise in connection with the issue thereof. To the extent that such issuance shall be for a consideration other than cash, then, except as herein otherwise expressly provided, the amount of such consideration shall be deemed to be the fair value of such consideration at the time of such issuance as determined in good faith by the Board of Directors of Company. The consideration for any Additional Shares of Common Stock issuable pursuant to any warrants or other rights to subscribe for or purchase the same shall be the consideration received by Company for issuing such warrants or other rights plus the additional consideration payable to Company upon the exercise of such warrants or other rights. The consideration for any Additional Shares of Common Stock issuable pursuant to the terms of any Convertible Securities shall be the consideration received by Company for issuing any warrants or other rights to subscribe for or purchase such Convertible Securities plus the consideration paid or payable to Company in respect of the subscription for or purchase of such Convertible Securities plus the additional consideration, if any, payable to Company upon the exercise of the right of conversion or exchange of such Convertible Securities. In case of the issuance at any time of any Additional Shares of Common Stock or Convertible Securities in payment or satisfaction of any dividend upon any class of equity securities other than Common Stock, Company shall be deemed to have received for such Additional Shares of Common Stock or Convertible Securities a consideration equal to the amount of such dividend so paid or satisfied. (b) READJUSTMENT OF PER SHARE WARRANT PRICE. Upon expiration of the right of exercise, conversion or exchange of any Convertible Securities, or upon the expiration of any rights, options or warrants, or upon the termination of any firm contract or commitment for the issuance of such rights, options, warrants or Convertible Securities, or upon any increase 4 Warrant in the minimum consideration receivable by Company for the issuance of Additional Shares of Common Stock pursuant to such Convertible Securities, rights, options or warrants, if any such Convertible Securities shall not have been exercised, converted or exchanged, or if any such rights, options or warrant shall not have been exercised, the number of shares of Common Stock deemed to be issued and outstanding by any reason of the fact that they were issuable upon exercise, conversion or exchange of any such Convertible Securities or upon exercise of any such rights, options or warrants shall no longer be computed as set forth above, and the per share Warrant Price shall forthwith be readjusted and thereafter be the price which it would have been (but reflecting any other adjustments in the per share Warrant Price made pursuant to the provisions of this Section 3 after the issuance of such Convertible Securities, rights, options or warrants) had the adjustment of the per share Warrant Price made upon the issuance or sale of such Convertible Securities or the issuance of such rights, options or warrants been made on the basis of the issuance only of the number of Additional Shares of Common Stock actually issued upon exercise, conversion or exchange of such Convertible Securities or upon the exercise of such rights, options or warrants, or upon the basis of such increased minimum consideration, as the case may be, and thereupon only the number of Additional Shares of Common Stock actually so issued plus the number thereof then issuable upon the basis of such increased minimum consideration shall be deemed to have been issued and only the consideration actually received plus shall increased minimum consideration receivable by Company (computed in accordance with Section 3.4(a)) shall be deemed to have been received by Company. (c) ROUNDING OF PER SHARE WARRANT PRICE. Any determination of per share Warrant Price hereunder shall be expressed in United States Dollars, cents and portions of cents and shall be rounded to the nearest 1/1000 of one cent or, if there is no nearest 1/1000 of one cent, to the next highest 1/1000 of one cent. SECTION 3.5 EXTRAORDINARY DIVIDENDS. In case Company shall declare a dividend upon its Common Stock (except a dividend payable in shares of Common Stock referred to in Section 3.1(a) or a dividend payable in warrants, rights or Convertible Securities referred to in Section 3.3) payable otherwise than out of earnings or surplus (other than revaluation surplus or paid-in surplus), the per share Warrant Price in effect immediately prior to the declaration of such dividend shall be reduced by an amount equal, in the case of a dividend in cash, to 10% of the amount thereof payable per share of Common Stock or, in the case of any other dividend, to the fair value thereof per share of Common Stock as determined in good faith by the Board of Directors of Company. For the purposes of the foregoing, a dividend payable other than in cash shall be considered payable out of earnings or surplus (other than revaluation surplus or paid-in surplus) only to the extent that such earnings or surplus are charged an amount equal to the fair value of such dividend as determined by the Board of Directors of Company. If such dividend is paid or Company declares and becomes legally liable to pay such dividend, such reduction shall take effect as of the date on which a record is taken for the purpose of such dividend or, if a record is not taken, the date as of which the holders of the Common Stock of record entitled to such dividend are to be determined. Appropriate readjustment of the per share Warrant Price shall be made in the event that any dividend referred to in this Section 3.5 shall be lawfully abandoned. SECTION 6. ADJUSTMENT OF NUMBER OF SHARES PURCHASABLE. Upon each adjustment of the per share Warrant Price, the number of shares of Common Stock purchasable hereunder shall be 5 Warrant adjusted by multiplying the number of shares of Common Stock purchasable hereunder immediately prior to such adjustment of the per share Warrant Price by a fraction, the numerator of which shall be the per share Warrant Price in effect immediately prior to such adjustment and the denominator of which shall be the per share Warrant Price in effect immediately following such adjustment. SECTION 3.7 MINIMUM ADJUSTMENT. Except as hereinafter provided, no adjustment of the per share Warrant Price hereunder shall be made if such adjustment results in a change of the per share Warrant Price then in effect of less than 1%. Any adjustment of less than 1% shall be carried forward and shall be made at the time of and together with any subsequent adjustment which, together with the adjustment or adjustments so carried forward, amounts to 1% or more of the per share Warrant Price then in effect. However, upon the exercise of this Warrant, Company shall make all necessary adjustments not theretofore made to the per share Warrant Price up to and including the date upon which this Warrant is exercised. SECTION 3.8 NOTICE OF ADJUSTMENTS (a) Whenever the per share Warrant Price or number of shares deliverable upon exercise of this Warrant shall be adjusted pursuant to this Section 3, Company shall promptly prepare a certificate signed by the President or a Vice President and by the Treasurer of Company setting forth, in reasonable detail, the event requiring the adjustment, the amount of the adjustment, the method by which such adjustment was calculated (including a description of the basis on which the Board of Directors of Company made any determination hereunder), and shall promptly cause copies of such certificate to be mailed in the manner provided in Section 12.1 of the Warrant Agreement to the holder of this Warrant. (b) The adjustment set forth in the certificate furnished pursuant to Section 3.8(a) shall be final and binding unless, within 90 days after receipt thereof, the Majority Holders of the Warrants deliver to Company a written statement of objection to such adjustment. (i) In the event of any such statement of objection by said Majority Holders, Company's accountants and a firm of independent public accountants selected by said Majority Holders shall attempt to prepare a computation in which both accountants concur. Any such joint computation shall be set forth in a joint certificate to each holder of the Warrants and Company and shall be final and binding. (ii) If Company's accountants and said Majority Holders' accountants are unable to resolve their differences within 30 days after the receipt by Company of said Majority Holders' statement of objection, they shall submit the matter to a third firm of independent certified public accountants of nationally recognized standing agreed upon by said Majority Holders and Company or, if said Majority Holders and Company are unable to agree within 10 days after the expiration of said 30-day period, to such firm designated by the then president of the state society of certified public accountants for the state in which Company maintains its principal place of business. Such third firm of accountants shall thereupon compute the amount of the adjustment and, upon completion of such computation, shall transmit its certificate 6 Warrant to each holder of the Warrants and Company setting forth such computations, which shall be final and binding. (iii) The fees and expenses of all accountants referred to in this Section 3.8(b) shall be borne by Company. SECTION 4. MERGERS, CONSOLIDATIONS, SALES. In the case of any consolidation or merger of Company with another entity, or the sale of all or substantially all of its assets to another entity, or any reorganization, recapitalization or reclassification of the Common Stock or other equity securities of Company, then, as a condition of such consolidation, merger, sale, reorganization, recapitalization or reclassification, lawful and adequate provision shall be made whereby the holder of this Warrant shall thereafter have the right to receive upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore purchasable hereunder, such shares of stock, securities or assets as may (by virtue of such consolidation, merger, sale, reorganization or reclassification) be issued or payable with respect to or in exchange for a number of outstanding shares of Common Stock equal to the number of shares of Common Stock immediately theretofore so purchasable hereunder had such consolidation, merger, sale, reorganization, recapitalization or reclassification not taken place. In any such case, appropriate provisions shall be made with respect to the rights and interest of the holder of this Warrant to the end that the provisions hereof shall thereafter be applicable, as nearly as may be, in relation to any shares of stock, securities or assets thereafter deliverable upon exercise of this Warrant. Company shall not effect any such consolidation, merger or sale, unless prior to or simultaneously with the consummation thereof, the successor entity (if other than Company) resulting from such consolidation or merger or the entity purchasing such assets shall assume by written instrument executed and mailed or delivered to the holder of this Warrant, the obligation to deliver to such holder such shares of stock, securities or assets as, in accordance with the foregoing provisions, such holder may be entitled to receive. SECTION 5. DISSOLUTION OR LIQUIDATION. In the event of any proposed distribution of the assets of Company in dissolution or liquidation except under circumstances when the foregoing Section 4 shall be payable, Company shall mail notice thereof to the holder of this Warrant and shall make no distribution to shareholders until the expiration of 30 days from the date of mailing of the aforesaid notice and, in any such case, the holder of this Warrant may exercise the purchase rights with respect to this Warrant within 30 days from the date of mailing such notice and all rights herein granted not so exercised within such 30-day period shall thereafter become null and void. SECTION 6. NOTICE OF DIVIDENDS. If the Board of Directors of Company proposes to declare any dividend or other distribution on its Common Stock, except by way of a stock dividend payable on its Common Stock, Company shall mail notice thereof to the holder of this Warrant as soon as possible (such notice being referred to as the "DISTRIBUTION NOTICE"). Company shall not fix a record date until the lapse of a 10-day period beginning on the date of delivery of the Distribution Notice. The holder of this Warrant shall not participate in such dividend or other distribution or be entitled to any rights on account or as a 7 Warrant result thereof unless and to the extent that this Warrant is exercised prior to such record date. The provisions of this paragraph shall not apply to distributions made in connection with transactions covered by Section 4. SECTION 7. FRACTIONAL SHARES. No fractional shares may be issued upon the exercise of this Warrant. In the event that a Holder would otherwise be entitled to a fractional share except for the operation of the previous sentence, in lieu of such fractional share such Holder shall be paid a cash amount equal to (i) such fraction multiplied by (ii) the Current Market Value of one full share of Common Stock on the date of exercise. SECTION 8. FULLY PAID STOCK; TAXES. Company covenants and agrees that the shares of stock represented by each and every certificate for its Common Stock to be delivered on the exercise of the purchase rights and the payment of the applicable purchase price herein provided for shall, at the time of such delivery, be validly issued and outstanding and be fully paid and nonassessable. Company further covenants and agrees that it will pay when due and payable any and all federal and state taxes (other than income taxes) which may be payable in respect of this Warrant or any Common Stock or certificates therefor upon the exercise of the rights herein and in the Warrant Agreement provided for pursuant to the provisions hereof and thereof. Company shall not, however, be required to pay any tax which may be payable solely in respect of any transfer and delivery of stock certificates in a name other than that of the holder exercising this Warrant, and any such tax shall be paid by such holder at the time of presentation. SECTION 9. CLOSING OF TRANSFER BOOKS. The right to exercise this Warrant shall not be suspended during any period that the stock transfer books of Company for its Common Stock may be closed. Company shall not be required, however, to deliver certificates of its Common Stock upon such exercise while such books are duly closed for any purpose, but Company may postpone the delivery of the certificates for such Common Stock until the opening of such books, and they shall, in such case, be delivered forthwith upon the opening thereof, or as soon as practicable thereafter. SECTION 10. PARTIAL EXERCISE AND PARTIAL ASSIGNMENT. SECTION 10.1 PARTIAL EXERCISE. If this Warrant is exercised in part only, the holder hereof shall surrender this Warrant upon such exercise for endorsement thereon of the number of shares of Common Stock as to which it has been exercised. No partial exercise of this Warrant shall be made in respect of shares of Common Stock of Company representing less than 1% of Pro Forma Shares. SECTION 10.2 ASSIGNMENT. (a) Subject to the conditions set forth in Section 10.2(b) hereof, this Warrant may be assigned either in whole or in part by surrender of this Warrant at the principal office of Company in Denison, Texas (with the assignment or, as the case may be, partial assignment form at the end hereof duly executed). If this Warrant is being assigned in whole, the assignee shall receive a new Warrant (registered in the name of such assignee or its nominee) which new Warrant shall cover 100% of the number of shares of Common Stock then purchasable hereunder and shall 8 Warrant set forth the Aggregate Warrant Price. If this Warrant is being assigned in part, the assignor and assignee shall each receive a new Warrant (which, in the case of the assignee, shall be registered in the name of the assignee or its nominee), which new Warrants shall cover the number of shares of Common Stock then purchasable hereunder not so assigned and so assigned, respectively, and shall set forth the proportionate Aggregate Warrant Price applicable to such shares. (b) Neither this Warrant nor any Warrant Shares may be sold, assigned or otherwise transferred unless such sale, assignment or transfer is registered or qualified pursuant to the registration requirements of the Securities Act of 1933, as amended, and all applicable state securities laws, or is preceded by an opinion of counsel addressed to Company that such sale, assignment or other transfer is exempt from all such registration requirements; PROVIDED, HOWEVER, that no such opinion of counsel shall be required in connection with any such sale, assignment or transfer to any affiliate of the holder of this Warrant or any Warrant Shares issued in respect hereof. The fees and expenses of such counsel incurred in respect of such sales, assignments or transfers shall be paid by the holder of this Warrant or any Warrant Shares which are the subject of such proposed sale, assignment or transfer. All certificates representing the Warrant Shares shall be stamped or imprinted with an appropriate restrictive legend, substantially as set forth on the cover page hereof. SECTION 11. DEFINITIONS. Terms not otherwise defined herein shall have the respective meanings assigned thereto in the Warrant Agreement and the Credit Agreement. In addition to the terms defined elsewhere in this Warrant, the following terms have the following respective meanings: "ADDITIONAL SHARES OF COMMON STOCK" shall mean all shares of Common Stock issued by Company after the Closing Date, except: (a) Common Stock issued upon exercise of the Warrants; (b) Common Stock issued upon exercise of warrants issued under the Existing Warrant Agreements; and (c) Common Stock issued to officers, directors or employees of, or consultants to, Company pursuant to any existing or future stock option, incentive, bonus or compensation plan or program approved by the Company's shareholders (no later than 12 months following adoption of the plan or program by the Company's Board of Directors). "AGGREGATE WARRANT PRICE" has the meaning specified on the first page of this Warrant. "CASHLESS EXERCISE" has the meaning specified in Section 1. "COMMON STOCK" shall mean the shares of Common Stock, par value $0.01 per share, of Company described in the Certificate of Incorporation. "CONVERTIBLE SECURITIES" shall mean evidences of indebtedness, equity, rights, options, warrants or other securities which are convertible into or exchangeable for shares of Common Stock, 9 Warrant either immediately or upon the arrival of a specified date or the happening of a specified event, or otherwise. "CURRENT MARKET PRICE" shall mean, at the date of determination thereof, an amount equal to the market price on the Business Day occurring most recently prior to the subject issuance of such shares of Common Stock (the "ISSUANCE DATE"). The market price for such Business Day shall be the last sale price on such day on the American Stock Exchange, or, if the Common Stock is not then listed or admitted to trading on the American Stock Exchange, on such other principal stock exchange on which such shares are then listed or admitted to trading, or, if no sale takes place on such day on any such exchange, the average of the closing bid and asked prices on such day as officially quoted on any such exchange, or, if the Common Stock is not then listed or admitted to trading on any stock exchange, the market price for each such Business Day shall be the last reported sale price on such day on The Nasdaq Stock Market's National Market or The Nasdaq Stock Market's Small Cap Market, as furnished by Nasdaq, or, if no sale takes place on such day on such system, the average of the closing bid and asked prices on such day as officially quoted by Nasdaq, or, if such price at the time is not available from such system, the market price for such Business Day shall be the average of the reported closing bid and asked prices on such day in the over-the-counter market, as furnished by Nasdaq, or, if such price at the time is not available from such system, such price shall be determined in good faith by Company's Board of Directors, which shall be evidenced by a notice setting forth such determination in reasonable detail (including computations and assumptions used) (THE "CMP COMPUTATION NOTICE") to each holder of the Warrants not later than 30 days after the issuance date of the Common Stock giving rise to such determination (the "CMP COMPUTATION DATE") setting forth such determination and setting forth in detail the rights and procedures the holders of the Warrants may take in the event the Majority Holders do not agree with the valuation set forth in the CMP Computation Notice, PROVIDED, that if the Majority Holders of such Warrants shall object to the valuation contained in the CMP Computation Notice in writing to Company within 15 days of the CMP Computation Date, an Appraiser, the expenses of whom shall be paid by said Majority Holders, shall be selected by Company and said Majority Holders (on behalf of all of the holders of the Warrants as a class), or, if said Majority Holders and Company are unable to agree upon the selection of an Appraiser within 10 days of the date of the written notice from said Majority Holders to Company objecting to the CMP Computation Notice, by the American Arbitration Association. Said Majority Holders and Company shall be jointly responsible for engaging the Appraiser finally selected. In the event that the Majority Holders do not object to the CMP Computation Notice within 15 days after receiving the CMP Computation Notice, then the value shall be that which was determined solely by Company's Board of Directors. The Appraiser appointed pursuant to the foregoing procedure shall be instructed to determine such value within 15 days after the selection of such Appraiser, and any such determination made by the Appraiser shall be final and binding upon the parties. Notwithstanding the foregoing, in the event that, on the Issuance Date, shares of Common Stock shall be offered for sale to the public in connection with an underwritten public offering, the Current Market Price in respect of said Issuance Date shall be deemed to be the price at which said shares are initially sold to the public. "EXERCISE DATE" shall mean a date on which this Warrant is exercised. "EXERCISE PERIOD" means the period of time from the Exercise Date until, and including, the Expiration Date. 10 Warrant "EXPIRATION DATE" means from and after 5:00 p.m. Denison, Texas time on April 5, 2003, the third anniversary of issuance of Warrant. "MAJORITY HOLDERS" shall mean, at the time of any determination, the holders of a majority of the Warrants (determined by the number of shares of Common Stock represented by each such Warrant as if exercised). "PER SHARE WARRANT PRICE" is defined in the first paragraph of this Warrant. "PERMITTED CONSIDERATION" shall mean each of the following (or any combination thereof): (a) cash or other funds immediately available to Company; and (b) Warrants. "PRO FORMA SHARES" shall mean, as of the date of any determination thereof, the sum of (i) the total number of outstanding shares of Common Stock, plus (ii) the total number of shares of Common Stock issuable upon exercise of the Warrants and any other warrants, options or other rights and upon the exercise of any conversion or exchange rights with respect to Convertible Securities. "UNDERLYING SHARES" shall mean the shares of Common Stock issuable upon exercise of any of the Warrants and any references contained herein to a holder or holders of any Underlying Shares shall be deemed to refer to the holder of the Warrants relating thereto. "WARRANT PRICE" - see the definition of "per share Warrant Price". "WARRANT SHARES" shall mean shares of Common Stock issued upon exercise of the warrants. "WARRANTS" as used herein shall refer to, collectively, this Warrant and all other warrants issued in exchange or substitution for this Warrant. SECTION 12. WARRANT HOLDER NOT SHAREHOLDER. This Warrant does not confer upon the holder hereof any right to vote or to consent or to receive notice as a shareholder of Company, as such, in respect of any matters whatsoever, or any other rights or liabilities as a shareholder, prior to the exercise hereof as hereinbefore provided. SECTION 13. SEVERABILITY. Should any part of this Warrant for any reason be declared invalid or unenforceable, such decision shall not affect the validity or enforceability of any remaining portion, which remaining portion shall remain in force and effect as if this Warrant had been executed with the invalid or unenforceable portion thereof eliminated, and it is hereby declared the intention of the parties hereto that they would have executed and accepted the remaining portion of this Warrant without including therein any such part, parts or portion which may, for any reason, be hereafter declared invalid or unenforceable. 11 Warrant SECTION 14. GOVERNING LAW. This Warrant shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Texas excluding choice-of-law principles of the law of such state that would require the application of the laws of a jurisdiction other than such state. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 12 Warrant IN WITNESS WHEREOF, Company has caused this Warrant to be signed by a duly authorized officer and to be dated this 5th day of April, 2000. HORIZON PHARMACIES, INC. By: /s/ Ricky D. McCord -------------------------------------- Name: Ricky D. McCord Title: President and CFO S-1 EX-10.1 3 EXHIBIT 10.1 COOPERATIVE MARKETING AGREEMENT THIS COOPERATIVE MARKETING AGREEMENT (the "Agreement") dated as of April 6, 2000 (the "EFFECTIVE DATE"), is entered into by and between eGrocery.com, Inc., a Minnesota corporation ("EG"), and HORIZON Pharmacies, Inc., a Delaware corporation ("HZP"). EG and HZP are collectively the "PARTIES" and each is individually a "PARTY." WITNESSETH WHEREAS, EG provides in-store and online media tools promoting consumer brand awareness and product sales; WHEREAS, HZP is engaged in the business of, among other things, operating retail drugstores and selling pharmaceuticals, health and beauty care products, and home medical equipment; and WHEREAS, both EG and HZP desire that HZP promote its business to EG's users and offer for sale to EG's users through the EG web site pharmaceuticals, health and beauty care products, and home medical equipment. NOW, THEREFORE, in consideration of the foregoing, and the representations, warranties, covenants and agreements contained herein, the Parties, intending to be legally bound, hereby agree as follows: SECTION 1. DEFINITIONS The following terms (and their derivations) are used in this Agreement with the respective meanings set forth below: "AFFILIATE" means, with respect to either Party, any individual or entity that, directly or indirectly (through one or more intermediaries) controls, is controlled by or is under common control with that Party. "ALLIANCE PARTNER" shall mean an entity maintaining or operating a web site(s) not hosted by EG that has elected to participate through EG in one or more of EG's programs. "CONTROL" (including the terms "CONTROLLED," "CONTROLLED BY," and "UNDER COMMON CONTROL WITH"), for the purposes of determining an "Affiliate," means the possession, directly or indirectly or as trustee or executor, of the power to direct or cause the direction of the management or policies of an individual or entity, whether through the ownership of stock, as trustee or executor, by contract or credit arrangement or otherwise. "CORPORATE GROCER" shall mean a Grocer or wholesaler maintaining Links via EG specifications that represents a store count of twenty-five (25) or more affiliated individual retail grocery stores. "EG SITES" include, but are not limited to, any web site that is at any time during the Term of this Agreement maintained or operated by EG or any of its participating Affiliates or Alliance Partners, including, but not limited to, www.egrocery.com and www.groceryshopping.net. "INTELLECTUAL PROPERTY RIGHTS" means all forms of intellectual property rights and protections, including, without limitation, all right, title and interest in and to all patents (including all filed, pending or potential applications for letters patent), copyrights, trade names, trade secrets, Marks and any other intellectual property rights. "FULFILLMENT COST" means any cost associated with filling an Order including, but not limited to, (a) the cost to HZP of the drugs or other goods supplied in the Order, (b) the reasonable allocable cost of a pharmacist to fill the Order, (c) the cost to HZP of the bottles for, and labeling of, the Order and other supplies associated with the Order, and (d) a reasonable allocable cost for overhead and operating expenses. 1 "GROCER" means a company in the business of providing groceries to retail customers that maintains a Link by participating as an EG Affiliate or Alliance Partner on the EG Sites. "GROCER LIST" means any list of third party providers located on the EG Sites including, but not limited to, the Grocers. "GROCER LISTING" means, with respect to any person or entity, any promotional piece related to the person or entity (including related marketing and promotional materials and graphical or text Links) which is included in or associated with any Grocer List. "GROCER SITE" means a web site of a Grocer through EG or one of its Affiliates or Alliance Partners. "HZP LINK" means a Link from a page of the EG Sites to a page of the HZP Site. "HZP SITE" means the web site maintained and operated by HZP located at www.horizonscripts.com. "KIOSK" means a self-standing unit placed in a Grocer's physical grocery store that contains a computer with a Link to the HZP Site; provided, however, kiosk shall not include the Money Board coupon system. "KIOSK USER" means an individual who uses a Kiosk to connect to the HZP Site. "LINK" is a textual placement or graphical button containing a direct Internet connection between two URLs, without any intermediate URLs, so that a user can complete the connection with a single click of a computer mouse or similar device. "LINKED USER" means any user of the EG Sites who executes a HZP Link and is connected to the HZP Site. Once a user becomes a defined "linked user" they always remain a defined "linked user". "MARKS" means a Party's trademarks, tradenames, service marks, symbols, logos, brand names, Internet domain names and other proprietary indicia of a Party under common law, state law, federal law and laws of foreign countries. "NET PROFIT" means gross proceeds from an Order less Fulfillment Costs, the Linked User Fee or Kiosk Fee (as defined in Section 4.1), any applicable taxes, credit card processing fees, miscellaneous processing fees, the cost to HZP of shipping and handling the Order to the customer, and any proceeds attributable to returned products that were previously included in "Net Profit." "OFFENSIVE MATERIAL" means material that infringes the intellectual property or privacy rights of a third party; is obscene; is defamatory; or otherwise gives rise, or is likely to give rise, to criminal or civil liability. "ORDER" means a transaction between HZP and a customer whereby a customer orders one or more products from HZP at any one time and remits payment for such products. "USER DATA" is identifying information relating to a Linked User or Kiosk User, including, but not limited to, information regarding the following: profile and personal interests, pattern of use, addresses and telephone numbers, and financial and credit situation. SECTION 2. PROMOTIONAL PLACEMENTS AND LINKAGE 2.1. At least 10 business days before the Target Launch Date (as defined below), HZP shall furnish EG with full color representations of, and technical specifications for, the Promotional Placements (as defined in Section 2.2). The graphics and content of the Promotional Placements will be subject to EG's approval, which may not be unreasonably withheld. 2.2. During the term of this Agreement, EG will post and maintain certain Links, advertisements and listings (collectively, the "PROMOTIONAL PLACEMENTS") on the EG Sites, as follows: (a) EG will list HZP in all EG 2 Sites related to pharmaceuticals and home medical equipment; (b) EG will post HZP Links under a heading indicating that such Link is related to pharmaceuticals on (i) the main pages of the EG Sites and each Grocer Site and/or (ii) other relevant pages of the EG Sites and each Grocer Site; (c) EG will post HZP Links to, and banner advertisements for, the HZP Site on such other pages of the EG Sites and the Grocer Sites as the parties mutually and reasonably agree and deem appropriate. SECTION 3. IMPLEMENTATION 3.1. EG will use all commercially reasonable efforts to design, implement and put in operation the Promotional Placements, subject to HZP's approval which may not be unreasonably withheld, at a future date to be mutually agreed upon (the "TARGET LAUNCH DATE"), but in no event shall the Target Launch Date occur after September 1, 2000, or, if that is not practicable, by the first practicable subsequent date. The actual date of initial exchange of data in actual commercial use (not in a test mode) between the HZP Links and the HZP Site is the "ACTUAL LAUNCH DATE." 3.2. EG will maintain the Promotional Placements, and HZP will maintain the HZP Site, during the Term (as defined below) of this Agreement. 3.3. Each Party will assign an account manager to facilitate coordination of the Parties' performance of their obligations under this Agreement. Either Party may change its account manager from time to time, and will promptly notify the other Party of any change. 3.4. EG will use all commercially reasonable efforts to generate cooperative advertising dollars (the "COOPERATIVE ADVERTISING REVENUE") from general merchandise, trade funds, and display allowances on behalf of HZP at HZP owned or managed stores. HZP retains the right to generate advertising dollars from general merchandise, trade funds, and display allowances by, through, and from its own efforts. For purposes of this Agreement, Cooperative Advertising Revenue will include all advertising revenues generated by, through, or from sources other than EG, except as set forth in Schedule A hereto. 3.5. EG will use all commercially reasonable efforts to identify, employ, and retain in employment an expert in the area of maximizing and capturing advertising revenues (the "EXPERT"). The Expert, as an employee of EG, will devote a considerable portion of his or her time to maximizing and capturing the advertising revenues subject to this Agreement and will use commercially reasonable efforts to generate advertising revenues for the HZP Site. 3.6. HZP will be the exclusive provider of pharmaceuticals and home medical equipment on websites located at www.egrocery.com and www.groceryshopping.net and any other sites maintained by EG that contain similar content. HZP will also be the exclusive provider of pharmaceuticals and home medical equipment on EG Sites; provided, however, such exclusivity requirement shall not apply to sites operated by Grocers with pre-existing retail pharmaceutical operations. For all other EG sites, HZP will be promoted as the preferred provider of pharmaceuticals and home medical equipment. SECTION 4. COMPENSATION 4.1. During the Term of this Agreement, HZP will pay to EG the following cash payments: (a) 40% of the Net Profits generated from all Orders by Linked Users and Kiosk Users; provided, that in the event that proceeds from Orders originating from a single Grocer Site or Kiosk exceed $10,000 per month, HZP will pay EG 50% of the Net Profits derived from the portion of proceeds exceeding $10,000 originating from that particular Grocer Site or Kiosk; provided, however, that the percentage of Net Profits to be paid to EG from Orders by Linked Users and Kiosk Users originating through Corporate Grocers shall not be subject to the preceding clause, but rather will be negotiated in good faith between EG and HZP (the "REVENUE-BASED FEES"); (b) $.50 per Order placed by a Linked User on the HZP Site (the "LINKED USER FEES"); and (c) $.25 per Order placed through a Kiosk (the "KIOSK FEES" and together with the Linked User Fees and the Revenue-Based Fees, the "TRANSACTION FEES"). 3 4.2. HZP will pay the Transaction Fees on a monthly basis. Within 15 days following the end of each month occurring subsequent to the Launch Date, HZP shall deliver the Transaction Fees to EG that accrued during that month. 4.3. HZP will deliver the Transaction Fees and the EG Traffic Reports (as defined in Section 5.2) to EG at the address on the signature page of this Agreement, marked "ATTN: Accounting Department." 4.4. EG shall have the right, upon no less than 15 days' advance written notice to HZP, to have an independent certified public accountant inspect and audit the books and records of HZP directly associated with HZP's obligations to make payments under this Agreement. Any such audit will be conducted during HZP's normal business hours. Any shortfall or overpayment identified as a result of such audit will, in the absence of a good faith dispute, be paid promptly by the appropriate Party. EG will bear the costs of any such audit. However, if a shortfall in payments due to EG is found which exceeds 10 percent of the total payments due to EG for the reporting period audited, HZP shall promptly reimburse EG for all reasonable costs of the audit. EG's audit and audit reimbursement rights under this Section 4.4 will survive for a period of 6 months following expiration or termination of this Agreement. 4.5. (a) EG will pay by cash payment on a monthly basis to HZP 66.67% of the Cooperative Advertising Fees. For purposes of this Agreement, "COOPERATIVE ADVERTISING FEES" means Cooperative Advertising Revenues generated pursuant to Section 3.4 less direct costs of generating the Cooperative Advertising Revenues (not including any costs other than reasonable costs directly associated with generating Cooperative Advertising Revenues). Within 15 days following the end of each month occurring subsequent to the Launch Date, EG shall deliver the Cooperative Advertising Fees received by EG to HZP that accrued during that month. (b) HZP will pay by cash payment on a monthly basis to EG 33.33% of the Cooperative Advertising Fees paid to HZP. Within 15 days following the end of each month occurring subsequent to the Launch Date, HZP shall deliver the Cooperative Advertising Fees received by HZP to EG that accrued during that month. 4.6 EG will pay by cash payment on a monthly basis to HZP 33.33% of the HZP Site Fees. For purposes of this Agreement, "HZP SITE FEES" means all gross advertising revenues generated by EG pursuant to Section 3.5 and derived from advertisements on the HZP Site less all reasonable and direct costs of obtaining and producing such advertising on the HZP Site; provided, however, that in no event shall EG be required to pay HZP any gross advertising revenues generated by EG that are wholly unrelated to HZP or the HZP Site. The advertising costs described in the previous sentence shall not include any costs other than reasonable costs directly associated with placing advertising on the HZP Site. Within 15 days following the end of each month occurring subsequent to the Launch Date, EG shall deliver to HZP the HZP Site Fees that accrued during that month. In no event will HZP be required or obligated to make any payment, or give any credit for payment, to EG pursuant to this Section 4.6. 4.7 EG will deliver the Cooperative Advertising Fees, the HZP Site Fees, and the HZP Traffic Reports (as defined in Section 5.1) to HZP at the address on the signature page of this Agreement, marked "ATTN: Accounting Department." 4.8 HZP shall have the right, upon no less than 15 days' advance written notice to EG, to have an independent certified public accountant inspect and audit the books and records of EG directly associated with EG's obligations to make payments under this Agreement. Any such audit will be conducted during EG's normal business hours. Any shortfall or overpayment identified as a result of such audit will, in the absence of a good faith dispute, be paid promptly by the appropriate Party. HZP will bear the costs of any such audit. However, if a shortfall in payments due to HZP is found which exceeds 10 percent of the total payments due to HZP for the reporting period audited, EG shall promptly reimburse HZP for all reasonable costs of the audit. HZP's audit and audit reimbursement rights under this Section 4.8 will survive for a period of 6 months following expiration or termination of this Agreement. SECTION 5. TRAFFIC AND USER DATA 5.1. During the Term of this Agreement EG will deliver to HZP within 15 days following the end of each month a reasonably detailed report describing for the month the calculation of the Cooperative Advertising 4 Fees paid to EG and the HZP Site Fees (the "HZP TRAFFIC REPORTS"). The HZP Traffic Reports will be delivered promptly at EG's cost, to HZP in a form and via a distribution method mutually agreed upon by the Parties. 5.2. During the Term of this Agreement, HZP will deliver to EG within 15 days following the end of each month a reasonably detailed report describing for the month the calculation of the Cooperative Advertising Fees paid to HZP and the Transaction Fees (the "EG TRAFFIC REPORTS"). The EG Traffic Reports will be delivered promptly, at HZP's cost, to EG in a form and via a distribution method mutually agreed upon by the Parties. 5.3. The HZP Traffic Reports and the EG Traffic Reports will be deemed to be the Confidential Information (as defined below) of both Parties, and both Parties will share in the ownership of the HZP Traffic Reports and the EG Traffic Reports (including, without limitation, the rights to use any of the HZP Traffic Reports or the EG Traffic Reports, which use will be subject to the limitations of Section 8 and to all applicable privacy laws). SECTION 6. QUALITY CONTROL; LIMITED EXPRESS WARRANTIES 6.1. HZP will promptly respond to and resolve, in a commercially reasonable manner, all complaints it receives (directly or indirectly) regarding the products and services offered to Linked Users and Kiosk Users by HZP, and all written complaints it receives (directly or indirectly) from a Grocer with which EG has a contractual relationship. 6.2. If HZP makes a reasonable good faith determination that the EG Site contains Offensive Material and delivers notice of such to EG, EG shall immediately suspend and remove all links on the EG Sites to the HZP Site, or otherwise block access to the Offensive Material by reliable technical means until such Offensive Material is removed. If EG fails to remove from the EG Site, or make appropriate modifications to the content of, the Offensive Material, and that failure continues for 5 days after HZP's delivery of notice to EG, HZP shall then have the option to give notice under Section 10.2(a), and if the breach remains uncured for the 30-day period specified there, to terminate this Agreement as specified in that Section. 6.3. HZP shall have the sole right and responsibility for processing all orders for HZP's products or services on or through the HZP Site, including receiving, filling, shipping and handling, collecting payment, tracking and transaction security. All orders for HZP's products and services shall be placed by customers directly with HZP and shall be subject to acceptance by HZP. 6.4. Each Party warrants that the execution, delivery and performance of this Agreement are within its corporate powers; have been duly authorized by all necessary corporate action on such Party's part; and do not and will not contravene or constitute a default under, and are not and will not be inconsistent with, any law or regulation, any judgment, decree or order, or any contract, agreement, or other undertaking applicable to such Party. 6.5. HZP warrants that the materials furnished by HZP for display on the EG Sites and the operation of, and content displayed on, the HZP Site does not and will not infringe on the Intellectual Property Rights of any third party or violate any law, statute, rule or regulation, and that it possesses all Intellectual Property Rights necessary to fulfill its obligations under this agreement. 6.6. EG will ensure that the performance and availability of the EG site is monitored on a continuous basis and remains competitive in all material respects with the performance and availability of other comparable web sites. SECTION 7. INTELLECTUAL PROPERTY RIGHTS 7.1. Subject to the limited license granted to EG under Section 7.2, HZP reserves all of its ownership rights, title and interest in its Intellectual Property Rights. Subject to the limited license granted to HZP under Section 7.3, EG reserves all of its ownership rights, title and interest in its Intellectual Property Rights. Neither Party grants any license to any of the Party's Intellectual Property Rights to the other Party except as specifically set forth in this Section 7. 5 7.2. HZP hereby grants to EG, during the term of this Agreement, a non-exclusive, non-transferable license to use HZP's Marks as reasonably necessary to perform its obligations under this Agreement. However, any promotional materials containing HZP's Marks will be subject to HZP's prior written approval. 7.3. EG hereby grants to HZP, during the term of this Agreement, a non-exclusive, non-transferable license to use EG's Marks as reasonably necessary to perform its obligations under this Agreement. However, any promotional materials containing EG's Marks will be subject to EG's specific prior written approval. 7.4. Each Party agrees to cooperate with the other Party in facilitating the monitoring and control of the use of the other Party's Marks, and to supply the other Party with samples of use upon request. Neither EG nor HZP will use the other Party's Marks in a manner that disparages the other Party, its Marks or its products or services, or portrays the other Party, its Marks or its products or services in a false, competitively adverse or poor light. Each of EG and HZP will comply with the other Party's requests as to the use of the other Party's Marks and will avoid any action that diminishes the value of such Marks. Either Party's unauthorized use of the other's Marks is strictly prohibited. 7.5. Upon termination of this Agreement, each Party will immediately cease any and all use of the other Party's Intellectual Property, and within 15 days return all assets (digital, proprietary or otherwise) belonging to the other. SECTION 8. CONFIDENTIALITY 8.1. For the purposes of this Agreement, "CONFIDENTIAL INFORMATION" means information about the disclosing Party's business or activities that is proprietary and confidential, including, without limitation, all trade secrets; financial information; processes; formulas; specifications; programs; instructions; source code; object code; technical know-how; methods and procedures for operation; benchmark test results; information about employees; User Data (or similar data about customers or users of a Party's products or services other than Linked Users and Kiosk Users); marketing strategies; services; business or technical plans and proposals (in any form); and any other information relating to either Party that is not generally known to the public at large. The terms and conditions of this Agreement will be deemed to be Confidential Information of both Parties. 8.2. Confidential Information will not include information that: (a) is in or enters the public domain through no action or fault of the receiving Party; (b) the receiving Party lawfully receives from a third party without restriction on disclosure and without breach of a nondisclosure obligation; (c) become known to the receiving Party, from the receiving Party's own independent sources (other than the disclosing Party or its Affiliates) as evidenced from the receiving Party's written records, prior to receiving such information from the disclosing Party and without breach of a nondisclosure obligation; or (d) the receiving Party develops independent of any information originating from the disclosing Party, so long as the receiving Party's written records demonstrate that its employees or agents involved in such development had no access to the Confidential Information in question. 8.3. (a) Each Party agrees: (i) that it will not disclose to any third party or use any Confidential Information disclosed to it by the other Party except as expressly permitted in this Agreement; and (ii) that it will take all reasonable measures to maintain the confidentiality of all Confidential Information of the other Party in its possession or control, which will in no event be less than the measures it uses to maintain the confidentiality of its own information of similar importance; (b) Notwithstanding the foregoing, each Party may disclose Confidential Information: (i) to the extent required by a court of competent jurisdiction or other governmental authority or otherwise as and to the extent required by law; or (ii) on a "need-to-know" basis under an obligation of confidentiality to its legal counsel, accountants, banks and other financing sources and their advisors; and (c) Under paragraph (b)(i) above, it will not be deemed a breach of this Agreement for a Party to disclose the terms and conditions of this Agreement in any regulatory filing with the Securities & Exchange Commission, which such Party in good faith determines is required, provided such Party seeks confidential treatment of the material financial terms and conditions of this Agreement. In a situation to which Section 8.3(b)(i) applies, the Party subject to a disclosure order will make reasonable efforts promptly to inform the other Party, so that the other Party has the opportunity to oppose the disclosure order. 6 8.4. Neither Party will sell, disclose, transfer or rent any User Data which could reasonably be used to identify a specific named individual ("INDIVIDUAL DATA") to any third party nor will either Party use Individual Data on behalf of any third party without the express permission of the individual user. Where user permission for release of Individual Data to third parties has been obtained, each Party will obtain written assurances from the third party recipients of Individual Data to provide the option, in any communications generated by, or on behalf of, the third party recipients of Individual Data, for the individual user to elect not to receive any further communications from such third party. Each Party will comply with all applicable privacy laws in using or releasing the Individual Data. HZP will prominently display its privacy policy on the HZP Site, and EG will prominently display its privacy policy on the EG Sites, at all times during the Term of this Agreement. If it is a Party's practice to aggregate User Data (or similar data about customers or users of a Party's products or services other than Linked Users or Kiosk Users) for statistical analysis or other similar purposes, such Party will include a statement to that effect in its privacy policy. SECTION 9. INDEMNIFICATION 9.1. HZP will defend and indemnify EG and its Affiliates (and their respective employees, directors and representatives) against any claim or action brought by a third party (including, without limitation, any governmental entity or authority), to the extent relating to: (a) the operation of the HZP Site (but not including claims for which HZP has a right to indemnity under Section 9.2(a) or (b)); (b) products or services sold by or through the HZP Site; or (c) the direct, contributory or vicarious infringement of third-party Intellectual Property Rights by virtue of any materials furnished by HZP for display on the EG Sites. 9.2. EG will defend and indemnify HZP and its Affiliates (and their respective employees, directors and representatives) against any claim or action brought by a third party (including, without limitation, any governmental entity or authority), to the extent relating to (a) the operation of the EG Sites (but not including claims for which EG has a right to indemnity under Sections 9.1(a) or(b)); (b) products or services sold by or through the EG Site; or (c) or (c) the direct, contributory or vicarious infringement of any third-party Intellectual Property Rights by virtue of any materials furnished by EG for display on the HZP Site. 9.3. Subject to the indemnified party's compliance with the procedures described in Section 9.4, the indemnifying party will pay any Award against the indemnified party or its Affiliates (or their respective employees, directors or representatives) and any costs and, to the extent of any failure by the indemnifying party to defend, any attorneys' fees reasonably incurred by the indemnified party and its Affiliates resulting from the claim or action. For the purposes of this Section 9, "AWARD" means any final settlement or final judgment (i.e., a settlement or judgment no longer subject to further review, reconsideration or appeal by any court, agency, or other tribunal of competent jurisdiction). 9.4. In connection with any claim or action described in this Section, the Party seeking indemnification: (a) will give the indemnifying Party prompt written notice of the claim; (b) will cooperate with the indemnifying Party (at the indemnifying Party's expense) in connection with the defense and settlement of the claim; and (c) will permit the indemnifying Party to control the defense and settlement of the claim, provided that the indemnifying Party may not settle the claim without the indemnified Party's prior written consent (which will not be unreasonably withheld). Further, the indemnified Party (at its cost) may appear separately through counsel and participate in the defense and settlement of the claim. SECTION 10. TERM AND TERMINATION 10.1. The initial term of this Agreement will begin on the Effective Date and will end on the fifth anniversary of the Effective Date (the "INITIAL TERM"). This Agreement may be extended for additional five year renewal terms (the "RENEWAL TERM") upon the mutual written agreement of the parties hereto. As the context permits, the "TERM" of this Agreement includes the Initial Term and the Renewal Term, if any. 10.2. At any time during the Initial Term or the Renewal Term, either Party may terminate this Agreement (a) if the other Party materially breaches this Agreement and does not cure the breach within 30 days following its receipt of written notice from the non-breaching Party; (b) effective immediately upon delivery of written notice to the other Party if the other Party, pursuant to federal or state law, makes an assignment for the 7 benefit of creditors, or commences or has commenced against it under federal or state law any proceeding in bankruptcy, insolvency, or reorganization; or (c) effective immediately upon delivery of written notice to other Party if the Actual Launch Date does not occur on or prior to the Target Launch Date. 10.3. Unless stated otherwise herein, Sections 4.4 and 4.8 ("AUDIT RIGHTS"), 7.1 and 7.4 ("INTELLECTUAL PROPERTY RIGHTS"), 8 ("CONFIDENTIALITY"), 9 ("INDEMNIFICATION"), 11 ("DISCLAIMERS OF IMPLIED WARRANTIES") and 12 ("LIMITATION OF LIABILITY") will survive the termination or expiration of this Agreement. 10.4. All undisputed payments that have accrued prior to the termination or expiration of this Agreement will be payable in full in U.S. currency within 30 days after termination or expiration. SECTION 11. DISCLAIMERS OF IMPLIED WARRANTIES EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY MAKES, AND EACH PARTY HEREBY DISCLAIMS, ANY REPRESENTATIONS OR WARRANTIES REGARDING ITS WEBSITES OR THE SERVICES TO BE PROVIDED BY THAT PARTY UNDER THIS AGREEMENT, INCLUDING (WITHOUT LIMITATION) IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE OR NONINFRINGEMENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EACH PARTY SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY REGARDING ANY ECONOMIC OR OTHER BENEFIT THAT THE OTHER PARTY MIGHT OBTAIN THROUGH ITS PARTICIPATION IN THIS AGREEMENT. SECTION 12. LIMITATION OF LIABILITY NEITHER PARTY WILL BE LIABLE TO THE OTHER PARTY FOR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, LOST REVENUES, LOST PROFITS OR LOST DATA) ARISING OUT OF THIS AGREEMENT. EACH PARTY'S ENTIRE LIABILITY ARISING FROM THIS AGREEMENT (EXCEPT FOR LIABILITIES ARISING UNDER SECTION 9, RELATING TO A PARTY'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OR RELATING TO A PARTY'S DAMAGE TO PERSON OR TANGIBLE PERSONAL PROPERTY) WHETHER IN CONTRACT, TORT OR ANY OTHER LEGAL THEORY, WILL NOT EXCEED THE AGGREGATE AMOUNTS PAYABLE BY SUCH PARTY UNDER SECTION 4. SECTION 13. MISCELLANEOUS 13.1. The Parties are entering this Agreement as independent contractors, and this Agreement will not be construed to create a partnership, joint venture, franchise or employment relationship between them. Neither Party will represent itself to be an employee or agent of the other or enter into any agreement on the other's behalf or in the other's name. 13.2. Neither Party will issue any press release or make any other public disclosure regarding this Agreement or its terms without the other Party's prior written consent as to the timing and content of that release or disclosure (which consent shall not be unreasonably withheld), or except as may be required by law in the opinion of the disclosing Party's counsel. 13.3. Neither HZP nor EG will be liable for, or will be considered to be in breach of, or default under, this Agreement on account of any delay or failure to perform as required by this Agreement as a result of any causes or conditions that are beyond the Party's reasonable control and that the Party is unable to overcome through the exercise of commercially reasonable diligence. If any force majeure event occurs, the affected Party will give prompt written notice to the other Party and will use commercially reasonable efforts to minimize the impact of the event. 13.4. Notices deliverable under this Agreement shall be given in writing, addressed to the Parties as set forth on the signature page below and shall be deemed to have been given either one day after being given to an express overnight carrier with a reliable system for tracking delivery; or when sent by a facsimile promptly and 8 specifically confirmed by telephone, with another copy sent by express overnight carrier with a reliable system for tracking delivery. 13.5. The prevailing Party will be entitled to recover from the non-prevailing Party all of its costs and expenses incurred in connection with any litigation commenced to enforce any provision of this Agreement or to seek a declaration of the rights of the Parties under this Agreement or as a result of any breach of any provision of this Agreement, including without limitation reasonable attorneys' fees. 13.6. Neither HZP nor EG may assign this Agreement, in whole or in part, without the other Party's prior written consent. However, either party may assign its rights and duties under this Agreement without the other Party's consent, so long as the assignee agrees in writing to be bound by this Agreement, to an entity purchasing all or substantially all of the assigning Party's capital stock or assets or the surviving entity in connection with the merger, consolidation or reorganization of the assigning Party. 13.7. If any provision of this Agreement is declared null, void or otherwise unenforceable, that provision will be deemed severed from this Agreement, and the remainder of this Agreement will be enforceable to the maximum practicable extent. 13.8. This Agreement represents the entire agreement between the Parties with respect to this subject matter and supersedes any previous or contemporaneous oral or written agreements regarding this subject matter. This Agreement may be amended or modified only by a written instrument signed by a duly authorized agent of each Party. 13.9. This Agreement and all questions relating to its validity, interpretation, performance and enforcement, shall be governed by and construed in accordance with the laws of the state of Texas, without giving effect to Texas' choice of law rules. 13.10. This Agreement may be executed in any number of counterparts, each of which shall be an original and all of which shall constitute together one and the same document. 13.11. The failure of either Party at any time to require performance by the other Party of any provision of this Agreement will in no way affect the right of that Party to require performance of that provision. Any waiver by either Party of any breach of any provision of this Agreement will not be construed as a waiver of any continuing or succeeding breach of that provision, a waiver of the provision itself or a waiver of any other provision or right under this Agreement. 13.12. This Agreement will be deemed to have been negotiated and prepared at the joint request, direction, and construction of the Parties, at arms length, with the advice and participation of counsel, and will be interpreted in accordance with its terms without favor to either Party. 13.13. Nothing in this Agreement, express or implied, will give to any person, other than the Parties and their successors under this Agreement, any benefit or any legal or equitable right, remedy or claim under this Agreement. [SIGNATURE PAGE TO FOLLOW] 9 THEREFORE, the Parties have executed this Agreement as of the date first written above by their duly authorized representatives. eGROCERY.COM INC. By: /s/ Allen Snyder ----------------------------------------- Allen Snyder Chairman 360 North Robert Street, Suite 500 St. Paul, MN 55101 Facsimile:------------------------------- HORIZON PHARMACIES, INC. By: /s/ Ricky D. McCord ----------------------------------------- Rick McCord President and CEO 531 West Main Street, Denison, Texas 75020 Facsimile: (903) 465-6274 S-1 SCHEDULE A ---------- Mason Vitamins Hallmark Lifescan McKesson HBOC, Inc. Any and all revenues derived from prescription rebates Any and all revenues related to market share monies on prescription drug items Schedule A-1 EX-99.1 4 EXHIBIT 99.1 HORIZON PHARMACIES, INC. FORMS STRATEGIC ALLIANCE WITH eGROCERY.COM-TM- DENISON, TX., April 13, 2000/PRNewswire/--HORIZON Pharmacies, Inc. (AMEX: HZP) today announced that it has formed a strategic alliance with eGrocery.com-TM-, Inc. (www.egrocery.com). HORIZON will make an equity investment of $200,000 in eGrocery.com-TM- and will be issued shares of eGrocery.com-TM- common stock. Both parties will also receive warrants to purchase common stock in each other's respective companies. Any customer using one the approximately 1,000 Internet-based grocery stores affiliated with or owned or maintained by eGrocery.com-TM- (the "EG Web Sites") will have access to HorizonScripts.com (www.horizonscripts.com) by links to its web site or banner advertisements promoting its web site. Additionally, HorizonScripts.com will be the exclusive fulfillment center of all online prescriptions and home medical equipment for customers shopping on any EG Web Site except for those web sites operated by grocery store companies with pre-existing retail pharmaceutical operations. eGrocery.com-TM- is a leading Internet solutions for the grocery and supermarket industry and features a complete and affordable online shopping program that grocery retailers can offer to their customers. The Grocery Shopping Network-TM- ("GSN") Website Program is a retail grocery store website program. GSN offers software and e-commerce solutions that allow supermarkets to implement full-service consumer home shopping programs which include web site development and hosting, online shopping, and internet marketing services for the grocery industry. GSN currently has active web sites for approximately 1,000 grocery stores with approximately 20 million online customers per month. GSN, a business unit of Hometown Information, Inc., recently launched eGrocery.com-TM-. Designed to increase profits for grocery businesses, eGrocery.com-TM- is one of the easiest to use and most competitive Virtual Supermarket products on the Internet today. eGrocery.com-TM- has generated interest from grocery stores that do not currently offer in-house prescription services to its customers to install the online-services of HorizonScripts.com for prescription drugs and health care needs. Rick McCord, President and CEO of HORIZON, states, "The strategic alliance with eGrocery.com will intensify our move into the e-commerce market. Entry into the fast-growing grocery store virtual market will accelerate our opportunity to increase our current customer base through our Virtual Internet Pharmassist concept in combination with the newly designed Virtual Internet Pharmassist kiosk." McCord continues, "The two companies working together creates a powerful symbiotic relationship to increase our customer and prescription base into 2000 and beyond. eGrocery.com-TM- has many opportunities to increase the number of their approximately 1,000 active web sites which will broaden the exposure of HORIZON name beyond our current customer base of 1 million people and our 2.5 million prescriptions annually." Currently, HORIZON owns and operates one Internet pharmacy (www.horizonscripts.com), two mail order pharmacies, and 51 retail pharmacies in 17 states, 15 home medical equipment locations, five closed-door institutional pharmacies, five intravenous (IV) operations, and one home healthcare agency. HORIZON Pharmacies, Inc. acquires, consolidates and operates high volume, free-standing full-service retail pharmacies primarily located in communities that have populations of fewer than 50,000 people, and it operates an Internet pharmacy. HORIZON believes that its success is primarily due to its philosophy of retaining the individual, time-proven customer service characteristics of the stores it acquires, while enabling such stores to offer complete and competitively priced inventories to their small town customers through enhanced technology, greater purchasing power, increased advertising and management of such stores as a chain. THIS NEWS RELEASE CONTAINS FORWARD-LOOKING STATEMENTS CONCERNING THE FUTURE PERFORMANCE OF HORIZON PHARMACIES, INC., WHICH ARE SUBJECT TO A NUMBER OF FACTORS OVER WHICH IT HAS NO CONTROL. FORWARD-LOOKING INFORMATION INCLUDES STATEMENTS CONCERNING PHARMACY SALES TRENDS, ONLINE PHARMACY SALES TRENDS, PRESCRIPTION MARGINS, NUMBER OF NEW STORE OPENINGS, THE LEVEL OF CAPITAL EXPENDITURES AND ITS SUCCESS IN ADDRESSING ANY REMAINING YEAR 2000 ISSUES; AS WELL AS THOSE THAT INCLUDE OR ARE PRECEDED BY THE WORDS "EXPECTS," "ESTIMATES," "BELIEVES," OR SIMILAR LANGUAGE. FOR A MORE COMPLETE DISCUSSION OF THE RISKS ASSOCIATED WITH AN INVESTMENT IN HORIZON AND FOR ADDITIONAL INFORMATION PLEASE REFER TO THE REPORTS ON FILE WITH THE SECURITIES AND EXCHANGE COMMISSION. SOURCE: HORIZON Pharmacies, Inc. CONTACT: Rick McCord of HORIZON Pharmacies, Inc. at 903-465-2397/FAX903-465-6769. For more information, visit its web site at www.horizonrx.com and at www.horizonscripts.com. 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