CONFIDENTIAL TREATMENT REQUESTED
(The redacted  material,  indicated by [*], has been  separately  filed with the
Commission)


                          AMENDMENT TO SUPPLY AGREEMENT

This Amendment to the Supply  Agreement  ("Amendment")  is entered into this 5th
day of  November,  1999 by and between  Phar-Mor,  Inc.  LLC and its  affiliates
("Phar-Mor")  and  McKesson  Drug  Company,  a division of McKesson  HBOC,  Inc.
("McKesson"), formerly McKesson Corporation.

                                  INTRODUCTION

Pursuant to the terms of the Supply  Agreement  dated June 19, 1997 (the "Supply
Agreement"),  McKesson and Phar-Mor, Inc. entered into an agreement to establish
a prime vendor  relationship  whereby  McKesson  serves as the supply  source of
pharmaceutical and OTC products for Phar-Mor and its retail pharmacies.

Phar-Mor,  Inc.  has recently  purchased  all of the assets of  Pharmhouse  (the
"Transaction").  In view of the Transaction, Phar-Mor and McKesson now desire to
amend the Supply Agreement as set forth below.

                                    AGREEMENT

For good and  valuable  consideration,  McKesson  and  Phar-Mor  hereby agree as
follows:

1.       McKesson  hereby  acknowledges  the  assignment  of all of the tangible
         assets,  rights and obligations of Phar-Mor,  Inc. including the Supply
         Agreement,  to its  affiliate,  Phar-Mor,  Inc.  LLC on June 27,  1997.
         Phar-Mor,  Inc. LLC remains a wholly-owned affiliate of Phar-Mor,  Inc.
         and its wholly-owned subsidiary,  Phar-Mor of Wisconsin,  Inc. Inasmuch
         as the retail  pharmacies  subject to this  Agreement  are  operated by
         wholly-owned subsidiaries and affiliates of Phar-Mor, Inc., the parties
         agree that the appropriate parties to the Supply Agreement, as amended,
         should be Phar-Mor,  Inc. LLC and its  affiliates,  and McKesson hereby
         agrees  to  such  assignment  of  the  Supply  Agreement.  Accordingly,
         hereinafter  all references to Phar-Mor  shall refer to Phar-Mor,  Inc.
         LLC and its affiliates.

2.       Section 8 of the Supply Agreement shall be amended to reflect an annual
         purchase  commitment of [ * ] (net of returns,  allowances and rebates)
         in volume of D.S.D. Merchandise by Phar-Mor.

3.       The term of the Supply Agreement as defined in Section 11 thereof shall
         be modified by this  Amendment  to extend for an  additional  four-year
         period through  November 15, 2005. For purposes  hereof,  each Contract
         Year  during the term of the Supply  Agreement  shall be defined as the
         twelve (12) month period commencing on November 15.

4.       Section 9 of the  Agreement  shall be modified by adding the  following
         payment terms:

         McKesson agrees to provide Phar-Mor with [ * ] [(*)] day payment terms.
         All invoices for each week (Sunday  through  Saturday)  will be due and
         payable via wire  transfer on the [ * ] day  following  the end of each
         week.  If any of the due dates  herein  fall on a weekend  or  holiday,
         payment will be due the next business day. All late charges as noted in
         Section 9 of the Supply  Agreement will apply to unpaid  balances.  The
         availability  of such payment terms and conditions as specified in this
         Section 4 of the Amendment is based on and  contingent  upon payment by
         Phar-Mor via wire transfer.  Until such time as Phar-Mor begins payment
         by wire transfer,  the existing  payment terms in the Supply  Agreement
         shall apply.

5.       The first  paragraph of Section 7 Purchase  Price:  Definition  of Cost
         will be deleted in its entirety and replaced with the following:

         The purchase  price of the  Merchandise  delivered to Phar-Mor shall be
         the Cost of the Merchandise less the reductions or plus the markup,  as
         applicable,  set  forth  in the  cost of goods  schedule  set  forth in
         Section 19 below.  Except in the case of  contract  items as  discussed
         below,  "Cost"  means the  manufacturer's  published  acquisition  cost
         (exclusive  of cash  discounts)  on the date of  McKesson's  invoice to
         Phar-Mor, adjusted for selected bonus goods, manufacturers' off-invoice
         allowances  and  manufacturers'  deal  prices to be made  available  to
         Phar-Mor  in  accordance  with  McKesson's  established  policies.  For
         purchases of  Merchandise  with  respect to which  Customer has entered
         into a vendor contract with a manufacturer ("Contract Products") loaded
         with McKesson,  "Cost" shall mean the "bid price" of the product as set
         forth in the vendor contract.

6.       The Developmental Funds subsection in Section 8 of the Supply Agreement
             -------------------
         will be deleted in its entirety and replaced with the following:

         In  consideration  for the  initial  two  years of the  four-year  term
         extension as specified in Section 3 of this Amendment,  McKesson agrees
         to pay to Phar-Mor the following amounts:

         (i)      the sum of [ * ] ("Developmental  Funds") within ten (10) days
                  of the  Select  Implementation  Date as  herein  defined.  For
                  purposes hereof, the Select Implementation Date shall mean the
                  date on which all Phar-Mor and Pharmhouse  locations are fully
                  participating     in    the    McKesson     Select    Generics
                  auto-substitution program; and

         (ii)     the sum of [ * ] ("Continuing  Commitment  Funds") on November
                  15, 2001.

         In the event that the Supply  Agreement is  terminated  by either party
         for any reason during the term hereof (other than a material  breach of
         the Supply  Agreement by McKesson that is not cured by McKesson  within
         sixty (60) days of Phar-Mor's  notice  thereof,  upon  termination  for
         which  Phar-Mor  shall not be  required to repay such  amounts  already
         paid),  Phar-Mor  shall  immediately  reimburse  to  McKesson  the then
         applicable  portion  of the  above-specified  Developmental  Funds  and
         Continuing  Commitment  Funds as determined  by the following  pro-rata
         reimbursement formulas:

         Reimbursement Formula for Previously Paid Developmental Funds
         -------------------------------------------------------------

        |-----                                                        -----|
        |                                                                  |
        |                      Number of months remaining in the Supply    |
        |                      Agreement between the date of termination   |
        |  [   *   ] times     and November 15, 2003                       |
        |                      ----------------------------------------    |
        |                                      60                          |
        |                                                                  |
        |                                                                  |
        |-----                                                        -----|

         Reimbursement Formula for Previously Paid Continuing Commitment Funds

         |-----                                                       -----|
         |                                                                 |
         |                      Number of months remaining in the Supply   |
         |                      Agreement between the date of termination  |
         |  [   *   ] times     and November 15, 2003                      |
         |                      -----------------------------------------  |
         |                                          24                     |
         |                                                                 |
         |-----                                                       -----|


7.       Section 19 Cost of Goods, will be deleted in its entirety and  replaced
                    -------------
         with the following:


         The  Retail  Cost of Goods  set  forth in this  Section  19 is based on
         Phar-Mor  achieving  the  following  purchase  volumes in Direct  Store
         Delivery ("D.S.D.") prescription drug and OTC product purchases (net of
         returns,  allowances and rebates) from McKesson  throughout the term of
         this Agreement:

          (i)   $[ * ] in total  chainwide  annual  purchases;  and
          (ii)  minimum  chainwide average of $[ * ] per store per month.


Retail Direct Store Delivery
----------------------------

         RX                Cost Minus                [   *   ]%
         OTC               Cost Minus                [   *   ]%

Pharmhouse Transition OTC Cost of Goods

Subject to the terms and conditions herein, all former Pharmhouse locations will
be billed at Cost  Minus [ * ]% on OTC  products  as per this  Section 19 of the
Supply Agreement.  This cost will remain effective as long as such OTC purchases
remain  consistent  with  Phar-Mor's   current  practices  and  do  not  include
Non-Ethical  OTC and General  Sundries  which are to be provided to the Phar-Mor
and Pharmhouse stores by the Phar-Mor warehouse.

Phar-Mor  stores will be invoiced at Cost Plus [ * ]%. Provided that Phar-Mor is
maintaining a minimum  chainwide  monthly  average net volume of [ * ] in D.S.D.
purchases  per  store,  McKesson  will  provide a monthly  rebate to  Phar-Mor's
corporate  offices in the amount of [ * ]% on  discountable Rx purchases and [ *
]% of discountable OTC purchases (net of returns and  allowances).  In the event
that Phar-Mor's  chainwide monthly average net purchase volume per store is less
than $[ * ], the monthly rebate will be the difference between the invoice price
and the  applicable  cost of  goods.  Items  that are  billed  at a net price as
outlined in Section 7 of the Supply  Agreement will be excluded from the monthly
rebate.

In the event that Phar-Mor fails to maintain a minimum  chainwide average volume
of $[ * ] in net D.S.D.  prescription  drug and OTC product  purchases per store
per  month  from  McKesson  during  any  three  (3)  consecutive  months of this
Agreement,  all retail cost of goods pricing hereunder shall be increased to the
then applicable  pricing based on the following  schedule until such time as the
minimum  chainwide D.S.D.  prescription drug and OTC product net purchase volume
requirement of $[ * ] is met for three (3) consecutive months, at which time the
retail cost of goods  pricing  shall return to Cost minus [ * ]% for Rx and Cost
minus [ * ]% for OTC products.

             Chainwide Monthly
             Average Per Store                         Rx             OTC
             (net of returns,                          --             ---
             allowances and rebates)
             -----------------------
             $[   *   ]                             [   *   ]       [   *   ]
             $[   *   ]                             [   *   ]       [   *   ]
             $[   *   ]                             [   *   ]       [   *   ]
             $[   *   ]                             [   *   ]       [   *   ]
             $[   *   ]                             [   *   ]       [   *   ]
             $[   *   ]                             [   *   ]       [   *   ]
             $[   *   ]                             [   *   ]       [   *   ]
             $[   *   ]                             [   *   ]       [   *   ]
             $[   *   ]                             [   *   ]       [   *   ]

         It is further  understood  and agreed by both  parties that if Phar-Mor
         fails to maintain a minimum  chainwide  average  volume of [ * ] in net
         D.S.D.  prescription drug and OTC product purchases per store per month
         from  McKesson  during  any  rolling  three  (3)  month  period of this
         Agreement, such failure shall constitute a default of this Agreement by
         Phar-Mor.

8.       The Annual  Volume  Incentive  subsection as set forth in Section 19 of
             -------------------------
         the Supply Agreement will be deleted in its entirety;  provided however
         that within thirty (30) days of the execution of this Amendment by both
         parties, McKesson will pay to Phar-Mor a volume incentive payment based
         on  Phar-Mor's  purchase  volume  of D.S.D.  prescription  drug and OTC
         products  (net of  returns,  allowances  and  rebates)  for the  period
         between  November  1, 1998 and July 1, 1999 in the  amount of [ * ]% of
         net total purchases during such period.

9.       Section 20 Generic  Pharmaceuticals will be deleted in its entirety and
                    ------------------------
         replaced with the following:

         Phar-Mor agrees to participate in McKesson's  Select  Generics  Program
         through its  auto-substitution  feature and to thereby  designate  this
         program  as the  primary  source  of  generic  pharmaceuticals  for all
         Phar-Mor and Pharmhouse stores. The Select  Implementation Date for all
         such   stores  will  occur  on  or   before-January   31,   2000.   All
         Phar-Mor/Pharmhouse  pharmacies  will be  billed  for  McKesson  Select
         Generics at discounted  bid prices,  which are subject to change due to
         market  conditions.  In  addition,  a  quarterly  rebate  will  be paid
         Phar-Mor  following the Select  Implementation  Date in accordance with
         the following schedule:

       Chainwide Quarterly McKesson Select Generics    Rebate Percent
       Purchases (net                                  on Net McKesson
       of returns allowances and rebates)              Select Generics Purchases
       ----------------------------------              -------------------------
       Less than [   *   ]                                            [   *   ]%
       and above                                                      [   *   ]%
                                                                      [   *   ]%

All  Phar-Mor/Pharmhouse  locations must be fully  participating in the McKesson
Select  Generic  auto-substitution  program in order for Phar-Mor to qualify for
any quarterly rebate hereunder. Notwithstanding anything herein to the contrary,
the quarterly McKesson Select Generics minimum purchase volume of [ * ] required
to obtain the  above-specified  rebate will be waived for the period between the
Select  Implementation  Date as  referenced  above and March 31, 2000,  and with
respect to such period the following rebate payment percentages shall apply:

|X|      [ * ]% if net McKesson Select Generics  purchase volume is less than
         $[ * ].

|X|      [ * ]% if net McKesson  Select  Generics  purchase  volume is $[ * ] or
         greater.

Rebate payments pursuant to this Section 20 will be made to Phar-Mor's corporate
offices within 30 days of the end of each quarter.

a.       Market Competitiveness
         ----------------------

         McKesson  shall  provide a Select  Generics  Benchmark  each quarter to
         ensure  Phar-Mor of the market  competitiveness  of the McKesson Select
         Generics Program.

b.       Service Level
         -------------

         McKesson will ensure a [ * ] service level,  as defined in Section 13.A
         of the Supply  Agreement for products  purchased on the McKesson Select
         Generics  Program.  If McKesson fails to meet this [ * ]% service level
         for Select Generics Program purchases for two (2) consecutive quarters,
         then  McKesson  will pay Phar-Mor an amount equal to [ * ] basis points
         ([ * ]%) of Phar-Mor's total Select Generics purchases (net of returns,
         allowances  and rebates)  during the subject period within fifteen (15)
         days following Phar-Mor's demand for same.

c.       New-to-Market Generics Features
         -------------------------------

         |X|      Stocking allowances / slotting fees on New-to-Market  products
                  will be passed to  Phar-Mor  when made  available  to McKesson
                  from the manufacturer.

         |X|      Free  goods  and/or  automatic   shipment  for   New-to-Market
                  products will be provided to Phar-Mor  when made  available to
                  McKesson from the manufacturer.

10.  Section 21.  Repack  Pharmaceuticals  will be deleted in its  entirety  and
                  -----------------------
replaced by the following:

         Repack Pharmaceuticals
         ----------------------

         A comprehensive program will be made available to Phar-Mor for repacked
         pharmaceuticals.  Stores shall be net-billed with an additional  volume
         rebate to be paid to Phar-Mor headquarters, each quarter.

          Quarterly RxPak Volume                              Rebate % on
          (net of returns, allowances & rebates)              Net RxPak Volume
          --------------------------------------              ----------------
          Less than $ [   *   ]                                   [   *   ]%
          $ [   *   ] - $[   *   ] million                        [   *   ]%
          $ [   *   ] - $[   *   ] million                        [   *   ]%
          $ [   *   ] - $[   *   ] million                        [   *   ]%
          $ [   *   ] - $[   *   ] million                        [   *   ]%
          $ [   *   ] million and above                           [   *   ]%

11.      The  reimbursement  formula  specified  at the end of Section 15 of the
         Supply Agreement shall be deleted in its entirety and replaced with the
         following:

     |-----                      -----|       |-----                     -----|
     |   Total amount of On-Site      |       | Number of months remaining    |
     |   Support Monies paid by       |       | in the then current Contract  |
     |  McKesson to Phar-Mor for      | times | year upon date of termination |
     |  the then current Contract Year|       | ----------------------------- |
     |                                |       |              12               |
     |-----                      -----|       |-----                     -----|


12.      Provided  that  all  of  Phar-Mor's  material  contractual  commitments
         required  under  this  Supply  Agreement  have  been  met for the  then
         concluding  Contract  Year as of each of the  designated  dates  below,
         McKesson  will  provide to  Phar-Mor  an annual  compliance  payment in
         accordance with the following schedule:

         $[   *   ] payable November 15, 2000
         $[   *   ] payable November 15, 2001
         $[   *   ] payable November 15, 2002
         $[   *   ] payable November 15, 2003
         $[   *   ] payable November 15, 2004
         $[   *   ] payable November 15, 2005

         In  the  event  that   Phar-Mor   fails  to  qualify  for  any  of  the
         above-specified payments due to nonperformance of its material contract
         commitments in any given Contract Year, that particular payment will be
         deemed  forfeited  and McKesson will have no liability or obligation to
         subsequently make such payment available to Phar-Mor.

13.      The Supply Agreement  between  Pharmhouse  Corporation and the McKesson
         U.S.  Healthcare division of McKesson  Corporation,  dated May 1, 1998,
         shall be deemed  terminated  upon the execution of this  Amendment.  No
         damages  or other  amounts,  other  than trade  payables  and  McKesson
         PaySystem  receivables,   shall  be  owed  to  McKesson  by  Pharmhouse
         Corporation  or by Phar-Mor,  Inc. or its  subsidiaries  or  affiliates
         based on that Supply Agreement.

14. All terms and conditions of this Amendment  shall be deemed  effective as of
July 1, 1999.

15. Except as modified above, the Supply Agreement remains unchanged and in full
force and effect.

IN  WITNESS  WHEREOF  the  parties  have  caused  this  Amendment  to the Supply
Agreement to be duly executed as, of the day and year specified above.

PHAR-MOR, INC. LLC AND ITS AFFILIATES,         McKESSON DRUG COMPANY,
BY PHAR-MOR, INC.LLC                           a division of McKesson HBOC, Inc.

By:   /s/ David Schwartz                        By:  /s/ Mark J. Majeske
      ------------------                             -------------------
Name:  David Schwartz                           Name:  Mark T. Majeske
       -----------------                               -----------------
Title: President & COO                          Title: Group President, Retail
       ---------------                                 and Customer Operations
                                                       -----------------------

Date:  November 5, 1999                         Date:  November 10, 1999
       ----------------                                -----------------

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