<PAGE>

                                                                   EXHIBIT 10.1


                                                          CONFIDENTIAL
                                       
                               SUPPLY AGREEMENT

This Supply Agreement dated this 30th day of April, 1998, between McKesson 
U.S. Health Care, a division of McKesson Corporation ("McKesson") and Horizon 
Pharmacies Inc. ("Horizon") shall be to establish a five (5) year program for 
the supply of prescription drugs and other health and beauty care products by 
McKesson to retail pharmacies owned or operated by Horizon (referred to 
herein as "Pharmacies" or "Stores"). The parties hereto agree as follows:

1.   MERCHANDISE

     For purposes hereof, "Merchandise" shall comprise all items normally 
     stocked or drop-shipped by McKesson Drug Distribution Centers servicing 
     the 48 contiguous states, including prescription drugs, OTC drugs, health 
     and beauty aids and sundries. This Agreement does not apply to 
     merchandise sold to Horizon by McKesson Corporation divisions or 
     subsidiaries other than McKesson Drug Company.

2.   TERM

     The term of this Agreement shall be for the five year period commencing 
     on April 30, 1998, and during such period Horizon agrees to designate 
     McKesson as its primary supplier of prescription drugs and to purchase 
     from McKesson substantially all of the requirements of its retail 
     pharmacies for prescription drugs and other items covered hereunder.

3.   ORDERING AND DELIVERY

     A.  Prescription products will be delivered to Horizon pharmacies up to 
         five (5) times per week, on mutually agreed upon days. Orders 
         transmitted by 8:00 p.m. local time Sunday through Thursday will be 
         delivered the next day, with every reasonable attempt to deliver by 
         noon (of next day). Currently Horizon has three stores requiring a 
         Saturday (Rx only and limited items) delivery (Store #21, #23, and 
         #29). In order to receive a Saturday delivery, orders for Stores #21 
         and #29 will be transmitted by no later than noon on Friday. Store 
         #23 will transmit no later than 2:00 p.m., Friday. Although Saturday 
         delivery is not a common practice, both parties mutually agree to 
         discuss future needs as Horizon acquires new stores. McKesson agrees 
         to maintain a [redacted - Confidential Treatment] service level to 
         Horizon Pharmacies chainwide on an aggregate basis for prescription 
         Merchandise, tested on a monthly basis. Service level is defined as 
         total lines ordered (partial lines included) less total omit lines 
         (ordered but not filled). Items that manufacturers are unable to 
         supply, manufacturer back-orders, product recalls, same item ordered 
         again within 72 hours, items the manufacturer has discontinued, and 
         new items with no inventory demand shall be excluded from the service 
         level calculation.

                                      -1-
<PAGE>

                                                                   CONFIDENTIAL

     B.  Non-prescription Merchandise will be delivered to Horizon Pharmacies 
         up to 5 days per week. McKesson agrees to maintain a [redacted -
         Confidential Treatment] service level to Horizon Pharmacies 
         chainwide on an aggregate basis for non-prescription Merchandise. 
         Service level is defined as total lines ordered (partial lines 
         included) less total omit lines (ordered but not filled). Items that 
         manufacturers are unable to supply, manufacturer back-orders, 
         product recalls, same item ordered again within 72 hours, items the 
         manufacturer has discontinued, and new items with no inventory 
         demand shall be excluded from the service level calculation.

     C.  McKesson will provide daily updates of AWP and acquisition cost to 
         the National Data Corporation pharmacy system for pharmaceutical 
         Merchandise. In addition, McKesson will provide retail and 
         acquisition cost fields for non-pharmaceutical Merchandise to the 
         Horizon system no less often than weekly.

4.   PAYMENT TERMS

     A.  The payment terms options for the Merchandise covered by this 
         Agreement are as follows: Horizon Pharmacies may elect one of the 
         following options for payment terms for the Merchandise covered by 
         this Agreement, and shall have the right to elect to switch to the 
         other options during the term of this Agreement after giving a 30 
         day written notice. Any changes to payment terms will be made at the 
         beginning of a payment cycle.

         STANDARD SEMI-MONTHLY PAYMENT TERMS

         Payment for Merchandise delivered to Horizon retail pharmacies shall 
         be paid by Horizon as follows: Invoices dated from the 1st to the 
         15th of the month are due and payable on the 25th day of the same 
         month. Invoices dated from the 16th to the end of the month are due 
         and payable on the 10th of the following month.

         30-DAY EXTENDED PAYMENT TERMS

         Invoices dated from the 1st to the end of the month are due and 
         payable on the 10th day of the following month.

         45 DAY EXTENDED PAYMENT TERMS

         Invoices dated from the 1st of the month to the end of same month 
         are due and payable on the 25th day of the following month.


                                      -2-

<PAGE>

                                                           CONFIDENTIAL

         PREPAYMENT INCENTIVES

         Prepayment Terms (30 day, 15 day and 7 day): The prepayment is a 
         one-time payment equivalent to thirty (30) or fifteen (15) or seven 
         (7) days worth of purchases (based on the most recent three-month 
         purchase history) which is held as a deposit by McKesson. The amount 
         of the required deposit will be adjusted quarterly, and may be 
         adjusted as often as monthly, to cover increases or decreases in 
         purchase volume. Following such one-time payment, all purchases are 
         payable under the Standard Semi-Monthly Payment Terms as described 
         above.

         Horizon shall be entitled to a reduction in the markup set forth in 
         the cost of goods schedule for prepayment if Horizon elects this 
         prepayment option. The prepay incentive shall be as follows:

             PREPAY INCENTIVE                  MARKUP REDUCTION

                30 Days             [redacted - Confidential Treatment]
                15 Days             [redacted - Confidential Treatment]
                 7 Days             [redacted - Confidential Treatment]

    B.   Any payments made after the due date indicated herein shall result 
         in a [redacted - Confidential Treatment] (or the maximum amount 
         permissible under applicable law, if lower) increase in the purchase 
         price of the Merchandise. A [redacted - Confidential Treatment] 
         percent ([redacted Confidential Treatment]%) service charge 
         (or the maximum amount permissible under applicable law, if 
         lower) will be imposed semi-monthly on all balances delinquent 
         more than [redacted - Confidential Treatment] days. If payment 
         is due on a Saturday or Sunday, the payment due date will be 
         the Monday immediately following any such Saturday or Sunday.

     C.  Horizon hereby grants to McKesson a purchase money security interest 
         covering all Merchandise sold and shipped to Horizon by McKesson to 
         secure repayment of amounts due McKesson under this Agreement. Such 
         security interest shall be subject and inferior to security 
         interests covering inventory of specific pharmacies granted by 
         Horizon in favor of prior owners of such pharmacies who have 
         provided Horizon with secured seller financing in the past or who 
         provide such secured seller financing in the future for new 
         pharmacies acquired by Horizon. The security interest of McKesson 
         shall be subordinate to seller financing security interests
         notwithstanding the filing dates of financing statements or any 
         rights under applicable law which McKesson may otherwise have as the 
         holder of a purchase money security interest. Horizon agrees to 
         execute from time to time such financing statements as McKesson may 
         request for the purpose of perfecting McKesson's security interest.

                                  -3-

<PAGE>

                                                           CONFIDENTIAL

     D.  This Agreement is conditioned upon Horizon not being in default 
         under the terms of the Credit Agreement throughout the term hereof 
         and to that end, Horizon agrees to promptly substantiate in writing, 
         at McKesson's request, the existence of such condition with annual 
         audited and quarterly unaudited financial statements and any other 
         supporting information required by McKesson.

     E.  McKesson reserves the right, in its sole discretion, to change a 
         payment term (including imposing the requirement of cash payment 
         upon delivery) or limit total credit, if (i) McKesson concludes 
         there has been a material adverse change in Horizon's financial 
         condition or an unsatisfactory payment performance; or (ii) Horizon 
         is in default under the terms of the Credit Agreement. Upon the 
         occurrence of any of the events of default specified above in (i) or 
         (ii) of this Section, McKesson shall allow a five (5) day period from 
         receipt of written notice of default to cure the default before 
         changing the payment terms. During that period, Horizon must adhere 
         to its normal buying patterns. If the default is not cured after five 
         days, McKesson will change the payment term to limit its risk, but 
         will continue to ship product for thirty (30) days before 
         suspending or discontinuing shipment of any additional orders to 
         Horizon pharmacies.

5. COST OF GOODS

     A.  In consideration for the Cost of Goods specified herein, Horizon 
         expressly commits to purchase throughout the term of this Agreement 
         (i) no less than [redacted - Confidential Treatment] percent 
         (redacted %) of its pharmaceutical Merchandise from McKesson, (ii) 
         no less than [redacted - Confidential Treatment] percent (redacted 
         %) of its OTC drug, HBA, and DME Merchandise from McKesson, and 
         (iii) not less than a monthly average of [redacted - Confidential 
         Treatment] percent (redacted %) (net of returns, allowances and 
         rebates) during any three month period of this Agreement in Direct 
         Store Pharmacy Delivery ("D.S.D.") volume of Merchandise from 
         McKesson ("Volume Purchase Commitment"). Unless otherwise 
         indicated, Horizon shall at the time of implementation of service 
         under this Agreement ("Implementation Date") be charged, in 
         accordance with its designated payment terms, the applicable markup 
         specified below for such Purchase Volume Commitment amount. 
         Horizon's Cost of Goods thereafter shall be subject to quarterly 
         review by McKesson and will be adjusted, if and to the extent 
         necessary, to reflect Horizon's actual chain-wide monthly average 
         purchase volume. If at any time after the first year of this 
         Agreement Horizon has not achieved the appropriate pro rata 
         purchase volume based on its Volume Purchase Commitment, McKesson, 
         in addition to the other rights and remedies available to it 
         hereunder, reserves the right in its sole discretion to redetermine 
         the Cost of Goods pricing specified below.
         
     B.  Horizon hereby further agrees to maintain a minimum chain-wide 
         monthly average volume per retail pharmacy operation location of 
         [redacted - Confidential Treatment] in D.S.D. prescription and OTC 
         product purchases (net of returns, allowances and rebates) from 
         McKesson throughout the term of this Agreement. In the event that 
         Horizon

                                -4-

<PAGE>

                                                                CONFIDENTIAL

         fails to maintain this minimum chainwide average volume of 
         $ [redacted-Confidential Treatment] in net D.S.D. prescription drug 
         and OTC product purchases per retail pharmacy operation location per 
         month from McKesson during any three month period of this Agreement  
         [excluding the first three (3) months of this Agreement], all Cost 
         of Goods mark-ups hereunder shall be increased by 
         [redacted - Confidential Treatment] during each subsequent three (3) 
         month period until such time as the minimum chainwide net D.S.D. 
         prescription drug and OTC product purchases volume requirement of 
         $ [redacted-Confidential Treatment] is met for three (3) consecutive 
         months.

     C.  Subject to the terms and conditions of this Section, the Cost of 
         Goods for Merchandise delivered to Horizon shall be Cost plus the 
         applicable markup as specified below. [redacted - Confidential 
         Treatment]

     D.  Subject to the terms and conditions herein, the Cost of Goods hereunder
         shall be in accordance with the pricing schedule set forth below.

<TABLE>
<CAPTION>

     CHAIN-WIDE MONTHLY VOLUME FOR 
     [REDACTED - CONFIDENTIAL TREATMENT] PAYMENT                                      COST PLUS MARKUP
     TERMS (NET OF RETURNS, ALLOWANCES AND REBATES)                              RX                               OTC
     ----------------------------------------------                          -------                     -------------------
          <S>                                       <C>                                     <C>
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
</TABLE>

<TABLE>
<CAPTION>

     CHAIN-WIDE MONTHLY VOLUME FOR 
     [REDACTED - CONFIDENTIAL TREATMENT] PAYMENT                                      COST PLUS MARKUP
     TERMS (NET OF RETURNS, ALLOWANCES AND REBATES)                               RX                               OTC
     -----------------------------------------------------                    -------                     -------------------
          <S>                                       <C>                                     <C>
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%

                                      -5-

<PAGE>


                                                                   CONFIDENTIAL

          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
</TABLE>

<TABLE>
<CAPTION>
     CHAIN-WIDE MONTHLY VOLUME FOR 
     [REDACTED - CONFIDENTIAL TREATMENT] PAYMENT                                           COST PLUS MARKUP
     TERMS (NET OF RETURNS, ALLOWANCES AND REBATES)                              RX                             OTC
     ----------------------------------------------                          -------                    -------------------
          <S>                                       <C>                                     <C>
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
          [redacted - Confidential Treatment]       [redacted - Confidential Treatment]%    [redacted - Confidential Treatment]%
</TABLE>

         NET BILLED ITEMS:  The purchase price for selected Merchandise, 
         including but not limited to the following product lines, will be 
         net-billed and not covered by the above-specified Cost of Goods 
         pricing: [redacted - Confidential Treatment]

     E.  All Horizon pharmacies will be invoiced at Cost plus [redacted - 
         Confidential Treatment] for all Merchandise except net-billed items.
         A rebate will be calculated based on the difference between such 
         invoiced amount and the then applicable Cost of Goods pricing as 
         determined by the Horizon's respective chainwide monthly Volume 
         Level and current payment terms. Said rebate amount will be issued 
         monthly via check to Horizon's headquarters by the eighteenth (18th)
         of the following month.

     F.  If Horizon Pharmacies elects not to participate in the McKesson 
         Select Generic Program as specified in Section 10 of this Agreement
         or discontinues its participation in the McKesson Select Generics 
         Program at any time during the term of this Agreement, an

                                      -6-

<PAGE>

                                                                   CONFIDENTIAL

     increase in the Cost of Goods markups set forth in Section 5.D. above will
     apply in accordance with the following schedule:

<TABLE>
<CAPTION>
     Applicable Payment Terms                      Markup Increase
     ------------------------                      ---------------
     <S>                                  <C>
            45 Days                       [redacted - Confidential Treatment]%
            30 Days                       [redacted - Confidential Treatment]%
            15 Days                       [redacted - Confidential Treatment]%
</TABLE>

     Such increase will become effective immediately upon the occurrence of 
     either the above-referenced events regarding participation in the 
     McKesson Select Generics Program.

G.   It is further understood and agreed by the parties that if:

           i)  Horizon fails to maintain a minimum chain-wide average volume 
               of [redacted - Confidential Treatment] in D.S.D. prescription 
               drug and OTC product purchases (net of returns, allowances and
               rebates) per month from McKesson during any consecutive three 
               (3) months of this Agreement (excluding the first three (3) 
               month period of this Agreement); or

          ii)  Horizon fails to maintain a minimum average volume per Store 
               per month of [redacted - Confidential Treatment] in D.S.D. 
               prescription drug and OTC product purchases (net of returns, 
               allowances and rebates) from McKesson during any consecutive 
               three (3) months of this Agreement (excluding the first (3) 
               month period of this Agreement),

          either such failure shall constitute a non-monetary default under 
          this Agreement by Horizon as contemplated in Section 13.A.

H.        Prior to making any adjustments to amounts payable by Horizon 
          pursuant to Section 5.D. as a result of different volumes of 
          Merchandise purchased, McKesson will first give written notice to 
          Horizon of the proposed change and provide sufficiently detailed 
          backup information to Horizon to substantiate the proposed change. 
          Horizon will have an opportunity to review the information provided 
          by McKesson to verify the accuracy of the calculations, to request 
          additional information and to discuss the matter with McKesson 
          personnel responsible for such information, and in any event, shall 
          have no less than thirty (30) days to complete such verification.

6.   CONVERSION ALLOWANCE

     In consideration for Horizon's Volume Purchase Commitment specified 
     above, McKesson agrees to pay to Horizon a conversion allowance 
     ("Conversion Allowance") based on the following terms and conditions:

                                      -7-
<PAGE>

                                                                   CONFIDENTIAL

     A.   The Conversion Allowance to be paid under this Agreement shall be 
          [redacted - Confidential Treatment]% of the [redacted - Confidential 
          Treatment] as hereinafter defined.  Such Run Rate shall equal the
          amount of Horizon's [redacted - Confidential Treatment] purchases,
          net of returns, allowances, rebates and any net-billed items, from 
          McKesson following the Implementation Date of this Agreement. The 
          [redacted - Confidential Treatment] shall be defined as those 
          purchases hereunder beginning [redacted - Confidential Treatment].  
          This one-time payment will occur thirty (30) days following 
          expiration of the [redacted - Confidential Treatment] set forth 
          above.

     B.   If Horizon has not met its Purchase Volume Commitment as specified 
          in Section 5.A. above at the time of either expiration of this 
          Agreement or termination of this Agreement by either party, Horizon 
          shall repay to McKesson in accordance with the following formula a 
          pro-rata portion of the Conversion Allowance previously paid 
          hereunder to Horizon pursuant to Section 6.A. above:


                          [redacted - Confidential Treatment]


          Such repayment amount shall be paid in full by Horizon within five 
          (5) days of the effective date of such expiration or termination of 
          this Agreement in immediately available funds, without making any 
          deductions, offsets, short payments or other unauthorized accounts 
          payable adjustments. Notwithstanding anything in this Section 6 to 
          the contrary, Horizon shall have no repayment obligation hereunder 
          in the event of termination of this Agreement by Horizon due to a 
          default by McKesson resulting from a material breach of its 
          obligations that is not cured in accordance with the terms and 
          conditions set forth in Section 13.A. below.

7.   RETURNED GOODS

     A.   Credits for returned goods from McKesson are divided into four 
          categories, depending on the reason for the claim. Credits will be 
          issued for any of the following reasons:

          1)   Non-merchandise problems, such as shortages and pricing errors;
          2)   McKesson merchandise received in error;
          3)   Recalls; and
          4)   Outdated merchandise (defined as items with less than 6 months
               dating)

                                      -8-
<PAGE>

                                                                   CONFIDENTIAL

B.  The amount of credit allowed by McKesson will vary as follows:

    1)   [redacted - Confidential Treatment] credit will be given for:

         a)  Pricing errors, shipping errors and billing errors;
         b)  Shortages (required to be phoned into the Customer Service 
             Center within 48 hours of receipt of Merchandise);
         c)  Ordering errors (must be returned within 30 days of receipt);
         d)  Manufacturer recalls;
         e)  Items received from McKesson with less than six (6)
             months dating; and
         f)  Merchandise that had concealed damage.

         Invoice number is required in each of the above-specified instances, 
         except recalls, for full credit.

    2)   [redacted - Confidential Treatment] credit will be given for:

         Clean, salable merchandise with at least nine (9) months dating 
         returned more than 30 days after store receipt.

    3)   [redacted - Confidential Treatment] credit will be given for:

         a)  Unsalable merchandise which can be returned to manufacturer,
         b)  Outdated items (subject to the approved vendor list); and
         c)  Salable merchandise with price tickets NOT removed.

    4)   [redacted - Confidential Treatment] credit will be given for:

         a)  Merchandise damaged in store pharmacies;
         b)  Merchandise from manufacturers not listed on the approved
             vendor list; and
         c)  Merchandise not purchased from McKesson.

         These items will be sent back to the store which initiated the return.

C.  [redacted - Confidential Treatment]

                                      -9-
<PAGE>

                                                                   CONFIDENTIAL

8.  CUSTOMER SUPPORT CENTER

    A.  Customer Service Support personnel will be available at the McKesson 
        Premier Service Center from 8:00 a.m. EST to 8:00 p.m. EST Monday 
        through Friday. Technical and emergency support is available 24 hours 
        a day, seven (7) days a week. A Customer Service POD will be assigned 
        to the Horizon chain of Stores with a key National Account contact as 
        well.

    B.  Horizon will be provided the names and telephone numbers of its key 
        contacts at McKesson as well as the names and telephone numbers of 
        McKesson's designated support personnel.

    C.  McKesson will provide the necessary training for Horizons employees 
        on all programs and services described in this Agreement and provide 
        personnel to complete the initial store conversion at no charge. 
        Additionally McKesson will provide assistance for a one-time reset to 
        coincide with POS installation (this may or may not occur at the same 
        time as conversion).

9.   CONTRACT MANAGEMENT

    A.  McKesson agrees to service all manufacturers' contracts negotiated by 
        Horizon, provided such manufacturers are approved suppliers of 
        McKesson. Merchandise will be supplied at Horizon's negotiated bid 
        price plus McKesson's applicable markup as described above in the 
        Cost of Goods section.

    B.  Horizon's eligibility for participation under a vendor contract must 
        be authorized by the vendor, before the contract is loaded by 
        McKesson. Horizon shall be liable for unpaid charge backs resulting 
        from eligibility issues.

    C.  In the event that a manufacturer in the case of a Horizon negotiated 
        contract (i) makes an assignment for the benefit of creditors, files 
        a petition in bankruptcy, is adjudicated insolvent or bankrupt, or 
        if a receiver of trustee is appointed with respect to a substantial 
        part of the vendor's property or a proceeding is commenced against it 
        which will substantially impair its ability to pay on charge backs or 
        (ii) otherwise defaults in the payment of charge backs to McKesson, 
        Horizon shall be invoiced and become liable for the unpaid charge 
        backs allocable to its purchases from such vendor.

10.   GENERIC PHARMACEUTICALS

      Horizon agrees that upon commencement of the term of this Agreement to 
      participate in McKesson's Select Generics Program through its 
      auto-substitution feature and to thereby designate this program as 
      Horizon's primary source of generic pharmaceuticals. A

                                      -10-
<PAGE>

                                                                CONFIDENTIAL

     quarterly rebate shall be paid to Horizon in accordance with the 
     following matrix based on such participation:

<TABLE>
<CAPTION>

     CHAIN-WIDE QUARTERLY SELECT
     GENERICS VOLUME (NET OF RETURNS,                                   QUARTERLY REBATE % ON
     ALLOWANCES AND REBATES)                                            SELECT GENERICS PURCHASES
     -------------------------------                                    -------------------------

                                     REBATE UNDER [REDACTED - CONFIDENTIAL   REBATE UNDER [REDACTED - CONFIDENTIAL 
                                     TREATMENT] PAYMENT TERMS                TREATMENT] PAYMENT TERMS
     <S>                             <C>                                     <C>
[redacted - Confidential Treatment]  [redacted - Confidential Treatment]00%  [redacted - Confidential Treatment]00%
[redacted - Confidential Treatment]  [redacted - Confidential Treatment]00%  [redacted - Confidential Treatment]00%
[redacted - Confidential Treatment]  [redacted - Confidential Treatment]00%  [redacted - Confidential Treatment]00%
[redacted - Confidential Treatment]  [redacted - Confidential Treatment]00%  [redacted - Confidential Treatment]00%
[redacted - Confidential Treatment]  [redacted - Confidential Treatment]00%  [redacted - Confidential Treatment]00%
</TABLE>

11.  REPACKAGED PHARMACEUTICALS

     A competitive and comprehensive program will be made available to 
     Horizon to participate in, at its option, for repackaged pharmaceutical 
     products. Stores shall be net-billed on McKesson's RxPak line of 
     repackaged branded pharmaceutical products.

12.  SYSTEM SERVICES, EQUIPMENT AND PROGRAMS

     The following systems and services will be made available to Horizon 
     Pharmacy as specified:

     REQUIRED:

     A.   ECONOMOST order system offers the following:
          1)   Telxon order entry device
          2)   Customized retail price capabilities
          3)   Scannable shelf identification labels
          4)   Item price stickers for pharmaceutical and H.B.C. merchandise
          5)   Controlled substance report (A detailed listing of all 
               controlled substances purchased from the servicing McKesson DC.
          6)   Manufacturer off invoice allowances automatically applied upon 
               ordering

          7)   McKesson Advantage. (Monthly publication that lists manufacturer
               off invoice allowances, new Rx and OTC merchandise, advertising
               allowances, etc.)
          Fee is $ [redacted - Confidential Treatment] per month per location.

                                      -11-
<PAGE>
                                                                CONFIDENTIAL

     OPTIONAL:

     A.   Valu-Rite offers the following:
          1)   National identification
          2)   Extensive line of Valu-Rite private label merchandise
          3)   Circular advertising (Promotions unlimited)
          4)   Chain class a contract pricing on Owens Brockway prescription 
               ware
          5)   No charge Yellow Page ad under Valu-Rite Pharmacies 
          6)   1-800 Valu-Rite locator number.
          7)   Quarterly rebate program ([redacted - Confidential Treatment] 
               McKesson Select Generics, [redacted - Confidential Treatment] 
               Private Label Products)
          8)   National advertising program
          9)   New neighbor program, and marketing services
          10)  Prefer Rx-Contract pricing on select branded name pharmaceuticals
          11)  MAP Zone pricing for each retail pharmacy location.
          Fee is $[redacted - Confidential Treatment] per month per location.

     B.   Microfiche
          Microfiche Updated twice per month
          Fee is $[redacted - Confidential Treatment] per mo. per location.
 
     C.   EconoLink* offers the following:
          1)   Includes IBM compatible windows based system with color monitor,
               printer and modem. Hardware and software maintenance are 
               included in monthly charge.
          2)   Customized data base and reports.
          3)   Contract compliance and best price search
          4)   Daily automatic price and product updates.
          5)   On line listing of product availability
          6)   Order submission via electronic data interchange
          7)   Quantity acknowledgments (instant purchase order confirmation
               with a detailed listing of merchandise filled and out of stock
          Fee is $ [redacted - Confidential Treatment] per mo. per location-
          Optional.

          * One (1) Econolink Host system shall be provided to Horizon's 
          headquarters, at [redacted - Confidential Treatment]. EconoLink shall 
          be subject to a separate license agreement between the parties 
          governing use and maintenance.

     D.   OmniLink: Terms and conditions for utilization of McKesson's OmniLink
          program will be agreed to under separate contract.

                                      -12-
<PAGE>

                                                                   CONFIDENTIAL
13.  DEFAULT AND REMEDIES

     A.  Failure of either party to make any payments within five (5) days of 
         when due in accordance with the terms of this Agreement shall 
         constitute a default. Any breach by either party of a material 
         non-monetary provision of the Agreement or any other agreement 
         between Horizon and McKesson (i.e. a provision not requiring the 
         payment of money), which is capable of being cured and has not been 
         caused by any action or omission of the other party, shall 
         constitute a default if not cured to the reasonable satisfaction of 
         the other party within sixty (60) days after the giving of written 
         notice of such breach by the non-breaching party. Such written 
         notice shall specify the nature of the breach and be accompanied by 
         calculations and other appropriate materials to substantiate the 
         allegation of breach in order for the alleged breach to be verified 
         if necessary. Upon default by either party the non-breaching party 
         may, at its option, terminate the Agreement immediately without 
         further notice and pursue any remedy available to it under this 
         Agreement, at law or in equity or any combination thereof.

     B.  Either party may, on ten (10) days notice, terminate this Agreement:

         1)    If the other party shall file any petition under any 
               bankruptcy, reorganization, insolvency or moratorium laws, or 
               any other law or laws for the relief of or in relation to the 
               relief of debtors; or

         2)    If the other party shall file any involuntary petition under 
               any bankruptcy statute or a receiver or trustee shall be 
               appointed to take possession of all or substantial part of the 
               assets of the party which has not been dismissed or terminated 
               within sixty (60) days of the date of such filing or 
               appointment, or

         3)    If the other party shall make a general assignment for the 
               benefit of creditors or shall become unable or admit in 
               writing its inability to meet its obligations as they mature; 
               or

         4)    If the other party shall institute any proceedings for 
               liquidation or the winding up of its business other than for 
               purposes of reorganization, consolidation or merger.

     C.  In the event of a termination hereunder the following continuing 
         obligations and liabilities shall survive termination and remain in 
         full force and effect:

         1)    Liability for accounts receivable balances or any other 
               payment due hereunder to the other party at the date of or upon 
               the occurrence of such termination; and


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                                                                   CONFIDENTIAL

         2)    Obligations imposed on each party under the Proprietary and 
               Confidentiality Information section set forth below.

14.  PROPRIETARY AND CONFIDENTIAL INFORMATION

     A.  Any and all accounts, records, books, files, and lists regarding any 
         transaction provided for or contemplated hereunder, shall be 
         confidential and proprietary to the party creating or generating 
         such information. This Agreement, and the terms and conditions 
         hereof, are confidential. The parties expressly agree to maintain 
         such terms and conditions in confidence, and shall take every 
         precaution to disclose the contents of this Agreement only to those 
         employees of each of the parties who have a reasonable need to know 
         such information.

     B.  Horizon and McKesson each acknowledge that, in connection with their 
         respective businesses, they have developed certain operating 
         manuals, symbols, trademarks, trade names, service marks, trade 
         secrets, customer lists, procedures, formulas, and other patented, 
         copyrighted, or legally protected materials which are confidential 
         and proprietary to each of them.

     C.  Neither party may disclose the terms of this Agreement during the 
         term hereof and for an additional period of twenty-four (24) months 
         following the effective date of expiration or other termination of 
         this Agreement. Furthermore, except upon the prior written consent 
         of the other party, neither party may divulge, disclose, 
         communicate, or use any of the other party's confidential or 
         proprietary information generally described in Subsection A and B 
         above, in any manner or for any purpose, including, without 
         limitation, use in advertising or for promotional materials, except 
         upon the prior written consent of the other party. A  party hereto 
         may refuse consent to the use of its confidential or proprietary 
         information for any or no reason. In the event that any such 
         confidential or proprietary information is used during the course of 
         this Agreement it shall retain its confidential and proprietary 
         nature and shall be returned immediately to its owner or destroyed 
         upon termination of this Agreement. Notwithstanding anything herein 
         to the contrary, nothing in this subsection shall require either 
         party to maintain in confidence any information, materials, or data 
         which is in the public domain, enters the public domain through 
         no fault of such party, was in possession of the party prior to being 
         furnished to it by the other, was supplied to the party by a third 
         party or parties lawfully in possession thereof, which is required 
         to be disclosed to the Securities and Exchange Commission or other 
         commission or agency regulating the activities of either party or 
         which the party is required to divulge pursuant to process of any 
         judicial or governmental body of competent jurisdiction, provided 
         that notice of receipt of such process is given to the other.


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                                                                   CONFIDENTIAL

15.  FORCE MAJEURE

     If service from any McKesson distribution center to any Horizon store(s) 
     is interrupted or delayed because of strike, lockout, labor dispute, 
     fire or other casualty, or any other reasons beyond the reasonable 
     control of McKesson, McKesson will take such action as may be reasonably 
     necessary, without additional cost or expense to Horizon, to maintain 
     service as mutually agreed upon to affected stores from an alternate 
     McKesson Distribution Center. Any adverse effects upon Horizon's 
     performance of this Agreement occurring as a result of the events 
     described in this section shall not in any way be considered a breach of 
     this Agreement.

16.  NOTICES

     All notices pertaining to this Agreement shall be delivered in person, 
     sent by certified mail, delivered by air courier, or transmitted by 
     facsimile and confirmed in writing (sent by air courier or certified 
     mail) to a party at the address or facsimile number shown in this 
     Section, or such other address or facsimile number as a party may 
     notify the other party from time to time. Notices delivered in person, 
     and notices dispatched by facsimile prior to 4:00 p.m. and confirmed, 
     shall be deemed to be received on the day sent. All other facsimiles 
     and notices shall be deemed to have been received on the business day 
     following receipt; provided, however, if such day falls on a weekend or 
     legal holiday, receipt shall be deemed to occur on the next business 
     day. Notices may also be transmitted electronically between the 
     parties, provided that proper arrangements are made in advance to 
     facilitate such communications and provide for their security and 
     verification.

     IF TO MCKESSON:                        IF TO HORIZON:
                                            
     McKesson Corporation                   Horizon Pharmacies Inc.
     809 110th St.                          275 W. Princeton Dr.
     Arlington, TX 76011                    Princeton, TX 75407
                                            
     ATTENTION: Dennis Milsow               ATTENTION: Rick McCord
                Vice President Sales                   President
           FAX: (817) 652-7699                    FAX: (972) 736-2424

17.  MISCELLANEOUS

     A.   This Agreement embodies the entire agreement between the parties with
          regard to the subject matter hereof and supersedes all prior 
          agreements, understandings and representations with the exception 
          of any promissory note, security agreement or other credit or 
          financial related document(s) executed by Horizon or between 
          Horizon and McKesson. This Agreement may not be modified, 
          supplemented or extended except by a writing signed by both 
          parties.

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                                                                   CONFIDENTIAL

     B.   This Agreement supersedes any and all prior McKesson agreements and 
          discount plans in which any Horizon pharmacy may currently be 
          participating.

     C.   Except as provided above in Section 15, neither party shall have any 
          obligation hereunder for failure or delay of performance due to 
          fire, shortage of materials or transportation, government acts, or 
          any other cause beyond its control.

     D.   Neither party shall have the right to assign this Agreement or any
          interest therein without the prior written consent of the other 
          party, and any such attempted assignment shall be without effect, 
          except that either party may, without the consent of the other, assign
          this Agreement to an affiliate of such party and except that this 
          provision shall not be applicable to any corporate reorganization 
          of either party, including but not limited to any merger, 
          reincorporation or sale of a significant portion of either party's 
          assets.

     E.   This Agreement shall be construed in accordance with the State of 
          California without regard to the provisions of Section 1654 of the 
          California Civil Code or the rules regarding conflict of laws.

     F.   If any provisions of this Agreement shall be held invalid under 
          any applicable law, such invalidity shall not affect any other 
          provision of this Agreement.

     G.   The failure of either party to enforce at any time or for any period
          of time any one or more of the provisions thereof shall not be 
          construed to be a waiver of such provisions or of the right of 
          such party thereafter to enforce each such provision.

     H.   If any federal, state, or local tax currently or in the future 
          (e.g. Minnesota Care Tax) is levied upon McKesson in a 
          jurisdiction where either McKesson or Horizon does business and 
          such tax relates or applies to the Merchandise and or any 
          applicable service fees covered by this Agreement (excluding taxes 
          imposed on McKesson's net income), the Cost of Goods to those 
          Horizon pharmacies involved will be increased a corresponding 
          percentage amount.

     I.   Horizon represents and warrants that similar conditions, including 
          prices, rebates, terms and delivery, have been made available to 
          Horizon by wholesale drug competitors of McKesson in the areas 
          covered by this Agreement.

     J.   If and to the extent any product discounts, rebates or other 
          purchasing incentives are earned by or granted to Horizon and paid 
          by McKesson under this Agreement, then applicable provisions of the 
          Medicare/Medicaid and state health care fraud and 
          abuse/antikickback laws and regulations (collectively, "fraud and 
          abuse laws") may require disclosure of the applicable price 
          reduction on Horizon's claims or cost reports for reimbursement 
          from governmental or other third party health care programs or 
          provider plans. Horizon agrees to comply with all

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                                                                   CONFIDENTIAL

          applicable provisions of the fraud and abuse laws and to indemnify 
          and hold McKesson harmless for any failure on its part to do so.

     K.   Participation hereunder by any of Horizon's pharmacies in 
          McKesson's Preferred Provider Network may be terminated by McKesson 
          if such pharmacy fails to comply with the terms and conditions of 
          this Agreement or the M.P.P.N. Agreement. Membership to these two 
          Networks are granted as members of McKesson's Valu Rite program and 
          at Horizon's discretion pharmacies can opt out of individual 
          managed care plans it so designates. Such membership shall be 
          discontinued for any Horizon Pharmacy not using McKesson as its 
          primary wholesaler as defined herein.

     L.   McKesson shall be entitled to set off any delinquent amount owing 
          from Horizon to McKesson after either of the five day cure periods 
          referenced in Sections 4.E. and 13.A. against any amount payable at 
          such time by McKesson to Horizon, whether arising under this 
          Agreement or otherwise. For purposes of this Section, Horizon and 
          McKesson in each case shall include its subsidiaries and affiliates.

     M.   Whenever possible, each provision of this Agreement shall be 
          interpreted so as to be effective and valid under applicable law, 
          but if any provision of this Agreement should be prohibited or 
          invalid under applicable law, such provision shall be ineffective 
          to the extent of such prohibition or invalidity without 
          invalidating the other of such provision or the remaining 
          provisions of this Agreement. The parties agree to replace any such 
          invalid provision with a new provision which has the most nearly 
          similar permissible economic effect.

     N.   The section headings contained in this Agreement are for reference 
          purposes only and shall not affect in any way the meaning or 
          interpretation of this Agreement.

     O.   This Agreement may be executed in any number of counterparts, and 
          each such counterpart hereof shall be deemed an original 
          instrument, but all such counterparts together shall constitute one 
          agreement.

     P.   In the event Horizon decides to develop its own private label (OTC) 
          line, McKesson, based on its current understanding of the 
          contemplated distribution requirements posed by such an arrangement, 
          agrees to establish a service fee of [redacted - Confidential 
          Treatment] percent ([redacted - Confidential Treatment]%) [separate 
          from any amounts due under this Agreement] for stocking and 
          shipping products covered by the designated Horizon private label. 
          It is understood and agreed by the parties that this fee would be 
          subject to an increase adjustment in the event of a material change 
          in the distribution requirements actually applicable at the time of 
          implementation of such services. All inventory of such private 
          label products stored at McKesson Distribution Centers will be 
          under the complete ownership of Horizon Pharmacies, Inc.

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                                                                   CONFIDENTIAL

     Q.   McKesson and Horizon agree to conduct an annual business review of 
          the supply arrangement created by this Agreement ("Annual Review") 
          which shall occur throughout the term hereof during the month 
          immediately preceding the anniversary of the commencement date of 
          this Agreement. The purpose of this Annual Review shall be to allow 
          the parties to discuss then current market conditions or other 
          competitive considerations which are directly related to the 
          parties' existing business relationship.

IN WITNESS WHEREOF the parties have caused this Agreement to be duly executed 
as of the date and year written below and the persons signing warrant that 
they are duly authorized to sign for and on behalf of the respective parties. 
This Agreement shall be deemed accepted by McKesson only upon execution by a 
designated signatory of McKesson.

HORIZON PHARMACIES INC.                McKESSON U.S. HEALTH CARE,
                                       A DIVISION OF McKESSON CORPORATION

By:  /s/ Rick McCord                   By:  /s/ William G. Hamik
   -------------------------------        -------------------------------

Name:    Rick McCord                   Name:    William G. Hamik
     -----------------------------          -----------------------------
         (Print or Type)                          (Print or Type)

                                               Senior Vice President,
Title:      President                  Title:   Customer Operations
     -----------------------------          -----------------------------

Date:        4/30/98                   Date:         4/30/98
     -----------------------------          -----------------------------


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