Document:

<PAGE>

                          SECURITIES PURCHASE AGREEMENT

                                  BY AND AMONG

                            HORIZON PHARMACIES, INC.

                                       AND

                   THE SEVERAL PURCHASERS NAMED IN SCHEDULE I

                            DATED AS OF JUNE 15, 1998

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<TABLE>
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                                TABLE OF CONTENTS

                                                                                                               Page
                                                                                                               ----
<S>               <C>                                                                                          <C>

ARTICLE I         DEFINITIONS.....................................................................................1

ARTICLE II        PURCHASE AND SALE OF SECURITIES.................................................................2

ARTICLE III       SECURITIES PURCHASE AGREEMENT...................................................................2

ARTICLE IV        REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS................................................4

ARTICLE V         PURCHASERS' CONDITIONS TO CLOSING...............................................................4

ARTICLE VI        COMPANY CONDITIONS TO CLOSING...................................................................5

ARTICLE VII       MISCELLANEOUS...................................................................................5

</TABLE>

SCHEDULES:
----------

Schedule I        -        Purchasers
Schedule II       -        Financial Statements

ANNEXES:
--------

Annex "A"         -        Warrant
Annex "B"         -        Registration Rights Agreement

<PAGE>

                          SECURITIES PURCHASE AGREEMENT

         SECURITIES PURCHASE AGREEMENT (the "Agreement"), dated as of June 15,
1998, by and among HORIZON Pharmacies, Inc., a Texas corporation (the
"Company"), and the several purchasers named in the attached Schedule I
(collectively, the "Purchasers").

                                   WITNESSETH

         WHEREAS, the Company wishes to sell and issue to the Purchasers for
an aggregate purchase price of $7,000,000, 736,838 shares of Common Stock (as
hereinafter defined) at a price of $9.50 per share, and 41,000 Warrants (as
hereinafter defined) at a price of $.001 per share (collectively, the
"Securities"); and

         WHEREAS, the Purchasers wish to purchase the Securities on the terms
and subject to the conditions set forth in this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants set forth herein, the parties agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

         For purposes hereof, the following terms shall have the meanings set
forth below:

         1.01     "ARTICLES OF INCORPORATION" shall have the meaning given such
term in Section 3.02.

         1.02     "AUDITED BALANCE SHEET" shall have the meaning given such
term in Section 3.05.

         1.03     "BEST KNOWLEDGE" or "BEST OF ITS KNOWLEDGE" shall mean the
due inquiry of the person making such statement of its officers, directors and
appropriate employees and advisors who would reasonably be anticipated to have
knowledge of such matter.

         1.04     "CLOSING" shall have the meaning set forth in Section 2.02.

         1.05     "CLOSING DATE" shall be the date of the Closing, which will
be held at such time or times as provided in Section 2.02.

         1.06     "COMMISSION" shall mean the Securities and Exchange
Commission.

         1.07     "COMMON STOCK" shall mean the common stock of the company,
par value $0.01 per share.

         1.08     "COMPANY" shall mean HORIZON Pharmacies, Inc., a Texas
corporation.

         1.09     "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.

         1.10     "FINANCIAL STATEMENTS" shall have the meaning given such term
in Section 3.05.

         1.11     "PERSON" shall mean an individual, corporation, trust,
partnership, joint venture, unincorporated organization, government agency or
any agency or political subdivision thereof, or other entity.

         1.12     "PURCHASERS" shall have the meaning given in the preamble to
this Agreement.

         1.13     "SEC REPORTS" shall have the meaning given such term in
Section 3.06.

         1.14     "SECURITIES" shall mean the Common Stock and Warrants to be
purchased by the Purchasers.

<PAGE>

         1.15     "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.

         1.16     "WARRANTS" shall mean warrants to purchase shares of the
Common Stock on the terms set forth herein.

                                  ARTICLE II

                         PURCHASE AND SALE OF SECURITIES

         2.01     SALE OF SECURITIES. Subject to all of the terms and
conditions herein stated, the Company agrees to sell, assign, transfer and
deliver to the Purchasers and the Purchasers agree to purchase from the
Company on the Closing Date, the Securities at an aggregate purchase price of
$7,000,000.

         2.02     TERMS OF WARRANTS. Each Warrant shall entitle the Purchasers
to purchase one share of Common Stock at a purchase Price of $9.50 per share,
upon terms and conditions substantially the same as those set forth in the
Warrant attached hereto as Annex "A."

         2.03     CLOSING. The closing of the sale (the "Closing") referred to
in Section 2.01 of this Agreement shall take place at 1:00 p.m. at the offices
of Phillips McFall McCaffrey McVay & Murrah, P.C. 211 N.Robinson, 12th Floor,
Oklahoma City, Oklahoma 73102, on June 15, 1998 (the "Closing Date"), or at
such time or place as the parties hereto shall by written instrument designate.

         2.04     CLOSING DELIVERIES. At Closing, the Company shall issue and
deliver to the Purchasers certificates in definitive form registered in the
name of such Purchasers and representing the Common Stock and Warrants. As
payment in full for the Securities, and against delivery of the certificates
therefor as aforesaid, on the Closing Date each of the Purchasers shall: (i)
deliver to the Company a check, payable to the order of HORIZON Pharmacies,
Inc. in the amount set forth opposite the name of such Purchaser on
Schedule  1, (ii) transfer such sum to the account of the Company by wire
transfer; or (iii) deliver or transfer such sum to the Company by any
combination of such methods of payments.

         2.05     BROKERS' FEE. The Company agrees to pay at Closing and out
of the proceeds of the sale of the Securities hereunder, to any broker agreed
upon by the parties, a brokers' fee of no more than $150,000.

         2.06     REGISTRATION RIGHTS. At the Closing, the Company and each
Purchaser shall enter into a Registration Rights Agreement having
substantially the terms set forth in Appendix "B" attached hereto.

                                 ARTICLE III

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

         3.01     ORGANIZATION AND QUALIFICATIONS. The Company (i) has been
duly incorporated, and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its organization; and (ii) is duly
qualified to do business as a foreign corporation and is in good standing in
each jurisdiction in which the ownership or leasing of its properties or the
conduct of its business requires such qualification except where the failure
to be so qualified or to be in good standing would not have a material adverse
effect on the Company's condition (financial or otherwise), earnings,
operations, business or business prospects.

         3.02     AUTHORIZATION. The execution and delivery by the Company of
this Agreement and the performance by the Company of its obligations
hereunder, including but not limited to the execution and delivery by the
Company of the Warrant and the Registration Rights Agreement and the issuance,
sale and delivery of the Securities, have been duly authorized by all
requisite corporate action and will not violate any provision of law, any
order of any court or other agency of government, the Articles of
Incorporation of the Company, as amended (the "Articles of Incorporation"), or
the Bylaws of the Company, as amended, or any provision of any indenture,
agreement or other instrument to which the Company or any of its properties or
assets is bound, or conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such Indenture,
agreement or other instrument, or result in the creation or

                                       2

<PAGE>

imposition of any lien, charge, restriction, claim or encumbrance of any
nature whatsoever upon any of the properties or assets of the Company.

         3.03     VALIDITY. This Agreement, the Warrant and the Registration
Rights Agreement have been duly exercised and delivered by the Company and
constitute the legal, valid and binding obligations of the company,
enforceable in accordance with its terms, except as limited by applicable
bankruptcy, insolvency, reorganization and moratorium laws and other laws
affecting enforcement of creditors' rights generally and by general principles
of equity.

         3.04     AUTHORIZED CAPITAL STOCK. The authorized capital stock of
the Company consists of (i) 14,000,000 shares of Common Stock, $.01 par value,
of which 4,517,387 shares were outstanding at June 1, 1998; and (ii) 1,000,000
shares of Preferred Stock, none of which were outstanding immediately prior to
Closing. The designations, powers, preferences, rights qualifications,
limitations and restrictions in respect of each class and series of authorized
capital stock of the Company are as set forth in the Articles of Incorporation
and all such designations, powers, preferences, rights, qualifications,
limitations and restrictions are valid, binding and enforceable and in
accordance with all applicable laws. Upon receipt of payment for the
Securities, such Securities will be validly issued, fully paid and
nonassessable and shall not be subject to any preemptive rights.

         3.05     FINANCIAL STATEMENTS. The Company has furnished to the
Purchasers the audited consolidated balance sheet (the "Audited Balance
Sheet") of the Company as of December 31, 1997 and the related audited
consolidated statements of income, shareholders' equity and cash flows of the
Company for the years ended December 31, 1996 and 1997, and the unaudited
consolidated balance sheet of the Company as of March 31, 1998 and the related
unaudited consolidated statements of income, shareholders' equity and cash
flows of the Company for the three months ended March 3, 1998 (collectively,
the "Financial Statements"). All such Financial Statements have been prepared
in accordance with generally accepted accounting principles consistently
applied (except that such unaudited financial statements do not contain all of
the required footnotes) and fairly present the financial position of the
Company as of December 31, 1996 and 1997, respectively, and the results of the
company's operations and cash flows for the years ended December 31, 1996 and
1997 and the three months ended March 31, 1998, respectively.

         3.06     NO MATERIAL MISREPRESENTATIONS. The Company has filed all
reports (the "SEC Reports") required to be filed under the Exchange Act, and
the SEC Reports, as of their respective dates, contained no untrue statement
of a material fact or omission? to state a material fact necessary in order to
make the statement made therein, in light of the circumstances under which
they were made, not misleading. None of the written statements, documents or
certificates delivered to the Purchasers in connection with the transactions
contemplated hereby contains an untrue statement of a material fact or omits a
material fact necessary to make the statements contained therein not
misleading. There is no fact which the Company has not disclosed to the
Purchasers of which the Company is aware which materially and adversely
affects or could materially and adversely affect the business, prospects,
financial conditions, operations, property or affairs of the Company. Except
as disclosed on the Company's quarterly report on Form 10-QSB for the period
ended March 31, 1998, there have been no material developments with the
Company since December 31, 1997.

         3.07     RECORD DATE. Since April 7, 1998, the record date for the
Company's annual meeting of shareholders, the Company has not established any
record date for a dividend or other corporate action, and the Company will not
establish such a record date as of a date prior to the date each Purchaser
becomes a recordholder of the Securities.

         3.08     FIRPTA. Collectively, the Company and its subsidiary are not
a "United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Internal Revenue Code of 1986, as amended.

         3.09     NO RESTRICTIONS. There are no restrictions in the Company's
Articles of Incorporation or Bylaws, nor any contractual restrictions or other
legal restrictions that would adversely affect any Purchaser in any manner
different from any other security holder of the Company which owns less than
15% of the total number of shares of Common stock outstanding.

                                       3

<PAGE>

                                  ARTICLE IV

                REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

         4.01     SUITABILITY. Each Purchaser represents and warrants to the
Company that:

                  (a)   it is an "accredited investor" within the meaning of
         Rule 501 under the Securities Act and was not organized for the
         specific purpose of acquiring the Securities or an investment company
         as defined in the Investment Company Act of 1940, as applicable;

                  (b)   it has sufficient knowledge and experience in investing
         in companies similar to the Company in forms of the Company's stage of
         development so as to be able to evaluate the risks and merits of an
         investment in the Securities and is able financially to bear the risks
         thereof;

                  (c)   it has had access to the SEC Reports and has been
         provided an opportunity to discuss the Company's business, management
         and financial affairs with the Company's management;

                  (d)   the Securities being issued to it are being acquired
         for its own account for the purpose of investment and not with a view
         to or for sale in connection with any distribution thereof in
         violation of the Securities Act; and

                  (e)   it understands that (i) the Securities have not been
         registered under the Securities Act by reason of their issuance in a
         transaction exempt from the registration requirements of the
         Securities Act pursuant to Section 4(2) thereof or Rule 505 or 506
         promulgated under the Securities Act; (ii) the Securities must be held
         a minimum of one year unless a settlement disposition thereof is
         registered under the Securities Act or is exempt from such
         registration; (iii) the Securities will bear a legend to such effect;
         and (iv) the Company will make a notation on its transfer books to
         such effect.

                                    ARTICLE V

                        PURCHASERS' CONDITIONS TO CLOSING

         The obligation of each Purchaser to purchase the Securities under
Article II is, at its option, subject to the satisfaction, on or before the
Closing Date of the following conditions:

         5.01     DOCUMENTS AND PROCEEDINGS. All documents and instruments to
be delivered by the Company and all corporate and other proceedings in
connection with this transaction shall have been so delivered and performed
and shall be reasonably satisfactory to the Purchasers and their legal counsel.

         5.02     REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties contained in Article III shall be true,
complete and correct on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such
date.

         5.03     PERFORMANCE. The Company shall have performed and complied
with all agreements contained herein required to be performed or complied with
by it prior to or at the Closing Date.

         5.04     SIMULTANEOUS TRANSACTIONS. The obligations of each of the
Purchasers hereunder are subject to all of the transactions contemplated
hereby closing automatically.

                                       4

<PAGE>

                                    ARTICLE VI

                          COMPANY CONDITIONS TO CLOSING

         The obligations of the Company to consummate the Closing hereunder
and sell the Securities shall be subject to the satisfaction at or before the
Closing of the following conditions:

         6.01     DOCUMENTS AND PROCEEDINGS. All documents and instruments to
be delivered by the Purchasers and all corporate and other proceedings in
connection with this transaction shall have been so delivered and performed
and shall be reasonably satisfactory to the Company and its legal counsel.

         6.02     PERFORMANCE OF AGREEMENT. The Purchasers shall have
performed and complied with all agreements contained herein required to be
performed or complied with by them prior to or at the Closing Date.

         6.03     REPRESENTATIONS AND WARRANTIES TO BE TRUE AND CORRECT. The
representations and warranties of the Purchasers contained in Article IV of
this Agreement shall be true, complete and correct on and as of the Closing
Date with the same effect as though such representations and warranties had
been made on and as of such date.

                                   ARTICLE VII

                                  MISCELLANEOUS

         7.01     EXPENSES. Except as provided in Section 2.05(d), each party
hereto will pay its own expenses in connection with the transactions
contemplated hereby, whether or not such transactions shall be consummated.

         7.02     SURVIVAL OF AGREEMENTS. All covenants, agreements,
representations and warranties made herein or in any instrument delivered to
the Purchasers pursuant to or in connection with this Agreement shall survive
the execution and delivery of this Agreement, the issuance, sale and delivery
of the Securities, and all statements contained in any instrument delivered by
the Company hereunder or thereunder or in connection herewith or therewith
shall be deemed to constitute representations and warranties made by the
Company.

         7.03     PARTIES IN INTEREST. All representations, covenants and
agreements contained in this Agreement by or on behalf of either of the
parties hereto shall bind and inure to the benefit of the respective
successors and assigns of the parties hereto whether so expressed or not.
Without limiting the generality of the foregoing, all representations,
covenants and agreements benefiting the Purchasers shall inure to the benefit
of any and all subsequent holders from time to time of the Securities.

         7.04     NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered in person,
mailed by certified or registered mail, return receipt requested or sent by
telecopier or telex, addressed as follows:

                  (a)   if to the Company, at 275 West Princeton Drive,
         Princeton, Texas 75407, Attention: Ricky D. McCord, President, with a
         copy to B. Kay Carol, Esq., Phillips McFall McCaffrey McVay and
         Murrah, P.C., 211 North Robinson, 12th Floor, Oklahoma City, Oklahoma
         73102?; and

                  (b)   if to the Purchasers, c/o White Rock Capital, Inc., at
         3131 Turtle Creek Blvd., Suite 100, Dallas, Texas 75210?;

or, in any such case, at such other address or addresses as shall have been
furnished in writing by such party to the other.

         7.05     GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas;

                                       5

<PAGE>

         7.06     ENTIRE AGREEMENT. This Agreement, including the Schedules
hereto, constitutes the sale and entire agreement of the parties with respect
to the subject matter hereof. All Schedules are hereby incorporated herein by
reference.

         7.07     COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same counterpart.

         7.08     AMENDMENTS. This Agreement may not be amended or modified,
and no provisions hereof may be waived, without the written consent of the
Company.

         7.09     SEVERABILITY. If any provision of this Agreement shall be
declared void or unenforceable by any judicial or administrative authority,
the validity of any other provision and of the entire Agreement shall not be
affected thereby.

         7.10     TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are for convenience only and are not to be considered in construing
or interpreting any term or provision of this Agreement.

                                       6

<PAGE>

         IN WITNESS WHEREOF, the Company and each of the Purchasers have
executed this Agreement as of the day and year first above written.

COMPANY:                             HORIZON PHARMACIES, INC.,
                                     a Texas corporation

                                     By:  /s/ Ricky D. McCord
                                        -----------------------------------
                                          Ricky D. McCord, President

PURCHASER:                           QUANTUM PARTNERS INC.

                                     By:
                                        -----------------------------------
                                          Joseph V. Barton

                                     COLLINS CAPITAL DIVERSIFIED FUND, L.P.

                                     By:
                                        -----------------------------------
                                          Joseph V. Barton

                                     WHITE ROCK CAPITAL PARTNERS, L.P.

                                     By:
                                        -----------------------------------
                                          Joseph V. Barton

                                     WHITE ROCK CAPITAL OFFSHORE, LTD.

                                     By:
                                        -----------------------------------
                                          Joseph V. Barton

                                     LEGION STRATEGIES LIMITED

                                     By:
                                        -----------------------------------
                                          Joseph V. Barton

                                     CAXTON INTERNATIONAL LIMITED

                                     By:
                                        -----------------------------------
                                          Joseph V. Barton

                                     WHITEROCK CAPITAL MANAGEMENT, L.P.

                                     By:
                                        -----------------------------------
                                          Joseph V. Barton

                                       7

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<TABLE>
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                                   SCHEDULE I

                                   PURCHASERS

                                                             NUMBER OF         NUMBER OF          AGGREGATE
                PURCHASER                                      SHARES         WARRANTIES       PURCHASE PRICE
                ---------                                      ------         ----------       --------------
<S>                                                          <C>              <C>              <C>

Quantum Partners LDC                                          206,300            11,500          $1,959,860

White Rock Capital Partners, L.P.                             117,900             6,600           1,120,060

White Rock Capital Offshore, Ltd.                             184,300            10,000           1,750,860

Canton International Limited                                  116,000             6,400           1,083,000

Legion Strategies Limited                                      81,200             4,500             771,400

White Rock Capital Management, L.P. (#10)                      11,138               700             105,820

Collins Capital Diversified Fund, L.P.                         22,000             1,300             209,000
                                                             --------          --------        ------------

                              Total                           736,838            41,000          $7,000,000
</TABLE>

<PAGE>

                                   SCHEDULE II

                              FINANCIAL STATEMENTS

Attached.

<PAGE>

                                    ANNEX "A"

                                     WARRANT

<PAGE>

                                    ANNEX "B"

                          REGISTRATION RIGHTS AGREEMENT

<PAGE>

                          REGISTRATION RIGHTS AGREEMENT

         THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is entered into
this 15th day of June, 1998, by and among HORIZON Pharmacies, Inc., a Texas
corporation (the "Corporation"), and Quantum Partners LDC, Collins Capital
Diversified Fund, L.P., White Rock Capital Partners, L.P., White Rock Capital
Offshore, Ltd., Legion Strategies Limited Caxton International Limited and
White Rock Capital Management, L.P. (#10) (collectively, the "Selling
Shareholders").

                              W I T N E S S E T H:

         WHEREAS, the Selling Shareholders have agreed to purchase an
aggregate 736,838 shares (the "Shares") of the Corporation's common stock,
$.01 par value (the "Common Stock"), and an aggregate 41,000 Common Stock
purchase warrants (the "Warrants") pursuant to that certain Securities
Purchase Agreement of even date herewith (the "Securities Purchase
Agreement"), by and among the Corporation and the Selling Shareholders; and

         WHEREAS, pursuant to the terms of the Securities Purchase Agreement,
the Corporation has granted to the Selling Shareholders certain registration
rights with regard to the Securities;

         NOW, THEREFORE, for and in consideration of the premises, the mutual
covenants and agreements contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:

         1.      DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:

                 "COMMISSION" shall mean the Securities and Exchange
         Commission, or any other Federal agency at the time administering the
         Securities Act.

                 "COMMON STOCK" shall mean the Corporation's common stock,
         $.01 par value, as constituted as of the date of this Agreement.

                 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934,
         as amended, or any similar Federal statute, and the rules and
         regulations of the Commission thereunder, all as the same shall be in
         effect at the time.

                 "REGISTRABLE SHARES" shall mean the Shares and/or Warrant
         Shares, as the context requires.

                 "REGISTRATION EXPENSES" shall mean the expenses as described
         in Section 4.

                 "SHARES" shall have the meaning set forth in the recitals
         hereto and as adjusted for events under Section 6, but excluding
         Shares which have been (a) registered under the Securities Act
         pursuant to an effective registration statement filed thereunder and
         disposed of in accordance with the registration statement covering
         them; or (b) publicly sold pursuant to Rule 144 under the Securities
         Act.

                 "SECURITIES ACT" shall mean the Securities Act of 1933, as
         amended, or any similar Federal statute, and the rules and regulations
         of the Commission thereunder, all as the same shall be in effect at
         the time.

                 "SELLING EXPENSES" shall mean the expenses so described in
         Section 4.

                 "SELLING SHAREHOLDERS" shall have the meaning set forth in the
         preamble to this Agreement.

                 "WARRANTS" shall have the meaning set forth in the recitals
         hereto and as adjusted for events under Section 6.

                 "WARRANT SHARES" shall have the meaning given such term in
         Section 2.

<PAGE>

         2.      REQUIRED REGISTRATION. (a) The Corporation shall promptly
within 75 days following the date of this Agreement, file a registration
statement on Form S-3 under the Securities Act for all of the Shares held by
the Selling Shareholders, on the terms set forth herein. The Corporation shall
be obligated to register Shares pursuant to this Section 2(a) on one occasion
only; provided, however, that such obligation shall be deemed satisfied only
when a registration statement covering all such Shares shall have become and
remain effective as contemplated in Section 3(a).

         3.      REGISTRATION PROCEDURES. For any registration statement the
Corporation is required to file under Section 2 above, the Corporation will:

                 (a)     prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective until such time as
all Shares (and Warrant Shares, as applicable) have been sold under such
registration statement or may be freely sold in the public market without
registration in reliance upon Rule 144(k);

                 (b)     prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of all
Registrable Shares covered by such registration statement in accordance with
the Selling Shareholders' intended method of disposition set forth in such
registration statement for such period.

                 (c)     furnish to the Selling Shareholders and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including such preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Registrable Shares covered by such registration statement;

                 (d)     use its best efforts to register or qualify the
securities covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the Selling Shareholders provided,
however, that the Corporation shall not for any such purpose be required to
qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;

                 (e)     use its best efforts to list the Registrable Shares
covered by such registration statement with any securities exchange on which
the Common Stock of the corporation is then listed;

                 (f)     immediately notify the Selling Shareholders at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event of which the Corporation has
knowledge as a result of which the prospectus contained in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in light of the circumstances then
existing, and use its best efforts to prepare and file post-effective
amendment(s) to such prospectus disclosing the occurrence of such event and
correcting such untrue or misleading statement; and

                 (g)     make available for inspection by the Selling
Shareholders and any attorney, accountant or other agent retained by the
Selling Shareholders all financial and other records, pertinent corporate
documents and properties of the Corporation and cause the Corporation's
officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement.

         In connection with each registration hereunder, the Selling
Shareholders will furnish to the Corporation in writing such information with
respect to them and the proposed distribution by them as reasonably shall be
necessary in order to assure compliance with Federal and applicable state
securities laws.

         4.      EXPENSES. All expenses incurred by the Corporation in
complying with Section 3 including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Corporation, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the National Association of Securities
Dealers, Inc., transfer taxes, fees of

                                       2

<PAGE>

transfer agents and registrars ad costs of insurance, but excluding any
Selling Expenses, are called "Registration Expenses."

         The Corporation will pay all Registration Expenses in connection with
such registration statement under Section 3. all Selling Expenses in
connection with each registration statement under Section 3 shall be borne by
the Selling Shareholders in proportion to the number of Registrable Shares
sold by them to the number of shares sold by participating sellers other than
the Corporation (except to the extent the Corporation shall be a seller) as
they may agree.

         5.      INDEMNIFICATION AND CONTRIBUTION. (a) In the event of a
registration of any of the Registrable Shares under the Securities Act
pursuant to Section 3, the Corporation will indemnify and hold harmless the
Selling Shareholders, each underwriter within the meaning of the Securities
Act, against any losses, claims, damages or liabilities, joint or several, to
which such seller, underwriter or controlling person may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such Registrable Shares was registered
under the Securities Act pursuant to Section 3, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement thereof, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading and will reimburse the Selling Shareholders,
each such underwriter and each such controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided,
however, that the Corporation will not be liable in any such case if and to
the extent that any such loss, claim damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by the
Selling Shareholders, any such underwriter or any such enrolling person in
writing specifically for use in such registration statement or prospectus.

                 (b)     In the event of a registration of any of the
Registrable Shares under the Securities Act pursuant to Section 3, the Selling
Shareholders will indemnify and hold harmless the Corporation, each person, if
any, who controls the corporation within the meaning of the Securities Act,
each officer of the Corporation who signs the registration statement, each
director of the Corporation, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Corporation or
such officer, director, underwriter or controlling person may become subject
under the Securities Act or otherwise, insofar as such leases, claims damages
or liabilities (or actions in respect thereof) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such securities were
registered under the Securities Act pursuant to Section 3, any preliminary
prospectus or fiscal prospectus contained therein, or any amendment or
supplement thereof, or arise out of or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
the Corporation and each such officer, director, underwriter and controlling
person for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Selling Shareholders will be
liable hereunder in any such case if and only to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to the Selling
Shareholders, as sellers, furnished in writing to the Corporation by the
Selling Shareholders specifically for use in such registration statement or
prospectus, and provided, further, however, that the liability of the Selling
Shareholders hereunder shall be limited to the proportion of any such loss,
claim, damage, liability or expenses which is equal to the proportion that the
public offering price of the shares sold by the Selling Shareholders under
such registration statement bears to the total public offering price of all
securities from the sale of the Registrable Shares covered by such
registration statement.

                 (c)     Promptly after receipt by the indemnified party of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party
hereunder, notify the indemnifying party in writing thereof, but the omission
so to notify the indemnifying party shall not relieve it from any liability
which it may have to such indemnified party other than under this Section 5
and shall only relieve it from any liability which it may have to such
indemnified party under this Section 5 if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and undertake the
defense thereof with counsel satisfactory to such indemnified party,

                                       3

<PAGE>

and, after notice form the indemnifying party to such indemnified party of its
election so to assure and undertake the defense thereof, the indemnifying
party shall not be liable to such indemnified party under this Section 5 for
any legal expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected, provided, however,
that, if the defendants in any such action included both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or
if the interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party shall have
the right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.

                 (d)     In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) the Selling Shareholders, or any controlling person thereof, makes
a claim for indemnification pursuant to this Section 5 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to approve or the denial of the last
right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 5 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be required on
the part of the Selling Shareholder or pay such controlling person in
circumstances for which indemnification is provided under this Section 5;
then, and in each such case, the Corporation and the Selling Shareholders will
contribute to the aggregate losses, claims, damages or liabilities to which
they may be subject (after contribution from others) in such proportion so
that the Selling Shareholders are responsible for the portion represented by
the percentage that the public offering price of their Shares offered by the
registration statement bears to the public offering price of all securities
offered by such registration statement, and the Corporation is responsible for
the remaining portion; provided, however, that, in any such case, (A) the
Selling Shareholders will not be required to contribute any amount in excess
of the public offering price of all such Registrable Shares offered by it
pursuant to such registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.

         6.      CHANGES IN CAPITAL STOCK. If, and as often as, there is any
change in the Common Stock of the Corporation by way of a stock split, stock
dividend, combination or reclassification, or through a merger, consolidation,
reorganization or recapitalization, or by any other means, appropriate
adjustment shall be made in the provisions hereof so that the rights and
privileges granted hereby shall continue with respect to the Common Stock as
so changed.

         7.      RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Shares to the public without
registration, at all times after 90 days after any registration statement
covering a public offering of securities of the Corporation under the
Securities Act shall have become effective, the Corporation agrees to:

                 (a)     take and keep public information available, as those
terms are understood and defined in Rule 144 and under the Securities Act;

                 (b)     use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Corporation
under the Securities Act and the Exchange Act; and

                 (c)     furnish to the Selling Shareholders forthwith upon
request a written statement by the Corporation as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Corporation, and rush other reports and documents so filed by the Corporation
as such holder may reasonably request in availing itself of any rule or
regulations of the Commission allowing the Selling Shareholders to sell any
securities without registration.

         8.      REPRESENTATIONS AND WARRANTIES OF THE CORPORATION. The
Corporation represents and warrants to the Selling Shareholders as follows:

                 (a)     The execution, delivery and performance of this
Agreement by the Corporation have been duly authorized by all requisite
corporate action and will not violate any provisions of law, any order of any
court or other agency of government, the Articles of Incorporation or Bylaws
of the Corporation or any provision of any

                                       4

<PAGE>

indenture, agreement or other instrument to which it or any of its properties
or assets is bound, conflict with, result in a breach of or constitute (with
due notice or lapse of time or both) a default under any such indenture,
agreement or other instrument or result in the creation or imposition of any
lien, charge of encumbrance of any nature whatsoever upon any of the
properties or assets of the Corporation.

                 (b)     This Agreement has been executed and delivered by the
Corporation and constitutes the legal, valid and binding obligation of the
Corporation, enforceable in accordance with its terms.

         9.      MISCELLANEOUS.

                 (a)     All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Shares or Warrant Shares),
whether so expressed or not

                 (b)     Any notice relating to this Agreement shall be deemed
sufficiently given and served for all purposes if given by a telegram filed,
charges prepaid, or a writing deposited in the United States mail, postage
prepaid and registered or certified within the Continental United States,
addressed as follows:

                 If to the Corporation:

                         Horizon Pharmacies, Inc.
                         Attention:  Ricky D. McCord, President
                         275 W. Princeton Drive
                         Princeton, Texas 75207

                 with copies to:

                         Phillips McFall McCaffrey McVay & Murrah, P.C.
                         Attention:  B. Kay Carrol, Esq.
                         12th Floor, 211 N. Robinson
                         Oklahoma City, Oklahoma  73102

                 If to the Selling Shareholders:

                         c/o White Rock Capital, Inc.
                         3131 Turtle Creek Blvd.
                         Suite 800?
                         Dallas, Texas  75219

         Any notice so duly sent by mail shall be deemed given two (2) days
after deposit in a proper governmental mailing facility and nay notice given
by telegram shall be deemed given on the day such notice is delivered to the
telegram company, charges paid.

                 (c)     This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.

                 (d)     This Agreement may not be amended or modified, and no
provisions hereof may be waived, without the written consent of the
Corporation and the Selling Shareholders.

                 (e)     This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.

                 (f)     Notwithstanding the provisions of Section 3(a), the
Corporation's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a

                                       5

<PAGE>

period not to exceed 60 days in any 24-month period if there exists at the
time material non-public information relating to the Corporation which, in the
reasonable opinion of the Corporation, should not be disclosed.

                 (g)     The Corporation shall not grant to any third party
any registration rights more favorable than or inconsistent with any of those
contained herein, so long as any of the registration rights under this
Agreement remain in effect.

                 (h)     If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any
manner affect or render illegal, invalid or unenforceable any other provisions
of this Agreement, and this Agreement shall be carried out as if any such
illegal, invalid or unenforceable provision were not contained herein.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
the day and year first written above.

CORPORATION:                           HORIZON PHARMACIES, INC.,
                                       a Texas corporation

                                       By:
                                          -----------------------------------
                                            Ricky D. McCord, President

SELLING SHAREHOLDERS:                  QUANTUM PARTNERS INC.

                                       By:
                                          -----------------------------------

                                       COLLINS CAPITAL DIVERSIFIED FUND, L.P.

                                       By:
                                          -----------------------------------

                                       WHITE ROCK CAPITAL PARTNERS, L.P.

                                       By:
                                          -----------------------------------

                                       WHITE ROCK CAPITAL OFFSHORE, LTD.

                                       By:
                                          -----------------------------------

                                       LEGION STRATEGIES LIMITED

                                       By:
                                          -----------------------------------

                                       6

<PAGE>

                                       CAXTON INTERNATIONAL LIMITED

                                       By:
                                          -----------------------------------

                                       WHITEROCK CAPITAL MANAGEMENT, L.P. (#10)

                                       By:
                                          -----------------------------------

                                       7<PAGE>

                                THIRD AMENDMENT
                              TO CREDIT AGREEMENT
                               AND LIMITED WAIVER

                  This THIRD AMENDMENT TO CREDIT AGREEMENT AND LIMITED WAIVER
(this "AMENDMENT") is dated as of May 14, 1999 between HORIZON Pharmacies, Inc.,
a Delaware corporation ("BORROWER"), and McKesson HBOC, Inc., a Delaware
corporation formerly known as McKesson Corporation ("MCKESSON").

                                    RECITALS

                  WHEREAS, Borrower and McKesson are parties to that certain
Credit Agreement dated as of July 2, 1998, as amended by a First Amendment to
Credit Agreement dated as of July 20, 1998 and a Second Amendment to Credit
Agreement dated as of August 26, 1998 (as so amended, the "CREDIT AGREEMENT").
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.

                  WHEREAS, Borrower has requested that McKesson consent to the
amendment or waiver of certain covenants and other provisions set forth in the
Credit Agreement, and McKesson is willing to do so upon the terms and conditions
set forth herein.

                  NOW, THEREFORE, in consideration of the promises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:

SECTION 1.        AMENDMENTS TO THE CREDIT AGREEMENT

                  A. The Credit Agreement is hereby amended to add a new Section
1.9 to read as follows:

                  SECTION 1.9 GUARANTY OF BANK FACILITY. If requested by
                  Borrower, McKesson will provide a guaranty to Bank One (the
                  "McKesson Guaranty") of up to $7,000,000 of indebtedness under
                  an unsecured revolving credit facility from Bank One to
                  Borrower not in excess of $7,000,000 (the "Bank One
                  Facility"), subject to McKesson's reasonable approval of the
                  form of McKesson Guaranty and related documentation. If the
                  McKesson Guaranty is issued by McKesson, the figure
                  "$15,000,000" in Section 1.1(a) and in clause (i) of Section
                  1.8 above shall be reduced by the maximum amount of the
                  McKesson Guaranty. As a condition to McKesson's issuing the
                  McKesson Guaranty, Borrower shall execute and deliver to
                  McKesson an Indemnification Agreement substantially in the
                  form of Exhibit J hereto (the "Indemnification

                                       1.
<PAGE>

                  Agreement") and the Security Documents shall be amended as
                  appropriate so that Borrower's obligations under the
                  Indemnification Agreement are secured under the terms of the
                  Security Documents. If the McKesson Guaranty is issued by
                  McKesson, Borrower agrees to pay to McKesson a guaranty fee on
                  the maximum dollar amount guaranteed under the McKesson
                  Guaranty at a rate per annum equal to the Guaranty Fee Amount,
                  payable quarterly in arrears on the last Business Day of each
                  calendar quarter (commencing on the first such date after the
                  McKesson Guaranty is issued) and on the date the McKesson
                  Guaranty is released or otherwise terminated in accordance
                  with its terms.

                  B. Section 2.3(b)(i) of the Credit Agreement is hereby amended
by changing the figure of "$5,000,000" therein to "$8,000,000."

                  C. The Credit Agreement is hereby amended by adding a new
Section 4.3 to read as follows:

                  SECTION 4.3 CONDITIONS PRECEDENT TO LOANS AFTER APRIL 1, 1999.
         The obligation of McKesson to make any Loan on or after April 1, 1999
         shall be subject to

                  (a) McKesson's approval, which shall be in McKesson's sole
         discretion, of Borrower's twelve month profitable operating plan for
         the twelve months commencing January 1, 1999;

                  (b) The Warrant Purchase Agreement shall have been amended and
         restated substantially in the form of Exhibit K hereto;

                  (c) Borrower shall have issued to McKesson a new Warrant under
         the Warrant Purchase Agreement (as amended pursuant to clause (b)
         above) for 101,500 shares of Borrower's Common Stock with an exercise
         price of $5.71 per share in exchange for the cancellation of the
         Warrant issued under the Warrant Purchase Agreement on July 2, 1998;

                  (d) Borrower shall have issued to McKesson a Warrant for
         100,000 shares of Borrower's Common Stock in addition to those
         described in clause (c) above but upon the same terms and conditions as
         those described in clause (c) above; and

                  (e) Upon or promptly after McKesson's notice to Borrower that
         the condition in clause (a) above has been met (the "Approval Notice"),
         Borrower shall have issued a Warrant for 50,000 shares of Borrower's
         Common Stock with an exercise price per share equal to the average
         closing price on the American Stock Exchange of Borrower's Common Stock
         for the five Business Day period commencing on the date on which
         McKesson gives the Approval Notice and with a termination date on the
         tenth anniversary of the date of the Approval Notice.

                                       2.
<PAGE>

                  D. Section 5.3(e) of the Credit Agreement is hereby amended
and restated as follows:

                  (e) by the twentieth day of each calendar month, a completed
                  Borrowing Base Certificate as of the last day of the preceding
                  calendar month duly executed by the Treasurer or Chief
                  Financial Officer of Borrower; PROVIDED, HOWEVER, that,
                  notwithstanding the foregoing, effective 30 days after the
                  date on which Borrower has installed the McKesson Pharmacy
                  Systems Multi-Site Back Office System ("Host System"),
                  Borrower shall deliver each such completed Borrowing Base
                  Certificate duly executed by the Treasurer or Chief Financial
                  Officer of Borrower by no later than the tenth day of each
                  calendar month;

                  E. Section 5.3 of the Credit Agreement is hereby further
amended by adding a new clause (g) at the end thereof to read as follows:

                  (g) Within 45 days after the end of each fiscal quarter, an
                  inventory report as to the pharmaceutical inventory of
                  Borrower and its Subsidiaries as of the end of such fiscal
                  quarter.

                  F. Section 6.1(a) of the Credit Agreement is hereby amended by
adding the word "Permitted" before "Acquisition" in clause (ii) thereof.

                  G. Section 6.9(d) of the Credit Agreement is amended by adding
the word "Permitted" before "Acquisition" in the last line thereof.

                  H. Section 8.1 of the Credit Agreement is amended by adding
the following definitions in appropriate alphabetical order:

                  "BANK ONE FACILITY" has the meaning set forth in Section 1.9.

                  "GUARANTY FEE AMOUNT" means, on any date, a rate per annum
(greater than zero) equal to the difference between (i) the rate of interest
that would apply to the principal amount of the Loans outstanding hereunder on
such date (regardless of whether any such amounts are then outstanding
hereunder) MINUS (ii) the rate of interest that would apply to the principal
amount of indebtedness outstanding under the Bank One Facility on such date
(regardless of whether any such amounts are then outstanding under the Bank One
Facility).

                  "INDEMNIFICATION AGREEMENT" has the meaning set forth in
Section 1.9.

                  "MCKESSON GUARANTY" has the meaning set forth in Section 1.9.

                  I. The definition of "Loan Documents" in Section 8.1 of the
Credit Agreement is amended to add ", the Indemnification Agreement" after "the
Warrant Documents."

                                       3.
<PAGE>

                  J. The definition of "Permitted Acquisition" in Section 8.1 of
the Credit Agreement is amended by inserting after the word "Borrower" in the
first line thereof the following:

                  (and, if after April 30, 1999, approved in writing by
McKesson)

                  K. The definition of "Permitted Guaranty" in Section 8.1 of
the Credit Agreement is amended by adding the word "Permitted" before
"Acquisition" in the last line thereof.

                  L. The definition of "Seller" in Section 8.1 of the Credit
Agreement is amended by adding the word "Permitted" before "Acquisition"
wherever that word appears in such definition.

                  M. Section 9.2(a) of the Credit Agreement is amended and
restated as follows:

                  If to Borrower:
                  HORIZON Pharmacies, Inc.
                  501 West Main Street
                  Denison, TX 75020
                  Attn: Chief Financial Officer
                  Facsimile: (903) 465-6769

                  with a copy to:

                  Jay H. Hebert, Esq.
                  Vinson & Elkins
                  2001 Ross, Suite 3700
                  Dallas, TX 75201
                  Facsimile: (214) 999-7745

                  N. The Credit Agreement is hereby amended to add Exhibits J
and K attached hereto as Exhibits to the Credit Agreement.

SECTION 2.        LIMITED WAIVER

                  McKesson hereby gives a limited one-time waiver as to:

                  (a) Borrower's failure to comply with Section 2.3(b)(i) at any
         time prior to the date of this Amendment;

                  (b) Borrower's failure to comply with the conditions of
         Section 4.2(d) with regard to any Loan made on or prior to March 31,
         1999;

                  (c) Borrower's failure to comply with Section 5.3(d) of the
         Credit Agreement insofar as Borrower has failed to timely deliver a
         completed Compliance Certificate for

                                       4.
<PAGE>

         the fiscal year ended December 31, 1998, duly executed by the Treasurer
         or Chief Financial Officer of Borrower; PROVIDED that Borrower delivers
         such completed and duly executed Compliance Certificate for the fiscal
         year ended December 31, 1998, by no later than the Third Amendment
         Date.

                  (d) Borrower's failure to comply with Section 5.3(e) of the
         Credit Agreement with regard to the calendar month of April 1999 or any
         prior calendar month, provided that (i) a completed Borrowing Base
         Certificate as of the last day of April 1999 duly executed by the
         Treasurer or Chief Financial Officer of Borrower be delivered to
         McKesson by no later than May 20, 1999;

                  (e) Borrower's failure to comply with the requirements of
         Section 5.9(b) of the Credit Agreement with respect to any fiscal
         quarter ending on or before March 31, 1999;

                  (f) Borrower's failure to comply with the requirements of
         Section 5.9(f) of the Credit Agreement with respect to any fiscal
         quarter ending on or before March 31, 1999;

                  (g) Borrower's failure to comply with the requirements of
         Section 5.9(g) of the Credit Agreement with respect to any fiscal
         quarter ending on or before December 31, 1998; and

                  (h) The existence of a Material Adverse Change under Section
         7.1(j) resulting from the loss of approximately $3,004,000 incurred by
         Borrower during fiscal quarter ended December 31, 1998, and Borrower's
         failure to comply with the conditions of Section 4.2(b) and 4.2(c) as a
         result thereof.

SECTION 3.        CONDITIONS TO EFFECTIVENESS

         This Amendment shall become effective as of the first date (the "THIRD
AMENDMENT DATE") on or before May 18, 1999 upon which the following conditions
have been satisfied:

                  (i) Borrower and McKesson shall have delivered to one another
duly executed counterparts of this Amendment;

                  (ii) all the representations and warranties in Section 4 below
(after giving effect to any amendments to the Representation Certificate
delivered to McKesson prior to the date of this Amendment) shall be true and
correct as of the date of this Amendment;

                  (iii) no Default shall have occurred and be continuing on the
date of this Amendment (other than Defaults which are not the subject of the
limited waiver in Section 2 above which might occur under Section 5.9 of the
Credit Agreement with respect to the fiscal quarter ending March 31, 1999, as to
which Borrower currently makes no representation and McKesson gives no waiver in
this Amendment) or will result from the consummation of this Amendment (after
giving effect to this Amendment);

                                       5.
<PAGE>

                  (iv) Borrower shall have executed and delivered UCC financing
statements satisfactory to McKesson for filing with appropriate officers of the
states of Illinois, Indiana and Kansas.

                  (v) Borrower and McKesson shall have executed and delivered to
one another the documentation concerning the Amended and Restated Warrant
Purchase Agreement and the Warrants described in clauses (b), (c) and (d) of
Section 4.3 of the Credit Agreement as added by this Amendment; and

                  (vi) Borrower shall have delivered to McKesson an opinion of
counsel, satisfactory to McKesson in form and substance, concerning the Amended
and Restated Warrant Purchase Agreement and the Warrants described in clauses
(b), (c) and (d) of Section 4.3 of the Credit Agreement as added by this
Amendment.

When and if this Amendment becomes effective, the amendments set forth in
Section 1 shall be deemed effective as of April 14, 1999.

SECTION 4.        BORROWER'S REPRESENTATIONS AND WARRANTIES

         In order to induce McKesson to enter into this Amendment, to amend the
Credit Agreement in the manner provided herein and to grant the waivers
contained herein, Borrower represents and warrants to McKesson that the
following statements are true, correct and complete:

                  A. CORPORATE POWER AND AUTHORITY. Borrower has all requisite
corporate power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "AMENDED AGREEMENT").

                  B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of
this Amendment and the performance of the Amended Agreement have been duly
authorized by all necessary corporate action on the part of Borrower.

                  C. NO CONFLICT. The execution and delivery by Borrower of this
Amendment does not and will not contravene (i) any law or any governmental rule
or regulation applicable to Borrower or any of its Subsidiaries, (ii) the
Certificate of Incorporation or Bylaws of Borrower, (iii) any order, judgment or
decree of any court or other agency of government binding on Borrower or any of
its Subsidiaries or (iv) any material agreement or instrument binding on
Borrower or any of its Subsidiaries.

                  D. GOVERNMENTAL CONSENTS. The execution and delivery by
Borrower of this Amendment and the performance by Borrower of the Amended
Agreement do not and will not require any registration with, consent or approval
of, or notice to, or other action to, with or by, any federal, state or other
governmental authority or regulatory body.

                                       6.
<PAGE>

                  E. BINDING OBLIGATION. This Amendment and the Amended
Agreement have been duly executed and delivered by Borrower and are the binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, except in each case as such enforceability may be limited by
bankruptcy, insolvency, reorganization, liquidation, moratorium or other similar
laws of general application and equitable principles relating to or affecting
creditors' rights.

                  F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Article III of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the date of this Amendment to the same extent as though
made on and as of such date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date.

                  G. ABSENCE OF DEFAULT. No event has occurred and is continuing
as of the date of this Amendment (other than Defaults which are not the subject
of the limited waiver in Section 2 above which might occur under Section 5.9 of
the Credit Agreement with respect to the fiscal quarter ending March 31, 1999,
as to which Borrower currently makes no representation and McKesson gives no
waiver in this Amendment) or will result from the consummation of the
transactions contemplated by this Amendment that would constitute a Default or
an Event of Default (as determined after giving effect to the amendments made by
this Amendment).

                  H. CASH AND CASH EQUIVALENTS. Borrower would not have been in
violation of Section 2.3(b)(i) at any time prior to the date of this Amendment
if the figure of "$5,000,000" contained in such section had read "$8,000,000."

                  I. PERMITTED LIENS. Each of the following UCC financing
statements evidences a security interest securing only indebtedness permitted
under Section 6.9(d) of the Credit Agreement (as amended by this Amendment):

<TABLE>
<CAPTION>
        State                           File No.                        Secured Party
        -----                           --------                        -------------
<S>                                     <C>                             <C>
        New Mexico                      981102069                       Ronald Paynter

        New Mexico                      981207058                       Kenn's Pharmacy, Inc.

        Texas                           95001121142                     Econo RX, Inc.

        Texas                           9800155379                      David DeVido

        Texas                           9800172367                      Moore's Home Health Care, Inc.

        Texas                           9800177834                      Borger Pharmacy, Inc.
</TABLE>

                                       7.
<PAGE>

UCC Financing Statement 970903045 filed in New Mexico in favor of Checkpoint
Financial Services evidences a security interest in connection with a lease
permitted by Section 6.9(b) of the Credit Agreement. UCC Financing Statement
9700028567 filed in Texas in favor of Banker's Trust Company evidences a
security interest in connection with factoring arrangements with Pharmacy Fund
as to which all indebtedness has been paid by Borrower.

SECTION 5.        RESERVATION OF RIGHTS

         Borrower acknowledges and agrees that the execution and delivery by
McKesson of this Amendment shall not be deemed to create a course of dealing or
otherwise obligate McKesson to forebear or execute similar amendments under the
same or similar circumstances in the future.

SECTION 6.        MISCELLANEOUS

                  A. Reference to and Effect on the Credit Agreement and the
Other Loan Agreements.

                  (i) On and after the Third Amendment Date, each reference in
the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or
words of like import referring to the Credit Agreement, and each reference in
the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or
words of like import referring to the Credit Agreement shall mean and be a
reference to the Amended Agreement.

                  (ii) Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.

                  (iii) The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of
McKesson under, the Credit Agreement or any of the other Loan Documents nor to
create any course of dealing or otherwise obligate McKesson to forebear or
execute similar amendments or any waiver in similar circumstances in the future.

                  B. COSTS AND EXPENSES. The Company covenants to pay to or
reimburse McKesson, upon demand, for all costs, out-of-pocket expenses and
reasonable attorneys' fees expended or incurred by McKesson in connection with
the development, preparation, negotiation, execution and delivery of this
Amendment and the documents and transactions contemplated hereby.

                  C. HEADINGS. Section and subsection headings in this Amendment
are included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

                  D. APPLICABLE LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE

                                       8.
<PAGE>

INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.

                  E. COUNTERPARTS. This Amendment may be executed in any number
of counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each of
the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by a party of a facsimile transmitted document purportedly bearing
the signature of the other party shall bind the other party with the same force
and effect as the delivery of a hard copy original. Any failure by a party to
receive the hard copy executed original of such document shall not diminish the
binding effect of receipt of the facsimile transmitted executed original of such
document of the other party.

                  F. RELATION TO APRIL 14 LETTER. This Amendment, among other
things, implements the provisions of Section 2 of that certain letter dated
April 14, 1999 between Borrower and McKesson (the "April 14 Letter"). In the
event of any inconsistency between this Amendment and Section 2 of the April 14
Letter, this Amendment shall govern.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.

                                             HORIZON PHARMACIES, INC.

                                             By: /s/ John N. Stogner
                                                ------------------------------
                                             Title:  CFO/Treasurer
                                                   ---------------------------

                                             McKESSON HBOC, INC.,
                                             FORMERLY KNOW AS
                                             McKESSON CORPORATION

                                             By: /s/ Alan Pearce
                                                ------------------------------
                                             Title:  Senior Vice President
                                                     Financial Services
                                                   ---------------------------

                                       9.
<PAGE>

                     ACKNOWLEDGMENT AND CONSENT OF GUARANTOR

                  The undersigned in its capacity as a guarantor under that
certain Guaranty dated as of July 2, 1998 made in favor of McKesson hereby (i)
acknowledges and consents to the execution, delivery and performance by Borrower
of the foregoing Third Amendment to Credit Agreement and Limited Waiver (the
"Amendment"), (ii) acknowledges that the undersigned's consent is being sought
purely as a protective measure and understands that the terms of the Credit
Agreement dated as of July 2, 1998 may be amended without prior notice to or
consent of the undersigned and without discharging or otherwise affecting the
liability of the undersigned under the Guaranty, and (iii) reaffirms that it
will continue to be bound by all of the provisions of the Guaranty and that such
Guaranty will remain in full force and effect notwithstanding the execution and
delivery by Borrower of the Amendment referred to above.

                                               HORIZON HOME CARE, INC.

                                               By:  /s/ John N. Stogner
                                                  ------------------------------
                                               Its: CFO/Treasurer
                                                   -----------------------------

                                      10.

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