Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
UNDER
The Securities Act Of 1933
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PHAR-MOR, INC.
(Exact name of Registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of incorporation or organization)
25-1466309
(I.R.S. Employer Identification No.)
20 Federal Plaza West
Youngstown, Ohio 44501-0400
(Address of principal executive offices) (Zip Code)
Phar-Mor, Inc. 1995 Amended and Restated Stock Incentive Plan
Phar-Mor, Inc. 1995 Director Stock Plan
John R. Ficarro
Senior Vice President, Chief Administrative Officer and General Counsel
20 Federal Plaza West
Youngstown, Ohio 44501-0400
(Name and address of agent for service)
(330) 740-6641
(Telephone number, including area code, of agent for service)
The Commission is requested to send copies of all communications to:
Morris F. DeFeo, Jr., Esq.
Swidler & Berlin, Chartered
3000 K Street, N.W.
Washington, DC 20007-5116
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Title of Amount Maximum Maximum Amount of
Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share(1) Offering Price Fee
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Common Stock,
$.01 par value 2,000,000 shares $7.875 $15,750,000 $4,772.73
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(1) Pursuant to Rule 457(h), based on the average of the high and low prices
of the Common Stock on November 19, 1997, as reported on the NASDAQ National
Market.
This Registration Statement is being filed for the purpose of registering
additional securities of the same class as other securities for which
Registration Statement No. 333-30895 on Form S-8 as filed with the Securities
and Exchange Commission on July 8, 1997 relating to the Phar-Mor, Inc. 1995
Amended and Restated Stock Incentive Plan and the Phar-Mor, Inc. 1995 Director
Stock Plan is effective. Pursuant to General Instruction E of Form S-8, the
contents of the above-listed Registration Statement are hereby incorporated by
reference.
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PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The following documents filed by Registrant with the Securities and
Exchange Commission are incorporated by reference in this Registration
Statement:
1. Registrant's Annual Report on Form 10-K for the fiscal year ended
June 28, 1997 filed on September 25, 1997.
2. Registrant's Quarterly Report on Form 10-Q for the fiscal quarter
ended September 27, 1997 filed on October 22, 1997.
3. Registrant's Report on Form 8-K dated August 22, 1997.
4. Registrant's Report on Form 8-K dated September 19, 1997.
In addition, all documents subsequently filed by Registrant pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934,
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be a part hereof from the date of filing of such
documents.
Any statement contained in any document incorporated, or deemed to be
incorporated, by reference herein shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any subsequently filed document which also
is, or deemed to be, incorporated by reference herein modifies or supersedes
such statement. Except as so modified or superseded, such statement shall not
be deemed to constitute a part of this Registration Statement.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Youngstown, State of Ohio on the
20th day of November, 1997.
PHAR-MOR, INC.
By: /s/ John R. Ficarro
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John R. Ficarro
Senior Vice President and Chief
Administrative Officer<PAGE>
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POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints M.
David Schwartz and John R. Ficarro, and each of them severally, his or her
true and lawful attorney-in-fact and agent, acting alone, with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any or all Amendments (including
post-effective Amendments) to this Registration Statement, and to file the
same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said attorneys-in-
fact and agents, full power and authority to do and perform each and every act
and thing requisite and necessary to be done in connection therewith, as fully
to all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, acting
alone, or his substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Date: November 20, 1997 /s/ Abbey J. Butler
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Abbey J. Butler, Co-Chairman of the Board,
Co-Chief Executive Officer and Director
(co-principal executive officer)
Date: November 20, 1997 /s/ Melvyn J. Estrin
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Melvyn J. Estrin, Co-Chairman of the
Board, Co-Chief Executive Officer and
Director (co-principal executive officer)
Date: November 20, 1997 /s/ Sankar Krishnan
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Sankar Krishnan
Senior Vice President and Chief
Financial Officer (principal financial
and accounting officer)
Date: November 20, 1997 /s/ Daniel H. Levy
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Daniel H. Levy, Director
Date: November 20, 1997 /s/ Monroe Osterman
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Monroe Osterman, Director
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EXHIBIT INDEX
Exhibit Page
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4.1 Phar-Mor, Inc. 1995 Amended and Restated
Stock Incentive Plan, as amended
4.2 Phar-Mor, Inc. 1995 Director Stock Plan, as amended
5 Opinion of Swidler & Berlin, Chartered
23.1 Consent of Swidler & Berlin, Chartered (included in its
opinion filed as Exhibit 5)
23.2 Consent of Deloitte & Touche LLP
24 Power of Attorney (included on signature page)
PHAR-MOR, INC.
1995 DIRECTOR STOCK PLAN, AS AMENDED
ARTICLE I - PURPOSE OF THE PLAN
The purpose of the Phar-Mor, Inc. 1995 Director Stock Plan is to promote
the long-term growth of Phar-Mor, Inc. (hereinafter sometimes referred to as
the "CORPORATION") by increasing the proprietary interest of Directors in
Phar-Mar, Inc. and to attract and retain highly qualified and capable
Directors.
ARTICLE II - DEFINITIONS
Unless the context clearly indicates otherwise, the following terms shall
have the following meanings:
2.1 "ANNUAL RETAINER" means the annual cash retainer fee payable by
the Corporation to a Director for services as a director of the Corporation,
as such amount may be changed from time to time.
2.2 "AWARD" means an award granted to a Director under the Plan in
the form of Options or Shares, or any combination thereof.
2.3 "BOARD" means the Board of Directors of Phar-Mor, Inc.
2.4 "CORPORATION" means Phar-Mor, Inc.
2.5 "DIRECTOR" means a director of the Corporation.
2.6 "FAIR MARKET VALUE" means, with respect to any date, the average
between the highest and lowest sale prices per Share on the Nasdaq Stock
Market on such date, provided that if there shall be no sale of Shares
reported on such date, the Fair Market Value of a Share on such date shall be
deemed to be equal to the average between the highest and lowest sale prices
per Share on the Nasdaq Stock Market for the last preceding date on which
sales of Shares were reported.
2.7 "OPTION" means an option to purchase Shares award under Article
VIII or IX which does not meet the requirements of Section 422 of the Internal
Revenue Code of 1986, as amended, or any successor law.
2.8 " OPTION GRANT DATE" means the date upon which an Option is
granted to a Director.
2.9 "OPTIONEE" means a Director of the Corporation to whom an Option
has been granted or, in the event of such Director's death prior to the
expiration of an Option, such Director's executor, administrator, beneficiary
or similar person, or, in the event of a transfer permitted by Article VII
hereof, such permitted transferee.<PAGE>
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2.10 "PLAN" means the Phar-Mor, Inc. 1995 Director Stock Plan, as
amended and restated from time to time.
2.11 "SHARES" means shares of the Common Stock, par value $.01 per
share, of the Corporation.
2.12 "STOCK AWARD DATE" means the date on which Shares are awarded
to a Director.
2.13 "STOCK OPTION AGREEMENT" means a written agreement between a
Director and the Corporation evidencing an Option.
ARTICLE III - ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATOR OF THE PLAN. The Plan shall be administered by
the Compensation Committee of the Board ("Committee").
3.2 AUTHORITY OF COMMITTEE. The Committee shall have full power and
authority to: (i) interpret and construe the Plan and adopt such rules and
regulations as it shall deem necessary and advisable to implement and
administer the Plan, and (ii) designate persons other than members of the
Committee to carry out its responsibilities, subject to such limitations,
restrictions and conditions as it may prescribe, such determinations to be
made in accordance with the Committee's best business judgment as to the best
interests of the Corporation and its stockholders and in accordance with the
purposes of the Plan. The Committee may delegate administrative duties under
the Plan to one or more agents as it shall deem necessary or advisable.
3.3 DETERMINATIONS OF COMMITTEE. A majority of the Committee shall
constitute a quorum at any meeting of the Committee, and all determinations of
the Committee shall be made by a majority of its members. Any determination
of the Committee under the Plan may be made without notice or a meeting of the
Committee by a written consent signed by all members of the Committee.
3.4 EFFECT OF COMMITTEE DETERMINATIONS. No member of the Committee
or the Board shall be personally liable for any action or determination made
in good faith with respect to the Plan or any Award or to any settlement of
any dispute between a Director and the Corporation. Any decision or action
taken by the Committee or the Board with respect to an Award or the
administration or interpretation of the Plan shall be conclusive and binding
upon all persons.
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ARTICLE IV - AWARDS UNDER THE PLAN
Awards in the form of Options shall be granted to Directors in accordance
with Article VIII. Deferred Contingent Shares may be granted to Directors in
accordance with Article IX. Each Option granted under the Plan shall be
evidenced by a Stock Option Agreement.
ARTICLE V - ELIGIBILITY
Directors of the Corporation shall be eligible to participate in the Plan
in accordance with Articles VIII and IX.
ARTICLE VI - SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Article XII, the aggregate number of
Shares which may be issued upon the award of Shares and the exercise of
Options shall not exceed 500,000 Shares. To the extent that Shares subject to
an outstanding Option are not issued or delivered by reason of the expiration,
termination, cancellation or forfeiture of such Option or by reason of the
delivery of Shares (either actually or by attestation) to pay all or a portion
of the exercise price of such Option, then such Shares shall again be
available under the Plan.
ARTICLE VII - NON-TRANSFERABILITY OF OPTIONS
All options granted under the Plan shall not be transferable by a
Director during his or her lifetime and may not be assigned, exchanged,
pledged, transferred or otherwise encumbered or disposed of except by court
order, will or by the laws of descent and distribution. Notwithstanding the
foregoing, in the event Options may be transferable without failing to comply
with Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), then each Option shall be transferable to the extent set
forth in the related Stock Option Agreement, as determined by the Committee
(provided that all Options granted under Article VIII with the same Option
Grant Date shall have identical provisions relating to the transferability of
such Options). In the event that any Option is thereafter transferred as
permitted by the preceding sentence, the permitted transferee thereof shall be
deemed the Optionee hereunder. Options shall be exercisable during the
Optionee's lifetime only by the Optionee or by the Optionee's guardian, legal
representative or similar person.
ARTICLE VIII - OPTIONS
Each Director shall be granted Options, subject to the following terms
and conditions:
8.1 TIME OF GRANT. On the first business day of October of each
year (or, if later, on the date on which a person is first elected or begins
to serve as a Director), each person who is a Director shall be granted an
Option to purchase 10,000 Shares (which number shall be pro-rated if such
Director is first elected or begins to serve as a Director on a date other
than the date of an annual meeting of stockholders).
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8.2 PURCHASE PRICE. The purchase price per Share under each Option
granted pursuant to this Article shall be 100% of the Fair Market Value per
Share on the Option Grant Date.
8.3 EXERCISE OF OPTIONS. Each Option shall be fully exercisable on
and after the Option Grant Date. In no event shall the period of time over
which the Option may be exercised exceed ten years from the Option Grant Date.
An Option, or portion thereof, may be exercised in whole or in part only with
respect to whole Shares.
Shares shall be issued to the Optionee pursuant to the exercise of an
Option only upon receipt by the Corporation from the Optionee of payment in
full either in cash or by surrendering (or attesting to the ownership of)
Shares together with proof acceptable to the Committee that such Shares have
been owned by the Optionee for at least six (6) months prior to the date of
exercise of the Option, or a combination of cash and Shares, in an amount or
having a combined value equal to the aggregate purchase price for the Shares
subject to the Option or portion thereof being exercised. The Shares issued
to an Optionee for the portion of any Option exercised by attesting to the
ownership of Shares shall not exceed the number of Shares issuable as a result
of such exercise (determined as though payment in full therefor were being
made in cash) less the number of Shares for which attestation of ownership is
submitted. The value of owned Shares submitted (directly or by attestation)
in full or partial payment for the Shares purchased upon exercise of an Option
shall be equal to the aggregate Fair Market Value of such owned Shares on the
date of the exercise of such Option.
ARTICLE IX - ELECTION TO RECEIVE CONTINGENT DEFERRED SHARES
9.1 ELECTION PROCEDURES. On the first business day of October of
each year, Shares shall be identified pursuant to this Article as being for
the contingent benefit of each Director who, at least six (6) months prior
thereto, files with the Committee or its designee a written election to
receive a contingent deferred right to such Shares in lieu of all or a portion
of such Director's Annual Retainer. In the event a Director does not file a
written election in accordance with the preceding sentence by reason of
becoming a Director after the date which is six (6) months prior to the first
business day of October in any year, Shares shall be identified as being for
the contingent benefit of such director as of the first day (the "Effective
Date") which is six (6) months after the date such Director files with the
Committee or its designee a written election to receive Shares in lieu of all
or a portion of such Director's Annual Retainer; provided, however, that such
an election may apply only to the portion of such Director's Annual Retainer
determined by multiplying such Director's Annual Retainer by a fraction, the
numerator of which is the number of days from and including the Effective Date
to and including the last day of the period for which such Annual Retainer
would otherwise be payable, and the denominator of which is 365 or 366, as the
case may be. An election pursuant to the first sentence of this Section 9.1
may be revoked or changed only on or prior to the date which is six (6) months
prior to the first business day of the following October. An election
pursuant to the second sentence of this Section 9.1 shall be irrevocable.
4<PAGE>
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9.2 TERM OF DEFERRAL. Receipt of Shares subject to a Director
election made pursuant to Section 9.1 shall be deferred until such Director's
retirement, resignation, disability, death, or termination (other than
termination resulting in forfeiture as described in Section 9.8) , or in the
event of emergency or necessity, as hereinafter provided.
9.3 ACCOUNTING. The Committee shall cause records to be kept in
the name of each Director electing to participate pursuant to Section 9.1
which shall reflect the number of contingent Shares deferred by that Director.
9.4 CONTINGENCY. Until and except to the extent that deferred
Shares hereunder are distributed to or vested in the Directors or
beneficiaries from time to time in accordance with orders of the Committee,
the interest of each Director and beneficiary therein is contingent only and
is subject to forfeiture as provided in Section 9.8. Title to and beneficial
ownership of the Shares, which the Corporation will identify as subject to its
contingent obligation hereunder, shall at all times remain in the Corporation;
and no Director or beneficiary shall under any circumstances acquire any
property interest in any specific assets of the Corporation.
9.5 METHOD OF PAYMENT.
(a) In order to meet its contingent Share obligation hereunder, the
Corporation shall each year set aside Shares in an amount equal to the total
amounts deferred for such year under this Article IX.
(b) In the event of vesting, or upon the retirement, resignation,
disability death or termination (other than termination resulting in
forfeiture as described in Section 9.8) of a Director, the number of
contingent deferred Shares payable to such Director or his beneficiary shall
be determined as of that date. If the Committee, in the exercise of its
discretion provided in Section 9.6, determines to make installment
distributions of such amount, the Corporation shall continue to set aside
Shares in an amount equal to the unpaid balance of such obligation to pay
Shares.
9.6 METHOD OF DISTRIBUTION. The Committee shall from time to time
determine the time and manner of making distributions of contingent deferred
Shares in case of the retirement, resignation, disability, or death of a
Director or in the event of an emergency or necessity affecting the personal
or family affairs of any Director or beneficiary of a deceased Director by
such methods as it shall find appropriate for providing incentive to Directors
for their continued service on behalf of the Corporation. Commencement of
distribution in each case may be deferred by the Committee, but (subject to
Section 9.8) not beyond one year after the retirement, disability or death of
the Director or, in the case of a Director who shall have resigned, not beyond
one year after such director reaches the age of 65 or incurs a disability or
dies. In the case of a Director's death before distribution is completed, the
balance may be distributed in a lump sum or on an installment basis as the
Committee may determine.
5<PAGE>
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9.7 DESIGNATION OF BENEFICIARIES. Each Director shall have the
right to designate beneficiaries who are to succeed to such Director's
contingent right to receive future payments hereunder in the event of death.
In case of the failure of a Director to make a designation or the death of a
designated beneficiary without the Director having designated a successor,
distribution shall be made to the Director's estate. No designation of
beneficiaries shall be valid unless it is in writing, signed by the Director,
dated, and filed with the Committee. Beneficiaries may be changed without the
consent of any prior beneficiaries.
9.8 POSSIBLE FORFEITURE OF SHARES.
(a) The contingent right of a Director or beneficiary to receive
deferred Shares hereunder shall be forfeited upon the occurrence of any one or
more of the following events:
(1) If the Director is discharged for cause by the Corporation or
a subsidiary thereof; or
(2) If the Director shall enter into a business or employment
which the Committee determines to be (i) detrimentally competitive with the
business of the Corporation or a subsidiary, and (ii) substantially injurious
to the Corporation's financial interests;
(b) The Committee may at any time and from time to time order all or
any part of the value of the contingent right of a Director or beneficiary to
receive future Shares to be vested and no longer subject to forfeiture, and
may order payment of the amounts so vested on dates specified in such orders,
if it finds such action appropriate in the circumstances.
9.9 NUMBER OF SHARES. The number of Shares identified pursuant to
this Article shall be the number of whole Shares equal to (i) the portion of
the Annual Retainer which the Director has elected pursuant to Section 9.1 to
be payable in Shares, divided by (ii) the Fair Market Value per Share on the
date stock is identified as contingent deferred stock of the Director (which
will occur either on October 1st of the year of election or on the Effective
Date, whichever is applicable). Any fraction of a Share shall be disregarded
and the remaining amount of such Annual Retainer shall be paid to the Director
in cash and shall not be deferred pursuant to this Article.
9.10 CHARACTERIZATION OF THE RELATIONSHIPS CREATED BY THIS ARTICLE.
Nothing contained herein shall be deemed to create a trust of any kind or
create any fiduciary relationship. Shares identified hereunder shall continue
for all purposes to be treasury stock held by the Corporation, and no person
other than the Corporation shall, by virtue of the provisions of this Article
IX, have any interest in such Shares. To the extent that any person acquires
a right to receive Shares from the Corporation under this Article IX, such
right shall be no greater than the right of any unsecured general creditor of
the Corporation.
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ARTICLE X - AMENDMENT AND TERMINATION
The Board may amend the Plan from time to time or terminate the Plan at
any time; provided, however, that no action authorized by this Article shall
adversely change the terms and conditions of an outstanding Option without the
Optionee's consent and, subject to Article XII, the number of Shares subject
to an Option granted under Article VIII, the purchase price therefor, the date
of grant of any such Option and the termination provisions relating to such
Option, shall not be amended more than once every six (6) months, other than
to comply with changes in the Internal Revenue Code of 1986, as amended, or
any successor law, or the Employee Retirement Income Security Act of 1974, as
amended, or any successor law, or the rules and regulations thereunder.
ARTICLE XI - ADJUSTMENT PROVISIONS
11.1 If the Corporation shall at any time change the number of issued
Shares without new consideration to the Corporation (such as by stock
dividend, stock split, recapitalization, reorganization, exchange of shares,
liquidation, combination or other change in corporate structure affecting the
Shares) or make a distribution of cash or property which has a substantial
impact on the value of issued Shares, the total number of Shares reserved for
issuance under the Plan shall be appropriately adjusted and the number of
Shares covered by each outstanding Option and the purchase price per Share
under each outstanding Option and the number of shares underlying Options to
be issued annually pursuant to Section 8.1 shall be adjusted so that the
aggregate consideration payable to the Corporation and the value of each such
Option shall not be changed.
11.2 Notwithstanding any other provision of the Plan, and without
affecting the number of Shares reserved or available hereunder, the Committee
shall authorize the issuance, continuance or assumption of outstanding Options
or provide for other equitable adjustments after changes in the Shares
resulting from any merger, consolidation, sale of assets, acquisition of
property or stock, recapitalization, reorganization or similar occurrence in
which the Corporation is the continuing or surviving corporation, upon such
terms and conditions as it may deem necessary to preserve Optionees' rights
under the Plan.
11.3 In the case of any sale of assets, merger, consolidation or
combination of the Corporation with or into another corporation other than a
transaction in which the Corporation is the continuing or surviving
corporation and which does not result in the outstanding Shares being
converted into or exchanged for different securities, cash or other property,
or any combination thereof (an "Acquisition"), any Optionee who holds an
outstanding Option shall have the right (subject to the provisions of the Plan
and any limitation applicable to the Option) thereafter and during the terms
of the Option, to receive upon exercise thereof the Acquisition Consideration
(as defined below) receivable upon the Acquisition by a holder of the number
of Shares which would have been obtained upon exercise of the Option or
portion thereof, as the case may be, immediately prior to the Acquisition.
7<PAGE>
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The term "Acquisition Consideration" shall mean the kind and amount of shares
of the surviving or new corporation, cash, securities, evidence of
indebtedness, other property or any combination thereof receivable in respect
of one Share of the Corporation upon consummation of an Acquisition.
ARTICLE XII - EFFECTIVE DATE
The Plan shall be submitted to the stockholders of the Corporation for
approval and, if approved by a majority of all the votes cast at the next
annual meeting of stockholders, shall become effective as of October 3, 1995.
If stockholder approval is not obtained at the next annual meeting of
stockholders, the Plan shall be nullified.
PHAR-MOR, INC.
1995 AMENDED AND RESTATED
STOCK INCENTIVE PLAN, AS AMENDED
(including Schedule and Form of Initial Options)
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TABLE OF CONTENTS
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I THE PLAN.........................................................1
1.1 Purpose..................................................1
1.2 Administration and Authorization; Power and Procedure....1
(a) Committee...........................................1
(b) Awards; Interpretation; Powers of Committee.........1
(c) Binding Determinations..............................2
(d) Reliance on Experts.................................2
(e) Delegation..........................................2
1.3 Participation............................................3
1.4 Shares Available for Awards; Share Limits................3
(a) Shares Available....................................3
(b) Share Limits........................................3
(c) Calculation of Available Shares and Replenishment...3
1.5 Grant of Awards..........................................4
1.6 Award Period.............................................4
1.7 Limitations on Exercise of Awards........................4
(a) Provisions for Exercise.............................4
(b) Procedure...........................................4
(c) Fractional Shares/Minimum Issue.....................4
1.8 Acceptance of Notes to Finance Exercise..................5
1.9 No Transferability.......................................5
(a) Limit on Exercise...................................5
(b) Limit on Transfer...................................6
(c) Designation of Beneficiary..........................6
(d) Exceptions..........................................6
II OPTIONS..........................................................6
2.1 Grants...................................................6
2.2 Option Price.............................................6
(a) Pricing Limits......................................6
(b) Payment Provisions..................................7
2.3 Limitations on Grant and Terms of Incentive Stock Options7
(a) $100,000 Limit......................................7
(b) Other Code Limits...................................7
2.4 Limits on 10% Holders....................................7
2.5 Option Repricing/Cancellation and Regrant/Waiver of
Restrictions.............................................8
2.6 Vesting of Initial Options...............................8
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III STOCK APPRECIATION RIGHTS......................................8
3.1 Grants...................................................9
3.2 Exercise of Stock Appreciation Rights....................8
(a) Exercisability......................................8
(b) Effect on Available Shares..........................8
3.3 Payment..................................................9
(a) Amount..............................................9
(b) Form of Payment.....................................9
3.4 Limited Stock Appreciation Rights........................9
IV OTHER PROVISIONS................................................10
4.1 Rights of Eligible Employees, Participants
and Beneficiaries......................................10
(a) Employment Status..................................10
(b) No Employment Contract.............................10
(c) Plan Not Funded....................................10
4.2 Adjustments; Acceleration...............................10
(a) Adjustments........................................10
(b) Acceleration of Awards Upon Change in Control......11
(c) Termination of Awards on Dissolution...............11
4.3 Effect of Termination on Employment.....................12
4.4 Compliance with Laws....................................12
4.5 Tax Withholding.........................................13
4.6 Plan Amendment, Termination and Suspension..............13
(a) Board Authorization................................13
(b) Shareholder Approval...............................13
(c) Amendments to Awards...............................13
(d) Limitations on Amendments to Plan and Awards.......14
4.7 Privileges of Stock Ownership...........................14
4.8 Effective Date of the Plan..............................14
4.9 Term of the Plan........................................14
4.10 Governing Law/Construction/Severability.................14
(a) Choice of Law......................................14
(b) Severability.......................................14
(c) Plan Construction..................................15
(d) Bifurcation........................................15
4.11 Captions................................................15
4.12 Effect of Change of Subsidiary Status...................15
4.13 Non-Exclusivity of Plan.................................15
4.14 Conflict................................................15
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V DEFINITIONS.....................................................16
5.1 Definitions.............................................16
Exhibits:
Exhibit A - Schedule of Initial Options
Exhibit B - Form of Initial Stock Option Agreement
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PHAR-MOR, INC.
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1995 AMENDED AND RESTATED
-------------------------
STOCK INCENTIVE PLAN, AS AMENDED
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I THE PLAN
1.1 PURPOSE.
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The purpose of this Plan as contemplated by the Reorganization
Plan is to promote the success of the Company by providing an additional means
through the grant of Awards to attract, reward and retain key personnel
(including executive officers, whether or not directors), of the Company and
certain other closely related eligible persons with awards and incentives for
high levels of individual performance and improved financial performance of
the Company. Capitalized terms are defined in Article V.
1.2 ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE.
(a) Committee. This Plan shall be administered by, and all
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Awards to Eligible Employees granted after the Initial Options shall be
authorized by, the Committee. Action of the Committee with respect to the
administration of this Plan shall be taken pursuant to a majority vote or by
written consent of its members.
(b) Awards; Interpretation; Powers of Committee. Subject to
-------------------------------------------
the express provisions of this Plan, the Committee shall have the authority:
(i) to determine from among those persons eligible the
particular Eligible Employees who will receive any
Awards;
(ii) to grant Awards to Eligible Employees, determine the
price at which securities will be offered and the
amount of securities to be offered to any of such
persons, and determine the other specific terms and
conditions of such Awards consistent with the express
limits of this Plan, and establish the installments
(if any) in which such Awards shall become
exercisable, or determine that no delayed
exercisability is required, and establish the events
of termination of such Awards;
(iii) to approve the forms of Award Agreements (which need
not be identical either as to type of Award or among
Participants);
(iv) to construe and interpret this Plan and any agreements
defining the rights and obligations of the Company and
Participants under this Plan, further define the terms
used in this Plan, and prescribe, amend and rescind
rules and regulations relating to the administration
of this Plan;
<PAGE>
<PAGE>
(v) to cancel, modify or waive the Corporation's rights
with respect to, or modify, discontinue, suspend or
terminate any or all outstanding Awards held by
Participants, subject to any required consent under
Section 4.6;
(vi) to accelerate or extend the exercisability or extend
the term of any or all such outstanding Awards within
the maximum seven year term of Awards under Section
1.6; and
(v) to make all other determinations and take such other
action as contemplated by this Plan or as may be
necessary or advisable for the administration of this
Plan and the effectuation of its purposes.
(c) Binding Determinations. Any action taken by, or inaction of,
----------------------
the Corporation, any Subsidiary, the Board or the Committee relating or
pursuant to this Plan shall be within the absolute discretion of that entity
or body and shall be conclusive and binding upon all persons. No member of
the Board or Committee, or officer of the Corporation or any Subsidiary, shall
be liable for any such action or inaction of the entity or body, of another
person or, except in circumstances involving bad faith, of himself or herself.
Subject only to compliance with the express provisions hereof, the Board and
Committee may act in their absolute discretion in matters within their
authority related to this Plan.
(d) Reliance on Experts. In making any determination or in
-------------------
taking or not taking any action under this Plan, the Committee or the Board,
as the case may be, may obtain and may rely upon the advice of experts,
including professional advisors to the Corporation. No director, officer or
agent of the Company shall be liable for any such action or determination
taken or made or omitted in good faith.
(e) Delegation. The Committee may delegate ministerial, non-
----------
discretionary functions to individuals who are officers or employees of the
Company.
1.3 PARTICIPATION.
-------------
Awards may be granted only to those persons identified on Exhibit
A hereto and such other persons as are determined to be Eligible Employees.
An Eligible Employee who has been granted an Award may, if otherwise eligible,
be granted additional Awards if the Committee shall so determine.
Non-Employee Directors shall not be eligible to receive any Awards under this
Plan.
2<PAGE>
<PAGE>
1.4 SHARES AVAILABLE FOR AWARDS; SHARE LIMITS.
-----------------------------------------
(a) Shares Available. Except as may otherwise be provided herein,
----------------
the capital stock that may be delivered under this Plan shall be shares of the
Corporation's authorized but unissued Common Stock and any shares of its
Common Stock held as treasury shares. The shares may be delivered for any
lawful consideration.
(b) Share Limits. The maximum number of shares of Common Stock
------------
that may be delivered pursuant to Awards granted under this Plan shall not
exceed 3,500,000 shares. The maximum number of shares of Common Stock subject
to those Options that are granted during any calendar year to any individual
under this Plan shall not exceed 277,778 shares. Each of the foregoing
numerical limits shall be subject to adjustment as contemplated by this
Section 1.4 and Section 4.2
(c) Calculation of Available Shares and Replenishment. Shares
-------------------------------------------------
subject to outstanding Awards shall be reserved for issuance. If any Option
or other right to acquire shares of Common Stock under an Award shall expire
or be canceled or terminated without having been exercised in full, or any
Common Stock subject to an Award shall not vest or be delivered, the
unpurchased, unvested or undelivered shares subject thereto shall again be
available for the purposes of the Plan. If a Stock Appreciation Right or
similar right is exercised, the number of shares of Common Stock to which such
exercise or payment relates under the applicable Award shall be charged
against the maximum amount of Common Stock that may be delivered pursuant to
Awards under this Plan and, if applicable, such Award. If the Corporation
withholds shares of Common Stock pursuant to Section 4.5, the number of shares
that would have been deliverable with respect to an award but that are
withheld pursuant to the provisions of Section 4.5 may in effect not be
issued, but the aggregate number of shares issuable with respect to the
applicable Award and under the Plan shall be reduced by the number of shares
withheld and such shares shall not be available for additional Awards under
this Plan.
1.5 GRANT OF AWARDS.
---------------
The Initial Options shall be granted under this Plan automatically,
without further corporate action, for the past or contracted services and
continued services contemplated by the Initial Stock Option Agreement and
embodied in the vesting schedule set forth in Section 3 thereof. Subject to
the express provisions of this Plan, the Committee shall determine the number
of shares of Common Stock subject to each other Award, and the price to be
paid for such shares. Each of the Initial Options shall be evidenced by an
Initial Stock Option Agreement and shall be signed by the Corporation and (as
a condition to receiving any benefits thereunder) by the Participant. Each
other Award shall be evidenced by an Award Agreement signed by the Corporation
and, if required by the Committee, by the Participant.
3<PAGE>
<PAGE>
1.6 AWARD PERIOD.
------------
Each Award and all executory rights and obligations under the
related Award Agreement shall expire on such date (if any) as shall be
determined by the Committee, but not later than seven (7) years after the
Award Date.
1.7 LIMITATIONS ON EXERCISE OF AWARDS.
---------------------------------
(a) Provisions for Exercise. Subject to Section 2.6 and, in the
-----------------------
case of the Initial Options, the express terms thereof, no Award shall be
exercisable until at least six months after the initial Award Date, and once
exercisable an Award shall remain exercisable until the expiration or earlier
termination of the Award unless the Committee otherwise provides as of the
Award Date or (by amendment consistent with the terms of Section 4.6(d))
thereafter.
(b) Procedure. Any exercisable Award shall be deemed to be
---------
exercised when the Secretary of the Corporation receives written notice of
such exercise from the Participant, together with any required payment made in
accordance with Section 2.2(a).
(c) Fractional Shares/Minimum Issue. Fractional shares shall not
-------------------------------
be issued, but fractional share interests may be accumulated. The Committee,
however, may determine that cash, other securities, or other property will be
paid or transferred in lieu of any fractional share interests. No fewer than
50 shares may be purchased on exercise of any Award at one time unless the
number purchased is the total number at the time available for purchase under
the Award.
1.8 ACCEPTANCE OF NOTES TO FINANCE EXERCISE.
---------------------------------------
The Corporation may, with the Committee's approval at or prior to
the time of exercise of any Award, accept one or more notes from any
Participant in connection with the exercise or receipt of any outstanding
Award; provided that any such note shall be subject to the following terms and
conditions:
(a) The principal of the note shall not exceed the amount required
to be paid to the Corporation upon the exercise or receipt of one or more
Awards under the Plan and the note shall be delivered directly to the
Corporation in consideration of such exercise or receipt.
(b) The initial term of the note shall be determined by the
Committee; provided that the term of the note, including extensions, shall not
exceed a period of five (5) years.
(c) The note shall provide for full recourse to the Participant
and shall bear interest at a rate determined by the Committee but not less
than the applicable imputed interest rate specified by the Code.
4<PAGE>
<PAGE>
(d) If the employment of the Participant terminates, the unpaid
principal balance of the note shall become due and payable within thirty (30)
days after such termination; provided, however, that if a sale of shares would
cause such Participant to incur liability under Section 16(b) of the Exchange
Act, the unpaid balance shall become due and payable on the 10th business day
after the first day on which a sale of such shares could have been made
without incurring such liability, assuming for these purposes that there are
no other transactions by the Participant subsequent to such termination.
(e) If required by the Committee or by applicable law, the note
shall be secured by a pledge of any shares or rights financed thereby in
compliance with applicable law.
(f) The terms, repayment provisions and collateral release
provisions of the note and the pledge securing the note shall conform with
applicable rules and regulations of the Federal Reserve Board as then in
effect.
1.9 NO TRANSFERABILITY.
------------------
(a) Limit on Exercise. The Committee may permit Options or SARs
-----------------
to be exercised by and paid to certain persons or entities related to the
Participant who are transferees of the Participant without consideration, but
only pursuant to such conditions and procedures as the Committee may expressly
establish.
(b) Limit on Transfer. No Award shall be transferrable by the
-----------------
Participant or shall be subject in any manner to anticipation, alienation,
sale, transfer, assignment, pledge, encumbrance or charge (other than to the
Corporation), except (i) by will or the laws of descent and distribution or
pursuant to a QDRO, (ii) pursuant to another exception to transfer
restrictions expressly permitted by the Committee and set forth in the Award
Agreement (or an amendment thereto) and (iii) in the case of Incentive Stock
Options, as permitted by the Code. Any attempted transfer in violation of
these provisions shall be void and the Corporation shall disregard any attempt
at transfer, assignment or other alienation prohibited hereby.
(c) Designation of Beneficiary. The designation of a Beneficiary
--------------------------
hereunder shall not constitute a transfer for these purposes.
(d) Exceptions. The restrictions on exercise and transfer above
----------
shall not be deemed to prohibit the authorization by the Committee of
"cashless exercise" procedures with unaffiliated third parties who provide
financing for the purpose of (or who otherwise facilitate) exercise of Options
consistent with any applicable legal restrictions (including Rule 16b-3), nor,
to the extent permitted by the Committee, transfers for estate and financial
planning purposes, or transfers to such other persons or in such other
circumstances as the Committee may in the Award Agreement or other writing
expressly permit.
5<PAGE>
<PAGE>
II OPTIONS
2.1 GRANTS.
One or more Options may be granted under this Article to any
Eligible Employee. Each Option granted may be either an Option intended to be
an Incentive Stock Option, or not so intended, and such intent shall be
indicated in the applicable Award Agreement.
2.2 OPTION PRICE.
(a) Pricing Limits. The purchase price per share of the Common
---------------
Stock covered by each of the Initial Options shall be the amount set forth in
the Initial Stock Option Agreement. The purchase price per share of each
other Option shall be determined by the Committee at the time of the grant of
the Option, but shall not be less than 100% (110% in the case of an Incentive
Stock Option to a Participant who owns or is deemed to own under Section
424(d) of the Code more than 10% of the total combined voting power of all
classes of stock of the Corporation ad such Option by its terms is not
exercisable after expiration of five (5) years from its Award Date) of the
Fair Market Value of the Common Stock on the date of grant (or, in the case of
an amendment, the date of the amendment).
(b) Payment Provisions. The purchase price of any shares purchased
------------------
on exercise of an Option granted under this Article shall be paid in full at
the time of each purchase in one or a combination of the following methods:
(i) in cash or by electronic funds transfer; (ii) by check payable to the
order of the Corporation; (iii) if authorized by the Committee or specified in
the applicable Award Agreement, by a promissory note of the Participant
consistent with the requirements of Section 1.8; (iv) by notice and third
party payment in such manner as may be authorized by the Committee; or (v) by
the delivery of shares of Common Stock of the Corporation already owned by the
Participant; provided, however, that the Committee may in its absolute
discretion limit or deny the Participant's ability to exercise an Option by
delivering such shares. Shares of Common Stock used to satisfy the exercise
price of an Option shall be valued at their Fair Market Value on the date of
exercise.
2.3 LIMITATIONS ON GRANT AND TERMS OF INCENTIVE STOCK OPTIONS.
---------------------------------------------------------
(a) $100,000 Limit. To the extent that the aggregate "fair market
--------------
value" of stock with respect to which Incentive Stock Options first become
exercisable by a Participant in any calendar year exceeds $100,000, taking
into account both Common Stock subject to Incentive Stock Options under this
Plan and stock subject to incentive stock options under all other plans of the
Company or any parent corporation, such options shall be treated as
nonqualified stock options. For this purpose, the "fair market value" of the
stock subject to options shall be determined as of the date the options
6 <PAGE>
<PAGE>
awarded. In reducing the number of options treated as incentive stock options
to meet the $100,000 limit, the most recently granted options shall be reduced
first. To the extent a reduction of simultaneously granted options is
necessary to meet the $100,000 limit, the Committee may, in the manner and to
the extent permitted by law, designate which shares of Common Stock are to be
treated a shares acquired pursuant to the exercise of an Incentive Stock
Option.
(b) Other Code Limits. There shall be imposed in any Award
------------------
Agreement relating to Incentive Stock Options such terms and conditions as
from time to time are required in order that the Option be an "incentive stock
option" as that term is defined in Section 422 of the Code.
2.4 LIMITS ON 10% HOLDERS.
----------------------
Notwithstanding the foregoing, no Incentive Stock Option may be
granted to any person who, at the time the Option is granted, owns (or is
deemed to own under Section 422(c)(5) of the Code) shares of outstanding
Common Stock possessing more than 10% of the total combined voting power of
all classes of stock of the Corporation, unless the exercise price of such
Option is at least 110% of the Fair Market Value of the stock subject to the
Option and such Option by its terms is not exercisable after the expiration of
five years from the date such Option is granted.
2.5 OPTION REPRICING/CANCELLATION AND REGRANT/WAIVER OF RESTRICTIONS.
----------------------------------------------------------------
Subject to Section 1.4 and Section 4.6 and the specific limitations
on Awards contained in this Plan, the Committee from time to time may
authorize, generally or in specific cases only, for the benefit of any
Eligible Employee, any adjustment in the exercise or purchase price, the
number of shares subject to, the restrictions upon or the term of, an Award
granted under this Article by cancellation of an outstanding Award and a
subsequent regranting of an Award, by amendment, by substitution of an
outstanding Award, by waiver or by other legally valid means. Such amendment
or other action may result among other changes in an exercise or purchase
price which is higher or lower than the exercise or purchase price of the
original or prior Award, provide for a greater or lesser number of shares
subject to the Award, or provide for a longer or shorter vesting or exercise
period, provided that in no event shall any such change reduce the exercise or
base price of an outstanding Option or Stock Appreciation Right to a price
below the Fair Market Value on the effective date of the change.
III STOCK APPRECIATION RIGHTS
3.1 GRANTS.
-------
In its discretion, the Committee may grant to any Eligible Employee
Stock Appreciation Rights either concurrently with the grant of another Award
or in respect of an outstanding Award, in whole or in part. Any Stock
Appreciation Right granted in connection with an Incentive Stock Option shall
contain such terms as may be required to comply with the
7<PAGE>
<PAGE>
provisions of Section 422 of the Code and the regulations promulgated
thereunder, unless the holder thereof otherwise agrees.
3.2 EXERCISE OF STOCK APPRECIATION RIGHTS.
-------------------------------------
(a) Exercisability. Unless the Award Agreement or the Committee
--------------
otherwise provides, a Stock Appreciation Right shall be exercisable only at
such time or times, and to the extent, that the related Award shall be
exercisable.
(b) Effect on Available Shares. To the extent that a Stock
--------------------------
Appreciation Right is exercised for stock or for cash, the number of
underlying shares of Common Stock with respect to which the Stock Appreciation
Right is exercised shall be charged against the maximum number of shares of
Common Stock that may be delivered pursuant to Awards under this Plan. The
number of shares subject to the Stock Appreciation Right and the related
Option of the Participant shall also be reduced by the same number of shares.
3.3 PAYMENT.
-------
(a) Amount. Unless the Committee otherwise provides, upon exercise
------
of a Stock Appreciation Right and attendant surrender of an exercisable
portion of any related Award, the Participant shall be entitled to receive
payment of an amount determined by multiplying
(i) the difference obtained by subtracting the exercise price
per share of Common Stock under the related Award from
the Fair Market Value of a share of Common Stock on the
date of exercise of the Stock Appreciation Right; by
(ii) the number of shares with respect to which the Stock
Appreciation Right shall have been exercised.
(b) Form of Payment. The Committee, in its sole discretion, shall
---------------
determine the form in which payment shall be made of the amount determined
under paragraph (a) above, either solely in cash, solely in shares of Common
Stock (valued at Fair Market Value on the date of exercise of the Stock
Appreciation Right), or partly in such shares and partly in cash, provided
that the Committee shall have determined that such exercise and form of
payment are consistent with applicable law and outstanding contractual
commitments of the Company. If the Committee permits the Participant to elect
to receive cash or shares (or a combination thereof) on such exercise, any
such election shall be subject to such conditions as the Committee may impose.
8<PAGE>
<PAGE>
3.4 LIMITED STOCK APPRECIATION RIGHTS.
---------------------------------
The Committee may grant to any Eligible Employee Stock Appreciation
Rights exercisable only upon or in respect of a change in control or any other
specified event ("Limited SARs") and such Limited SARs may relate to or
operate in tandem or combination with or substitution for Options or other
SARs (or any combination thereof), and may be payable in cash or shares based
on the spread between the exercise price of the SAR and a price based upon the
Fair Market Value of the shares during a specified period (or at a specified
time) within the period commencing not more than six months and 10 days before
and ending not more than six months and 10 days after such event.
IV OTHER PROVISIONS
4.1 RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES.
------------------------------------------------------------
(a) Employment Status. Status as an Eligible Employee shall not
-----------------
be construed as a commitment that any Award will be made under this Plan to an
Eligible Employee or to Eligible Employees generally.
(b) No Employment Contract. Nothing contained in this Plan (or in
----------------------
any other documents related to this Plan or to any Award) shall confer upon
any Eligible Employee any right to continue in the employ or other service of
the Company or constitute any contract or agreement of employment or other
service, nor shall it interfere in any way with the right of the Company to
change such person's compensation or other benefits or to terminate the
employment of such person, with or without cause, but nothing contained in
this Plan or any document related hereto shall adversely affect the
independent contractual right of such person without his or her consent
thereto.
(c) Plan Not Funded. Awards payable under this Plan shall be
---------------
payable in shares of the Corporation (unless determined otherwise pursuant to
Section 3.3(b)) and, (except as provided in Section 1.4(c)) no special or
separate reserve, fund or deposit shall be made to assure payment of such
Awards. No Participant, Beneficiary or other person shall have any right,
title or interest in any fund or in any specific asset (including shares of
Common Stock, except as expressly otherwise provided) of the Company by reason
of any Award hereunder. Neither the provisions of this Plan (or of any
related documents), nor the creation or adoption of this Plan, nor any action
taken pursuant to the provisions of this Plan shall create, or be construed to
create, a trust of any kind or a fiduciary relationship between the Company
and any Participant, Beneficiary or other person. To the extent that a
Participant, Beneficiary or other person acquires a right to receive payment
pursuant to any Award hereunder, such right shall be no greater than the right
of any unsecured general creditor of the Company.
9<PAGE>
<PAGE>
4.2 ADJUSTMENTS; ACCELERATION.
-------------------------
(a) Adjustments. If there shall occur any extraordinary dividend
-----------
or other extraordinary distribution in respect of the Common Stock (whether in
the form of cash, Common Stock, other securities or other property), or any
recapitalization, stock split (including a stock split in the form of a stock
dividend), reverse stock split, reorganization, merger, combination,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Common Stock or other securities of the Corporation, or there shall occur any
other fundamental change or event in respect of the Common Stock or a sale of
substantially all the assets of the Corporation as an entirety, then the
Committee shall, in such manner and to such extent (if any) as it in good
faith deems appropriate and equitable (1) proportionately adjust any or all of
(a) the number and type of shares of Common Stock (or other securities) which
thereafter may be made the subject of Awards (including the specific maxima
and numbers of shares set forth elsewhere in this Plan), (b) the number,
amount and type of shares of Common Stock (or other securities or property)
subject to any or all outstanding Awards, (c) the grant, exercise or base
price of any or all outstanding Awards, (d) the securities or property
deliverable upon exercise of any outstanding Awards; or (2) in the case of an
extraordinary dividend or other distribution, merger, reorganization,
consolidation, combination, sale of assets, split up, exchange, or spin-off,
make other provision for a cash payment or for the substitution or exchange of
any or all outstanding Awards or securities deliverable to the holder of any
or all outstanding Awards based upon the distribution or consideration payable
to holders of the Common Stock of the Corporation upon or in respect of such
event; provided, however, in each case, that with respect to Incentive Stock
Options, no such adjustment shall be made which would cause the Plan to
violate Section 422 of the Code or any successor provisions thereto, without
the written consent of the holders of Incentive Stock Options who are
materially adversely affected thereby.
(b) Acceleration of Awards Upon Change in Control. As to any or all
---------------------------------------------
Participants, upon or in anticipation of a Change in Control Event, the
Committee may determine that any or all Awards or certain or limited benefits
under Awards shall be accelerated and/or extended and the extent to which they
shall be accelerated and/or extended, and/or establish a different time in
respect of such Change in Control Event for such acceleration or extension.
The Committee may override its discretionary authority to accelerate in this
Section 4.2(b) and by express provision in the Award Agreement mandate
acceleration or preclude acceleration, and may accord any Eligible Employee a
right to refuse any acceleration, whether pursuant to the Award Agreement or
otherwise, in such circumstances as the Committee may approve. Any
acceleration of Awards shall comply with applicable regulatory requirements,
including without limitation, Section 422 of the Code unless, in the case of
compliance with Section 422 of the Code, the holders of Incentive Stock
Options otherwise consent in writing.
10<PAGE>
<PAGE>
(c) Termination of Awards on Dissolution. If any Option or other
------------------------------------
right to acquire Common Stock under this Plan is not exercised prior to a
dissolution of the Corporation, and no express provision has been made in the
Award Agreement or otherwise for the survival, substitution, exchange or other
settlement of such Option or right, such Option or right shall thereupon
terminate. Unless other provision is made for the payment of the fair value
thereof, under a reorganization event of the type described in Section 4.2(a)
that the Corporation does not legally survive, the Awards shall be converted
into or otherwise substituted for a right to receive, on exercise, the
consideration distributed or payable upon such reorganization event in respect
of the number of shares of Common Stock as to which the Option is exercised.
4.3 EFFECT OF TERMINATION ON EMPLOYMENT.
-----------------------------------
In determining the effect of a termination on the rights and
benefits of an Award, the Committee may make distinctions based upon the cause
of termination. Unless the Committee otherwise determines the effect a
termination of employment on the rights and benefits under an Award (or, in
the case of the Initial Options, extends the periods set forth herein), and in
the case of Incentive Stock Options, subject to the applicable Code limits:
(a) upon a Participant's death or Total Disability, an Award shall
become and shall remain fully exercisable for one year after the date of death
or until the expiration of the stated term of the Award, whichever occurs
first;
(b) upon the termination by the Company of the Participant's
employment for cause (other than a termination for cause within two (2) years
following a Change in Control Event), as determined by the Committee in its
sole discretion, the Award shall terminate; and
(c) upon a termination of a Participant's employment or services
for any reason other than the reasons set forth in clauses (a) and (b), any
portion of an Award that is not yet exercisable shall terminate and any
portion of such Award that is then exercisable shall remain fully exercisable
for three (3) months after the date of termination or until the expiration of
the stated term of the Award, whichever occurs first.
4.4 COMPLIANCE WITH LAWS.
--------------------
This Plan, the granting and vesting of Awards under this Plan and
the issuance and delivery of shares of Common Stock and/or the payment of
money under this Plan or under Awards granted hereunder are subject to
compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Corporation,
be necessary or advisable in connection therewith. Any securities delivered
under this Plan shall be subject to such restrictions, and the person
acquiring such securities shall, if requested by the Corporation, provide such
assurances and representations to the Corporation as the Corporation may
reasonably deem necessary to assure compliance with all applicable legal
requirements.
4.5 TAX WITHHOLDING.
---------------
Upon the exercise of any Award or upon the disposition of shares of
Common Stock acquired pursuant to the exercise of an Incentive Stock Option
prior to satisfaction of the holding period requirements of Section 422 of
the Code, the Company shall have the right at its option to (i) require the
Participant (or Personal Representative or Beneficiary, as the case may be) to
pay or provide for payment of the amount of any taxes which the Company may be
required to withhold with respect to such transaction, or (ii) deduct from any
amount payable in cash the amount of any taxes which the Company may be
required to withhold with respect to such cash amount. In any case where a
tax is required to be withheld in connection with the delivery of shares of
Common Stock under this Plan, the Committee may grant (either at the time of
the Award or thereafter) to the Participant the right to elect, pursuant to
such rules and subject to such conditions as the Committee may establish, to
have the Corporation reduce the number of shares to be delivered by (or
otherwise reacquire) the appropriate number of shares valued at their then
Fair Market Value, to satisfy such withholding obligation.
4.6 PLAN AMENDMENT, TERMINATION AND SUSPENSION.
------------------------------------------
(a) Board Authorization. Subject to the provisions of this
Section 4.6, the Board may, at any time, terminate or, from time to time,
amend, modify or suspend this Plan, in whole or in part. No Awards may be
granted during any suspension of this Plan or after termination of this Plan,
but the Committee shall retain jurisdiction as to Awards then outstanding in
accordance with the terms of this Plan.
(b) Shareholder Approval. If any amendment to this Plan would (i)
materially increase the benefits accruing to Participants under this Plan,
(ii) materially increase the aggregate number of securities that may be issued
under this Plan, or (iii) materially modify the requirements as to eligibility
for participation in this Plan, then to the extent required under applicable
law, or deemed necessary or advisable by the Board, such amendment shall be
subject to shareholder approval.
(c) Amendments to Awards. Without limiting any other express
authority of the Committee under but subject to the express limits of this
Plan, the Committee by agreement or resolution may waive conditions of or
limitations on Awards to Participants that the Committee in the prior exercise
of its discretion has imposed, without the consent of a Participant, and may
make other changes to the terms and conditions of Awards that do not affect in
any manner adverse to the Participant, his or her rights and benefits under an
Award.
12<PAGE>
<PAGE>
(d) Limitations on Amendments to Plan and Awards. No amendment,
suspension or termination of the Plan or change of or affecting any
outstanding Award shall, without written consent of the Participant, affect in
any manner materially adverse to the Participant any rights or benefits of the
Participant or obligations of the Corporation under any Award granted under
this Plan prior to the effective date of such change. Changes contemplated by
Section 4.2 shall not be deemed to constitute changes or amendments for
purposes of this Section 4.6
4.7 PRIVILEGES OF STOCK OWNERSHIP.
-----------------------------
Except as otherwise expressly authorized by the Committee or this
Plan, a Participant shall not be entitled to any privilege of stock ownership
as to any shares of Common Stock not actually delivered to and held of record
by him or her. No adjustment will be made for dividends or other rights as a
shareholder for which a record date is prior to such date of delivery.
4.8 EFFECTIVE DATE OF THE PLAN.
--------------------------
To the extent required by applicable law, the Plan shall be
submitted to the stockholders of the Corporation for approval. The effective
date shall be the Effective Date as defined in the Agreement.
4.9 TERM OF THE PLAN.
----------------
No Award shall be granted more than ten (10) years after the
Effective Date of this Plan (the "termination date"). Unless otherwise
expressly provided in this Plan or in an applicable Award Agreement, any Award
theretofore granted may extend beyond such date, and all authority of the
Committee with respect to Awards hereunder shall continue during any
suspension of this Plan and in respect of outstanding Awards on such
termination date.
4.10 GOVERNING LAW/CONSTRUCTION/SEVERABILITY.
---------------------------------------
(a) Choice of Law. This Plan, the Awards, all documents evidencing
-------------
Awards and all other related documents shall be governed by, and construed in
accordance with, the laws of the state of incorporation of the Corporation.
(b) Severability. If any provision shall be held by a court of
------------
competent jurisdiction to be invalid and unenforceable, the remaining
provisions of this Plan shall continue in effect.
13<PAGE>
<PAGE>
4.11 CAPTIONS.
--------
Captions and headings are given to the sections and subsections of
this Plan solely as a convenience to facilitate reference. Such headings
shall not be deemed in any way material or relevant to the construction or
interpretation of the Plan or any provision thereof.
4.12 EFFECT OF CHANGE OF SUBSIDIARY STATUS.
-------------------------------------
For purposes of this Plan and any Award hereunder, if an entity
ceases to be a Subsidiary, a termination of employment shall be deemed to have
occurred with respect to each employee of such Subsidiary who does not
continue as an employee of another entity within the Company.
4.13 NON-EXCLUSIVITY OF PLAN.
-----------------------
Nothing in this Plan shall limit or be deemed to limit the
authority of the Board or the Committee to grant awards or authorize any other
compensation, with or without reference to the Common Stock, under any other
plan or authority.
4.14 CONFLICT.
--------
Notwithstanding anything contained in this Plan or any amendment or
modification thereof, in the event of any conflict, inconsistency, or
ambiguity between, or arising as the result of, the terms and provisions of
this Plan and the terms and provisions of any Initial Stock Option Agreement
or any other written agreement between the grantee of an Initial Option and
the Corporation, the terms most favorable to the Participant shall be
controlling.
V DEFINITIONS
5.1 DEFINITIONS.
-----------
(a) "Award" shall mean an award of any Option or Stock Appreciation
-----
Right authorized by and granted under this Plan.
(b) "Award Agreement" shall mean any writing setting forth the
---------------
terms of an Award that has been authorized by the Committee.
(c) "Award Date" shall mean the date upon which the Committee took
----------
the action granting an Award or such later date as the Committee designates as
the Award Date at the time of the Award.
14<PAGE>
<PAGE>
(d) "Award Period" shall mean the period beginning on an Award Date
------------
and ending on the expiration date of such Award.
(e) "Beneficiary" shall mean the person, persons, trust or trusts
-----------
designated by a Participant or in the absence of a designation entitled by
will or the laws of descent and distribution to receive the benefits specified
in the Award Agreement and under this Plan in the event of a Participant's
death, and shall mean the Participant's executor or administrator if no other
Beneficiary is identified and able to act under the circumstances.
(f) "Board" shall mean the Board of Directors of the Corporation.
-----
(g) "Change in Control Event" shall mean any of the following:
-----------------------
(i) Approval by the stockholders of the Corporation of the
dissolution or liquidation of the Corporation;
(ii) Approval by the stockholders of the Corporation of an
agreement to merge or consolidate, or otherwise
reorganize, with or into one or more entities that are
not Subsidiaries, as a result of which less than 50% of
the outstanding voting securities of the surviving or
resulting entity immediately after the reorganization
are, or will be, owned by stockholders of the
Corporation immediately before such reorganization
(assuming for purposes of such determination that there
is no change in the record ownership of the
Corporation's securities from the record date for such
approval until such reorganization and that such record
owners hold no securities of the other parties to such
reorganization);
(iii) Approval by the stockholders of the Corporation of the
sale of substantially all of the Corporation's business
and/or assets to a person or entity which is not a
Subsidiary;
(iv) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act but excluding any person
described in and satisfying the conditions of Rule 13d-
(b)(1) thereunder), other than
(A) Robert Haft,
(B) Hamilton Morgan, LLC, or
(C) any affiliate of any of the foregoing persons,
becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of
securities of the Corporation representing more than 50%
of the combined voting power of the Corporation's then
outstanding securities entitled to then vote generally
in the election of directors of the Corporation; or
15<PAGE>
<PAGE>
(v) During any period (commencing after the Effective Date)
not longer than two consecutive years, individuals who
at the beginning of such period constituted the Board
cease to constitute at least a majority thereof, unless
the election, or the nomination for election by the
Corporation's stockholders, of each new Board member was
approved by a vote of at least three-fourths of the
Board members then still in office who were Board
members at the beginning of such period (including for
these purposes, new members whose election or nomination
was so approved).
(h) "Code" shall mean the Internal Revenue Code of 1986, as amended
----
from time to time.
(i) "Commission" shall mean the Securities and Exchange Commission.
----------
(j) "Committee" shall mean a committee appointed by the Board to
---------
administer this Plan, which committee shall be comprised only of two or more
directors or such greater number of directors as may be required under
applicable law, each of whom shall be Disinterested.
(k) "Common Stock" shall mean the Common Stock of the Corporation
------------
and such other securities or property as may become the subject of Awards, or
become subject to Awards, pursuant to an adjustment made under Section 4.2 of
this Plan.
(l) "Company" shall mean, collectively, the Corporation and its
-------
Subsidiaries.
(m) "Corporation" shall mean Phar-Mor, Inc., a Pennsylvania
-----------
corporation.
(n) "Disinterested" shall mean disinterested within the meaning of
-------------
any applicable regulatory requirements, including Rule 162(m) of the Code and
"Non-Employee Directors" under Rule 16b-3.
(o) "Effective Date" shall mean the Effective Date as that term is
--------------
defined in the Agreement.
(p) "Eligible Employee" shall mean an officer (whether or not a
-----------------
director) or key executive, administrative, managerial, production, marketing
or sales employee of the Company or any Other Eligible Person.
16 <PAGE>
<PAGE>
(q) "ERISA" shall mean the Employee Retirement Income Security Act
-----
of 1974, as amended.
(r) "Exchange Act" shall mean the Securities Exchange Act of 1934,
------------
as amended from time to time.
(s) "Fair Market Value" on any applicable determination date shall
-----------------
mean (i) if the stock is listed or admitted to trade on a securities exchange,
the closing price of the stock, regular way, on such day, on the principal
securities exchange on which the stock is so listed or admitted to trade, or,
if there is no such reported sale on such date, the average closing bid and
asked prices on such day, or (if none) then the closing price of the stock or
(if none) such average, as reported on the next preceding date on which there
was such reported activity in such shares (such determination or earlier date
being hereinafter referred to as the "applicable trading date"); (ii) if the
stock is not listed or admitted to trade on a securities exchange, the last
reported sales price for the stock or (if none) the average of the last
reported bid and asked prices on the applicable trading date, as reported by
the principal reputable quotation system available to the Committee; (iii) if
the stock is not listed or admitted to trade on a securities exchange and no
such reported closing sale price or closing bid and asked prices are
available, the average of the reported high bid and low asked price for the
stock on the applicable trading date, as reported by a reputable quotation
source designated by the Committee; or (iv) if the stock is not listed or
admitted to trade on a securities exchange, trading is not so reported, and
bid and asked prices are not available on a reasonably current basis, the
value as established by the Committee in good faith at such time for purposes
of this Plan.
(t) "Incentive Stock Option" shall mean an Option which is
----------------------
designated as an incentive stock option within the meaning of Section 422 of
the Code, the award of which contains such provisions as are necessary to
comply with that section and is subject to or follows the stock holder
approval required thereby.
(u) "Initial Stock Option Agreement" shall mean the Award
------------------------------
Agreements for the Initial Options, in substantially the form of Exhibit B
hereto.
(v) "Initial Options" shall mean those Options granted under this
---------------
Plan as of the Effective Date as set forth in Exhibit A hereto.
17<PAGE>
<PAGE>
(w) "Nonqualified Stock Option" shall mean an Option that is
-------------------------
designated as a Nonqualified Stock Option and shall include any Option
intended as an Incentive Stock Option that fails to meet the applicable legal
requirements thereof. Any Option granted hereunder that is not designated as
an Incentive Stock Option shall be deemed to be designated a Nonqualified
Stock Option under this Plan.
(x) "Non-Employee Director" shall mean a member of the Board of
---------------------
Directors of the Corporation who is not an officer or employee of the Company.
(y) "Option" shall mean an option to purchase Common Stock under
------
this Plan. The Committee shall designate any Option granted to an Eligible
Employee as a Nonqualified Stock Option or an Incentive Stock Option.
(z) "Other Eligible Person" shall mean any other person (including
---------------------
a significant agent or consultant) who performs substantial services for the
Company of a nature similar to those performed by key employees, selected to
participate in this Plan by the Committee from time to time; provided that in
no event shall a Non-Employee Director be selected as an Other Eligible
Person.
(aa) "Participant" shall mean an Eligible Employee who has been
-----------
granted an Award under this Plan.
(bb) "Personal Representative" shall mean the person or persons
-----------------------
who, upon the disability or incompetence of a Participant, shall have acquired
on behalf of the Participant, by legal proceeding or otherwise, the power to
exercise the rights or receive benefits under this Plan and who shall have
become the legal representative of the Participant.
(cc) "Plan" shall mean the Phar-Mor, Inc. 1995 Amended and Restated
----
Stock Incentive Plan, as amended from time to time.
(dd) "QDRO" shall mean a qualified domestic relations order as
----
defined in Section 414(p) of the Code or Title I, Section 206(d)(3) of ERISA
(to the same extent as if this Plan were subject thereto), or the applicable
rules thereunder.
(ee) "Reorganization Plan" shall mean the Third Amended Joint Plan
-------------------
of Reorganization dated as of May 25, 1995, as filed by the Corporation and
its Subsidiaries with the United States Bankruptcy Court for the Northern
District of Ohio, as the same may be amended from time to time.
18 <PAGE>
<PAGE>
(ff) "Rule 16b-3" shall mean Rule 16b-3 as promulgated by the
----------
Commission pursuant to the Exchange Act, as amended from time to time.
(gg) "Section 16 Person" shall mean a person subject to Section
-----------------
16(a) of the Exchange Act.
(hh) "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended from time to time.
(ii) "Stock Appreciation Right" or "SAR" shall mean a right to
------------------------
receive a number of shares of Common Stock or an amount of cash, or a
combination of shares and cash, the aggregate amount or value of which is
determined by reference to a change in the Fair Market Value of the Common
Stock, that is authorized under this Plan.
(jj) "Subsidiary" shall mean any corporation or other entity a
----------
majority of whose outstanding voting stock or voting power is beneficially
owned directly or indirectly by the Corporation.
(kk) "Total Disability" shall mean a "permanent and total
----------------
disability" within the meaning of Section 22(e)(3) of the Code and such other
disabilities, infirmities, afflictions or conditions as the Committee by rule
may include.<PAGE>
<PAGE>
EXHIBIT A
---------
STOCK OPTIONS
-------------
(To be granted under the Reorganization Plan and
Under the 1995 Stock Incentive Plan (the "1995 Plan")
Name of Optionee No. of Shares
---------------- -------------
Reorganization Plan/Management
Agreement - Alvares & Marsal 416,667
1995 Plan - Initial Stock Options
Allocated (Granted)
Robert M. Haft 256,250
M. David Schwartz 175,000
Daniel J. O'Leary 87,500
Richard Juliano 25,000
Warren E. Jeffery 45,000
Robert W. McCurdy 10,000
Sankar Krishnan 25,000
Joseph A. Yannerella 15,000
Carmen G. Forde 7,500
John R. Ficarro 15,000
Joseph P. McCabe 10,000
Michael I. Tamarkin 7,500
Joseph W. Teichman 7,500
Charles Fowler 7,500
Scott Thomas Gorley 5,500
Daniel E. Maher 5,500
Gerald Reinhardt 5,500
Anthony Forde 5,500
Peter S. Austin 5,500
Mickey V. McDonald 5,500
Lawrence G. Hruska 5,500
Robert W. Solomon 4,000
Michael L. Malkin 4,000
Gregory C. Eckhart 4,000
William Edwards 65,000*
Subtotal (allocated) 809,250
Unallocated (reserved) 24,083
------
1995 Plan Total 833,333
-------
Total Options under 1995 Plan
and Under A&M Agreement 1,250,000
----------
- --------------------------------------
*Effective as of the later of the Effective Date or the date of
employment.<PAGE>
<PAGE>
EXHIBIT B
---------
"Initial Option"
EMPLOYEE NONQUALIFIED STOCK OPTION AGREEMENT
--------------------------------------------
THIS AGREEMENT dated as of the ___ day of ____________, 1995, between
Phar-Mor, Inc., a Pennsylvania corporation (the "Corporation"), and
__________________________________ (the "Employee").
W I T N E S S E T H
-------------------
WHEREAS, pursuant to the Corporation's 1995 Stock Incentive Plan (the
"Plan"), the Corporation has granted to the Employee effective as of the date
hereof (the "Option Date") a nonqualified stock option, representing an
Initial Option under the Plan, to purchase authorized but unissued or treasury
shares of Common Stock $0.01 par value per share (the "Common Stock") of the
Corporation, as an incentive to services or continued services, as the case
may be, as embodied in the vesting schedule set forth herein, subject to the
terms and conditions set forth herein and in the Plan, and in partial
consideration of any contract for services to be performed that expressly
provides for this option;
WHEREAS, the contemplated services represent fair value to the
Corporation for this Agreement, and the terms hereof are deemed advantageous
to the Corporation; and
WHEREAS, the Corporation has determined in good faith that the exercise
price of the option represents a fair value of the underlying shares as of the
Effective Date.
NOW, THEREFORE, for valuable consideration, including the foregoing, the
receipt of which is hereby acknowledged and in consideration of the mutual
promises made herein and the mutual benefits to be derived herefrom, the
parties agree as follows:
1. Defined Terms. Capitalized terms used herein and not otherwise
-------------
defined herein shall have the meaning assigned to such terms in the Plan.
2. Grant of Option. This Agreement evidences the Corporation's grant
---------------
as of the Option Date to the Employee of the right and option to purchase,
subject to the terms and conditions set forth herein and in the Plan, all or
any part of an aggregate of __________ shares of the Common Stock (the
"Option") at a price per share of $8.00 exercisable from time to time, to the
extent provided in this Agreement and the Plan, prior to the close of business
on the day before the seventh anniversary of the Option Date (the "Expiration
Date").
<PAGE>
<PAGE>
3. Exercisability of Option. Except as earlier permitted by or
-------------------------
pursuant to the Plan or by resolution of the Committee adopted after the date
hereof and subject to Section 4.4. of the Plan, the Option shall become
exercisable in installments as to 20% of the aggregate number of shares set
forth in Section 2 hereof (subject to adjustment) on and after the Effective
Date and as to an additional 20% of the aggregate number of shares (subject to
adjustment) on each of the first, second, third and fourth anniversaries of
the Effective Date. After an installment vests, the Option may be exercised
to such extent, in whole or in part, from time to time, until its expiration
or earlier termination.
Fractional shares shall not be issued, but fractional share interests may
(at the Employee's election) be accumulated. No fewer than 50 shares may be
purchased at any one time, unless the number purchased is the total number at
the time available for purchase under the Option.
4. Method of Exercise of Option. The Option shall be exerciseable by
----------------------------
the delivery to the Corporation of a written notice stating the number of
shares to be purchased pursuant to the Option and accompanied by payment made
in accordance with and in a form permitted by Section 2.2(b) of the Plan for
the full purchase price of the shares to be purchased and by provision for tax
withholding consistent with Section 4.5 of the Plan, subject to such further
limitations and rules or procedures as the Committee may from time to time
reasonably establish (consistent with accounting, securities and corporate law
requirements) as to any non-cash payment and as to the tax withholding
requirements of Section 4.5 of the Plan. Shares delivered in payment of the
exercise price must have been owned by Employee for at least six months prior
to the exercise. In addition, the Employee (or the Employee's Beneficiary or
Personal Representative) shall furnish any written statements required
pursuant to Section 4.4 of the Plan.
5. Effect of Termination of Employment or Death: Change in Subsidiary
------------------------------------------------------------------
Status. The Option and all other rights hereunder, to the extent not
- ------
exercised, shall terminate and become null and void at such time as the
Employee ceases to be employed by either the Corporation or any Subsidiary,
except that
(a) if the Employee is terminated without cause (or for cause
within two years after a Change in Control Event) or the Employee
voluntarily retires or resigns, the Employee may at any time within a
period of six months after such termination exercise the Option to the
extent the Option was exercisable at the date of such termination; and
(b) if the Employee's employment terminated because of Total
Disability (within the meaning of Section 22(e)(3) of the Internal
Revenue Code of 1986 or as otherwise defined by the Committee), or if the
Employee dies while in the employ of the Corporation or any Subsidiary,
then the Option may be exercised within a period of one year after the
date of termination, by or on behalf of the Employee by the Employee's
Beneficiary or legal representative to the extent the Option was
exercisable on the date of termination;
2 <PAGE>
<PAGE>
provided, however, that in no event may the Option be exercised by anyone
under this Section or otherwise after the Expiration Date. If the Employee is
employed by an entity which ceases to be a Subsidiary, such event shall be
deemed for purposes of this Section 5 to be a termination of employment
described in subsection (a) in respect of the Employee. Absence from work
caused by military service or authorized sick leave shall not be considered as
a termination of employment for purposes of this Section.
6. Termination of Option Under Certain Events. To the extent
------------------------------------------
permitted by Section 4.2 of the Plan, the Committee retains the right to
adjust or, upon dissolution, terminate the Option to the extent not previously
exercised upon certain events; provided that the treatment of the Option is
consistent with the treatment of other options or rights to acquire Common
Stock of the Corporation.
7. Non-Transferability of Option; Restrictions on Shares. The Option
-----------------------------------------------------
and any other rights of the Employee under this Agreement or the Plan are
nontransferable as provided in Section 1.9 of the Plan. Any shares of Common
Stock delivered under this Agreement shall be subject to such restrictions,
and the person acquiring such shares shall, if requested, provide such
assurances and representations to the Corporation as it may reasonably deem
necessary or advisable to assure compliance with applicable legal
requirements, including federal and state securities laws.
8. Notices. Any notice to be given under the terms of this Agreement
-------
shall be in writing and addressed to the Corporation at its principal offices
located in Youngstown, Ohio, to the attention of the Corporate Secretary and
to the Employee at the address given beneath the Employee's signature hereto,
or at such other address as either party may hereafter designate in writing to
the other.
9. Plan. The Option and all rights of the Employee thereunder are
----
subject to, and the Employee agrees to be bound by, all of the terms and
conditions of the provisions of the Plan, incorporated herein by this
reference; provided, however, that in the event of any conflict, inconsistency
or ambiguity between, or arising as the result of, the terms and provisions of
this Agreement or any other written agreement between the Employee and the
Corporation and the terms and provisions of the Plan, the terms and provisions
most favorable to the Employee shall control for all purposes and in all
respects. The Employee acknowledges receipt of a copy of the Plan, which is
made a part hereof by this reference, and (except as set forth in the proviso
of the preceding sentence) agrees to be bound by the terms thereof. Unless
otherwise expressly provided in other Sections of this Agreement or in any
other written agreement with the Employee, provisions of the Plan that confer
discretionary authority on the Committee do not (and shall not be deemed to)
create any rights in the Employee unless such rights are expressly set forth
herein or therein or are otherwise in the sole discretion of the Committee so
conferred by appropriate action of the Committee under the Plan after the date
hereof.
3<PAGE>
<PAGE>
10. Effective Date. This Agreement and the Option evidenced hereby
--------------
shall be granted as of the Effective Date and subject to the effectiveness of
the Reorganization Plan.
11. Ohio Securities Condition. The Option shall not be exercisable
-------------------------
unless the Common Stock issuable on exercise, at the time of exercise, is
exempt from qualification, is the subject of an exempt transaction or is
registered or qualified in the State of Ohio. The Corporation agrees to use
its best efforts to effect a qualification of the Common Stock or the subject
transaction is not otherwise exempt from such requirements.
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
executed on its behalf by a duly authorized officer and the Employee has
hereunto set his or her hand.
PHAR-MOR, INC.
(a Pennsylvania corporation)
By:
Title:
EMPLOYEE
(Signature)
(Print Name)
(Address)
(City, State, Zip Code)
4<PAGE>
<PAGE>
CONSENT OF SPOUSE
-----------------
(IF REQUIRED OR DEEMED BY THE CORPORATION
TO BE ADVISABLE UNDER APPLICABLE STATE LAW)
In consideration of the execution of the foregoing Nonqualified Stock
Option Agreement by Phar-Mor, Inc., I, , the
spouse of the Employee herein named, do hereby join with my spouse in
executing the foregoing Nonqualified Stock Option Agreement and do hereby
agree to be bound by all of the terms and provisions thereof and of the Plan.
DATED: , 1995.
----------------------------------
Signature of Spouse
November 21, 1997
The Board of Directors
Phar-Mor, Inc.
20 Federal Plaza West
Youngstown, Ohio 44501-0400
Re: Registration Statement on Form S-8
Members of the Board:
We have acted as counsel to Phar-Mor, Inc., a Pennsylvania corporation
(the "Company"), with respect to the Company's Registration Statement on Form
S-8 (the "Registration Statement") filed under the Securities Act of 1933, as
amended (the "Securities Act"), with the Securities and Exchange Commission,
covering the issuance and sale from time to time of additional 2,000,000
shares of Common Stock of the Company, $.01 par value per share (the
"Additional Common Shares"), pursuant to the Company's 1995 Amended and
Restated Stock Incentive Plan and the Phar-Mor, Inc. 1995 Director Stock Plan
(collectively, the "Plans").
As counsel to the Company, we have examined the Company's Articles of
Incorporation and such Company records, certificates and other documents and
relevant statutes, regulations, published rulings and such questions of law as
we considered necessary or appropriate for the purpose of this opinion.
In our examination, we have assumed the authenticity of original
documents, the accuracy of copies and the genuineness of signatures. We have
relied upon the representations and statements of officers and other
representatives of the Company with respect to the factual determinations
underlying the legal conclusions set forth herein. We have not attempted to
verify independently such representations and statements.
Based on the foregoing, and subject to the assumptions and qualifications
stated herein, we are of the opinion that:
1. The Additional Common Shares being registered under the
Registration Statement have been duly authorized by all necessary
corporate action.
2. The Additional Common Shares, when issued, delivered and paid for
in accordance with the respective terms of the Plans to which such
issuance relates, as set forth in the Registration Statement, will
be legally issued, fully paid and nonassessable.<PAGE>
<PAGE>
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to all references to our firm in the Registration
Statement. In giving this consent, we do not admit that we come within the
category of persons whose consent is required under Section 7 of the
Securities Act or the rules promulgated thereunder.
This opinion is rendered solely for your benefit in connection with the
Registration Statement upon the understanding that we are not hereby assuming
any professional responsibility to any other person. Except as provided in
the preceding paragraph, this opinion may not be relied upon by any other
person and this opinion may not be used, disclosed, quoted, filed with a
governmental agency or otherwise referred to without our express prior written
consent. The opinions expressed in this letter are limited to the matters
expressly set forth herein, and no other opinions should be inferred beyond
the matters expressly stated herein.
Very truly yours,
SWIDLER & BERLIN, CHARTERED
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Phar-Mor, Inc. on Form S-8 of our report dated August 15, 1997 (September 19,
1997 as to Note 11) appearing in the Annual Report on Form 10-K for the fiscal
year ended June 28, 1997. Our report expresses an unqualified opinion on the
consolidated balance sheets of Phar-Mor, Inc. and subsidiaries as of June 28,
1997 and June 29, 1996 and the related consolidated statements of operations,
changes in stockholders' equity (deficiency) and cash flows for the fifty-two
weeks ended June 28, 1997 and the forty-three weeks ended June 29, 1996. Our
report expresses a qualified opinion on the consolidated statements of
operations, changes in stockholders' equity (deficiency) and cash flows of
Phar-Mor, Inc. and subsidiaries for the nine weeks ended September 2, 1995 and
the fifty-two weeks ended July 1, 1995, as reliable accounting records and
sufficient evidential matter to support the acquisition cost of property and
equipment were not available. Also, our report includes an explanatory
paragraph relating to the comparability of financial information prior to
September 2, 1995 as a result of Phar-Mor's emergence from bankruptcy and the
creation of a new entity.
DELOITTE & TOUCHE LLP
Pittsburgh, Pennsylvania
November 20, 1997
