PHAR-MOR, INC.
REGISTRATION RIGHTS AGREEMENT
DATED AS OF SEPTEMBER__, 1995
TABLE OF CONTENTS
Page
Section 1. DEFINITIONS.................................................1
Section 2. SHELF REGISTRATION..........................................3
Section 3. DEMAND REGISTRATION RIGHTS..................................4
Section 4. SUSPENSION OF EFFECTIVENESS.................................6
Section 5. INCIDENTAL REGISTRATION RIGHTS..............................6
Section 6. HOLDBACK AGREEMENT..........................................7
Section 7. REGISTRATION PROCEDURES.....................................8
Section 8. REGISTRATION EXPENSES......................................10
Section 9. INDEMNIFICATION; CONTRIBUTION..............................11
(a) Indemnification by Company................................11
(b) Conduct of Indemnification Proceedings....................11
(c) Indemnification by Holders of Registrable Shares..........12
(d) Contribution..............................................12
Section 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS................13
Section 11. MISCELLANEOUS..............................................13
(a) Amendments and Waivers....................................13
(b) Notices...................................................13
(c) Successors and Assigns....................................14
(d) Counterparts..............................................14
(e) Headings..................................................14
(f) Governing Law.............................................14
(g) Consent to Jurisdiction; Service of Process...............14
(h) Severability..............................................14
(i) Entire Agreement..........................................14
(j) Effectiveness.............................................15
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REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of September __, 1995 by PHAR-MOR, INC., a Pennsylvania
corporation (the "COMPANY"), and the holders of the Registrable Shares (as
defined) located on the signature pages hereto who execute this Agreement and
for the benefit of any Eligible Transferee (as hereinafter defined).
The New Common Stock (as defined herein) is being issued pursuant to
Section 1145 of Title 11 of the United States Code. In order to induce holders
of the requisite percentages of the Allowed Senior Secured Claims (as such term
is defined in the Third Amended Joint Plan of Reorganization of Phar-Mor, Inc.
et al. dated as of May 25, 1995, (the "PLAN OF REORGANIZATION")) to approve the
Plan of Reorganization, the Company has agreed to provide registration rights
with respect to the Registrable Shares as set forth in this Agreement.
This Agreement is incorporated into the Plan of Reorganization and
its terms and conditions shall be binding upon each of the Holders, regardless
of whether any or all of such Holders are signatories hereto.
The parties hereto agree as follows:
SECTION 1. DEFINITIONS.
The terms set forth below are used herein as so defined:
"COMMISSION" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Exchange Act or the
Securities Act.
"COMPANY" means Phar-Mor, Inc., the Reorganized Phar-Mor under and as
defined in the Plan of Reorganization.
"DEMAND REGISTRATION" means a registration requested pursuant to the
terms of Section 3 hereof
"EFFECTIVE DATE" means the date the Plan of Reorganization becomes
effective.
"ELIGIBLE TRANSFEREE" means (a) any transferee, in a single
transaction of all, but not less than all, of the Registrable Shares held by a
Holder (including Holders that are themselves Eligible Transferees) on the date
of such transfer, (b) not more than two members of Xxxxxxxx Xxxxxx, L.L.C. (the
"LLC") which may acquire, obtain or otherwise receive any or all of the
Registrable Shares from the LLC, and (c) Credit Lyonnais New York Branch upon
its foreclosure of Registrable
Shares pledged to it by any Holder.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"HOLDER" means the holders of Registrable Shares named on the
signature pages of this Agreement and the Eligible Transferees.
"INDEMNIFIED PERSON" has the meaning assigned to that term in Section
9(a) hereof
"INSPECTORS" has the meaning assigned to that term in Section 7(e)
hereof
"NEW COMMON STOCK" means the common stock, par value $0.01 per share,
of the Company.
"PARTICIPATING HOLDER" means any Holder that has Registrable Shares
registered for sale pursuant to a Registration Statement.
"PERSON" means any individual, partnership, joint venture,
corporation, trust, unincorporated organization, or other entity.
"RECORDS" has the meaning assigned to that term in Section 7(e)
hereof.
"REGISTRABLE SHARES" means the shares of New Common Stock issued
pursuant to the Plan of Reorganization to the Holders party hereto and held by
the Holders from time to time. A share of New Common Stock will cease to be a
Registrable Share when (a) a registration statement covering a Registrable Share
has been declared effective by the Commission and such share has been disposed
of pursuant to such effective registration statement, (b) such shares is
transferred to a Person other than an Eligible Transferee, (c) such share is
held by the Company or one of its subsidiaries or otherwise ceases to be
outstanding, or (d) such share may be traded without restriction pursuant to
paragraph (k) of Rule 144.
"REGISTRATION EXPENSES" has the meaning assigned that term in Section
8 hereof.
"REGISTRATION STATEMENT" means any registration statement or
comparable document under the Securities Act through which a public sale or
disposition of the Registrable Shares may be registered, including the
prospectus, amendments and supplements to such registration statement, all
exhibits, and all material incorporated by reference or deemed to be
incorporated by reference in such Registration Statement.
"REQUESTING HOLDERS" has the meaning assigned to that term in Section
3(a) of this Agreement.
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"REQUISITE HOLDERS" means Holders holding at least 25% of the total
number of Registrable Shares of New Common Stock that were issued or issuable
pursuant to the Plan of Reorganization to the Holders party hereto and that
remain Registrable Shares.
"RULE 144" means Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or any similar rule (other than Rule 144A) or
regulation hereafter adopted by the Commission providing for offers and sales of
securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
free of the registration and prospectus delivery requirements of the Securities
Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect from time to time.
"SELLING HOLDER" means a Holder who is selling Registrable Shares
pursuant to a Registration Statement under this Agreement.
"SHELF REGISTRATION" has the meaning assigned to that term in Section
2(a) of this Agreement.
SECTION 2. SHELF REGISTRATION.
(a) Subject to the terms of Section 2(d) hereof, the Company agrees
to use its best efforts to file with the Commission as soon as practicable after
the Effective Date a "shelf" Registration Statement on any appropriate form
pursuant to Rule 415 under the Securities Act and/or any similar rule that may
be adopted by the Commission with respect to all of the Registrable Shares (the
"SHELF REGISTRATION"). This Agreement shall constitute the consent of each
Holder to the inclusion of such Holder's Registrable Shares in the Shelf
Registration upon its effectiveness, except with respect to those Registrable
Shares the Holder of which notifies the Company in writing no later than thirty
(30) days following the Effective Date that it does not want to be included in
the Shelf Registration. The Company agrees (i) to use its best efforts to have
such Shelf Registration declared effective as soon as reasonably practicable
after such filing and (ii) to keep such Shelf Registration continuously
effective for a period of three (3) years following the date on which such Shelf
Registration is declared effective; provided, however, that the effectiveness of
the Shelf Registration may be terminated earlier to the extent that none of the
shares of New Common Stock registered therein are then Registrable Shares.
(b) The Company agrees, if necessary, to supplement or make
amendments to the Shelf Registration, if required by the registration form
utilized by the Company for such Shelf Registration or by the instructions
applicable to such registration form or by the Securities Act or the rules and
regulations thereunder or as reasonably requested by a Participating Holder in
connection with any material change in the information provided by such
Participating Holder and the Company agrees to furnish to the Participating
Holders, on request, copies of any supplements or amendments. The
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Company will pay all Registration Expenses in connection with such Shelf
Registration or any supplements or amendments thereto, whether or not it becomes
effective. The Shelf Registration may include securities other than Registrable
Shares.
(c) In connection with any underwritten offering of Registrable
Shares under the Shelf Registration, the Company shall have the right, with the
consent of the Holders of a majority of the Registrable Shares to be offered
pursuant to such distribution (which consent shall not be unreasonably
withheld), to designate an investment banker to act as managing underwriter with
respect to such offering.
(d) The Holders acknowledge that the Company has audited financial
statements only as of July 2, 1994 and June 26, 1993, and for the fifty-three
week period ended July 2, 1994 and the thirty-nine week period ended June 26,
1993. As a result thereof, the Company is not currently eligible to file a
Registration Statement and shall have no obligation under this Section 2 to file
with the Commission a Registration Statement until the earliest to occur of the
following: (i) the Company has sufficient historical audited and unaudited
financial information to satisfy the disclosure requirements for a Registration
Statement on Form S-1 or S-3 or other appropriate form; (ii) the Company files
with the Commission a Registration Statement and such Registration Statement is
declared effective; or (iii) the Company obtains a "no action" or other
interpretive position from the Commission permitting it to register equity
securities under the Securities Act (it being understood and agreed that the
Company shall have no obligation to seek any such "no action" or interpretive
position).
SECTION 3. DEMAND REGISTRATION RIGHTS.
(a) At any time after the expiration of the Shelf Registration,
Requisite Holders may by written notice to the Company request that the Company
register all or a portion of the Registrable Shares held by such Holders under
the Securities Act and, subject to the provisions of this Agreement, the Company
shall use its best efforts to effect such registration promptly. Each notice to
the Company shall set forth (i) the names of the Requisite Holders requesting
registration ("Requesting Holders") and the number of shares to be sold by each
and (ii) the proposed manner of sale. Within ten (10) days after receipt of
notice from Requisite Holders, the Company shall notify each Holder who is not a
party to the written notice served on the Company and offer to them the
opportunity to include their shares in such registration. Each such Holder shall
have 20 days following delivery of such notice to elect, by notice to the
Company, to have such Holder's Registrable Shares included in such registration.
The Company shall have no obligation to effect any Demand Registration under
this Section 3 unless the number of Registrable Shares in such Demand
Registration shall be equal to at least 5% of the number of shares of New Common
Stock outstanding at the time of such request. The maximum number of such
demands under this Section 3 shall be two (2); provided, however, that no such
demand may be made after the eighteenth month following the expiration of the
Shelf Registration. A Registration Statement will not count as a Demand
Registration hereunder unless it is declared effective by the Commission and
remains effective for at least ninety (90) days or such shorter period which
shall terminate when all of the
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Registrable Shares covered by such Demand Registration have been sold pursuant
to such Demand Registration; provided, however. that in the event a Registration
Statement is withdrawn at the request of the Requesting Holders (other than a
withdrawal pursuant to Section 3(c) of this Agreement), such Requesting Holders
will pay all Registration Expenses unless they agree to forfeit such Demand
Registration to which such Registration Expenses relate. The demand registration
rights granted pursuant to this Section 3 are in addition to, and shall not
limit, the registration rights of the Holders of Registrable Shares These rights
are in addition to, and shall not limit, the registration rights of the Holders
of registrable Shares granted pursuant to Section 2 or 5 hereunder.
(b) If the managing underwriter of an underwritten offering under
this Section 3 advises the Company in writing that in its opinion the number of
shares requested to be included in such registration (including, without
limitation, shares to be included in such registration pursuant to incidental or
"piggyback" rights heretofore or hereafter granted by the Company) exceeds the
number which can be sold in such offering, the Company will include in such
registration only the number of shares which in the opinion of such underwriter
can be sold. If the number of shares which can be sold is less than the number
of shares proposed to be registered, the amount to be so registered shall be
allocated, (i) first, pro rata among the Holders of Registrable Shares desiring
to participate in such registration on the basis of the number of such
Registrable Shares initially proposed to be registered by such Holders and (ii)
second, among other holders of shares of New Common Stock requested to be
included in such registration, in such proportions as the Company shall
determine.
(c) The Company shall not be obligated to effect any Demand
Registration within three (3) months after the effective date of a previous
demand registration under which the Holders had piggyback rights pursuant to
Section 5 hereof (irrespective of whether such rights were exercised). The
Company may (i) postpone for up to 120 days the filing or the effectiveness of a
Registration Statement for a Demand Registration if, based on the good faith
judgment of the Company's Board of Directors, such registration and offering
would materially interfere with any material financing& acquisition, corporate
reorganization, security offering or other material transaction, or such
postponement or withdrawal is necessary in order to avoid premature disclosure
of a matter the Board has determined would not be in the best interest of the
Company to be disclosed at such time or (ii) postpone the filing of a Demand
Registration for a period of not more than 120 days in the event the Company
shall be required to prepare audited financial statements as of a date other
than its fiscal year end (unless the Holders requesting such registration agree
to pay the expenses of such an audit); provided, however, that in no event shall
the Company withdraw a Registration Statement under clause (i) after such
Registration Statement has been declared effective; and provided. further that
in any of the events described in clause (i) or (ii) above, the Holders
initiating the request for such Demand Registration shall be entitled to
withdraw such request (without expense to such Holders) and, if such request is
withdrawn, such Demand Registration shall not count as a permitted Demand
Registration. The Company shall provide prompt written notice to the Requesting
Holders of (x) any postponement or withdrawal of the filing or effectiveness of
a Registration Statement pursuant to this paragraph (c), (y) the Company's
decision to file or seek effectiveness of such
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Registration Statement following such withdrawal or postponement and (z) the
effectiveness of such Registration Statement.
(d) If any of the Registrable Shares covered by a Demand Registration
are to be sold in an underwritten offering, the Company shall have the right to
select the managing underwriter(s) to administer the offering, subject to the
approval of the Holders of a majority of the Registrable Shares initiating the
request for registration, which approval shall not be unreasonably withheld.
(e) Notwithstanding anything to the contrary contained in this
Section 3, if the Company has effected a Shelf Registration in accordance with
the provisions of Section 2 of this Agreement, the Company may elect to extend
such Shelf Registration for a period of at least eighteen months beyond the
three (3) year term required pursuant to Section 2 and (i) for so long as such
Shelf Registration remains effective, the Company shall have no obligation to
effect a Demand Registration pursuant to this Section 3 and (ii) if such Shelf
Registration remains effective for such eighteen month period, the rights of the
Holders to request registration pursuant to this Section 3 shall be terminated
and the Company shall have no obligation to effect a Demand Registration.
SECTION 4. SUSPENSION OF EFFECTIVENESS.
The Company's obligations under Section 2(a) and Section 3(a) shall
not restrict its ability to suspend the effectiveness of the Shelf Registration
or any Demand Registration, at any time, for such reasonable period of time
which the Company believes is necessary to prevent the premature disclosure of
any events or information having a material effect on the Company. In addition,
the Company shall not be required to keep the Shelf Registration or any Demand
Registration, effective, or may, without suspending such effectiveness, instruct
the holders of Registrable Shares included in the Shelf Registration or any
Demand Registration, not to sell such shares, during any period during which the
Company is instructed, directed, ordered or otherwise requested by any
governmental agency or self-regulatory organization to stop or suspend such
trading or sales.
SECTION 5. INCIDENTAL REGISTRATION RIGHTS.
(a) If the Company, at any time during the period commencing on the
Effective Date and ending on the date that is four years and six months after
the date on which the Shelf Registration becomes effective, proposes to register
any New Common Stock under the Securities Act (other than pursuant to Sections 2
or 3 of this Agreement or pursuant to a registration statement on a form
exclusively for the sale or distribution of securities by the Company to
employees of the Company or its subsidiaries or for use exclusively in
connection with a business combination) whether or not for sale for its own
account, and the registration form to be used may be used for the registration
of Registrable Shares, it will give prompt written notice to all Holders of the
Company's intention to effect such a registration and include in such
registration all Registrable Shares with respect to which the Company has
received written notice for inclusion therein within 20 days after the date of
the Company's notice; provided that:
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(i) if, at any time after giving written notice of its intention to
register any shares and, prior to the effective date of the Registration
Statement filed in connection with such registration, the Company shall
determine for any reason not to register such shares, the Company may, at its
election, give written notice of such determination to each Holder requesting
inclusion therein, and, thereupon, the Company shall be relieved of its
obligation to register any Registrable Shares in connection with such
registration (but not of its obligation to pay the Registration Expenses in
connection therewith); and
(ii) if such registration shall be in connection with an
underwritten public offering and the managing underwriter shall advise the
Company in writing that in its opinion the number of shares requested to be
included in such registration exceeds the number of such securities which can be
sold in such offering or would have an adverse impact on the price of such
securities, the Company shall include in such registration (A) first, the
securities the Company proposes to sell and, if such registration includes an
underwritten secondary registration on behalf of holders of the Company's
securities exercising demand registration rights, the securities requested to be
included therein by such holders requesting such registration, in such
proportions as the Company shall determine, and (B) second, the number (if any)
of other securities of the Company (including, without limitation, Registrable
Shares) so requested to be included which in the opinion of such underwriter can
be sold (and if, in the opinion of such underwriter, some but not all of such
securities may be so included, all holders of New Common Stock requested to be
included therein shall share pro rata in the number of shares of New Common
Stock included in such underwritten public offering on the basis of the number
of shares of New Common Stock requested to be included therein);
(b) If any Registration pursuant to this Section 5 is an underwritten
primary offering, the Company shall have the right to select the managing
underwriter to administer such offering.
SECTION 6. HOLDBACK AGREEMENT.
(a) In the event of any post-effective amendment to the Shelf
Registration or the filing of a prospectus supplement, as the case may be, or
the commencement of an underwritten public distribution of New Common Stock
under a Registration Statement, whether or not Registrable Shares are included,
each Holder agrees not to effect any public sale or distribution of New Common
Stock (except as part of such underwritten public distribution), including a
sale pursuant to Rule 144 or Rule 144A under the Securities Act, during a period
designated by the Company in a written notice duly given to the Holders in
accordance with Section 11(b), which period shall commence approximately 14 days
prior to the effective date of any such post-effective amendment to the Shelf
Registration or filing of such prospectus supplement, as the case may be, or the
commencement of such underwritten public distribution of New Common Stock under
a Registration Statement and shall continue for up to 104 consecutive days.
(b) The foregoing provisions shall not apply to any Holder to the
extent such Holder is prohibited by applicable law from agreeing to withhold
from sale.
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SECTION 7. REGISTRATION PROCEDURES.
Except as otherwise expressly provided herein, in connection with any
registration of Registrable Shares pursuant to this Agreement, the Company
shall, as expeditiously as possible, at its own expense:
(a) prepare and file with the Commission a Registration Statement on
the appropriate form with respect to such Registrable Shares and use its best
efforts to cause such Registration Statement to become effective as soon as
practicable thereafter; and before filing a Registration Statement or prospectus
or any amendments or supplements thereto, furnish to each Selling Holder, copies
of such Registration Statement and such other documents as proposed to be filed
(including copies of any document to be incorporated by reference therein), and
thereafter furnish to such Selling Holder such number of copies of such
Registration Statement, each amendment and supplement thereto (including copies
of any document to be incorporated by reference therein), in each case at the
written request of the Selling Holder, including all exhibits thereto, the
prospectus included in such registration statement (including each preliminary
prospectus), and, promptly after the effectiveness of a Registration Statement,
the definitive final prospectus filed with the Commission, and such other
documents as such Selling Holder may reasonably request in order to facilitate
the disposition of the Registrable Shares owned by such Selling Holder;
(b) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions within
the United States as any Selling Holder reasonably (in light of such Selling
Holder's intended plan of distribution) requests; provided that the Company will
not be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this Section 7(b),
(ii) subject itself to taxation in any such jurisdiction or (iii) consent to
general service of process in any such jurisdiction;
(c) notify each Selling Holder of such Registrable Shares, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of any event as a result of which the
prospectus included in such Registration Statement (including any document to be
incorporated by reference therein) contains an untrue statement of a material
fact or omits any fact necessary to make the statements therein not misleading
and, at the request of any such Selling Holder, the Company shall prepare a
supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Shares, such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and promptly make available to each Selling Holder any such supplement or
amendment;
(d) in connection with an underwritten public offering, enter into
customary agreements (including, if requested, an underwriting agreement),
reasonably satisfactory in form and substance to the Company, and take such
other actions in connection therewith as the Holders of at least a majority of
the Registrable Shares being sold or the underwriter shall reasonably request in
order to consummate the disposition of such Registrable Shares;
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(e) make available for inspection during business hours on reasonable
advance notice by any Selling Holder of such Registrable Shares, any underwriter
participating in any disposition pursuant to a Registration Statement, and any
attorney, accountant or other professional retained by any such Selling Holder
or underwriter (collectively, the "INSPECTORS"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "RECORDS") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such Registration Statement. Records which the
Company determines, in good faith, to be confidential and which it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a material
misstatement or omission in the Registration Statement or (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction. Each Selling Holder of such Registrable Shares further
agrees that it will, upon learning that disclosure of such Records is sought in
a court of competent jurisdiction, give written notice to the Company, and allow
the Company, at the Company's expense, to undertake appropriate action to
prevent disclosure of the Records it deemed confidential. Each Selling Holder of
such Registrable Shares further agrees that information obtained by it as a
result of such inspections which is deemed confidential by the Company shall not
be used by it, and it shall cause each of its Inspectors not to use such
confidential information, as the basis for any market transactions in securities
of the Company or for any purpose other than any due diligence review with
respect to decisions regarding such Selling Holder's investment in the
Registrable Shares, unless and until such information is made generally
available to the public;
(f) in the event such sale is pursuant to an underwritten offering,
use its best efforts to obtain (i) a comfort letter or comfort letters from the
Company's independent public accountants in customary form and covering such
financial and accounting matters of the type customarily covered by comfort
letters as the Selling Holders of a majority of the Registrable Shares being
sold or the managing underwriter reasonably request, and (ii) an opinion or
opinions from counsel for the Company, addressed to the underwriters, covering
the matters customarily covered in opinions given by counsel in similar
transactions; and
(g) notify the Selling Holders and the managing underwriters, if any,
promptly, and (if requested by any such Person) confirm such advice in writing,
(i) when the Registration Statement, the prospectus or any prospectus supplement
or post-effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of the issuance by the Commission of any stop order suspending
the effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of any
proceedings for that purpose and the Company shall promptly use its best efforts
to prevent the issuance of any stop order or to obtain its withdrawal if such
stop order should be issued and (iii) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable Shares
for offer or sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose.
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The Company may require each Selling Holder of Registrable Shares as
to which any registration is being effected to furnish to the Company such
information regarding the Selling Holder and the distribution of such
Registrable Shares as the Company may from time to time reasonably request in
writing and such other information as may be legally required in connection with
such registration. Each Selling Holder agrees, by its acquisition of Registrable
Shares and its acceptance of the benefits provided to it hereunder, to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Selling Holder
not materially misleading.
Each Holder agrees that upon receipt of any notice from the Company
of the happening of any event of the kind described in Sections 7(c), (g)(ii) or
(g)(iii) hereof, such Holder will forthwith discontinue disposition of
Registrable Shares pursuant to the Registration Statement covering such
Registrable Shares until such Holder's receipt of the copies of the supplemented
or amended prospectus contemplated by Section 7(c) hereof, or until it is
advised in writing by the Company that the use of the prospectus may be resumed,
and, if so directed by the Company, such Holder will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the prospectus covering such Registrable Shares current
at the time of receipt of such notice. In the event the Company shall give any
such notice, the Company shall extend the period during which such Registration
Statement shall be maintained effective by the number of days during the period
from and including the date of the giving of such notice pursuant to Section
7(c) hereof to and including the date when each Holder of Registrable Shares
covered by such Registration Statement shall have received the copies of the
supplemented or amended prospectus contemplated by Section 7(c) hereof
SECTION 8. REGISTRATION EXPENSES.
All expenses incident to the Company's performance of or compliance
with this Agreement, including, without limitation, all registration and filing
fees, fees and expenses of compliance with securities or "blue sky" laws
(including reasonable fees and disbursements of counsel of the Company and
counsel for the underwriters in connection with "blue sky" qualifications of the
Registrable Shares), and listing on any national securities exchange or
exchanges in which listing may be sought, fees and expenses associated with
filings required to be made with the National Association of Securities Dealers,
Inc., printing expenses, messenger and delivery expenses, fees and expenses of
counsel for the Company and its independent certified public accountants
(including the expenses of any special audit or "cold comfort") letters required
by or incident to such performance), securities acts liability insurance (if the
Company elects to obtain such insurance), the fees and expenses of any special
experts retained by the Company in connection with such registration, and fees
and expenses of other persons retained by the Company (all such expenses being
herein called "REGISTRATION EXPENSES") will be borne by the Company whether or
not any registration statement becomes effective; provided that in no event
shall Registration Expenses include any (i) underwriting discounts, commissions,
or fees attributable to the sale of the Registrable Shares, (ii) fees and
expenses of any counsel, accountants, or other persons retained or employed by
the Holders or underwriters (other than the reasonable fees and expenses (of
which the Company shall only be
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obligated to pay up to an aggregate maximum of $15,000) of one counsel for
Participating Holders of Registrable Shares included in the Registration
Statement, which counsel shall be selected by Holders of a majority of the
Registrable Shares included in the Registration Statement), or (iii) transfer
taxes, if any.
SECTION 9. INDEMNIFICATION; CONTRIBUTION.
(A) INDEMNIFICATION BY COMPANY. The Company agrees to indemnify and
hold harmless each Selling Holder of Registrable Shares, its officers,
directors, partners and agents and each Person, if any, who controls such
Selling Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each such person being sometimes hereinafter
referred to as an "INDEMNIFIED PERSON") from and against any and all losses,
claims, damages, liabilities and judgments (including, the reasonable legal
expenses incurred in connection with any action, suit or proceeding) arising out
of or based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
registration hereunder or arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances under
which they were made, not misleading, or (ii) any violation by the Company of
any federal state or common law rule or regulation applicable to Company and
relating to action or inaction required by the Company in connection with any
such registration; provided, however, that the Company shall not be liable for
any losses, claims, damages, liabilities or judgments arise out of, or are based
upon, any such untrue statement or omission or allegation thereof based upon
information furnished in writing to the Company by such Selling Holder or on
such Selling Holder's behalf expressly for use therein, or by any Holder's
failure to deliver a copy of the Registration Statement or prospectus or any
amendment or supplement thereto after being furnished with a sufficient number
of copies thereof by the Company.
(B) CONDUCT OF INDEMNIFICATION PROCEEDINGS. If any action or
proceeding (including any governmental investigation) shall be brought or
asserted against any Indemnified Person in respect of which indemnity may be
sought from the Company, such Indemnified Person shall promptly notify the
Company in writing, and the Company shall assume the defense thereof, including
the employment of counsel reasonably satisfactory to such Indemnified Person and
the payment of all reasonable expenses. Such Indemnified Person shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Person unless (i) the Company has agreed to pay such
fees and expenses or (ii) the named parties to any such action or proceeding
(including any impleaded parties) include both such Indemnified Person and the
Company, and such Indemnified Person shall have been advised in writing by the
counsel employed by the Company in accordance with the provisions of this
Section 9(b) that there may exist a conflict of interest between such
Indemnified Person and the Company with respect to such claim (in which case, if
such Indemnified Person notifies the Company in writing that it elects to employ
separate counsel at the expense of the Company, the Company shall not have the
right to assume the defense of such action or
11
proceeding on behalf of such Indemnified Person, it being understood, however,
that the Company shall not, in connection with any one such action or proceeding
or separate but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm of
attorneys at any time for such Indemnified Person and any other Indemnified
Persons, which firm shall be designated in writing by a majority of such
Indemnified Persons). The Company shall not be liable for any settlement of any
such action or proceeding effected without the Company's written consent, but if
settled with its written consent, or if there be a final, unappealable judgment
for the plaintiff in any such action or proceeding, the Company agrees to
indemnify and hold harmless such Indemnified Persons from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
(C) INDEMNIFICATION BY HOLDERS OF REGISTRABLE SHARES. Each Selling
Holder agrees severally and not jointly to indemnify and hold harmless the
Company, its directors, officers and agents and each Person, if any, who
controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing
indemnity from the Company to such Selling Holder, but only with respect to
information furnished in writing by such Selling Holder or on such Selling
Holder's behalf expressly for use in any Registration Statement or prospectus or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its directors,
officers or agents or any such controlling person, in respect of which indemnity
may be sought against such Selling Holder, such Selling Holder shall have the
rights and duties given to the Company, and the Company or its directors,
officers or agents or such controlling person shall have the rights and duties
given to such Selling Holder by the preceding Section 9(b).
(D) CONTRIBUTION. If the indemnification provided for in this Section
8 is unavailable to or unenforceable by the Company or the Indemnified Persons
in respect of any losses, claims, damages, liabilities or judgments referred to
herein, then each such indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, liabilities and
judgments in such proportions as is appropriate to reflect the relative fault of
the Company and the Indemnified Persons in connection with the actions or
inactions which resulted in such losses, claims, damages, liabilities and
judgments, as well as any other relevant equitable considerations (including the
relative fault and indemnification or contribution obligations of other relevant
parties). The relative fault of the indemnifying party on the one hand and of
the indemnified person on the other shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party, and
by such party's relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
The Company and the Indemnified Persons agree that it would not be
just and equitable if contribution pursuant to this Section 9(d) were determined
by pro rata allocation or by any other method of allocation which does not take
account of the equitable considerations referred to in the
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immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the persons entitled
hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements and (c) agrees to pay such Person's pro rata portion of all
underwriting discounts, commissions and fees.
SECTION 11. MISCELLANEOUS.
(A) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given unless the Company has obtained the
written consent of Holders of at least a majority of the Registrable Shares.
Notwithstanding the foregoing, (i) if a waiver or consent to departure from the
provisions hereof does not adversely affect the rights of all of the Holders,
the Company shall not be required to obtain the consent of any such Holder not
adversely affected thereby, and (ii) if such waiver or consent to departure
relates exclusively to the rights of Holders whose Registrable Shares are being
sold pursuant to a Registration Statement and does not directly or indirectly
affect the rights of other Holders, such waiver or consent to departure may be
given by Holders of at least a majority in interest of the Registrable Shares
being sold by such Holders pursuant to such Registration Statement; provided
that the provisions of this sentence may not be amended, modified or
supplemented except in accordance with the provisions of the immediately
preceding sentence.
(B) NOTICES. All notices and other communications provided for or
permitted hereunder shall be in writing and shall be delivered personally or by
first-class mail, telecopier or overnight courier:
(i) if to a Holder of Registrable Shares, at the most current
address set forth on the books of the Company, and
(ii) if to the Company, initially at Phar-Mor, Inc., 00 Xxxxxxx
Xxxxx Xxxx, Xxxxxxxxxx, Xxxx 00000-0000, Attention: General Counsel, and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 11(b).
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail (postage prepaid), if mailed; upon
receipt of a telecopy confirmation sheet, if telecopied; and on the day
delivered if sent by an air courier guaranteeing overnight delivery.
13
(C) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of and be binding upon the successors and, to the extent set forth herein, the
assigns of each of the parties, including without limitation and without the
need for an express assignment, Eligible Transferees.
(D) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(E) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof
(F) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
UNDER AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES.
(G) CONSENT TO JURISDICTION; SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST ANY PARTY HERETO ARISING OUT OF OR RELATING TO THIS
AGREEMENT SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF OHIO OR THE STATE OF DELAWARE, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT EACH PARTY HERETO ACCEPTS FOR ITSELF AND IN
CONNECTION WITH ITS PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE EXCLUSIVE
JURISDICTION OFT HE AFORESAID COURTS AND WAIVE ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO HEREBY AGREES THAT SERVICE
OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY such court may be made by
registered or certified mail, return receipt requested, to the applicable
address provided in Section 11(b), such service being hereby acknowledged by
each party hereto to be sufficient for personal jurisdiction in any action
against such party in any such court and to be otherwise effective and binding
service in every respect.
(H) SEVERABILITY. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall not invalidate the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable any such provision in
any other jurisdiction.
(I) ENTIRE AGREEMENT. This Agreement is intended by the parties as a
final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Company with
respect to the Registrable Shares. This Agreement supersedes all prior
agreements and understandings between the parties with respect to
14
such subject matter.
(J) EFFECTIVENESS. This Agreement shall become effective on the
Effective Date.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the Company and the Holder have executed this
Agreement as of the date first written above.
COMPANY:
PHAR-MOR, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Xxxx X. Xxxxxxx, Vice President
HOLDERS:
XXXXXXXX XXXXXX L.L.C.
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
Title: President
FOXMEYER DRUG COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President and Treasurer
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