SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(Amendment No. 2)(1)
AVATEX CORPORATION
(Name of Issuer)
$4.20 Cumulative Exchangeable Series A Preferred Stock
(Title of Class of Securities)
05349F-30-3
(CUSIP Number)
Emanuel J. Adler
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
(212) 885-5565
(Name, Address and Telephone Number of Person Authorized
to receive Notice and Communications)
June 18, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box |_|.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-1(a)
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 9 Pages)
- ----------
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
- --------------------- -------------------
CUSIP NO. 05349F-20-4 Page 2 of 9 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MOSES MARX
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 1,176,200
SHARES
BENEFICIALLY -------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING --
PERSON
WITH -------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,176,200
-------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,176,200
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
27.3%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING
EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 2 of 9 Pages
<PAGE>
SCHEDULE 13D
- --------------------- -------------------
CUSIP NO. 05349F-20-4 Page 3 of 9 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
UNITED EQUITIES (COMMODITIES) COMPANY
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
NEW YORK
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 425,974
SHARES
BENEFICIALLY -------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING --
PERSON
WITH -------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
425,974
-------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
425,974
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
9.9%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
PN
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING
EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 3 of 9 Pages
<PAGE>
SCHEDULE 13D
- --------------------- -------------------
CUSIP NO. 05349F-20-4 Page 4 of 9 Pages
- --------------------- ------------------
- --------------------------------------------------------------------------------
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
MOMAR CORPORATION
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |X|
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) |_|
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Maryland
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 257,026
SHARES
BENEFICIALLY -------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING --
PERSON
WITH -------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
257,026
-------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
--
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
257,026
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
6.0%
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- --------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING
EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
Page 4 of 9 Pages
<PAGE>
This Amendment No. 2 amends and supplements the Schedule 13D, filed May 30,
1997, as amended by Amendment No. 1, filed July 30, 1997 ("Schedule 13D"), of
Moses Marx, United Equities (Commodities) Company ("UECC") and Momar Corporation
("Momar", together with Moses Marx and UECC, the "Reporting Persons"), with
respect to the $4.20 Cumulative Exchangeable Series A Preferred Stock (the
"Series A Preferred Stock"), of Avatex Corporation (the "Issuer"). Except as
modified hereby, there has been no change in the information previously reported
in the Schedule 13D.
Item 4. Purpose of Transaction.
The Reporting Persons have previously reported on certain beliefs
regarding the securities of the Issuer, certain contacts between the
Reporting Persons and representatives of the Issuer in which the
Reporting Persons stated such beliefs and made certain requests of the
Issuer, and the Reporting Persons' intentions regarding certain of the
actions set forth in subparagraphs (a) through (j) of Item 4.
On April 23, 1998, Elliott Associates, L.P. ("Elliott") brought an
action in the Delaware Court of Chancery against the Issuer, Xetava
Corporation ("Xetava"), and each member of the Issuer's Board of
Directors to enjoin the Issuer's merger with Xetava (Elliot
Associates, L.P. v Avatex Corporation et al., CA 16336) (the
"Action"). On June 18, 1999, Elliott and the Issuer agreed to settle
the Action and entered into a Stipulation of Settlement. In connection
with such settlement, Elliott, certain of Elliott's affiliates and
each of the Reporting Persons entered into a Stockholders' Agreement
with the Issuer wherein they agreed to the following, subject to the
occurrence of the proposed merger and various other contingencies:
1. To vote their shares of $5.00 Cumulative Convertible Preferred
Stock ("$5.00 First Series Preferred Stock") and $4.20 Cumulative
Exchangeable Preferred Stock, Series A ("$4.20 Series A Preferred
Stock") in favor of the proposed merger between the Issuer and Xetava,
and granted the Issuer their proxies to effect same;
2. To waive their appraisal rights in connection with such proposed
merger;
3. To exchange their shares of the Issuer's preferred stock for the
alternate consideration as follows:
(a) Each share of the Reporting Person's $5.00 First Series
Preferred Stock will be exchanged for (i)
Page 5 of 9 Pages
<PAGE>
$3.7408 in cash, (ii) $8.34 principal amount of 6.75% notes to be
issued by Avatex Funding, Inc. ("Avatex Funding"), a new wholly-owned
subsidiary of the Issuer, (iii) warrants to purchase 0.67456 shares of
the common stock of the post-merger entity, and (iv) a deferred
contingent cash right to receive (x) 16% of an amount (the "Net
Recovery Participation Cap") equal to 20% (up to $7.5 million) of any
net recovery that the Issuer may receive in certain litigation brought
by it against McKesson Corporation and a number of large
pharmaceutical manufacturers (the "McKesson Litigation"), divided by
(y) the number of outstanding shares of $5.00 First Series Preferred
Stock; and
(b) Each share of the Reporting Person's $4.20 Series A Preferred
Stock will be exchanged for (i) $2.9705 in cash, (ii) $6.623 principal
amount of 6.75% notes to be issued by Avatex Funding, (3) warrants to
purchase 0.53567 shares of the common stock of the post-merger entity,
and (iv) a deferred contingent cash right to receive (x) 84% of the
Net Recovery Participation Cap, divided by (y) the number of
outstanding shares of $4.20 Series A Preferred Stock.
4. For a period of ten years, not to acquire any additional equity
securities of the Issuer or seek to influence or control the
management or policies of the Issuer; and
5. To release the Issuer and its directors from liability for matters
in connection with the Issuer's proposed merger with Xetava.
The Issuer will pay $300,000 to Momar or UECC (as directed by Mr.
Marx) in consideration for the execution of the Stockholders'
Agreement by the Reporting Persons.
Furthermore, the Reporting Persons entered into a Stock Purchase
Agreement with Phar-Mor, Inc. ("Phar-Mor") on June 18, 1999 whereby
Phar-Mor will purchase all of the Reporting Persons' shares of the
Issuer's common stock now held for a purchase price of $2.00 per
share, to be effected simultaneously with the closing of proposed
merger with Xetava. The Reporting Persons have each granted Phar-Mor a
proxy to vote their shares of the Issuer's common stock, but Phar-Mor
is contractually bound to vote in favor of the revised Xetava merger
proposal.
Pursuant to the Stockholders' Agreement, Mr. Marx unconditionally
withdrew his demand for nomination of
Page 6 of 9 Pages
<PAGE>
certain persons for election to the Board of Directors of the Issuer.
Except as set forth herein, the Reporting Persons have no plans or
proposals which relate to or would result in any of the actions set
forth in subparagraphs (a) through (j) of Item 4.
Item 5. Interest in Securities of the Issuer.
(a) - (b)
According to the Issuer's Annual Report on Form 10-K for the Fiscal
Year ended March 31, 1999, there were, as of March 31, 1999, 4,312,351
shares of Series A Preferred Stock issued and outstanding.
UECC owns 425,974 shares of Series A Preferred Stock, comprising 9.9%
of the issued and outstanding shares of Series A Preferred Stock. UECC
has sole power to vote and dispose of all such shares.
Momar owns 257,026 shares of Series A Preferred Stock, comprising 6.0%
of the issued and outstanding shares of Series A Preferred Stock.
Momar has sole power to vote and dispose of all such shares.
Mr. Marx beneficially owns 1,176,200 shares of Series A Preferred
Stock (27.3% of the issued and outstanding shares of Series A
Preferred Stock), which amount includes (1) 425,974 shares
beneficially owned by UECC; (ii) 257,026 shares beneficially owned by
Momar; and (iii) 493,200 shares owned by Mr. Marx. Mr. Marx may be
deemed a beneficial owner of such 1,176,200 shares of Series A
Preferred Stock by virtue of his being the only person in a position
to determine the investment and voting decisions of UECC and Momar
with respect to such shares.
Mr. Marx, through United Equities Commodities and Momar, has the sole
power to vote and dispose of all such shares.
(c) The Reporting Persons have not engaged in any transactions in the
Series A Preferred Stock during the past 60 days.
(d) Each of the Reporting Persons affirms that no person other than
the Reporting Persons has the right to receive, or the power to direct
the receipt of, dividends from, or the proceeds from the sale of, the
Preferred Stock owned by the Reporting Persons.
Page 7 of 9 Pages
<PAGE>
(e) It is inapplicable for the purposes hereof to state the date on
which the Reporting Persons ceased to be the owners of more than five
percent of the Preferred Stock.
Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
to Securities of the Issuer.
Reference is made to Item 4 of this Schedule 13D which sets forth
certain arrangements between the Reporting Persons and certain other
parties regarding securities of the Issuer. Except as set forth in
Item 4 of this Schedule 13D, the Reporting Persons have no contracts,
arrangements, understandings or relationships (legal or otherwise)
with any person with respect to any securities of the Issuer,
including, but not limited to, transfer or voting of any of the
securities, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees of profits, division of
profits or loss, or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
1. Stockholders' Agreement dated June 18, 1999, among Elliott
Associates, L.P., Westgate International L.P., Martley International
Inc., Moses Marx, Momar Corporation, United Equities (Commodities)
Company and Avatex Corporation.
2. Stock Purchase Agreement dated June 18, 1999, among Elliott
Associates, L.P., Westgate International L.P., Martley International
Inc., Moses Marx, Momar Corporation, United Equities (Commodities)
Company and Phar-Mor, Inc.
3. Irrevocable Proxy of Moses Marx dated June 18, 1999, in favor of
Phar-Mor, Inc.
Page 8 of 9 Pages
<PAGE>
SIGNATURE
After reasonable inquiry, and to the best of our knowledge and belief, the
undersigned certify that the information set forth in this statement is true,
complete and correct.
Date: July 29, 1999
/s/ Moses Marx
-------------------------------
MOSES MARX
UNITED EQUITIES (COMMODITIES)
COMPANY
By: /s/ Moses Marx
---------------------------
Moses Marx, General Partner
MOMAR CORPORATION
By: /s/ Moses Marx
---------------------------
Moses Marx, President
Page 9 of 9 Pages
EXHIBIT 1
STOCKHOLDERS' AGREEMENT
AGREEMENT, dated as of June 18, 1999, among Elliott Associates, L.P.
("Elliott"), Westgate International L.P. ("Westgate"), Martley International,
Inc. ("Martley"), Moses Marx ("Marx"), Momar Corporation ("Momar") and United
Equities Commodities Company ("United Equities"), and Avatex Corporation, a
Delaware corporation ("Avatex"). Elliott, Westgate, Martley, Marx, Momar and
United Equities sometimes are referred to herein collectively as the
"Stockholders" and individually as a "Stockholder."
W I T N E S S E T H:
WHEREAS, each of the Stockholders is the beneficial and record owner of the
shares of capital stock of Avatex set forth opposite each such Stockholder's
name on Schedule A hereto;
WHEREAS, concurrently with the execution of this Agreement, Avatex and
Xetava Corporation, a Delaware corporation and wholly-owned subsidiary of Avatex
("Xetava"), are entering into an Amended and Restated Agreement and Plan of
Merger (the "Merger Agreement") pursuant to which Xetava will be merged with and
into Avatex (the "Merger"), with Avatex continuing as the Surviving Corporation;
WHEREAS, concurrently with the execution of this Agreement, Avatex and each
of the Stockholders are entering into (or causing its counsel to enter into) a
Stipulation of Settlement (the "Settlement Agreement") relating to the
settlement and dismissal of all litigation brought by the Stockholders and/or
their affiliates against Avatex, Xetava and/or certain of Avatex's and/or
Xetava's directors in respect of, among other things, a proposed merger of
Avatex with and into Xetava, which proposed merger was previously announced on
April 14, 1998, including the lawsuits filed in April 1998 in the Delaware
Chancery Court styled Elliott Associates, L.P. v. Avatex Corporation, et al.,
C.A. 16336, and Harbor Finance Partners Ltd., et al. v. Butler, et al., C.A. No.
16334 (the "Harbor Action") and Strougo v. Butler, et al., C.A. No. 16345 (the
"Strougo Action") (the Harbor Action and the Strougo Action were consolidated by
the Delaware Chancery Court in May 1998 under the caption In re: Avatex
Corporation Shareholders Litigation, C.A. No. 16334) (the lawsuits referred to
in this recital are sometimes hereinafter collectively referred to as the
"Lawsuits"); and
<PAGE>
WHEREAS, in order to induce Avatex and Xetava to enter into the Merger
Agreement, the Stockholders are making certain representations, warranties,
covenants and agreements in connection with the Merger.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized terms used herein but not otherwise defined
herein shall have the respective meanings ascribed thereto in the Merger
Agreement, and the following terms shall have the following meanings:
"Affiliate" means with respect to any Person, any Person directly or
indirectly Controlling or Controlled by or under direct or indirect common
Control with such Person. For purposes of this definition, a subsidiary of a
Person is an Affiliate of such Person and of each other subsidiary of that
Person.
"beneficially own" shall have the meaning set forth in Rule 13d-3 under the
Exchange Act.
"Control" shall mean, as to any Person, the power to direct or cause the
direction of the management and policies of such person, whether through the
ownership of Voting Securities, by contract or otherwise. The terms "Controlling
Person", "Controlling" and "Controlled by" shall have correlative meanings.
"Equity Securities" shall have the meaning set forth in Rule 405 under the
Securities Act, and, with respect to Avatex or the Surviving Corporation, as
applicable, shall include, but not be limited to, Old Avatex Common Stock,
Convertible Preferred Stock, Series A Preferred Stock, New Avatex Common Stock
and the warrants to be issued as part of the Convertible Preferred Stock
Alternate Consideration or the Series A Preferred Stock Alternate Consideration.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
-2-
<PAGE>
"Governmental Entity" shall mean any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state or local, or any agency, instrumentality or authority thereof, or any
court or arbitration tribunal (public or private).
"Permitted Assignee" shall mean (i) with respect to Marx, (w) Marx, (x)
Marx's lineal descendants, (y) a trust for the benefit of, the estate of,
executors, personal representatives, administrators, guardians or conservators
of, any of the individuals referred to in the foregoing clauses (w) and (x) (but
only in their capacity as such) and (z) charitable trusts and charitable
foundations formed by Marx; and (ii) with respect to Elliott, Westgate, Martley,
Momar and United Equities, (x) any Person Controlled by or under common Control
with such Stockholder and (y) its respective partners, members, stockholders or
other holders of equity interests in such Stockholder.
"Person" shall mean and include an individual, a partnership, a limited
liability company, a joint venture, a corporation, a trust, an unincorporated
organization, a governmental or regulatory body or any department,
instrumentality or agency thereof, and any court.
"Preferred Shares" shall mean, collectively, shares of Convertible
Preferred Stock and Series A Preferred Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended and the
rules and regulations promulgated thereunder. "Voting Securities" shall have the
meaning set forth in Rule 405 under the Securities Act.
For the purposes of this Agreement, the term "Surviving Corporation" shall
include any successor, by operation of law or otherwise, or any Person that
acquires or succeeds to all or substantially all of the assets of Avatex, and
the term "Avatex" shall include the Surviving Corporation.
ARTICLE 11
REPRESENTATIONS AND WARRANTIES
OF THE STOCKHOLDERS
2.1 Representations and Warranties of the Stockholders. Each Stockholder
represents and warrants, severally but not jointly, to Avatex as follows:
-3-
<PAGE>
(a) Ownership of Avatex Shares. Such Stockholder is the beneficial owner of
the Avatex Shares set forth opposite such Stockholder's name on Schedule A
hereto, free and clear of all liens, claims, charges, security interests or
other encumbrances and, except for this Agreement, the Merger Agreement or as
otherwise indicated on Schedule A hereto, there are no options, warrants or
other rights, agreements, arrangements or commitments of any character to which
such Stockholder or, to its best knowledge after due inquiry, any of its
Affiliates, is a party relating to the holding, pledge, disposition, acquisition
or voting of any shares of capital stock of Avatex (or securities convertible
into or exchangeable for shares of capital stock of Avatex), and there are no
voting trusts or voting agreements with respect to such shares (or securities
convertible into or exchangeable for shares of capital stock of Avatex). The
Avatex Shares set forth opposite such Stockholder's name on Schedule A hereto
constitute all of the outstanding shares of capital stock of Avatex owned
beneficially or of record by such Stockholder and, to its best knowledge after
due inquiry, any of its Affiliates, and neither such Stockholder nor, to its
best knowledge after due inquiry, any of its Affiliates has any options,
warrants or other rights (including through derivative transactions) to acquire
any additional shares of capital stock of Avatex or any security exercisable or
exchangeable for, or convertible into, shares of capital stock of Avatex.
(b) Authority to Execute and Perform Agreements. Such Stockholder has the
full legal right and power and all authority required to enter into, execute and
deliver this Agreement and to perform fully such Stockholder's obligations
hereunder. The execution and delivery of this Agreement by such Stockholder have
been duly authorized by all requisite organizational action, if any, on the part
of such Stockholder. This Agreement has been duly executed and delivered and
constitutes the legal, valid and binding obligation of such Stockholder
enforceable against such Stockholder in accordance with its terms, except as the
enforceability may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or similar laws now or hereafter in effect
generally affecting creditors' rights or by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
(c) No Conflicts; Consents.
(i) The execution and delivery by such Stockholder of this
Agreement do not, and the consummation of the transactions
contemplated hereby will not, conflict with or result in any violation
of or default (with or without notice or lapse of time, or both) under
(A) any contract, agreement or other binding arrangement to which such
Stockholder is a party or
-4-
<PAGE>
(B) any judgment, order, writ, injunction or decree of any court,
governmental body, administrative agency or arbitrator applicable to
such Stockholder.
(ii) No consents, approvals or authorizations of, or notices or
filings with, any Person are required to be obtained or made by such
Stockholder in connection with the execution and delivery by such
Stockholder of this Agreement and the consummation of the transactions
contemplated hereby.
(d) Information Supplied. None of the written information specifically
supplied or to be supplied by such Stockholder with respect to such Stockholder
for inclusion or incorporation by reference in (i) the Registration Statement
will, at the time the Registration Statement is filed with the SEC and at the
time it becomes effective under the Securities Act, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading and (ii) the Proxy
Statement will, at the date the Proxy Statement is first mailed to stockholders
of Avatex and at the time of the Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF AVATEX
3.1 Representations and Warranties of Avatex. Avatex represents and
warrants to each Stockholder as follows:
(a) Authority.
(i) Avatex has the requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by Avatex
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Avatex.
(ii) Avatex has the requisite corporate power and authority to execute
and deliver the Merger Agreement and, subject to obtaining the Stockholder
Approval, to consummate the transactions contemplated thereby. The
execution, delivery and performance of the Merger Agreement by Avatex and
the consummation of the transactions contemplated thereby have been
-5-
<PAGE>
duly authorized by all necessary corporate action on the part of Avatex
subject to obtaining the Stockholder Approval.
(b) Due Execution.
(i) This Agreement has been duly executed and delivered by Avatex and,
assuming this Agreement constitutes the valid and binding obligation of the
Stockholders, constitutes the valid and binding obligation of Avatex,
enforceable against Avatex in accordance with its terms, except that (A)
such enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter relating to creditors'
rights generally, and (B) the remedy of specific performance and injunctive
relief hereunder may be subject to equitable defenses and to the discretion
of the court before which any proceeding therefor may be brought.
(ii) The Merger Agreement has been duly executed and delivered by
Avatex and constitutes the valid and binding obligation of Avatex,
enforceable against Avatex in accordance with its terms, except that such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter relating to creditors'
rights generally.
(c) No Consents. No consent, approval, order or authorization of or
registration, declaration or filing with, any Governmental Entity is required by
Avatex in connection with the execution and delivery of this Agreement or the
Merger Agreement by Avatex or the consummation by Avatex of the transactions
contemplated hereby or thereby, except for (i) the filings, permits,
authorizations, consents and approvals described herein or in the Merger
Agreement, or as may be required by, and other applicable requirements of, the
Securities Act, the Exchange Act, any applicable state securities or "blue sky"
laws and the General Corporation Law of the State of Delaware, and (ii) such
other consents, approvals, orders, authorizations, registrations, declarations
and filings the failure of which to be obtained or made would not, individually
or in the aggregate, (x) impair, in any material respect, the ability of the
Company to perform its obligations under this Agreement or the Merger Agreement
or (y) prevent the consummation of or materially impair the ability of Avatex to
consummate the transactions contemplated by this Agreement or the Merger
Agreement.
(d) No Conflicts. Except as set forth in the immediately preceding
paragraph, the execution and delivery of this Agreement and the Merger Agreement
do not, and the consummation of the transactions contemplated hereby and thereby
will not, conflict with, or result in any violation of, or
-6-
<PAGE>
default under, (i) the certificate of incorporation or by-laws of Avatex, (ii)
any loan or credit agreement, note, bond, indenture, lease or other material
agreement or instrument applicable to Avatex or its properties or assets, or
(iii) any law, ordinance, regulation, statute, judgment or decree applicable to
Avatex, other than any such conflicts, violations or defaults that, individually
or in the aggregate, would not (x) impair in any material respect the ability of
Avatex to perform its obligations under this Agreement and the Merger Agreement
or (y) prevent or impede the consummation of the transactions contemplated by
this Agreement or the Merger Agreement.
ARTICLE IV
COVENANTS
4.1 No Disposition or Acquisition of Shares. Subject to Sections 4.4 and
6.1 hereof, each of the Stockholders agrees that, except as otherwise
specifically contemplated by this Agreement or the Merger Agreement, such
Stockholder shall not, and shall use its best efforts to cause its Affiliates
not to, directly or indirectly, sell, transfer, pledge, hypothecate, encumber,
grant a participation in, place in trust, or otherwise dispose of (including
through any "short sales" or derivative transactions), or enter into any
contract, option or other arrangement or understanding with respect to the sale,
transfer, pledge, hypothecation, encumbrance or other disposition of (including
through any "short sales" or derivative transactions), any of the Avatex Shares
set forth opposite such Stockholder's name on Schedule A hereto; provided,
however, that such Stockholder shall have the right to transfer such shares to a
Permitted Assignee if such Permitted Assignee becomes a party to this Agreement
and agrees to be bound by the terms hereof pursuant to a written instrument
satisfactory to Avatex. Each Stockholder agrees that within five business days
of the date hereof it will surrender to Avatex the certificates representing the
Avatex Shares owned by such Stockholder and Avatex shall cause the transfer
agent for such Avatex Shares to endorse on such certificates a legend indicating
that such Avatex Shares are subject to this Agreement. Promptly following the
endorsement of such legend, Avatex shall cause the transfer agent to return the
certificates to the Stockholders. In addition, each Stockholder acknowledges
that Avatex will provide the transfer agent for the Avatex Shares stop-order
instructions that the Avatex Shares owned by such Stockholder are subject to
this Agreement. Such legend and stop-order instructions will be removed upon
such Stockholder's surrender of such certificates in connection with the Merger
and as contemplated by this Agreement and as long as, prior to the Effective
Time, such Stockholder does not breach this Agreement.
-7-
<PAGE>
4.2 Voting, Arrangements. Except as otherwise indicated on Schedule A
hereto, each of the Stockholders agrees, that, except pursuant to this
Agreement, it shall not grant any proxies, deposit any Avatex Shares into a
voting trust or enter into any voting agreement with respect to any Avatex
Shares now or hereafter owned by such Stockholder.
4.3 Satisfaction of Conditions to the Merger . Each of the Stockholders
agrees that such Stockholder, solely in its capacity as such, shall use
reasonable efforts to assist and cooperate with the parties to the Merger
Agreement in doing all things reasonably necessary, proper or advisable under
applicable laws as promptly as practicable to consummate and make effective the
Merger and the other transactions contemplated by the Merger Agreement, and the
other agreements and documents referred to in the Merger Agreement (but without
being required to incur any material unreimbursed expenses) and such Stockholder
shall not take any action that would or is reasonably likely to result in any of
the conditions set forth in Article IV of the Merger Agreement not being
satisfied.
4.4 Standstill, Transfer Restrictions.
(a) Each Stockholder agrees that, from the date hereof until the date that
is the tenth anniversary of the Closing Date, such Stockholder shall not, and
shall use its best efforts to cause its Affiliates not to, without the prior
written consent of the Board of Directors of Avatex, (i) in any manner acquire,
agree to acquire or make any proposal to acquire, directly or indirectly, any
Equity Securities of Avatex or the Surviving Corporation, or any rights,
warrants, options or securities to acquire any such Equity Securities (other
than with respect to the Merger Consideration to be received by such Stockholder
in the Merger); provided, however, that, the Stockholders may engage in hedging
and other similar transactions with respect to the shares of New Avatex Common
Stock it then owns as long as such transactions are for trading purposes only
and do not violate or conflict with any of the other provisions of this Section
4.4, (ii) other than with respect to the Merger, propose to enter into, directly
or indirectly, a merger or other business combination involving Avatex or the
Surviving Corporation or propose to purchase, directly or indirectly, a material
portion of the assets of Avatex or the Surviving Corporation, (iii) make, or in
any way participate, directly or indirectly, in, any "solicitation" of "proxies"
(as such terms are used in Regulation 14A under the Exchange Act) to vote or
consent or seek to advise or influence any Person with respect to the voting of,
or granting of a consent with respect to, any Equity Securities of Avatex or the
Surviving Corporation, including, but not limited to, for the purpose of
nominating
-8-
<PAGE>
candidates for election, or otherwise electing directors, to the Board of
Directors of Avatex at any meeting of the stockholders of Avatex or otherwise,
(iv) form, join or in any way participate in a "group" (within the meaning of
Section 13(d)(3) of the Exchange Act) for the purpose of acquiring, holding,
voting or disposing of any Equity Securities of Avatex or the Surviving
Corporation (other than with an Affiliate of such Stockholder), (v) otherwise
act, alone or in concert with others, to seek to control or influence in any
public manner or public forum the management or policies of Avatex or the
Surviving Corporation, (vi) disclose any intention, plan or arrangement
inconsistent with the foregoing, (vii) advise, assist (including by knowingly
providing or arranging financing for that purpose) or encourage any other Person
in connection with any of the foregoing, (viii) request Avatex or the Surviving
Corporation or any agent of Avatex or the Surviving Corporation, directly or
indirectly, to amend or waive any provision of this Section 4.4(a) (including
this sentence) or (ix) other than with respect to entering into this Agreement
or the consummation of the Merger, take any action which might require Avatex or
the Surviving Corporation to make a public announcement regarding the
possibility of a transaction between such Stockholder and Avatex or the
Surviving Corporation (including any of their respective Affiliates).
(b) Except as otherwise indicated on Schedule A hereto, each Stockholder
agrees that, from the date hereof until the Closing Date, such Stockholder shall
not, and shall use its best efforts to cause its Affiliates not to without the
prior written consent of the Board of Directors of Avatex, directly or
indirectly, sell, transfer, pledge, encumber or otherwise dispose of, or agree
to sell, transfer, pledge, encumber or otherwise dispose of (including through
any "short sales" or derivative transactions), any Equity Securities of Avatex
or any rights or options (including through derivative transactions) to acquire
such Equity Securities.
(c) Nothing contained in this Section 4.4 shall prevent a Stockholder from
(i) enforcing its rights with respect to the Merger, the Convertible Preferred
Stock Alternate Consideration and/or the Series A Preferred Stock Alternate
Consideration, (ii) discussing with Avatex or other stockholders of the Company
any possible amendments or modifications to the Merger, the Merger Agreement or
the Merger Consideration proposed by Avatex, or (iii) following the consummation
of the Merger, discussing with the Surviving Corporation or other recipients of
the Convertible Preferred Stock Alternate Consideration or the Series A
Preferred Stock Alternate Consideration any possible amendments or modifications
proposed by the Surviving Corporation to the 6.75% Notes, the 6.75% Notes
Indenture, the Warrants or any other document, agreement or instrument related
to the Convertible
-9-
<PAGE>
Preferred Stock Alternate Consideration or the Series A Preferred Stock
Alternate Consideration. The standstill provisions contained in this Section 4.4
shall not apply to any Equity Securities of Avatex acquired of record or
beneficially by any stockholder which are or were exchanged for Phar-Mor, Inc.
securities (pursuant to a merger or similar business combination transaction),
which Phar-Mor, Inc. securities were pledged (or subject to a later pledge) as
collateral for the 6.75% Notes.
(d) In consideration for the agreements and covenants of the Stockholders
set forth in this Section 4.4, within one business day following the Effective
Time, Avatex shall pay to (i) Momar or United Equities (as directed by Marx) an
amount in cash equal to $300,000 and (ii) each of Elliott and Westgate an amount
in cash equal to $150,000.
4.5 Certain Information. Each Stockholder shall, on or prior to the Closing
Date, deliver to Avatex a written certification as to (i) the aggregate amount
of shares of Old Avatex Common Stock, Convertible Preferred Stock and Series A
Preferred Stock which such Stockholder acquired between January 1, 1995 and
October 1, 1996, and (ii) the amount of Old Avatex Common Stock owned by such
Stockholder both directly and by attribution under Section 318(a) of the
Internal Revenue Code of 1986 as of the Closing Date.
ARTICLE V
AGREEMENT TO VOTE; ELECTIONS;
PROXY; WAIVER OF RIGHTS
5.1 Agreement to Vote; Elections; Proxy.
(a) Each Stockholder hereby agrees that, at any meeting of the stockholders
of Avatex, however called, including the Stockholders' Meeting, and at every
adjournment thereof, and in any action by written consent of the stockholders of
Avatex, in any such case, and/or in which holders of Preferred Shares are given
the right or are entitled to vote, to (i) vote all of the Preferred Shares then
owned by such Stockholder, in favor of the adoption of the Merger Agreement as
in effect on the date hereof (as such agreement may be amended as contemplated
by the Merger Agreement, provided that any such amendment could not reasonably
be deemed to adversely affect the Merger Consideration to be received by such
Stockholders in the Merger), the Merger and each of the other transactions
contemplated thereby and any action required in furtherance thereof, (ii) vote
such Preferred Shares against any action or agreement that would result in a
breach in any material respect of any covenant, representation or warranty
-10-
<PAGE>
or any other obligation of Avatex or Xetava under the Merger Agreement, and
(iii) vote such shares against any other action or agreement that, directly or
indirectly, is inconsistent with or that would, or is reasonably likely to,
directly or indirectly, impede, interfere with or attempt to discourage the
Merger or any other transaction contemplated by the Merger Agreement, including,
but not limited to (A) any extraordinary corporate transaction (other than the
Merger on the terms set forth in the Merger Agreement), such as a merger,
consolidation, business combination, reorganization, recapitalization or
liquidation involving Avatex, (B) a sale or transfer of a material amount of
assets of Avatex, or (C) any material change in Avatex's corporate structure or
business, unless such action or agreement has been approved by the Board of
Directors of Avatex and recommended for approval by the Stockholders of Avatex;
provided, however, that, if any representative of any such Stockholder is a
member of the Board of Directors of Avatex, nothing herein shall be construed to
obligate such Avatex representative to act in such representative's capacity as
a director in any manner which may conflict with such Person's fiduciary duties
as a director of Avatex.
(b) In addition, each Stockholder hereby agrees, in connection with the
Merger and as contemplated by the Merger Agreement (as such agreement may be
amended as contemplated by the Merger Agreement, provided that any such
amendment could not reasonably be deemed to adversely affect the Merger
Consideration to be received by such Stockholder in the Merger), to make an
irrevocable and unconditional Convertible Preferred Stock Alternate
Consideration Election and/or Series A Preferred Stock Alternate Consideration
Stock Election with respect to all shares of Convertible Preferred Stock and/or
Series A Preferred Stock, as applicable, beneficially owned by such Stockholder
as set forth on Schedule A hereto in accordance with Section 2.2 of the Merger
Agreement, including, but not limited to, duly executing a Form of Election and
returning such Form of Election to the Exchange Agent or, if applicable, The
Depository Trust Company, prior to the Election Deadline. As a result of such
elections, each Stockholder further agrees that all such shares of Convertible
Preferred Stock and/or Series A Preferred Stock shall be Convertible Preferred
Stock Electing Shares and/or Series A Preferred Stock Electing Shares, as
applicable, in accordance with Section 2.2 of the Merger Agreement.
(c) In furtherance of the foregoing, (i) (A) each Stockholder hereby
appoints Avatex and the proper officers of Avatex, and each of them, with full
power of substitution in the premises, its proxies to vote all such
Stockholder's Preferred Shares at any meeting, general or special, of the
stockholders of Avatex, including the Stockholders' Meeting, and to execute one
-11-
<PAGE>
or more written consents or other instruments from time to time in order to take
such action without the necessity of a meeting of the stockholders of Avatex, in
accordance with the provisions of the paragraph (a) above of this Section 5. 1,
and (B) Avatex hereby agrees to vote such shares or execute written consents or
other instruments in accordance with the provisions of the paragraph (a) above
of this Section 5. 1; and (ii) each Stockholder hereby appoints Avatex and the
proper officers of Avatex, and each of them, with full power of substitution in
the premises, as its true and lawful attorney-in-fact, in the name and behalf of
such Stockholder, to make an irrevocable and unconditional Convertible Preferred
Stock Alternate Consideration Election and/or Series A Preferred Stock Alternate
Consideration Stock Election with respect to all shares of Convertible Preferred
Stock and/or Series A Preferred Stock, as applicable, beneficially owned by such
Stockholder as set forth on Schedule A hereto in accordance with Section 2.2 of
the Merger Agreement and, in connection therewith, to execute and deliver to the
Exchange Agent a Form of Election with respect to such shares of Convertible
Preferred Stock and/or Series A Preferred Stock, and (B) Avatex hereby agrees to
make such elections with respect to such shares and complete such Forms of
Election in accordance with the provisions of the paragraph (b) above of this
Section 5. 1. Notwithstanding the foregoing, such proxies and powers may be
revoked by the Stockholders, acting unanimously, if the Merger Agreement in
effect on the date hereof is amended or modified, or if any provision thereof is
waived or not complied with, and such amendment, modification, waiver or
non-compliance could reasonably be deemed to adversely affect the Merger
Consideration to be received by the Stockholders in the Merger.
(d) The proxy and power of attorney granted herein shall be irrevocable
during the term of this Agreement, shall be deemed to be coupled with an
interest and shall revoke all prior proxies and/or powers of attorney granted by
such Stockholder. Such Stockholder shall not grant any proxy and/or powers of
attorney to any Person which conflicts with the proxy and power of attorney
granted herein, and any attempt to do so shall be void. The power of attorney
granted herein is a durable power of attorney and, in the case of a Stockholder
that is an individual, shall survive the disability or incompetence of such
Stockholder.
5.2 Waiver of Appraisal Rights. Subject to Section 6.1 hereof, each
Stockholder hereby waives its rights to appraisal under Section 262 of the DGCL
with respect to any shares of Convertible Preferred Stock and Series A Preferred
Stock owned by it in connection with the transactions contemplated by the Merger
Agreement.
-12-
<PAGE>
5.3 Waiver of Certain Rights; Dismissal and Settlement of the Lawsuits.
(a) Except with respect to the Lawsuits, each Stockholder hereby
irrevocably waives, releases and discharges, and agrees not to assert, any
claim, action, cause of action, suit, right or demand, known or unknown, it has
or can, shall or may have against Avatex or any director, officer, employee,
Affiliate, representative, successor and assign of Avatex (including, but not
limited to, the Surviving Corporation) based upon, in respect of, as a result
of, or by reason of any matter, cause or thing, whatsoever arising out of, in
connection with, or in any way related to, (i) the Original Merger Agreement or
the transactions contemplated thereby, (ii) the approval or adoption of the
Merger Agreement or the consummation of the Merger or the other transactions
contemplated thereby, or (iii) such Stockholder's investment in and/or ownership
of Avatex Shares at any time prior to the date hereof. Each Stockholder hereby
acknowledges and confirms in all respects that the execution and delivery to
Avatex by each of them of a release as of, and effective immediately upon, the
effectiveness of the Merger, with substantially the provisions set forth in the
preceding sentence and in form reasonably satisfactory to Avatex, shall be a
condition precedent to Avatex consummating the Merger.
(b) Each Stockholder hereby agrees, effective as of the Effective Time, to
settle and dismiss (or cause to be settled and dismissed) with prejudice each of
the Lawsuits in accordance with the Settlement Agreement, which settlements
shall be final and non-appealable.
(c) Without limiting the generality of Section 4.3 hereof, Section 5.1
hereof and paragraph (a) above of this Section 5.3, each Stockholder hereby
agrees that in no event and under no circumstances will such Stockholder,
directly or indirectly, challenge, attempt to prohibit or enjoin, or otherwise
object to the right or ability of any Person, including, but not limited to, any
director, officer, employee or Affiliate of Avatex (including Phar-Mor, Inc.
("Phar-Mo ") or any pension plan sponsored by Avatex or any of its Affiliates),
to vote, in such Person's capacity as a holder of Avatex Shares, on the Merger
Agreement or the Merger at any meeting of stockholders of Avatex, including the
Stockholders' Meeting, or otherwise.
5.4 Withdrawal of Director Nominations. As of the date hereof, Moses Marx
shall unconditionally withdraw his demand for nomination of Messrs. Charles K.
MacDonald and Donald Press for election to the Board of Directors of Avatex,
which demand was made in a letter, dated February 27, 1998, from Mr. Marx to
Avatex. Such withdrawal shall be made pursuant to a written
-13-
<PAGE>
instrument addressed to Avatex and its Board of Directors making specific
reference to such February 27, 1998 letter, which written instrument shall be
delivered to Avatex and its Board of Directors concurrently with the execution
and delivery of this Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 Termination.
(a) This Agreement shall terminate upon the earlier to occur of (i) the
mutual written consent of Avatex and all of the Stockholders, (ii) the
termination of the Merger Agreement prior to the consummation of the Merger and
(iii) the tenth anniversary of the Closing Date. The Stockholders, acting
unanimously, may terminate this Agreement if the Effective Time shall have not
occurred on or before December 15, 1999, provided that no Stockholder shall have
breached any provision of or any of its obligations under this Agreement. In
addition, the Stockholders, acting unanimously, shall have the right to
terminate this Agreement only if (i) the Merger Agreement in effect on the date
hereof is amended or modified, or if any provision thereof is waived or not
complied with, and such amendment, modification, waiver or non-compliance could
reasonably be deemed to adversely affect the Merger Consideration to be received
by the Stockholders in the Merger, or (ii) Phar-Mor fails to cause all shares of
Old Avatex Common Stock beneficially owned by the Stockholders as set forth on
Schedule A hereto to be purchased at or prior to the Effective Time at a
purchase price per share equal to $2.00. (b) If this Agreement is terminated
pursuant to Section 6. 1 (a) above, this Agreement, except for the provisions of
this Section 6. 1 (b), shall forthwith become void and have no effect.
6.2 Amendment. This Agreement may be amended only by a written instrument
executed by the parties or their respective successors or assigns.
6.3 Notices. Notices, requests, permissions, waivers and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if signed by the respective persons giving them (in the case of any
corporation the signature shall be by an officer thereof) and delivered by hand,
deposited in the United States mail (registered or certified, return receipt
requested), properly addressed and postage prepaid, or delivered by telecopy:
-14-
<PAGE>
If to Avatex, to:
Avatex Corporation
5910 North Central Expressway Suite 1780
Dallas, Texas 75206
Telephone: (214) 365-7450
Telecopy: (214) 365-7498
Attention: General Counsel
with a copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Telephone: (212) 310-8000
Telecopy: (212) 310-8007
Attention: Stephen E. Jacobs, Esq.
If to the Stockholders, at such address as may be
furnished to Avatex from time to time;
with a copy to:
Kleinberg, Kaplan, Wolff & Cohen, P.C.
551 Fifth Avenue
New York, New York 10 176
Telephone: (212) 986-6000
Telecopy: (212) 986-8866
Attention: Martin D. Sklar, Esq.
6.4 Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original, but all of
which shall constitute one and the same original.
6.5 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware without reference to choice
of law principles, including all matters of construction, validity and
performance.
6.6 Severability; Enforcement. The invalidity of any portion hereof shall
not affect the validity, force or effect of the remaining portions hereof. If it
is ever held that any restriction hereunder is too broad to permit enforcement
of such restriction to its fullest extent, each party agrees that any court of
the United States located in the State of Delaware or any Delaware state court
may enforce such restriction to the maximum extent permitted by law, and each
party hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
-15-
<PAGE>
6.7 Further Assurances. Each party hereto shall execute and deliver such
additional documents as may be reasonably requested by another party to
consummate the transactions contemplated by this Agreement.
6.8 Parties in Interest; Assignment. Neither this Agreement nor any of the
rights, interest or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties.
6.9 Entire Agreement. This Agreement and the Merger Agreement and the other
agreements and documents referred to in the Merger Agreement contain the entire
understanding of the parties hereto and thereto with respect to the subject
matter contained herein and therein, and supersede and cancel all prior
agreements, negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto or to the Merger Agreement or any of the other agreements
and documents referred to in the Merger Agreement with respect to the
transactions contemplated by this Agreement and the Merger Agreement and the
other agreements and documents referred to in the Merger Agreement other than
those set forth or described herein or therein or made hereunder or thereunder.
6.10 Specific Performance, Consent to Jurisdiction.
(a) The parties hereto agree that the remedy at law for any breach of this
Agreement will be inadequate and that any party by whom this Agreement is
enforceable shall be entitled to specific performance in addition to any other
appropriate relief or remedy. Such party may, in its sole discretion, apply to
any court of the United States located in the State of Delaware or any Delaware
state court for specific performance or injunctive or such other relief as such
court may deem just and proper in order to enforce this Agreement or prevent any
violation hereof and, to the extent permitted by applicable law, each party
waives any objection to the imposition of such relief.
(b) In addition, each of the parties hereto (i) consents to submit itself
to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any matter referred to herein, (ii) agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other request for
leave from any such court and (iii) agrees that it will not bring any action
relating to this Agreement or any
-16-
<PAGE>
matter referred to herein in any court other than a Federal or state court
sitting in the State of Delaware.
6.11 Headings, References. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. All references herein to
"Sections" or "Exhibits" shall be deemed to be references to Articles or
Sections hereof or Exhibits hereto unless otherwise indicated.
[Signatures appear on following pages.]
-17-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto had caused this Agreement to
be duly executed and delivered as of the day and year first above written.
AVATEX CORPORATION
By: /s/ Melvyn J. Estrin
---------------------------------
Name: Melvyn J. Estrin
Title: Co-Chief Executive Officer
ELLIOTT ASSOCIATES, L.P
By: /s/ Paul E. Singer
---------------------------------
Paul E. Singer
General Partner
WESTGATE INTERNATIONAL, L.P.
By: Martley International, Inc.,
as Attorney-in-Fact
By: /s/ Paul E. Singer
---------------------------------
Paul E. Singer
President
MARTLEY INTERNATIONAL, INC.
By: /s/ Paul E. Singer
---------------------------------
Paul E. Singer
President
/s/ Moses Marx
---------------------------------
Moses Marx
MOMAR CORPORATION
By: /s/ Moses Marx
---------------------------------
Moses Marx
President
-18-
<PAGE>
UNITED EQUITIES COMMODITIES COMPANY
By: /s/ Moses Marx
---------------------------------
Moses Marx
General Partner
-19-
<PAGE>
<TABLE>
Schedule A
<CAPTION>
=======================================================================================================
Number of Shares Number of Shares Number of Shares
of Old Avatex of Convertible of Series A
Stockholder Common Stock(1) Preferred Stock Preferred Stock
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Elliott Associates, L.P. 417,600 111,637 547,613
- -------------------------------------------------------------------------------------------------------
Westgate International L.P. 416,300 -0- 661,797
- -------------------------------------------------------------------------------------------------------
Martley International, Inc. -0- -0- -0-
- -------------------------------------------------------------------------------------------------------
Moses Marx 75,000 100 270,000
- -------------------------------------------------------------------------------------------------------
Momar Corporation 802,500 26,000 257,026
- -------------------------------------------------------------------------------------------------------
United Equities Commodities 1,151,000 178,300 425,974
Company
=======================================================================================================
</TABLE>
- ----------
(1) Elliott Associates, L.P., Westgate International L.P., Martley
International, Inc., Springfield Associates, L.L.C., Kensington
international Ltd., Moses Marx, Momar Corporation and United Equities
Company have entered into a stock purchase agreement with Phar-Mor, Inc.
pursuant to which (i) Phar-Mor, Inc. has agreed to purchase the shares of
Old Avatex Common Stock owned by each such Stockholder at or prior to the
Effective Time, and (ii) each such Stockholder has granted to Phar-Mor,
Inc. an irrevocable proxy to vote the shares of Old Avatex Common Stock
owned by each such Stockholder until the earlier of Phar-Mor's purchase of
such shares or the termination of such stock purchase agreement.
-20-
EXHIBIT 2
STOCK PURCHASE AGREEMENT
dated as of
May __, 1999
by and between
ELLIOT ASSOCIATES, L.P., WESTGATE INTERNATIONAL, L.P., MARTLEY
INTERNATIONAL, INC., MOSES MARX, MOMAR CORPORATION, and UNITED
EQUITIES COMMODITIES COMPANY, as the Stockholders,
and
PHAR-MOR, INC., as the Purchaser
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I: DEFINITIONS...................................................... 1
Section 1.1 Definitions............................................... 1
ARTICLE II: TRANSACTIONS.................................................... 4
Section 2.1 Transfer of Stock......................................... 4
Section 2.2 Purchase Price............................................ 4
Section 2.3 Delivery and Payment...................................... 5
Section 2.4 Taxes..................................................... 5
Section 2.5 Expenses.................................................. 5
Section 2.6 Public Announcements...................................... 5
Section 2.7 Proxy..................................................... 5
ARTICLE III: CONDITIONS TO CLOSING.......................................... 5
Section 3.1 Conditions to Purchaser's Obligation to Close............. 5
Section 3.2 Conditions to Each Stockholder's Obligation to Close...... 6
ARTICLE IV: CLOSING......................................................... 6
Section 4.1 Time of Closing........................................... 6
Section 4.2 Location of Closing....................................... 6
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS............... 7
Section 5.1 Corporate Existence and Power, Partnership
Existence and Power, Company Existence and Power..................... 7
Section 5.2 Authorization; Contravention.............................. 7
Section 5.3 Approvals................................................. 7
Section 5.4 Binding Effect............................................ 7
Section 5.5 Ownership................................................. 7
Section 5.6 Continuing Representations and Warranties................. 8
ARTICLE VI: REPRESENTATIONS AND WARRANTIES OF THE PURCHASER................. 8
Section 6.1 Corporate Existence and Power............................. 8
Section 6.2 Authorization; Contravention.............................. 8
Section 6.3 Approvals................................................. 8
Section 6.4 Binding Effect...............................................
ARTICLE VII: INDEMNIFICATION................................................ 8
Section 7.1 Indemnification by the Stockholders....................... 8
Section 7.2 Indemnification by Purchaser.............................. 8
Section 7.3 Procedure................................................. 9
Section 7.4 No Limitation on Other Rights of Recovery................. 10
Section 7.5 Treatment of Indemnity Payments........................... 10
-i-
<PAGE>
Page
ARTICLE VIII: MISCELLANEOUS................................................. 10
Section 8.1 Notices................................................... 10
Section 8.2 Further Assurances........................................ 10
Section 8.3 No Waivers; Remedies; Specific Performance................ 10
Section 8.4 Amendments, Etc........................................... 11
Section 8.5 Successors and Assigns.................................... 11
Section 8.6 Governing Law............................................. 11
Section 8.7 Counterparts; Effectiveness............................... 11
Section 8.8 Severability of Provisions................................ 11
Section 8.9 Headings and References................................... 11
Section 8.10 Entire Agreement......................................... 11
Section 8.11 Survival................................................. 11
Section 8.12 Exclusive Jurisdiction................................... 12
Section 8.13 Waiver of Jury Trial..................................... 12
Section 8.14 Construction............................................. 12
-ii-
<PAGE>
EXHIBITS
Exhibit 2.1 List of Beneficial and Record Owners of the Common Shares of Avatex
Exhibit 2.7 Irrevocable Proxy
-A-
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement") dated as of May __, 1999 by and
among ELLIOTT ASSOCIATES, L.P., a Delaware limited partnership("Elliott"),
WESTGATE INTERNATIONAL, L.P., a ________________ limited partnership
("Westgate"), MARTLEY INTERNATIONAL, INC., a Cayman Islands corporation
("Martley"), MOSES MARX, an individual residing at _______________ ("Marx"),
MOMAR CORPORATION, a _________________corporation ("Momar"), and UNITED EQUITIES
COMMODITIES COMPANY, a ________________ corporation ("United Equities," and
collectively with Elliott, Westgate, Martley, Marx, and Momar, together with
their respective successors and assigns, the "Stockholders"), and PHAR-MOR,
INC., a Pennsylvania corporation (together with its successors and assigns, the
"Purchaser").
WHEREAS, the Stockholders are the beneficial and record owners of the
common shares of Avatex Corporation, a Delaware corporation ("Avatex"), as set
forth on Exhibit 2.1;
WHEREAS, Avatex and Xetava Corporation, a Delaware corporation ("Xetava"),
have entered into an Agreement and Plan of Merger (the "Original Merger
Agreement"), which provided that Avatex would be merged with and into Xetava
(the "Proposed Original Merger");
WHEREAS, class representative brought two putative class action lawsuits in
Delaware against Avatex on behalf of Avatex preferred stockholders as a result
of the Proposed Original Merger asserting several claims (the "Class Actions");
WHEREAS, the Proposed Original Merger was postponed pending resolution of
the Class Actions;
WHEREAS, in determination of one claim under the Class Actions, the
Delaware Supreme Court held that the Proposed Original Merger could not be
consummated without the approval of two-thirds of certain preferred
stockholders;
WHEREAS, pursuant to settlement negotiations of the other claims of the
Class Actions, Avatex and Xetava entered into that certain Amended and Restated
Agreement and Plan of Merger, dated as of May __, 1999 (the "Restated Merger
Agreement");
WHEREAS, pursuant to the Restated Merger Agreement, Xetava will merge into
Avatex, with Avatex as the surviving corporation (the "Revised Merger");
WHEREAS, the Stockholders desire to sell and the Purchaser desires to buy
the Avatex Shares (as defined below), conditioned on the closing of the Revised
Merger-,
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below.
<PAGE>
Action against a person means an action, suit, cause of action,
investigation, complaint or other proceeding threatened or pending against or
affecting the person or its property, whether civil or criminal, in law or in
equity or before any arbitrator or Governmental Body.
Affiliate of a person means (1) any other person that directly or
indirectly controls, is controlled by or is under common control with, such
person or any of its subsidiaries and (2) if such person is an individual, any
other individual that is a relative (by blood or marriage) of such person. The
term control me s the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a person, whether
through the ownership of voting securities, by contract or otherwise.
Agreement has the meaning stated in the preamble to this Agreement.
Approval means an authorization., consent, approval or waiver of, clearance
by, notice to or registration or filing with, or any other similar action by or
with respect to a Governmental Body or any other person and the expiration or
termination of all prescribed waiting, review or appeal periods wit respect to
any of the foregoing.
Avatex has the meaning stated in the recitals to this Agreement.
Avatex Shares has the meaning stated in Section 2.1 of this Agreement.
Avatex Stock has the meaning stated in Section 2.1 of this Agreement.
beneficially own or beneficial ownership with respect to any securities
shall mean having beneficial ownership of such securities (as determined
pursuant to Rule 13-d under the Exchange Act, except as provided below,
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the same
holder, securities beneficially owned by a person shall include securities
beneficially owned by all Affiliates of such person and all other persons with
whom such person would constitute a Group.
Class Action has the meaning stated in the recitals to this Agreement.
Closing has the meaning stated in Section 4.1 of this Agreement.
Closing Date shall mean the date that is the effective date of the Revised
Merger.
Code means the internal Revenue Code of 1986, and the related Regulations,
in each case as amended as of the date hereof, and as the same may be amended or
modified from time to time.
Elliott has the meaning stated in the preamble of this Agreement.
Exchange Act means the Securities Exchange Act of 1934, as amended, and the
related rules and regulations thereunder,
Governmental Body means any agency, bureau, commission, court, department,
official, political subdivision, tribunal or other instrumentality of any
government, whether federal, state, county or local, domestic or foreign,
-2-
<PAGE>
Group has the meaning given such term in Section 13(d)(3) of the Exchange
Act.
Indemnified Persons has the meaning stated in Section 7.3 of this
Agreement.
Indemnifiable Claim means any Loss for or against which any party is
entitled to indemnification under this Agreement.
IRS means the United States Internal Revenue Service or any Governmental
Body succeeding to any or all of its functions.
Lien means any mortgage, deed of trust, lien (statutory or otherwise),
pledge, hypothecation, charge, deposit arrangement, preference, priority,
security interest, adverse claim, restriction or encumbrance of any kind
(including, without limitation, any conditional sale contract any capitalized
lease or any financing lease having substantially the same economic effect as
the foregoing and the filing of or agreement to give any financing statement
under the Uniform Commercial Code or comparable law of any jurisdiction to
evidence any of the foregoing).
Loss means any cost, damage, disbursement, expense, liability, judgment,
loss, deficiency, obligation, penalty or settlement of any kind or nature,
whether foreseeable or unforeseeable, including, without limitation, interest or
other carrying costs, penalties, legal, accounting, expert witness, consultant
and other professional fees and expenses incurred in the investigation,
collection, prosecution and defense of claims (including, without limitation,
claims for indemnification Under Article VII and other claims in connection with
the enforcement of any rights under this Agreement) and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified person.
Martley has the meaning stated in the preamble of this Agreement.
Marx has the meaning stated in the preamble of this Agreement.
Momar has he meaning stated in the preamble of this Agreement.
Order means any decision, decree, injunction, judgment, order, ruling,
assessment or writ.
Original Merger Agreement has the meaning stated in the recitals to this
Agreement,
person means an individual, a corporation, a partnership, a joint venture,
an association, a trust, an unincorporated association or any other entity or
organization, including a Governmental Body.
Pro Rata Shares has the meaning stated in Section 2.2 of this Agreement
Proposed Original Merger has the meaning stated in the recitals to this
Agreement.
Proxy has the meaning stated in Section 2.7 of this Agreement
Purchase Price has the meaning stated in Section 2.2 of this Agreement.
-3-
<PAGE>
Purchaser has the meaning stated in the preamble to this Agreement.
Regulation means (1) any applicable law, rule, regulation, ordinance,
Order, award, injunction, recommendation or other official action of any
Governmental Body and (2) any official change in the interpretation or
administration of any of the foregoing by the Governmental Body or by any other
Governmental Body or other person responsible for the interpretation or
administration of any of the foregoing.
Restated Merger Agreement has the meaning stated in the recitals to this
Agreement.
Revised Merger has the meaning stated in the recitals to this Agreement.
Securities Act means the Securities Act of 1933, as amended, and the
related rules and regulations thereunder.
Stockholders has the meaning stated in the preamble of this Agreement.
Taxes means all taxes, charges, fees, levies, duties, imposts,
withholdings, restrictions, fines, interest, penalties, additions to tax or
other assessments or charges, including, but not limited to, income, excise,
property, withholding, sales, use, gross receipts, value added and franchise
taxes, license recording, documentation and registration fees and custom duties
imposed by any Governmental Body.
Transactions means, collectively, the transactions undertaken pursuant to,
or otherwise contemplated by, this Agreement and the Proxy.
Transfer means a sale, an assignment, a lease, a license, a grant, a
transfer or other disposition of an asset or any interest of any nature in an
asset. The term transfer used as a verb has a correlative meaning.
United Equities has the meaning stated in the preamble of this Agreement.
Westgate has the meaning stated in the preamble of this Agreement.
Xetava has the meaning stated in the recitals to this Agreement.
ARTICLE II
TRANSACTIONS
Section 2.1 Transfer of Stock. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date (or such later date as specifically
set forth below) each Stockholder shall transfer to the Purchaser, free and
clear of any and all Liens, the number of shares of Common Stock, par value
$5.00 per share ("Avatex Stock"), of Avatex set forth on Exhibit 2.1 hereto (in
each case, the "Avatex Shares").
Section 2.2 Purchase Price. Subject to the terms and conditions set forth
in this Agreement, at Closing, the Purchaser shall pay to the Stockholders by
wire transfer of immediately available funds an aggregate purchase price for the
2,862,400 Avatex Shares being purchased hereunder
-4-
<PAGE>
equal to $5,724,800 (the "Purchase Price"). The Purchase Price per Avatex Share
is $2.00. The Purchase Price shall be allocated among the Stockholders in
accordance with the percentages (the "Pro Rata Shares") set forth opposite each
Stockholder's name on the signature page hereto.
Section 2.3 Delivery and Payment. Delivery of the Avatex Shares to the
Purchaser shall be made by Stockholders at Closing. The Avatex Shares shall be
accompanied by updated stock powers duly endorsed in blank and shall have
affixed thereto evidence of the payment of the relevant transfer/stamp taxes,
Section 2.4 Taxes. Each Stockholder shall pay any Taxes payable with
respect to the transfer of the Avatex Shares sold by such Stockholder to the
Purchaser pursuant to this Agreement.
Section 2.5 Expenses. Except as expressly set forth herein, all costs and
expenses incurred or paid by a party shall be paid by the party incurring or
paying such expenses. Without limiting the generality of the foregoing, (A) all
costs and expenses of the Stockholders, including, without limitation, expenses
of counsel, financial advisors and accountants incurred in connection with the
negotiation and review of documentation relating hereto and the performance of
obligations hereunder, shall be paid by the Stockholders without any cost or
other liability to the Purchaser and (B) all costs and expenses of the
Purchaser, including, without limitation, expenses of counsel, financial
advisors and accountants incurred in connection with the negotiation and review
of documentation relating hereto and the performance of obligations hereunder,
shall be paid by the Purchaser without any cost or other liability to any of the
Stockholders.
Section 2.6 Public Announcements. Except as required by applicable law,
including without limitation, any filings required by the Exchange Act the
Stockholders shall not, and shall not permit any of their Affiliates to, make
any published announcement in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of the Purchaser.
Section 2.7 Proxy. Concurrently with the execution and delivery of this
Agreement, each of the Stockholders is hereby delivering to the Purchaser an
irrevocable proxy in the form Exhibit 2.7 hereto (the "Proxy"). Purchaser agrees
to vote all of the Avatex Shares pursuant to each Proxy in favor of the Revised
Merger.
ARTICLE III
CONDITIONS TO CLOSING
Section 3.1 Conditions to Purchaser's Obligation to Closing. Purchaser's
obligation to consummate the Transactions contemplated hereby is subject to
satisfaction (or written waiver) at or prior to the Closing Dale of the
following conditions:
(a) Representations and Warranties. The representations and warranties
of the Stockholders contained herein shall be true and correct as of the
Closing Date.
(b) Covenants. Each of the Stockholders shall have performed and
complied with the agreements and covenants contained herein to be performed
by them on or prior to the Closing Date.
-5-
<PAGE>
(c) Compliance with Applicable Laws. The Transactions contemplated
hereby shall not be prohibited by any applicable Regulation and all
requisite Approvals shall have been obtained and shall be in full force and
effect.
(d) Revised Merger. The Revised Merger shall have occurred or shall be
occurring simultaneously on or prior to December 15, 1999, on the terms set
forth in the Restated Merger Agreement as in effect on the date hereof (as
such agreement may be amended with the consent of the Purchaser). This
Agreement shill also terminate at the option of the Purchaser if the
Stockholders Agreement dated the date hereof among Avatex and the
Stockholders terminates for any reason.
(e) Settlement and Dismissal. The Class Actions shall have been
settled pursuant to a settlement agreement and such settlement agreement
shall have bean approved by a court of competent jurisdiction and in
connection therewith the Class Action shall be dismissed with prejudice,
and such settlement, approval and dismissal shall have been final and
non-appealable on or prior to the Closing Date.
Section 3.2 Conditions to Each Stockholder's Obligation to Close. Each
Stockholder's obligation to consummate the Transactions contemplated hereby is
subject to satisfaction (or written waiver) at or prior to the Closing Date of
the following conditions:
(a) Representations and Warranties. The representations and warranties
of Purchaser contained herein shall be true and correct as of the Closing
Date.
(b) Covenants. Purchaser shall have performed and complied with the
agreements and covenants contained herein to be performed by it on or prior
to the Closing Date.
(c) Compliance with Applicable Laws. The Transactions contemplated
hereby shall not be prohibited by any applicable Regulation and all
requisite Approvals shall have been obtained and shall be in full force and
effect
(d) Revised Merger. The Revised Merger shall have occurred or shall be
occurring simultaneously, on or prior to December 15, 1999, on the terms
set forth in the Restated Merger Agreement as in effect on the date hereof
(as such agreement may be amended with the consent of the Stockholders).
This Agreement shall also terminate at the option of a majority-in-interest
of the Stockholders if the Stockholders Agreement dated the date hereof
among Avatex and Stockholders terminates for any reason.
(e) Settlement and Dismissal. The Class Actions shall have been
settled pursuant to a settlement agreement and such settlement agreement
shall have been approved by a court of competent jurisdiction and in
connection therewith the Class Actions shall be dismissed with prejudice,
and such settlement, approval and dismissal shall have been final and
non-appealable on or prior to the Closing Date.
ARTICLE IV
CLOSING
Section 4.1 Time of Closing. The closing of this Agreement (the "Closing")
shall take place, if at all, on the effective date of the Revised Merger.
-6-
<PAGE>
Section 4.2 Location of Closing. The Closing shall take place at the
offices of Swidler Bartz Shereff Friedman, LLP, 3600 K Street N.W., Suite 300,
Washington, D.C. 20001, or at such other location as approved by the parties.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders severally, and not jointly, represents and
warrants to the Purchaser as follows.
Section 5.1 Corporate Existence and Power,. Partnership Existence and
Power, Company Existence and Power. The representing Stockholder, except Marx
(1) is, as applicable, (a) a corporation duty incorporated, validly existing and
in good standing under the laws of the state of its incorporation, (b) a limited
partnership duly formed validly existing and in good standing under the laws of
the jurisdiction of its formation, or (c) a limited liability company duly
formed, validly existing and in good standing under the laws of the state of its
formation; and (2) has all necessary corporate, limited partnership, or limited
company, as applicable, power and authority to execute and deliver and perform
its obligations under this Agreement..
Section 5.2 Authorization; Contravention. As applicable to the representing
Stockholder, the execution and delivery by the Stockholder of this Agreement and
the Proxy and the performance by it of its obligations under this Agreement and
the Proxy have been duly authorized by all necessary corporate, partnership or
company action and do not and will not contravene, violate, result in a breach
of or constitute a default under (A) its articles of incorporation, articles of
organization, bylaws, operating agreement, or other organizational or governing
document, (B) any Regulation or any Order by which the Stockholder or any of its
properties may be bound or affected, or (C) any agreement, instrument or other
instrument to which such Stockholder is a party or by which such Stockholder or
such Stockholder's properties may be bound or affected.
Section 5.3 Approvals. No Approval of any Governmental Body or other person
is required or advisable on the part of the representing Stockholder for (1) the
due execution and delivery by such Stockholder of this Agreement and the Proxy,
(2) the consummation of the Transactions, (3) the performance of such
Stockholder of its obligations under this Agreement and the Proxy and (4) the
exercise by the Purchaser of its rights and remedies under this Agreement and
the Proxy.
Section 5.4 Binding Effect. Each of this Agreement and the Proxy is a
legally valid and binding obligation of the representing Stockholder enforceable
against it in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and general principles of equity,
including, without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific performance
or injunctive relief, regardless of whether considered in a proceeding in equity
or at law.
Section 5.5 Ownership. (1) The Avatex Shares to be sold by the representing
Stockholder are all the shares of Avatex Stock beneficially owned and/or held of
record by such Stockholder, (2) such Stockholder is the sole beneficial owner of
the Avatex Shares to be sold by it pursuant to this Agreement (except that
Martley and Westgate share beneficial ownership of 416,300 Avatex Shares as to
which Westgate is the owner of record) free and clear of all Liens, and no other
person has any interest or right in or to any of the Avatex Shares and (3) such
Stockholder has good
-7-
<PAGE>
right, full power and lawful authority to sell to the Purchaser all its right,
title and interest in and to such Avatex Shares free and clear of all Liens.
Section 5.6 Continuing Representations and Warranties. Each of the
representations and warranties made by a representing Stockholder in this
Agreement or as of any date other than the Closing Date shall be true and
correct on and as of the Closing Date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to each of the Stockholders as
follows:
Section 6.1 Corporate Existence and Power. The Purchaser is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Pennsylvania and has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Agreement.
Section 6.2 Authorization; Contravention. The execution and delivery by the
Purchaser of this Agreement and the performance by it of its obligations under
this Agreement have been duly authorized by all necessary corporate action and
do not and will not contravene, violate, result in a breach of or constitute a
default under (A) its articles of incorporation or bylaws, (B) any Regulation or
any Order by which the Purchaser or any of its properties may be bound or
affected or (C) any agreement, indenture or other instrument to which it is a
party or by which it or its properties may be bound or affected.
Section 6.3 Approvals. No Approval of any Governmental Body or other person
is required or advisable on the part of the Purchaser for (1) the due execution
and delivery by the Purchaser of this Agreement, (2) the consummation of the
Transactions, (3) the performance by the Purchaser of its obligations under this
Agreement, and (4) the exercise by the Stockholders of their rights and remedies
under this Agreement.
Section 6.4 Binding Effect. This Agreement is a legally valid and binding
obligation of the Purchaser, enforceable against it in accordance with its
terms, except as may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to or affecting creditors' rights
generally ana general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing and the
possible unavailability of specific performance or injunctive relief, regardless
of whether considered in a proceeding in equity or at law.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Indemnification by the Stockholders. The Stockholders,
severally and not jointly, shall indemnify the Purchaser and its controlling
persons (within the meaning of Section 20 of the Exchange Act) and their
respective stockholders, partners, directors, officers, employees, agents and
Affiliates, against and hold each of such persons harmless from, any and all
Losses in any way relating to or arising out of any actual or alleged breach of
the representations, warranties, covenants or agreements of such Stockholder
contained in this Agreement.
-8-
<PAGE>
Section 7.2 Indemnification by Purchaser. The Purchaser shall indemnify the
Stockholders and, as applicable, their controlling persons (within the meaning
of Section 20 of the Exchange Act) and, as applicable, their respective
stockholders, partners, directors, officers, employees, agents and Affiliates
against and hold each of such persons harmless from, any and all Losses in any
way relating o arising out of any actual or alleged breach of the
representations, warranties, covenants or agreements of the Purchaser contained
in this Agreement.
Section 7.3 Procedure.
(a) If any Indemnifiable Claim shall be brought, asserted or threatened
against any person indemnified under this Article VII (an "Indemnified Person")
the Indemnified Person shall promptly notify the indemnifying person. A failure
to notify the indemnifying person timely or at all shall reduce the liabilities
and obligations of the indemnifying person under this Article VII only to the
extent the indemnifying person actually shall be materially prejudiced by such
failure. The indemnifying person shall assume the defense of the Indemmifiable
Claim, including the employment of counsel reasonably satisfactory to the
Indemnified Person and the payment of all related fees and expenses, but the
Indemnified Person may employ separate counsel in connection with such
Indemnifiable Claim, and participate in the defense of such Indemnifiable Claim
at its own expense. However, the Indemnified Person may by written notice to the
indemnifying person assume the defense of the Indemnifiable Claim, including the
employment of counsel, at the expense of the indemnifying person if:
(1) the indemnifying person fails to promptly assume the defense with
counsel reasonably satisfactory to the Indemnified Person; or
(2) the persons against whom the Indemnifiable Claim shall have been
brought, asserted or threatened (including any impleaded parties) include
both the Indemnified Person and the indemnifying person and the Indemnified
Person is advised by counsel that there may be one or more legal defenses
available to the Indemnified Person that are different from or additional
to those available to the indemnifying person and that conflict with the
defenses available to the indemnifying party; or
(3) the Indemnified Person reasonably believes that the Indemnifiable
Claim or an unfavorable result on of the Indemnifiable Claim may materially
and adversely affect the business, properties, operations, prospects or
condition (financial or otherwise) of the Indemnified Person and its
affiliates other than as a result of the payment of money damages.
If the Indemnified Person has assumed the defense of the Indemnifiable Claim
pursuant to any of the three conditions stated above, then the Indemnifying
person shall not have the right to assume the defense of the Indemnifiable Claim
on behalf of the Indemnified Person and the Indemnified Person shall have the
right to control the defense, compromise or settlement of any Indemnifiable
Claim on behalf of and for the account and risk of the indemnifying person. The
indemnifying person shall be bound by the result of the defense of any
Indemnifiable Claim, except that any settlement shall require the prior approval
of the indemnifying person, such consent not to be unreasonably withheld,
whether the defense shall have been assumed by the indemnifying person or by the
Indemnified Person, and shall indemnify the Indemnified Person against, and hold
the Indemnified Person harmless from, all Losses in any way relating to or
arising in connection with the matter or matters that shall be the basis of the
Indemnifiable Claim or otherwise connected to the Indemnifiable Claim.
Notwithstanding anything to the contrary herein, no indemnifying party shall,
without the written consent of each affected Indemnified Person, settle or
compromise any Indemnifiable Claim or permit a default or consent to entry of
any judgment,
-9-
<PAGE>
unless such settlement or compromise includes a complete release of each such
Indemnified Person with respect to liability related to such Indemnifiable
Claim.
(b) Each Stockholder agrees that, with respect to Indemnifiable Claims
hereunder, the Indemnified Persons may seek indemnification from any Stockholder
that is obligated to indemnify pursuant to this Article VII and that there is no
requirement that an Indemnified Person proceed against all of the Stockholders
in order to recover from any individual Stockholder,
Section 7.4 No Limitation on Other Rights of Recovery. The indemnification
set forth in this Article VII shall be in addition to any other obligations or
liabilities of an indemnifying person to an Indemnified Person at common law or
otherwise. The provisions of this Article VII shall not eliminate or otherwise
limit the right of any Indemnified Person to seek to recover contribution,
damages or otherwise enforce its rights against the indemnifying person or any
other person without regard to the provisions of this Article VII. If at any
time all or any part of any indemnification payment hereunder is or must be
rescinded or returned to the person making such indemnity payment for any reason
whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of any person) the indemnification obligations of the person
making such payment shall be reinstated with respect to such payment so
rescinded or returned as though such payment had never been made or received.
Section 7.5 Treatment of Indemnity Payments. All payments made pursuant to
this Article VII shall be treated as; adjustments to the purchase price for the
Avatex Stock.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Notices. All notices, requests and other communications to any
party or under this Agreement shall be in writing. Communications may be made by
telecopy or similar writing. Each communication shall be given to the party at
its address stated on the signature pages of this Agreement or at any other
address as the party may specify for this purpose by notice to the other party.
Each communication shall be effective (1) if given by telecopy, when the
telecopy is transmitted to the proper address and the receipt of the
transmission is confirmed, (2) if given by mail, 72 hours after the
communication is deposited in the mails property addressed with first class
postage prepaid or (3) if given by any other means, when delivered to the proper
address and a written acknowledgment of delivery is received.
Section 8.2 Further Assurances. Each party shall indefinitely after the
date of this Agreement promptly upon request by any other party, correct any
defect or error that may be discovered in this Agreement or in the execution or
acknowledgment of this Agreement and execute, acknowledge, deliver, file,
re-file, register and re-register, any and all such further acts, certificates,
assurances and other instruments as the requesting party may require from time
to time in order (1) to carry out more effectively, the purposes of this
Agreement, (2) to enable the requesting party to exercise and enforce its rights
and remedies and collect any payments and proceeds under this Agreement and (3)
to better transfer, preserve, protect and confirm to the requesting party the
rights granted or now or hereafter intended to be granted to the requesting
party under this Agreement or under each other instrument executed in connection
with this Agreement.
-10-
<PAGE>
Section 8.3 No Waivers; Remedies; Specific Performance.
(a) No failure or delay by any party in exercising any right, power or
privilege under this Agreement shall operate as a waiver of the right, power or
privilege. A single or partial exercise of any right, power or privilege shall
not preclude any other or further exercise of the right, power or privilege or
the exercise of any other right, power or privilege. The rights and remedies
provided in this Agreement shall be cumulative and not exclusive of any rights
or remedies provided by law.
(b) In view of the uniqueness of this Agreement and the Proxy, neither
party would have an adequate remedy at law for money damages in the event that
any of this Agreement or the Proxy is not performed in accordance with its
terms, and therefore each of the parties agrees that the other party shall be
entitled to specific enforcement of the terms of this Agreement and the Proxy in
addition to any other remedy to which it may be entitled, at law or in equity.
Section 8.4 Amendments, Etc. No amendment, modification, termination, or
waiver of consent, and no consent to any departure by a party from any provision
of any provision of this Agreement, shall be effective unless it shall be in
writing and signed and delivered by the other parties to this Agreement, and
then it shall be effective only in the specific instance and for the specific
purpose for which it is given.
Section 8.5 Successors and Assigns.
(a) No party to this Agreement may assign its rights under this Agreement
without the express prior written consent of the other parties hereto. Any
delegation in contravention of this Section shall be void ab initio and shall
not relieve the delegating party of any obligation under this Agreement.
(b) The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties to this Agreement and their respective successors and
permitted assigns.
Section 8.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware. All
rights and obligations of the parties hereto shall be in addition to and not in
limitation of those provided by applicable law.
Section 8.7 Counterparts; Effectiveness. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if all signatures were on the same instrument.
Section 8.8 Severability of Provisions. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of the prohibition or
unenforceability without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of the provision in any other
jurisdiction.
Section 8.9 Headings and References. Article and section headings in this
Agreement are included in this Agreement for the convenience of reference only
and do not constitute a part of this Agreement for any other purpose. References
to parties and articles and sections in this Agreement are references to the
parties to or the articles and sections of this Agreement, as the case may be,
unless the context shall require otherwise.
-11-
<PAGE>
Section 8.10 Entire Agreement. This Agreement embodies the entire agreement
and understanding of the respective parties, and supersedes all prior agreements
or understandings, with respect to the subject matter hereof.
Section 8.11 Survival. Except as otherwise specifically provided in this
Agreement, and notwithstanding any investigation or notice to the contrary or
any waiver by arty other party of a related condition precedent to the
performance by the other party of an obligation under this Agreement, each
representation and warranty of each party to this Agreement contained in or made
pursuant to this Agreement shall survive Closing. Each covenant or agreement of
a party to this Agreement required to be performed on or after the Closing Date
shall remain in fall force and effect thereafter in accordance with its terms.
Section 8.12 Exclusive Jurisdiction. Each party (1) agrees that any Action
with respect to this Agreement shall be brought exclusively in the federal or
state courts located in the State of Delaware, (2) accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
those courts, and (3) irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of any
Action in those jurisdictions.
Section 8.13 Waiver of Jury Trial. Each party waives any right to a trial
by jury in any Action to enforce or defend any right under this Agreement or any
amendment, instrument, document or agreement delivered, or which in the future
may be delivered, in connection with this Agreement and agrees that any Action
shall be tried before a court and not before a jury.
Section 8.14 Construction. Each of the parties hereto acknowledges that it
has been represented by counsel in connection with this Agreement. Accordingly,
any rule of law or legal decision that would require interpretation of any
claimed ambiguities in this Agreement against the party that drafted this
Agreement has no application and is expressly waived.
[Intentionally Left Blank]
-12-
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Stock
Purchase Agreement as of the date first written above.
Avatex Shares 417,600 Elliott Associates, L.P.
Pro Rata Shares: 14.59% By: /s/ Paul Singer
---------------------------------
Its: Paul Singer, General Partner
Address:
Telecopy
Avatex Shares 416,300 Westgate International, L.P.
/s/ Paul Singer
---------------------------------
Martley International ,Inc.
Pro Rata Shares: 14.54% By: as Attorney-in-Fact
Its: Paul Singer, President
Address:
Telecopy
Avatex Shares 0 Martley International, Inc.
Pro Rata Shares: 0% By: /s/ Paul Singer
---------------------------------
Its: Paul Singer, President
Address:
Telecopy
Avatex Shares 75,000 /s/ Moses Marx
-------------------------------------
Moses Marx
Pro Rata Shares: 2.62%
Address:
Telecopy
-13-
<PAGE>
Avatex Shares 802,500 Momar Corporation
Pro Rata Shares: 28.04% By: /s/ Moses Marx
---------------------------------
Its: President
Address:
Telecopy
Avatex Shares 1,151,000 United Equities Commodities Company
Pro Rata Shares: 40.21% By: /s/ Moses Marx
---------------------------------
Its: Partner
Address:
Telecopy
Phar-Mor, Inc.
By: /s/
---------------------------------
Its: Chief Administrative Officer
Address: 20 Federal Plaza West
P.O. Box 400
Youngstown, OH 44501
Telecopy: (330) 740-2985
Attention: General Counsel
-14-
<PAGE>
EXHIBIT 2.1
BENEFICIAL AND RECORD OWNERS OF AVATEX SHARES
Stockholder Number of Shares
- ----------- ----------------
Elliott Associates, L.P. 417,600
Westgate International 416,300
Martley International, Inc. 0
Moses Marx 75,000
Momar Corporation 802,500
United Equities Commodities Company 1,151,000
<PAGE>
EXHIBIT 2.7
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder (the
"Stockholder") of Avatex Corporation, a corporation organized under the laws of
the State of Delaware ("Avatex"), hereby constitutes and irrevocably appoints
Phar-Mor, Inc., a Pennsylvania corporation ("Phar-Mor") with full power of
substitution, such Stockholder's true and lawful attorney-in-fact, proxy and
agent for him and on his behalf and in his name, place and stead, in any and all
capacities, to receive all notices, and to represent, vote and consent or
otherwise act, at any special or annual meeting of the stockholders of Avatex or
any action by written consent in lieu thereof, with respect to all shares of
Avatex Common Stock, par value $5.00 per share, held of record by such
Stockholder now or hereafter, in such manner as Phar-Mor, may, in its exercise
of its sole absolute discretion, determine, and without any notice to the
Stockholder, whether or not such representation, vote or consent benefits the
interests of the Stockholder, granting unto Phar-Mor, full power and authority
to do and to perform each and every act and things requisite and necessary to be
done in and about the premises, hereby ratifying and confirming all that
Phar-Mor may lawfully do or cause to be done by virtue hereof.
This proxy is irrevocable and constitutes a power coupled with an interest
for all purposes.
This proxy shall terminate upon the termination for any reason of the
Stockholders Agreement, dated the date hereof, among, inter alia, Avatex and the
undersigned Stockholder.
IN WITNESS WHEREOF, the undersigned Stockholder has hereunder set his hand
and seal as of the date specified.
DATED: June __, 1999 -------------------------------
Signature
-------------------------------
Print Name
EXHIBIT 3
IRREVOCABLE PROXY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned stockholder (the
"Stockholder") of Avatex Corporation, a corporation organized under the laws of
the State of Delaware ("Avatex"), hereby constitutes and irrevocably appoints
Phar-Mor, Inc., a Pennsylvania corporation ("Phar-Mor") with full power of
substitution, such Stockholder's true and lawful attorney-in-fact, proxy and
agent for him and on his behalf and in his name, place and stead, in any and all
capacities, to receive all notices, and to represent, vote and consent or
otherwise act, at any special or annual meeting of the stockholders of Avatex or
any action by written consent in lieu thereof, with respect to all shares of
Avatex Common Stock, par value $5.00 per share, held of record by such
Stockholder now or hereafter, in such manner as Phar-Mor, may, in its exercise
of its sole absolute discretion, determine, and without any notice to the
Stockholder, whether or not such representation, vote or consent benefits the
interests of the Stockholder, granting unto Phar-Mor, full power and authority
to do and to perform each and every act and things requisite and necessary to be
done in and about the premises, hereby ratifying and confirming all that
Phar-Mor may lawfully do or cause to be done by virtue hereof.
This proxy is irrevocable and constitutes a power coupled with an interest
for all purposes.
This proxy shall terminate upon the termination for any reason of the
Stockholders Agreement, dated the date hereof, among, inter alia, Avatex and the
undersigned Stockholder.
IN WITNESS WHEREOF, the undersigned Stockholder has hereunder set his hand
and seal as of the date specified.
DATED: June 18, 1999 /s/ Moses Marx
-------------------------------
Signature
Moses Marx
-------------------------------
Print Name
