Document:

<PAGE>

April 14, 1999

Mr. Rick McCord, CEO
Horizon Pharmacies, Inc.
531 West Main St.
Denison, TX  75020

Subject:   New Supply and Technology Agreements

Dear Rick:

Pursuant to our discussions yesterday, McKesson HBOC, Inc. ("McKesson") and
Horizon Pharmacies, Inc. ("Horizon") agree to the following:

1)  Supply Agreement

    Horizon will execute a new five year wholesale supply agreement with
    McKesson effective May 1, 1999 on terms substantially similar to the
    current wholesale supply agreement, including exclusions therein from cost
    of goods, subject to:

    a) Cost of goods sold based on current 45 day terms:
       (EXCEPT ITEMS THAT  May 1, 1999 through April 30, 2000 - cost plus 0.2%
        ARE NET BILLED     May 1, 2000 through April 30, 2001 - cost plus 0.1%
        PURSUANT TO THE    May 1, 2001 through April 30, 2002 - cost plus 0.0%
        CURRENT SUPPLY     May 1, 2002 through April 30, 2003 - cost minus 0.2%
        AGREEMENT)         May 1, 2003 through April 30, 2004 - cost minus 0.2%

       For purposes of this section, "cost of goods" and "cost" shall have the
       same meaning as applicable under the current wholesale supply agreement.

    b)  The above cost of goods sold margins shall be firm, with no reopener
        rights during the term of the five year wholesale supply agreement.

    c)  McKesson will pay to Horizon the conversion allowance specified in
        Section 6 of the current wholesale supply agreement based on purchases
        through April 30, 1999. It is expressly understood that the repayment
        formula specified in Section 6.B. of the current wholesale supply
        agreement in the event of early termination or Horizon's failure to
        meet its purchase volume commitment shall continue in full force and
        effect under the new agreement.

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Mr. Rick McCord, CEO
April 14, 1999
Page 2

    d)  Unlike the current contract, there will not be a 50 bp rebate for first
        year purchases commencing May 1, 1999.

    e)  Current contract language with respect to waiver of return charges
        during the annual clean-up period will be clarified as follows:

        i)   Horizon shall submit to McKesson, annually no later than May 31st
             of each year, dates for which individual stores have been
             scheduled for their annual clean-up of return merchandise.
        ii)  Each store's clean-up period shall be for five contiguous business
             days only and shall commence on the dates scheduled, unless
             another commencement date shall be approved by McKesson
        iii) Accept during the annual clean-up period for which there shall be
             no return item charges, each store will be billed 15% and 25% for
             salable and non-salable merchandise (as defined in the current
             supply agreement), respectively.

    f)  In consideration of the substantial pricing concessions made by
        McKesson under the proposed new supply agreement Horizon agrees that
        the following sums shall be payable to McKesson as liquidated damages
        in the event of cancellation of the new supply contract by either party
        for any reason whatsoever prior to its expiration on April 30, 2004,
        regardless of cause:
                  If termination occurs during the first year -       $800,000
                  If termination occurs during the second year -      $600,000
                  If termination occurs during the third year -       $400,000
                  If termination occurs during the fourth year -      $200,000
                  If termination occurs during the fifth year
                  (other than by expiration on April 30, 2004) -      $100,000

2)  Financing Agreements

    a)  McKesson hereby grants Horizon upon execution of this letter by both
        parties a waiver on all breaches of financial covenants and such other
        defaults as to which Horizon has specifically requested a waiver under
        the current credit facility for Horizon's fiscal year ending December
        31, 1998 and quarter ending March 31, 1999.

    b)  Notwithstanding any waivers granted by McKesson, McKesson will
        reinstate the original credit facility commitment of $15 million for
        acquisitions and operating capital only upon McKesson's approval, which
        shall be in McKesson's sole discretion, of Horizon's twelve month
        profitable operating plan.

    c)  McKesson will provide a $7 million guarantee to Bank One to facilitate
        the bank's offering an unsecured revolving credit facility to Horizon
        designed to more efficiently accommodate Horizon's daily fluctuations
        in cash flow. The amount of commitment under the original McKesson
        credit facility will be reduced by the aggregate amount guaranteed
        under the Bank One facility, should Horizon decide to accept the bank's
        offer.

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Mr. Rick McCord, CEO
April 14, 1999
Page 3

        As a condition to providing the guarantee to the bank McKesson will
        require the same protections available to McKesson under the original
        credit facility, which among other conditions will include a
        requirement that Horizon indemnify McKesson for any payment that
        McKesson shall be obligated to pay Bank One pursuant to the guarantee.
        Such indemnity shall be secured pursuant to the terms of the existing
        security agreement.

    d)  In consideration of the proposed December 31, 1998 and March 31, 1999
        waivers under the current credit facility, Horizon agrees to provide
        McKesson warrants under substantially the same terms and conditions as
        the original warrants granted to McKesson to purchase common stock of
        Horizon, as follows:

        -    100,000 new warrants priced at the average closing price of
             Horizon stock for the five days ending April 16, 1999.

        -    Cancellation of the original 101,500 warrants and reissuance of an
             additional $101,500 of new warrants priced at the average closing
             price of Horizon stock for the five days ending April 16, 1999.

        -    50,000 new warrants priced at the average closing price of Horizon
             stock for the five day period commencing on the date McKesson
             advises Horizon that it has reinstated the original credit
             facility commitment.

3)  Technology Agreement

    Horizon agrees to enter into a five year Technology Agreement no later than
    30 days following McKesson Pharmacy Systems ("MPS") delivery of a fully
    operational Multi-Site Back Office System ("Host System"), in which
    Horizon commits to installing MPS point of sales systems ("POS") in all of
    its current and future store locations and further agrees to installing a
    minimum of 100 POS systems, including existing installations, in its
    stores by April 30, 2004. The cost of the new POS systems, training,
    scheduling and other applicable services and conditions relevant to the
    POS services, shall be the same as afforded by MPS to Horizon for the
    current 23 installations, after adjusting for specific system
    configurations pursuant to price quotations that MPS has previously
    provided Horizon. McKesson acknowledges that this commitment is contingent
    upon MPS delivering a fully operational Host System by October 15, 1999.
    McKesson agrees to pay Horizon as compensation for its increased costs, a
    penalty of $500 per day for each day the Host System is delayed beyond
    October 31, 1999. Should McKesson determine that it is unable or unwilling
    to provide the Host System, McKesson will give notice to Horizon of its
    intent not to deliver the system in which case McKesson's obligation to
    pay the penalty shall cease 30 days after giving notice. In the event
    McKesson provides a Host System and Horizon fails to purchase a minimum of
    77 new POS systems then Horizon shall pay McKesson on April 30, 2004 the
    sum of $2,000 multiplied times the difference between 77 and the actual
    number of new POS system Purchased during term of the Technology Agreement.

<PAGE>

Mr. Rick McCord, CEO
April 14, 1999
Page 4

4)  Reimbursement for and Release of Disputes

    In exchange for the payment by McKesson of $1 million, and for undertaking
    the other obligations of McKesson set forth in this letter, as full and
    final consideration for unresolved disputes arising in 1998 and the first
    calendar quarter of 1999, Horizon agrees to the release of claims set forth
    below, which shall be effective upon execution and delivery of this letter,
    and to undertake the other obligations of Horizon that are set forth in
    this letter.

                                RELEASE OF CLAIMS

         For the consideration set forth above, Horizon on behalf of itself,
         its employees, successors, predecessors, officers, directors,
         stockholders, subsidiaries, insurers, and each and all of them
         (collectively, the "Horizon"), hereby forever releases and
         discharges, McKesson and its employees, attorneys, successors,
         predecessors, officers, directors, stockholders, subsidiaries,
         insurers, assigns, representatives and agents (collectively, the
         "Releasees"), and hereby indemnifies the Releasees and holds them
         harmless from and against any and all losses or costs of any kind
         (including without limitation reasonable attorneys' fees and costs)
         arising from Claims (as defined below) by its stockholders, in each
         case from any and all manner of actions, claims, demands, damages,
         liabilities, costs, or causes of action of any kind or nature
         whatever, liquidated or unliquidated, known or unknown, matured or
         unmatured, asserted or unasserted, fixed or contingent (collectively,
         "Claims"), whether based in tort, contract or any other theory of
         recovery, including without limitation court costs, expenses and
         attorney fees, which they may have against Releasees based on facts
         occurring on or before April 15, 1999 arising out of the relationship
         (contractual or otherwise) between any Horizon and any Releasee,
         including but not limited to the Credit Agreement and the Supply
         Agreement (collectively the "Released Claims").

         THIS RELEASE EXTENDS TO CLAIMS RELEASED TO AND INCLUDED AMONG THE
         RELEASED CLAIMS WHICH HORIZON DOES NOT KNOW OR SUSPECT TO EXIST IN ITS
         FAVOR, WHICH IF KNOWN BY HORIZON WOULD HAVE MATERIALLY AFFECTED ITS
         DECISION TO ENTER INTO THIS RELEASE. HORIZON EXPRESSLY WAIVES AND
         RELINQUISHES, WITH RESPECT TO THE RELEASED CLAIMS, ANY RIGHTS OR
         BENEFIT WHICH IT HAS OR MAY HAVE UNDER ANY STATUTE OR LEGAL PRINCIPLE
         WITH THE EFFECT THAT A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH
         THE RELEASOR DOES NOT KNOW OR SUSPECT TO EXIST IN ITS FAVOR AT THE
         TIME OF EXECUTING THE RELEASE, WITHOUT LIMITING THE FOREGOING, HORIZON
         EXPRESSLY WAIVES AND RELINQUISHES ANY RIGHTS OR BENEFIT WHICH HAS OR
         MAY HAVE UNDER PARAGRAPH 1542 OF THE CIVIL CODE OF THE STATE OF
         CALIFORNIA, WHICH PROVIDES AS FOLLOWS:

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Mr. Rick McCord, CEO
April 14, 1999
Page 5

         A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
         NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
         RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
         SETTLEMENT WITH THE DEBTOR.

         Horizon acknowledges that after executing this Release it may discover
         Claims in addition to or different from those which it now has or
         believes to exist with respect to the Released Claims, but that it is
         Horizon's intention hereby to fully settle and release all of the
         Released Claims, known or unknown, which now exist, may exist, or
         heretofore may have existed. In furtherance of this intention, the
         release herein given shall be and will remain in effect as full and
         complete release of the Released Claims and Claims arising out of the
         Released Claims notwithstanding the discovery or existence of any such
         additional or different Claim or fact.

         This release shall become effective upon the execution and delivery of
         this letter. Horizon hereby represents and warrants that (i) it has
         exclusive authority to execute this Release, (ii) none of the Released
         Claims has been assigned to any person not a party bound by this
         Release, and (iii) all of the Released Claims are owned by Horizon and
         by no other Person(s).

         This Release constitutes the entire agreement between the parties
         hereto with respect to the subject matter hereof and supersedes all
         prior negotiations and agreements, whether written or oral, relating
         to its subject matter, and is binding upon and inures to the benefit
         of the parties' respective successors, assigns and representatives.
         This Release may not be altered, amended, or modified, except by
         another written agreement that specifically refers to this Release,
         duly executed by another written agreement that specifically refers
         to Release, duly executed by authorized representatives of each of
         Horizon and McKesson.

         This Release shall be governed by the laws of the State of California,
         and by executing this Release each party hereby waives any claim of
         inconvenient forum, lack of jurisdiction or similar claim contesting
         the ability of the courts of the State of California to decide any
         disputes arising hereunder.

5)  Public Disclosures

    Horizon agrees to provide McKesson drafts of all press releases and other
    forms of written public disclosure regarding the above agreements for
    review and approval by McKesson prior to release. Furthermore, Horizon
    agrees to refrain from any verbal discussion regarding the agreements other
    than to reiterate information contained in written disclosures that have
    been approved by McKesson. The draft press release dated April 14, 1999
    entitled "HORIZON Pharmacies, Inc. Negotiates New Technology and Supply
    Agreement with Primary Supplier" is satisfactory to McKesson.

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Mr. Rick McCord, CEO
April 14, 1999
Page 6

The following signatures authorize approval by both companies of all criteria
as stated above.

Bill Hamik, McKesson HBOC, Inc. /s/ Bill Hamik             Date: April 14, 1999
                               --------------------------        --------------
Rick McCord, Horizon Pharmacies, Inc. /s/ Ricky D. McCord  Date: April 14, 1999
                                     --------------------        --------------<PAGE>

                         AMENDMENT TO SUPPLY AGREEMENT

                  This Amendment to Supply Agreement (this "Amendment") is
entered into as of March 30, 2000, between HORIZON Pharmacies, Inc., a Delaware
corporation ("Horizon"), and McKesson HBOC, Inc., a Delaware corporation
formerly known as McKesson Corporation ("McKesson").

                                    RECITALS

                  WHEREAS, Horizon and McKesson are parties to that certain
Strategic Partnership Supply Agreement dated as of April 30, 1998, as amended by
that certain letter agreement dated April 14, 1999 (as so amended, the "Supply
Agreement"). Capitalized terms used herein without definition shall have the
same meanings herein as set forth in the Supply Agreement.

                  WHEREAS, Horizon has requested certain waivers and consents
under the Supply Agreement and the Credit Agreement dated as of July 2, 1998
between Horizon and Mckesson (as amended from time to time, the "Credit
Agreement"), and McKesson is willing to grant such waivers and consents on
certain terms and conditions, including the execution and delivery of this
Amendment.

                  NOW, THEREFORE, in consideration of the promises and
agreements, provisions and covenants herein contained, and the granting of the
waivers and consents referred to above, the parties hereto agree as follows:

SECTION 1.    AMENDMENT TO SUPPLY AGREEMENT

                  The Supply Agreement is hereby amended by deleting therefrom
the "45 Day Extended Payment Terms" referred to in Section 4.A of the Supply
Agreement, effective as of June 1, 2000. Horizon shall have the choice of the
other options set forth in Section 4.A of the Supply Agreement and agrees that
by June 1, 2000, it will be in full compliance with the option chosen for all
amounts incurred prior to June 1, 2000.

SECTION 2.    MISCELLANEOUS

         A. Reference to and Effect on the Supply Agreement.

                  (i) Each reference in the Supply Agreement to "this
Agreement", "hereunder", "hereof", "herein" or words of like import referring to
the Supply Agreement, and each reference in the Loan Documents (as defined in
the Credit Agreement) to the "Supply Agreement", "thereunder", "thereof" or
words of like import referring to the Supply Agreement shall mean and be a
reference to the Supply Agreement as amended by this Amendment.

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

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         B. COSTS AND EXPENSES. The Horizon 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 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.

                  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/ Ricky D. McCord
                                ---------------------------------------------
                             Title:  CEO & President
                                   ------------------------------------------

                             McKESSON HBOC, INC.

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

                                       2

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