Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
The Securities Act Of 1933
------------------
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. Employee Stock Purchase Plan
(Full title of the 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
- ---------------------------------------------------------------------------
Common Stock,
$.01 par value 500,000 shares $7.875 $3,937,500 $1,193.22
(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.
<PAGE>
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information*
Item 2. Registrant Information and Employee Plan Annual Information*
* Information required by Part I to be contained in the Section 10(a)
prospectus is omitted from the Registration Statement in accordance with
Rule 428 under the Securities Act of 1933 and the Note to Part I of Form
S-8.<PAGE>
<PAGE>
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.
5. Description of Registrant's Common Stock contained in Registrant's
Registration Statement on Form 10 filed on October 23, 1995, as
amended.
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.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Section 1741 of the Pennsylvania Business Corporation Law of 1988 (the
"BCL") empowers a corporation to indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or proceeding (a "Proceeding"), whether civil, criminal, administrative
or investigative, by reason of the fact that such person is or was a
representative of the corporation or is or was serving at the request of the
corporation as a representative of another corporation or enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
<PAGE>
<PAGE>
Proceeding, if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal proceeding, had no reasonable cause to believe his
conduct was unlawful. Section 1742 of the BCL empowers a corporation to
indemnify any person who was or is a party, or is threatened to be made a
party, to any threatened, pending or completed action by or in the right of
the corporation to procure a judgment in its favor by reason of the fact that
such person is or was a representative of the corporation or is or was serving
at the request of the corporation as a representative of another corporation
or enterprise, against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of the
action if he acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interest of the corporation, provided that
indemnification shall not be made in respect of any claim, use or matter as to
which such person has been adjudged to be liable to the corporation unless
there is a judicial determination that in view of all the circumstances of the
case, the person is fairly and reasonably entitled to indemnity for the
expenses that the court deems proper.
Section 1743 of the BCL provides that to the extent a representative of a
corporation has been successful on the merits or otherwise in defense of any
Proceeding, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
Section 1745 of the BCL provides that expenses (including attorneys'
fees) incurred in defending a Proceeding may be paid by the corporation in
advance of the final disposition of such Proceeding upon receipt of an
undertaking by or on behalf of the representative to repay such amount if it
is ultimately determined that he is not entitled to be indemnified by the
corporation.
<PAGE>
<PAGE>
Section 1746 of the BCL provides that the indemnification and advancement
of expenses provided by, or granted pursuant to, the other sections of the BCL
shall not be deemed exclusive of any other rights to which a person seeking
indemnification or advancement of expenses may be entitled under any bylaw,
agreement, vote of shareholders or disinterested directors or otherwise.
However, Section 1746 also provides that such indemnification shall not be
made in any case where the act or failure to act giving rise to the claim for
indemnification is determined by a court to have constituted willful
misconduct or recklessness.
The Registrant's Restated Articles of Incorporation include provisions to
indemnify the Registrant's directors and specified officers to the fullest
extent permitted by the BCL, including under circumstances in which
indemnification is otherwise discretionary. These provisions do not eliminate
the director's duty of care. In addition, each director is subject to
liability for breach of the director's duty of loyalty to the Registrant, for
acts or omissions not in good faith or involving intentional misconduct, for
known violations of law or for actions leading to improper personal benefit to
the director. These provisions do not affect a director's responsibilities
under any other laws, such as the federal securities laws or state or federal
environmental laws.
The Registrant has entered into indemnification agreements with each of
the directors and certain executive officers of the Registrant. The
agreements have the effect of providing contractual assurance to each of the
named indemnitees that the indemnification afforded by the Registrant's
Restated Articles of Incorporation and Bylaws will be available to such
persons, notwithstanding amendments thereto or revocations thereof or
acquisitions affecting the Registrant.
The Registrant has a policy insuring its directors and officers and the
Registrant to the extent it may be required or permitted to indemnify such
directors or officers, against certain liabilities arising from acts of
omissions in the discharge of their duties that they shall become legally
obligated to pay. The policy covers claims made during a one-year period,
provides a maximum coverage of $20 million and, subject to certain enumerated
exclusions, covers all losses above the deductible amount. The deductible
amount is $500,000 for each indemnifiable claim under the policy.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
See Exhibit Index on page 9.
<PAGE>
<PAGE>
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made of the securities registered hereby, a post-effective amendment to
this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs
(a)(1)(i) and (a)(1)(ii) above shall not apply if the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby further undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
<PAGE>
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of
whether such indemnification by it is against public policy as expressed in
the Act and will be governed by the final adjudication of such issue.
<PAGE>
<PAGE>
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
-------------------------------------
John R. Ficarro
Senior Vice President and Chief
Administrative Officer<PAGE>
<PAGE>
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
-----------------------------------
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
-----------------------------------
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
-----------------------------------
Sankar Krishnan
Senior Vice President and Chief
Financial Officer (principal financial
and accounting officer)
Date: November 20, 1997 /s/ Daniel H. Levy
------------------------------------
Daniel H. Levy, Director
Date: November 20, 1997 /s/ Monroe Osterman
------------------------------------
Monroe Osterman, Director
<PAGE>
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Page
- ------- ----
4.1 Phar-Mor, Inc. Employee Stock Purchase Plan
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)
EMPLOYEE STOCK PURCHASE PLAN
Phar-Mor, Inc. (the "Company") does hereby establish its Employee Stock
Purchase Plan (the "Plan") as follows:
1. Purpose of the Plan. The Plan is intended to provide a method
whereby eligible employees of the Company and its Subsidiaries will have an
opportunity to acquire a proprietary interest in the Company through the
purchase of shares of common stock of the Company. The Company believes that
employee participation in the ownership of the Company is of benefit to both
the employees and the Company. The Company intends to have the plan qualify
as an "employee stock purchase plan" under Section 423 of the Code. The
provisions of the Plan shall, accordingly, be construed so as to allow
participation in a manner that is consistent with the requirements of that
Section of the Code. The Company shall issue Shares under the Plan which are
authorized and unissued Shares, Shares issued and held by the Company as
treasury stock or Shares purchased on the open market, as may be determined
from time-to time by the Board of Directors.
2.Definitions
Account. "Account" means the funds that are accumulated with respect to
each individual Participant as a result of payroll deductions for the purpose
of purchasing Shares under the Plan. The funds that are allocated to a
Participant's Account shall at all times remain the property of that
Participant, but such funds may be commingled with the general funds of the
Company.
Authorization. "Authorization" means the payroll deduction authorization
form submitted by employees to the Company in accordance with the instructions
thereon to authorize regular payroll deductions under the Plan, as provided
for in Section 6.
Base Pay. "Base Pay" means an employee's regular straight time salary or
earnings (determined prior to any reduction thereof for amounts contributed to
an employee benefit plan of the Company or a subsidiary as the result of a
salary reduction agreement intended to satisfy Section 125, 402(e)(3) of
402(h) of the Code or the successor thereto and not including overtime and
bonus payments).
Board. The "Board" means the Board of Directors of the Company.
Code. The "Code" means the Internal Revenue Code of 1986, as amended.
ESPP Agent. The "ESPP Agent" is a qualified stock brokerage or other financial
services firm that has been designated from time-to-time by the Company.
Grant Date. The "Grant Date" means the January 1, April 1, July 1, and
October 1 on which options to purchase Stock are granted to an employee who is
a Participant in the Plan on that date. The first Grant Date shall not be any
earlier than October 1, 1997.
<PAGE>
<PAGE>
Holding Period. The "Holding Period" shall mean the holding period that
is set forth in Section 423(a) of the Code, which, as of the date that the
Company's Board of Directors adopted this Plan, is the later of (a) that two
(2) year period after the Grant Date and (b) that one (1) year period after
transfer to a Participant of any Shares under the Plan.
Participant. "Participant" means an employee who, pursuant to Section 3,
is eligible to participate in the Plan and has complied with the requirements
of Section 6.
Purchase Price. "Purchase Price" means the price at which options
granted by the Company to a Participant are exercised pursuant to Section 4.
Quarterly Purchase Date. The "Quarterly Purchase Date" means the last day of
any calendar quarter in which options are granted to Participants, or if not a
business day, the immediately preceding business day.
Shares. "Shares" means shares of the Company's common stock, $0.01 par
value per share, that will be sold to Participants under the Plan.
Subsidiaries. "Subsidiaries" shall mean any present or future or domestic or
foreign corporation that: (i) qualifies as a "subsidiary corporation" of the
Company as that term is defined in Section 424 of the Code, and (ii) whose
employees have been designated by the Board to be eligible, subject to Section
3, to be Participants under the Plan.
Withdrawal Notice. "Withdrawal Notice" means a notice, in a form
designed by the Company, that a Participant who wishes to withdraw from the
Plan must submit to the Company pursuant to Section 13 prior to the Quarterly
Purchase Date.
3. Employees Eligible to Participate. Any employee of the Company or
any of its Subsidiaries who (a) is in the employ of the Company or any of its
Subsidiaries on the Grant Date, (b) has been so employed for at least ninety
(90) days prior to the Grant Date, and (c) is customarily employed for more
than twenty (20) hours per week and for more that five (5) months per calendar
year during such employment is eligible to participate in the Plan, except
employees as provided in Section 19.
4. Purchase Price. The Purchase Price per Share shall be ninety
percent (90%) of the fair market value of the stock on the Quarterly Purchase
Date. Fair market value shall mean the closing price on the NASDAQ National
Market.
5. Number of Shares Reserved Under the Plan. The maximum number of
Shares that will be offered under the Plan is 500,000. If, on any date, the
total number of Shares for which purchase rights are to be granted pursuant to
Section 8 exceeds the number of Shares then available under this Section 5,
(after deduction of all Shares (a) that have been purchased under the Plan,
and (b) for which options to purchase are then outstanding), the Company shall
make a pro rata allocation of the Shares that remain available in as nearly a
uniform manner as shall be practicable and as it shall determine, in its sole
judgment to be equitable. In such event, each Participant's payroll
deductions shall be reduced accordingly, and the Company shall give to each
Participant a written notice of such reduction.<PAGE>
<PAGE>
6. Participation. An eligible employee may become a Participant on
any Grant Date (after July 1, 1997) by completing the Authorization provided
by the Company and submitting it to the Company at the time specified prior to
the Grant Date to which it relates. The Authorization shall authorize an
after-tax regular payroll deduction from the pay of the Participant commencing
with the first pay date following the Grant Date. Payroll deductions and
participation in the Plan shall continue for any employee submitting an
Authorization, until such employee becomes ineligible to participate in the
Plan or withdraws from the Plan or the Plan is terminated. A Participant who
ceases to participate in the Plan may again participate in the Plan on any
following Grant Date on which the Participant is eligible to do so, but only
once in the calendar year in which participation ceases, by completing and
filing an Authorization with the Company at the time specified prior to the
Grant Date to which it relates.
7. Payroll Deduction.
7.1 At the time the Authorization is filed with the Company and for so
long as a Participant participates in the Plan, each Participant shall
authorize the Company to make payroll deductions of a fixed dollar amount per
pay period not less than Ten Dollars ($10.00) up to a maximum of One Hundred
Dollars ($100.00) per week; provided, however, that no payroll deduction shall
exceed ten percent (10%) of Base Pay. The amount of the minimum fixed dollar
deduction may be adjusted by the Board of Directors from time-to-time.
7.2 Each Participant's payroll deductions shall be credited to that
Participant's Account. A Participant may not make a separate cash payment
into such Account nor may payment for Shares be made from other than the
Participant's Account.
7.3 A Participant's payroll deductions shall begin on the first pay
date following the applicable Grant Date, and shall end on the date the
Participant becomes ineligible to participate in the Plan or withdraws from
the Plan, or the Plan is terminated.
7.4 A Participant may increase or decrease the amount of his or her
payroll deductions, subject to the limits herein, by delivering a new
Authorization. Only one (1) increase or decrease in the amount of payroll
deductions shall be permitted in a calendar year. A new Authorization shall
take effect as soon as it can be processed by the Company.
8. Granting of Right to Purchase. On each Grant Date, the Plan shall
be deemed to have granted automatically to each Participant a right to
purchase as many Shares (including fractional Shares) as may be purchased with
such Participant's Account on the next following Quarterly Purchase Date,
subject to the limitations of the Plan.
9. Purchase of Shares. On the Quarterly Purchase Date, each
Participant whose Account has not been refunded due to the death of such
Participant or ineligibility to participate in the Plan shall be deemed to
have carried out the right to purchase, and shall be deemed to have purchased
at the number of Shares (including fractional Shares) that may be purchased
<PAGE>
<PAGE>
with such Participant's Account on the Quarterly Purchase Date at the Purchase
Price.
10. Carryover of Account. Following the purchase of Shares on an
Quarterly Purchase Date, any balance of a Participant's Account shall be used
to purchase Shares on the next Quarterly Purchase Date, unless the Participant
has advised the Company otherwise in writing, in which case the Company shall
refund to the Participant the funds that remain in the Participant's Account
as soon as practicable thereafter or unless the Participant's Account is
otherwise refunded under the applicable terms of the Plan.
11. Participant's Rights as a Shareholder. No Participant shall have
any rights of a shareholder with respect to any Shares until the Shares have
been purchased in accordance with Section 9 and issued by the Company.
12. Evidence of Ownership of Shares.
12.1 Promptly following each Quarterly Purchase Date, the Shares that
are purchased by each Participant shall be deposited into an account that is
established in the Participant's name with the ESPP Agent.
12.2 A Participant may direct, by written notice to the Company prior
to an Quarterly Purchase Date, that the ESPP Agent account be established in
the names of the Participant and one such other person as may be designated by
the Participant as a joint tenant with right of survivorship, tenants in
common, or community property, to the extent and in the manner permitted by
applicable law.
12.3 A Participant shall be free to undertake a disposition, as that
term is defined in Section 424(c) of the Code (which generally includes any
sale, exchange, gift or transfer of legal title), of Shares in the
Participant's ESPP Agent account at any time, whether by sale, exchange, gift
or other transfer of title. A Participant may move such Shares to an account
at another brokerage firm of the Participant's choosing or request that a
certificate that represents the Shares be issued and delivered to the
Participant.
13. Withdrawal. A Participant may terminate his or her participation
and withdraw from the Plan at any time prior to the Quarterly Purchase Date by
delivering a Withdrawal Notice to the Company, in which event the Company
shall carry out the purchase of Shares with the balance of Participant's
Account prior to Participant's withdrawal on the next Quarterly Purchase Date.
(Thereafter, such Participant may again participate in the Plan in accordance
with Section 6.)
14. Interest. No interest shall be paid or allowed on a Participant's
Account.
15. Rights Not Transferable. No Participant shall be permitted to
sell, assign, transfer, pledge, or otherwise dispose of or encumber such
Participant's Account or any rights and interest to purchase or to receive
Shares under the Plan, and such Account and rights and interests shall not be
<PAGE>
<PAGE>
liable for, or subject to, a Participant's debtors, contracts, or liabilities.
If any such action is taken by the Participant or any valid claim is made by
any party with respect to such Account or rights and interest, whether by
garnishment, levy, attachment or otherwise, such Participant shall cease to
participate in the Plan, no further payroll deductions shall be taken from the
pay due and owing to the Participant, and the balance in such Participant's
Account shall be refunded to the Participant.
16. Retirement, Death or Termination of Employment. In the event of
a Participant's termination of employment with the Company and all
subsidiaries for any reason (including retirement, death or disability) or in
the event the corporation by which Participant is employed ceases to be a
Subsidiary of the Company, no further payroll deduction shall be taken from
any pay due and owing to such Participant. In the event of a Participant's
termination of employment due to the death of such Participant, the balance in
such Participant's Account shall be refunded to his or her estate, or if none,
to the person(s) entitled to his or her estate under the intestate laws of the
state in which he or she resides. In the event of a Participant's termination
of employment for any reason other than death, on the following Quarterly
Purchase Date, each such Participant shall be deemed to have carried out the
right to purchase, and shall be deemed to have purchased at the number of
Shares (including fractional Shares) that may be purchased with such
Participant's Account on the Quarterly Purchase Date.
17. Amendment, Modification, Suspension or Discontinuance of this
Plan. The Board may amend the Plan at any time and for any reason, provided,
however, that no such amendment shall be effective without the approval of the
shareholders of the Company if the amendment (a) increases the number of
Shares to be offered under the Plan (other than as provided for herein) or (b)
decreases the Purchase Price per share or if such approval is required to meet
the requirements of Section 423 of the Code or Securities and Exchange
Commission Rule 16b-3 (or successors thereto).
18. Changes in Capitalization. In the event of reorganization,
recapitalization, stock split, stock dividend, combination of shares, merger,
consolidation, offerings of rights, or any other change in the capital
structure of the Company, the Board may make such adjustment, if any, as it
may deem appropriate in the number, kind, and the price of the Shares that are
available for purchase under the Plan, and in the number of Shares that an
employee is entitled to purchase all to the end that a Participant's
proportionate interest shall be maintained as before the occurrence of such
event. (Such adjustment made by the Board shall be conclusive.)
19. Share Ownership. Notwithstanding anything herein to the
contrary, no Participant shall be granted a right to purchase any Shares under
the Plan if such Participant, immediately after the granting of such rights,
owns Shares that account for (including all shares that may be purchased under
outstanding rights and options) five percent (5%) or more of the total
combined voting power or value of all classes of shares of the Company or its
Subsidiaries (or its parent with in the meaning of Section 424(e) of the
Code). For the foregoing purposes, the rules of Section 424(d) of the Code
shall apply in determining share ownership. In addition, no Participant shall
<PAGE>
<PAGE>
be granted a right to purchase any Shares under the Plan that permits such
Participant's rights to purchase Shares under all "employee stock purchase
plans" of the Company and its Subsidiaries (or its parent within the meaning
of 423(e) of the Code) to accrue at a rate that exceeds $25,000 of the fair
market value of such shares (determined at the time such right to purchase is
granted) for each calendar year in which such right to purchase is outstanding
at any time (as interpreted and applied in accordance with Section 423(b) (8)
of the Code).
20. Administration. The Plan shall be administered by the Board,
which may engage the ESPP Agent to assist in the administration of the Plan.
The Board shall be vested with full authority and discretion to (a)
administer, construe, and interpret the Plan, (b) define the terms of the
Plan, (c) prescribe, amend and rescind rules and regulations for the Plan, (d)
correct any defect, supply any omission or reconcile any inconsistency in the
Plan, and (e) make all legal and factual determinations necessary or advisable
for the administration of the Plan. All determinations, decisions, or actions
of the Board in connection with the construction, interpretation,
administration or application of the Plan shall be final, conclusive, and
binding upon all Participants and any and all persons that claim rights or
interests under or through a Participant. The Board may delegate any or all
of its authority hereunder to a committee of the Board, as it may designate.
21. Notices. All notices or other communications by a Participant to
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Company at the location,
or by the person, that is designated by the Company from time to time for the
receipt thereof, and, in the absence of such designation, the Company's Legal
Department; Attention: General Counsel.
22. Termination of Plan.
22.1 This Plan shall terminate at the earliest of the following:
(a) July 1, 2002;
(b) The date of the filing of a statement of intent to dissolve
by the Company or the effective date of a merger or consolidation wherein the
Company is not to be the surviving corporation, which merger or consolidation
is not between or among a corporation related to the Company. In such event,
a Participant shall be treated with respect to such Share for which the
Participant has been granted a right to purchase in the same manner, as nearby
as reasonably possible as a holder of a Share subject to options is otherwise
treated in such event.
(c) The date the Board acts to terminate the Plan; and
(d) The date when all of the Shares that were reserved for issuance
hereunder have been purchased.
22.2 Upon termination of the Plan, the Company shall refund to each
Participant the balance of each Participant's Account that is not otherwise
used to purchase Shares.
<PAGE>
<PAGE>
23. Limitations on Sale of Stock Purchased Under the Plan. The Plan is
intended to provide Shares for investment and not for resale. The Company
does not, however, intend to restrict or influence the conduct of any
employee's affairs. An employee, therefore, may sell Shares that are
purchased under the Plan at any time, subject to compliance with any
applicable federal and state securities laws. THE EMPLOYEE ASSUMES THE RISK
OF ANY MARKET FLUCTUATIONS IN THE PRICE OF THE SHARES.
24. Governmental Regulations. The Company's obligation to sell and
deliver Shares under this Plan is subject to any governmental approval that is
required in connection with the authorization, issuance, or sale of such
Shares. No right to purchase Shares or purchase and delivery of Shares shall
be granted or exercised if the same would be contrary to law or the
regulations of any duly constituted authority having jurisdiction or would
disqualify the Plan as "employee stock purchase plan" under Section 423 of the
Code.
25. No Employment Rights. The Plan does not, directly or indirectly,
create any right for the benefit of any employee or class of employees to
purchase any Shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company,
and it shall not be deemed to interfere in any way with the Company's right to
terminate, or otherwise modify, an employee's employment at any time.
26. Effective Date and Approvals. The Plan shall be effective
September 1, 1997, subject to its adoption by the Board by that date and
subject to approval of the stockholders of the Company (in accordance with
applicable law for the issuance of corporate stock or options) within (12)
months before or after the date the Plan is adopted by the Board. If the Plan
is not so adopted and approved, it shall not be effective.
27. Exchange Act. Notwithstanding any contrary provisions, any
Participants that are directors, executive officers and 10% or greater
shareholders subject to Section 16 of the Securities Exchange Act of 1934 (or
successor thereto) must effect transactions hereunder in accordance with
Section 16 of the 1934 Act and the rules promulgated thereunder. In this
regard, it is intended that the Plan comply with Rule 16b-3, and in order to
maintain compliance with Rule 16b-3, as well as the 1934 Act, the Board may
make such rules and impose such limitations as it deems advisable. Moreover,
in the event the Plan does not include a provision required by Rule 16b-3 to
be stated therein, such provision (other than one relating to eligibility
requirements to purchase Shares, the amount of Shares that may be purchased or
the price for the purchase of Shares) shall be deemed to be incorporated by
reference into the Plan with respect to Participants subject to Section 16 of
the 1934 Act.
<PAGE>
<PAGE>
28. Governing Law. The law of the Commonwealth of Pennsylvania
shall govern all matters that relate to this Plan, except to the extent it is
superseded by the laws of the United States.
Date Adopted by Board: June 5, 1997
Date Approved by Shareholders:______________________
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 500,000 shares of Common
Stock of the Company, $.01 par value per share (the "Common Shares"), pursuant
to the Company's Employee Stock Purchase Plan (the "Plan").
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 Common Shares being registered under the Registration
Statement have been duly authorized by all necessary corporate
action.
2. The Common Shares, when issued, delivered and paid for in
accordance with the terms of the Plan, 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
