Document:

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                                                                   Exhibit 10.38

                               AMENDMENT NO. 1 TO
                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

      This Amendment No. 1 is made as of August 13, 2002, by and between Mercury
Air Group, Inc., a Delaware corporation (hereinafter referred to as "Employer"),
and Mr. Joseph A. Czyzyk (hereinafter referred to as "Employee").

      WHEREAS, Employer and Employee entered into that certain Amended and
Restated Employment Agreement dated May 22, 2002 (as amended, the "Employment
Agreement"); and

      WHEREAS, Employer and Employee wish to amend the Employment Agreement to
reflect the wishes of the Compensation Committee of Employer and amend (I)
Paragraph Eleventh section (a) Rights Following Termination Without Cause , (ii)
Paragraph Twelfth section (b) Rights Following Voluntary Termination After a
Change of Control and (iii) Paragraph Thirteenth Death During Employment both
in their entirety;

      NOW, THEREFORE, the parties hereby agree to amend the Employment Agreement
as follows:

      Eleventh: Termination Without Cause

            (a) Rights Following Termination Without Cause. Should Employee be
      discharged by Employer at any time during the term of this Agreement
      except as provided in Article Tenth, Employer hereby agrees to: (i) pay
      Employee within thirty (30) days from such discharge the Base Compensation
      that would otherwise be paid to him over the remaining term of this
      Agreement; and (ii) Employer shall pay to Employee a pro rated bonus for
      the portion of the fiscal year during which he was employed prior to such
      termination. For purposes of the foregoing pro ration, the bonus for the
      fiscal year in which the termination occurs shall be calculated in
      accordance with the terms of and on the schedule set forth in Article
      Third of this Agreement. Following such calculation, the bonus for the
      total fiscal year shall be multiplied by a fraction, the numerator of
      which shall be the number of days in the fiscal year of termination during
      which Employee was employed by Employer, and the denominator of which
      shall be 365. The result of such calculation shall determine the pro rated
      bonus paid to Employee

      Twelfth : Rights to Voluntary Termination by Employee

            (b) Rights Following Voluntary Termination After a Change of
      Control. Following any voluntary termination of employment by Employee
      pursuant paragraph (a) of this Article Twelfth, Employee shall be entitled
      to be paid by Employer within thirty (30) days of such termination by
      Employee, the entire balance of his Base Compensation remaining to be paid
      to Employee over the full remaining term of this Agreement.

      Thirteenth: Death During Employment

            If Employee dies during the term of this Agreement, Employer shall
      pay to

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      the estate of Employee the Base Compensation which would otherwise be
      payable to Employee up to the end of the month in which his death occurs.
      In addition, Employer shall maintain a life insurance policy or policies
      providing Ten Million Dollars ($10,000,000) in death benefits payable to
      Employee's estate or other designated beneficiary. Employee shall be
      entitled to and the owner of the cash surrender value of all such
      insurance policies in excess of the premiums paid by Employer (if any).
      Notwithstanding any other provision of this Agreement, following any
      termination of Employee's employment with Employer: (a) Employer shall
      cease paying the premiums on any such life insurance policy and shall be
      entitled to withdraw (or be paid by Employee in the form of a set-off
      against any severance payments due or otherwise) its portion of the cash
      surrender value of the life insurance policies; and (b) Employee shall be
      entitled, in his discretion, to continue such policies for his benefit by
      payment of the premiums and shall be entitled to the full cash surrender
      value of such policies following withdrawal or repayment of Employer's
      interest in the cash surrender value. Employee and Employer will execute
      such assignments as are necessary to reflect this allocation of the death
      and cash surrender values of any life insurance policies paid for by
      Employer on the life of Employee.

      All other terms and conditions of the Employment Agreement remain
unchanged and in full force and effect.

      IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.

                                   MERCURY AIR GROUP, INC.

                                   Dr. Phillip J. Fagan, Chairman of the Board

                                   Joseph A. Czyzyk, Individually<PAGE>
                                                                   Exhibit 10.12

                         UNITED STATES BANKRUPTCY COURT

                            NORTHERN DISTRICT OF OHIO

In re:                             )     In Jointly Administered
                                   )     Chapter 11 Proceedings
PHAR-MOR, INC., et al.,            )
                                   )     Case No. 01-44007 through 01-44015
                      Debtor.      )
                                   )     William T. Bodoh,
                                   )     U.S. Bankruptcy Judge
                                   )
-----------------------------------)

                   DEBTORS' MOTION PURSUANT TO BANKRUPTCY CODE
             SECTIONS 541 AND 362 FOR AN INJUNCTION PROHIBITING THE
                 TRANSFER OF CERTAIN STOCK IN THE DEBTORS UNTIL
                   CONFIRMATION OF THE PLAN OF REORGANIZATION;
                 DECLARATION OF FRANK M. OLIVETI; DECLARATION OF
                GERALD A. MORELL, JR. AND PROPOSED ORDER THEREON
                ------------------------------------------------

         Phar-Mor, Inc. and its eight affiliated entities, the debtors and
debtors in possession in the above-captioned cases (the "Debtors"), move the
Court pursuant to sections 541 and 362 of the Bankruptcy Code for an injunction
prohibiting the transfer of certain stock in the Debtors until confirmation of
the plan of reorganization (the "Motion"). In support of the Motion, the Debtors
state:

         On September 24, 2001, the Debtors filed voluntary petitions under
chapter 11 of the Bankruptcy Code. Pursuant to Bankruptcy Code sections 1107 and
1108, the Debtors continue to possess, manage and operate their businesses and
properties as debtors in possession. The cases are being jointly administered
for procedural purposes only.

         Phar-Mor, Inc.'s ("Phar-Mor's") equity capitalization includes
40,000,000 authorized shares of common stock, of which 12,240,865 were
outstanding as of September 5, 2001. The

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other eight affiliated debtors are all either directly or indirectly owned by
Phar-Mor. The Debtors move this Court for the entry of an order pursuant to
sections 541 and 362(a) of the Bankruptcy Code prohibiting the transfer of
certain stock(1) in the Debtors until confirmation of the plan of
reorganization. Entry of such an order will enable the Debtors to preserve one
of their most valuable assets - as much as a $347 million consolidated net
operating loss carryforward (the "NOL"). As is more fully set forth in the
Declaration of Frank M. Oliveti of Deloitte & Touche, the Debtors' tax
consultants and independent auditors, attached hereto as Exhibit A (the "Oliveti
Declaration"), and the declaration of Gerald A. Morell, Jr., Director of Taxes
of Phar-Mor, attached hereto as Exhibit B (the "Morell Declaration"), so long as
it is not lost by reason of changes in ownership, the Debtors should be able to
use a significant portion of the NOL to offset future income and thereby
effectively reduce or eliminate some of the Debtors' future income tax
liability.

         If the injunction is not entered by the Court, the Debtors are in
serious danger of losing the NOL's benefit due to continued transfers of the
Debtors' stock. Under section 382 of the Internal Revenue Code of 1986, as
amended (the "IRC"), if as little as an additional twenty percent of the
Phar-Mor stock (assuming certain options are treated as stock) is involved in an
owner shift to or from a five percent shareholder, the availability of the NOL
will be effectively eliminated. This could cause the Debtors to incur a
substantial increase in future federal income tax liability, a result that would
seriously jeopardize the prospect of a successful reorganization.

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         (1) As used in the Motion, stock means all 40,000,000 authorized shares
of common stock, all options acquire stock, warrants, rights to acquire such
stock and rights to convert other interests into such stock. The Debtors also
seek to restrict the issuance of any new additional options or warrants unless
Phar-Mor and its advisors determine that such new issues are DE MINIMIS.

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I.       FACTUAL BACKGROUND AND REQUESTED RELIEF

         The Debtors currently estimate that they have a combined NOL of
approximately $347 million as a result of past operating losses. SEE Morell
Declaration, Paragraph 3. Section 172 of the IRC permits corporations, under
certain circumstances, to carry forward NOL's to offset future income.(2) Absent
additional limitations imposed by IRC section 382, the Debtors would be
permitted to utilize an estimated $100 million of the NOL to offset future
income, enabling them to realize "tax free" cash flow of approximately $35
million. SEE Oliveti Declaration, Paragraph 3. Any plan of reorganization would
contemplate utilizing this NOL to offset future income. SEE Morell Declaration,
Paragraph 4.

         Section 382 of the IRC, however, places an annual limit on a
corporation's ability to deduct NOLs when the corporation has experienced a
change of ownership.(3) An ownership change occurs where the percentage of stock
owned by one or more five percent shareholders has increased by more than 50
percentage points over the lowest percentage of stock owned by such shareholders
at any time during the testing period.(4) Generally, the testing period is a
three-year moving period. 26 U.S.C.A. section 382(i)(1). A corporation
experiencing an ownership change is subject to an annual limit on the use of its
NOL that is determined by multiplying the value of the corporation at the time
of the change by the federal long term tax exempt rate (the "section

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         (2) Section 172 of the IRC, provides, "There shall be allowed as a
deduction for the taxable year an amount equal to the aggregate of (1) the net
operating loss carryovers to such year, plus (2) the net operating loss
carrybacks to such year." 26 U.S.C.A. Section 172(a) (West Supp. 2001).

         (3) Section 382(a) of the IRC states, "The amount of the taxable income
of any new loss corporation for any post-change year which may be offset by
pre-change losses shall not exceed the section 382 limitation for such year." 26
U.S.C.A. Section 382(a) (West Supp. 2001).

         (4( An "owner shift involving a 5-percent shareholder" is the
triggering event for the potential application of the section 382 limitation. An
owner shift is any change in the percentage of ownership of stock in the loss
corporation which increases or decreases the percentage of stock hold by a
person who is a five percent shareholder. A five percent shareholder is "any
person holding 5 percent or more of the stock of the corporation at any time
during the testing period." 26 U.S.C.A. Section 382(k)(7).

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limitation").(5) The Debtors estimate that if the section 382 limitation were to
apply, the annual value of the NOL might be reduced to as little as $0,(6) which
would prohibit the Debtors from receiving any "tax free" cash flow as opposed to
the $35 million without the section 382 limitation. SEE Oliveti Declaration,
Paragraph 4. Therefore, if the section 382 limitation applies, Phar-Mor's NOL
will be effectively eliminated.

         For purposes of the section 382 limitation, the Debtors estimate that
an owner shift of 30% has occurred during the last thirty-six month period.(7)
SEE Oliveti Declaration, Paragraph 5-6. This means that if as little as twenty
percent of the Debtors' stock is involved in an owner shift to or from a five
percent shareholder, the section 382 limitation may apply and the NOL will be
severely limited in the future.

         Using the NOL to offset future income may well be vital to the Debtors'
reorganization efforts. If eliminated, future cash flow and cash on hand in the
post-reorganization company would be diminished, leaving less cash available to
fund the Debtors' continuing business operations. The Debtors' ability to obtain
needed post-reorganization financing could be impaired. Perhaps most
importantly, the Debtors' reorganization value could well be diminished by tens
of millions of dollars if Phar-Mor's NOL is eliminated. All of these results
would be detrimental to the Debtors' creditors and shareholders.

         Utilization of the NOL is sufficiently important to the Debtors'
reorganization efforts that they initially considered restricting the transfer
of certain shares immediately by amending Phar-

----------

         (5) Section 382 continues, "Except as otherwise provided in this
section, the section 382 limitation for any post-change year is an amount equal
to - (A) the value of the old loss corporation, multiplied by (B) the long-term
tax-exempt rate." Id. Section 382(b).

         (6) Assuming the hypothetical stock valuation utilized in paragraph 4
of the Oliveti Declaration.

         (7) Nothing in this Motion or the supporting declarations shall be
construed as an admission that for the purposes of the section 382 limitation
that 30% of the shares have been transferred. Nor shall it prejudice the

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Mor's corporate bylaws. However, the bylaws require amendments to be approved by
two-thirds of the shareholders - a costly and time consuming undertaking.
Because only a relatively small amount of shares needs to be transferred before
the section 382 limitation is imposed, there simply is not sufficient time to
obtain shareholder approval of an amendment restricting trading.

         Further, amending the bylaws under Pennsylvania law may still not
insure preservation of the NOL. While section 1529 of the Pennsylvania Business
Corporations Code permits a company to restrict the transfer of shares by
amending the bylaws, such restrictions only affect shares issued AFTER the
restriction is imposed "unless the holders of the securities are parties to the
agreement or voted in favor of the restriction." 15 Pa. Bus. Cons. Stat. Ann.
Section 1529(b) (Purdon 1992). How that provision interfaces with a later
provision that permits "[a]ny other lawful restriction on transfer or
registration of transfer of securities. . ." is less than clear. ID. Section
1529(e). However, an order pursuant to section 362 of the Bankruptcy Code should
certainly qualify as a lawful restriction.

         On February 14, 2002, the Phar-Mor Board of Directors passed a
resolution restricting all future transfers of stock, except to the extent that
Phar-Mor's advisors determine that a given transfer will not cause an owner
shift involving a five-percent shareholder and therefore will not significantly
increase the risk of impairing the value of the NOL. A copy of the resolution is
attached hereto as Exhibit C. Proposed transferors and transferees are and will
be asked to submit certain information concerning their stock holdings and the
proposed transfer. Phar-Mor and its advisors will promptly determine whether the
transfer should be permitted in light of section 382 of the IRC. Copies of the
transferee and transferor letters of representation are attached hereto as
Exhibit D. Phar-Mor will authorize only those transfers that it determines will

----------
Debtors' rights in any way to assert that any transfers should not be included
when determining whether the section 382 limitation applies.

                                       5
<PAGE>

not affect the application of the section 382 limitation and jeopardize
preservation of the NOL.(8) Therefore, the Debtors request that the Court enter
an order enjoining until confirmation of the plan of reorganization the transfer
of all shares of stock, unless Phar-Mor and its advisors determine that the
transfer will not affect the section 382 limitation and jeopardize preservation
of the NOL.

II.      LEGAL ARGUMENT

         A.       The NOL carryforward is property of the estate under
                  Bankruptcy Code section 541.

         Section 541(a) of the Bankruptcy Code provides that the bankruptcy
estate encompasses "all legal or equitable interests of the debtor in property
as of the commencement of the case." 11 U.S.C. Section 541(a)(1). Because it is
vital to the reorganization process that all of the debtor's property be
included in the estate, Congress intended section 541 to be interpreted broadly.
UNITED STATES V. WHITING POOLS, INC., 462 U.S. 198, 203-04 (1983); IN RE
PRUDENTIAL LINES, INC., 107 B.R. 832 (Bankr. S.D.N.Y. 1989) (granting
preliminary injunction), 114 B.R. 27 (Bankr. S.D.N.Y. 1989) (granting permanent
injunction), AFF'D, 928 F.2d 565, 569 (2d Cir. 1991), CERT. DENIED 112 S. Ct. 82
(1991). Further, while the nature and extent of the debtor's interest in
property is determined by non-bankruptcy law, whether the interest constitutes
property of the estate is determined by bankruptcy law. PRUDENTIAL LINES, 928
F.2d at 569 (citations omitted).

         A debtor's interest in its right to carryback an NOL that results in a
tax refund to the debtor and its interest in its right to carry forward an NOL
to offset future income have both been held to be property of the debtor's
estate under section 541. SEE SEGAL V. ROCHELLE, 382 U.S. 375, 380 (1966)
(construing predecessor to section 541 and holding that an NOL carryback is
property of the estate); PRUDENTIAL LINES, 928 F.2d at 573 ("We hold that the
right to a

----------

         (8) Phar-Mor's board of directors may also restrict stock transfers to
comply with certain securities laws.

                                       6
<PAGE>

carryforward attributable to [the debtor's] $74 million NOL was
property of [the debtor's] estate."); IN RE RUSSELL, 927 F.2d 413, 417-18 (8th
Cir. 1991); IN RE BEERY, 116 B.R. 808, 810 (D. Kan. 1990) ("The loss
carryforwards were property of the estate because they were sufficiently rooted
in the pre-bankruptcy past and not sufficiently entangled with the debtor's
ability to make an unencumbered fresh start"); IN RE WHITE METAL ROLLING AND
STAMPING CORP., 222 B.R. 417 (2nd Cir. 1998) ("It is beyond peradventure that
NOL carrybacks and carryovers are property of the estate of the loss corporation
that generated them"); IN RE FEILER, 218 F.3d 948, 956 (9th Cir. 2000)
("[Courts] have held that NOLs are property of the debtor's estate"). Indeed,
this Court found in a previous Phar-Mor bankruptcy proceeding "that NOL's are
property of the estate under the broad language of 11 U.S.C. Section 541(a)(1)
as a power or right which may be exercised by a debtor for its own benefit." IN
RE PHAR-MOR, INC., 152 B.R. 924, 926 (Bankr. N.D. Ohio 1993). Thus, the
approximately $347 million NOL attributable to the Debtors' pre-petition
business is property of the estate, and this Court has the authority under
section 362 of the Bankruptcy Code to enjoin the stock transfers that would have
the effect of eliminating this valuable asset.

         In PRUDENTIAL LINES, a shareholder attempted to take a worthless stock
deduction on its 1988 federal tax return with respect to the stock of its
subsidiary, a chapter 11 debtor. A worthless stock deduction would have enabled
the shareholder to reduce its own federal income tax liability. Taking this
deduction, however, would have caused a change in control of the debtor under
section 382 of the IRC. The plan of reorganization envisioned that the debtor
would be able to utilize a substantial portion of its NOLs under the "bankruptcy
exception" of IRC section 382(1)(5). The Second Circuit Court of Appeals
affirmed the bankruptcy court's order enjoining the shareholder from taking the
deduction as a violation of the automatic stay

                                       7
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because the "right to a carryforward attributable to its $74 million NOL was
property of [the Debtor's] bankruptcy estate." 928 F.2d at 573. The court
reasoned that section 541 was intended to be sufficiently broad to facilitate
bringing everything of value into the estate. It held:

                  Including the right to a NOL carryforward as property of [the
                  Debtor's] bankruptcy estate furthers the purpose of
                  facilitating the reorganization of (the Debtor). The fact that
                  both plans for reorganization contemplated its availability to
                  the reorganized company suggests that [the Debtor's] $74
                  million NOL was a valuable asset of [the Debtor].

ID.

         The reasoning in the PRUDENTIAL LINES case was applied by the Eighth
Circuit Court of Appeals in IN RE RUSSELL, 927 F.2d 413 (8th Cir. 1991). In
RUSSELL, the trustee brought a motion to avoid an individual chapter 11 debtor's
pre and post-petition elections to carry forward his substantial NOLs. Under
federal tax law, the debtor could apply the NOLs back three years against prior
income or use the NOLs exclusively in future years. If the debtor made the
carryback election, the bankruptcy estate would have been the primary
beneficiary of the NOLs and would have been entitled to a tax refund. With a
carry forward election, however, the debtor would be the beneficiary of the NOLs
because most of them would have been available only after plan confirmation. The
debtor elected to carry forward the NOLs and use them exclusively to offset
future income. When a trustee later filed amended tax returns in which he
attempted to carry back the 1982 and 1983 NOLs and claim a tax refund, the IRS
denied the refund claiming that elections regarding the NOLs were irrevocable.
ID. at 415. In the context of determining whether a transfer of property of the
estate had occurred under sections 548 and 549 of the Bankruptcy Code, the court
held that NOLs constituted property of the debtor's estate. It stated, "The
property interest at issue here is not the potential million dollar refund, but
rather the right

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to carry forward the NOLs: `[E]state property includes a debtor in possession's
right to carryforward an NOL.'" ID. at 417-18 (QUOTING PRUDENTIAL LINES, 107
B.R. at 836).

         B.       The requested stock transfers can be enjoined under section
                  362 of the Bankruptcy Code.

         Section 362(a)(3) of the Bankruptcy Code provides that the commencement
of a bankruptcy case operates as a stay of "any act to obtain possession of
property of the estate or of property from the estate or to exercise control
over property of the estate." 11 U.S.C. Section 362(a)(3). Having demonstrated
that the right to carry forward the NOL is property of the estate, the Court may
properly enjoin the requested stock transfers. As stated in PHAR-MOR, the "asset
is entitled to protection while Debtors move forward toward reorganization." 152
B.R. at 927. In PRUDENTIAL LINES, the court reasoned that even when the
shareholder's action is not specifically directed at the Debtor, its actions are
enjoined by the stay. It reasoned:

                  [W]here a non-debtor's action with respect to an interest that
                  is intertwined with that of a bankrupt debtor would have the
                  legal effect of diminishing or eliminating property of the
                  bankrupt estate, such action is barred by the automatic stay.
                  In the instant case, [the shareholder's] interest in its
                  worthless stock deduction is intertwined with [the debtor's]
                  NOL. If [the shareholder] were permitted to take a worthless
                  stock deduction on its 1988 tax return, it would have an
                  adverse impact on [the debtor's] ability to carryforward its
                  NOL. Accordingly, despite the fact that [the shareholder's]
                  action is not specifically directed at [the debtor], IT IS
                  BARRED BY THE AUTOMATIC STAY AS AN ATTEMPT TO EXERCISE CONTROL
                  OVER PROPERTY OF THE ESTATE.

PRUDENTIAL LINES, 928 F.2d at 574 (emphasis added).

         As in PRUDENTIAL LINES, the shareholders' interests in trading their
stock and the Debtors' interest in utilizing the NOL are inexorably intertwined.
The shareholders cannot continue to trade their stock without a high risk that
the sales would trigger a change in ownership under section 382 of the IRC and
invoke the annual limit on use of the NOL that effectively eliminates

                                       9
<PAGE>

its value to the estates. Accordingly, stock transfers constitute attempts to
exercise control over property of the estates that are barred by the automatic
stay.(9) ID.

         In another line of unreported but highly publicized decisions,
bankruptcy courts have held that NOLs are property of the estate and on that
basis enjoined trading in the debtor's debt where such trading would invoke the
section 382 limitation. In IN RE MCLEAN INDUSTRIES. INC., Nos. 86 B 12238-12241
(Bankr. S.D.N.Y. Feb. 16, 1989), the court enjoined trading in the debtor's
claims to protect the value of its NOLs.(10) The court's willingness to issue
this injunction implies that the court viewed NOLs as property of the debtor's
estate. SEE ALSO PAN AM CORP. V. UNSECURED CREDITORS OF PAN AM, Nos. 91B.10080
(CB)-91B.10087 (CB), Adv. Proc. 91-6175A (CB) (Bankr. S.D.N.Y. Oct. 3, 1991)
(enjoining the sale, trade, transfer, purchase or acquisition of any general
unsecured claims, bonds or debentures to protect NOLs proposed to be utilized
under the plan of reorganization). Copies of the MCLEAN and PAN AM orders are
attached hereto as Exhibit E.

         Similarly, this Court previously held in 1993 that Phar-Mor's NOL at
that time was property of the Debtors and enjoined trading where such trading
would invoke section 382 limitations. In PHAR-MOR, this Court stated that "[t]he
Court finds at this juncture, the sale of stock is prohibited by Section
362(a)(3) as an exercise of control over the NOL, which is property of

----------

         (9) Relying on section 105(a) of the Bankruptcy Code, the PRUDENTIAL
LINES court went so far as to issue a permanent injunction against the
shareholder ever claiming a worthless stock deduction on its 1988 tax return --
even post-confirmation. ID. Section 105(a) is not implicated in this Motion
because the NOL is clearly property of the Debtors' estate, and any attempt to
exercise control over it or any act that would have the effect of diminishing it
can be enjoined for the requested period pursuant to section 362.

         (10) Under IRC section 382(l)(5), the ability of a reorganized debtor
to use its NOLs or built-in losses to offset taxable income may be severely
limited unless a majority of the value of the debtor after reorganization is
received by existing shareholders and "qualified creditors." "Qualified
creditors" are creditors who have held their claims against the debtor for more
than 18 months or who acquired such claims in the ordinary course of their
business.

                                       10
<PAGE>

the estate." 152 B.R. at 927. The same rationale applied in the 1993 decision is
applicable here, and Phar-Mor should be allowed to utilize its NOL to offset
future income.

II.      CONCLUSION

         Using the NOL to offset future income may well be vital to the Debtors'
reorganization efforts. If eliminated, future cash flow and cash on hand in the
post reorganization companies would be diminished, leaving less cash available
to fund the Debtors' continuing business operations. The Debtors' ability to
obtain needed post-reorganization financing would be impaired. Perhaps most
importantly, the Debtors' reorganization value could well be diminished by tens
of millions of dollars if Phar-Mor's NOL is eliminated. All of these results
would be detrimental to the Debtors' creditors and shareholders. This Court has
the authority to issue the requested injunction pursuant to sections 541 and 362
of the Bankruptcy Code.

                                       11
<PAGE>

         WHEREFORE, the Debtors request that this Court enter an order in
substantially the form of that attached hereto as Exhibit F enjoining until
confirmation of the plan of reorganization all future transfers of stock unless
Phar-Mor and its advisors determine that such transfers do not increase the risk
of invoking the section 382 limitation and thereby jeopardize preservation of
the NOL. The Debtors request such relief be without prejudice to their right to
seek a further extension of the injunction beyond that date.

                  Dated this 15th day of February, 2002.

                               Respectfully Submitted,

                                    /s/ Mark B. Joachim
                               --------------------------------------------
                               MARK B. JOACHIM, ESQ.
                               MORRISON & FOERSTER LLP
                               1290 Avenue of the Americas
                               New York, NY  10104-0050
                               Phone: (212) 468-8000
                               Co-Counsel for Debtors and Debtors-in-Possession

                               And

                               MICHAEL A. GALLO, ESQ.
                               TIMOTHY M. REARDON, ESQ.
                               NADLER, NADLER & BURDMAN CO., LPA
                               20 Federal Plaza West
                               Suite 600
                               Youngstown, Ohio  44503
                               (330) 744-0247
                               Co-Counsel for Debtors and Debtors-in-Possession

                                       12

<PAGE>
                                    Exhibit A

                         UNITED STATES BANKRUPTCY COURT

                            NORTHERN DISTRICT OF OHIO

In re:                              )     In Jointly Administered
                                    )     Chapter 11 Proceedings
PHAR-MOR, INC., ET AL.,             )
                -- --               )
                                    )     Case No. 01-44007 through 01-44015
               Debtors.             )
                                    )     William T. Bodoh,
                                    )     U.S. Bankruptcy Judge
                                    )
----------------------------------- )

             DECLARATION OF FRANK M. OLIVETI IN SUPPORT OF DEBTORS'
                       MOTION PURSUANT TO BANKRUPTCY CODE
             SECTIONS 541 AND 362 FOR AN INJUNCTION PROHIBITING THE
                    TRANSFER OF CERTAIN STOCK IN THE DEBTORS
                UNTIL CONFIRMATION OF THE PLAN OF REORGANIZATION

     I, FRANK M. OLIVETI, DECLARE AS FOLLOWS:

         1. I give this declaration of my own personal knowledge and could
competently testify thereto if called as a witness.

         2. I am currently employed as a Firm Director in the Merger and
Acquisitions Services Group in the New York office of Deloitte & Touche ("D&T").
Within the Mergers and Acquisitions Service Group, I work with the RSG tax
group, which specializes in providing tax service to financially troubled and
bankrupt companies. I have provided tax planning services to companies in
chapter 11 reorganizations, such as Warnaco Group, Inc. and Phar-Mor, Inc.
("Phar-Mor").

         3. Phar-Mor's accumulated net operating loss ("NOL") is a valuable
asset of the bankruptcy estates. IRC section 172 generally provides that a
corporation may carry forward an NOL to offset taxable income in subsequent
years. However, section 382 of the IRC limits

                                       13
<PAGE>

the annual use of the NOL when the loss corporation has experienced a more than
50% change of ownership. Phar-Mor has an accumulated loss for tax purposes of
approximately $347 million at June 30, 2001. It is estimated that $100 million
of the NOL may be used before expiration given the current limitations on usage.
At a tax rate of 35%, this could represent potential tax savings of
approximately $35 million if the Company avoids a Section 382 ownership
change.(1)

         4. If the Company were to experience an ownership change at this time,
the NOL would be effectively eliminated. After an ownership change, the annual
deductible NOL is computed by multiplying the fair market stock value of the
Company at the time of the change by the federal long-term tax exempt rate
(currently 5.01%). The value of Phar-Mor's stock is unclear at this time
primarily because Phar-Mor's stock is not publicly traded. Assuming arguendo
that the value of a debtor in possession's stock was at $.05 per share(2),
applying that price to Phar-Mor's outstanding stock would yield a value of
approximately $600,000. The annual NOL deduction limit under section 382 would
be approximately $30,000 per year, assuming a value of $600,000 and a federal
long-term tax exempt rate of 5.01%. If the section 382 limitation were to apply,
the estates would realize a potential tax savings of only $210,000 over the
twenty year carryforward period, as opposed to the $35 million tax savings over
the same period absent the limitation.(3)

         5. On November 15, 2001, John Ficarro, Senior Vice President, Chief
Administrative Officer and General Counsel of Phar-Mor, requested that D&T
conduct an

----------
(1) The actual use of the NOL will still depend on numerous future events
related to a plan of reorganization, such as the amount of stock, if any, given
to creditors in exchange for their debts, the amount of debt cancellation, the
value of Phar-Mor's stock at confirmation and its future taxable income. It is
possible that these events may reduce the ultimate tax savings from the NOL
below the $35 million discussed herein; however, a pre-confirmation ownership
change would eliminate any chance of using more than a nominal portion of the
NOL post-confirmation.

(2) Although, if the limitation were to apply, the value of the debtor in
possession's stock would likely be zero.

(3) $30,000 x the maximum 20 year carry forward period x a 35% tax rate =
$210,000.

                                       2
<PAGE>

analysis to determine if the Company had experienced a change in ownership. To
facilitate this project, D&T reviewed Phar-Mor's public documents and filings
with the Securities and Exchange Commission.

         6. Based on our review, we believe that Phar-Mor has experienced an
ownership change of approximately 30% during the last thirty-six month period.
This calculation is based on current regulations that require options to be
treated as exercised when making the ownership change calculation.

         Executed under penalty of perjury this 14th day of February, 2002 at
New York, New York.

                                             /s/ Frank M. Oliveti
                                             -------------------------------
                                             Frank M. Oliveti

                                       3
<PAGE>

                                    Exhibit B

                         UNITED STATES BANKRUPTCY COURT

                            NORTHERN DISTRICT OF OHIO

In re:                               )     In Jointly Administered
                                     )     Chapter 11 Proceedings
PHAR-MOR, INC., ET AL.,              )
                                     )     Case No. 01-44007 through 01-44015
                      Debtors.       )
                                     )     William T. Bodoh,
                                     )     U.S. Bankruptcy Judge
                                     )
-----------------------------------  )

           DECLARATION OF GERALD A. MORELL, JR. IN SUPPORT OF DEBTORS'
                       MOTION PURSUANT TO BANKRUPTCY CODE
             SECTIONS 541 AND 362 FOR AN INJUNCTION PROHIBITING THE
                    TRANSFER OF CERTAIN STOCK IN THE DEBTORS
                UNTIL CONFIRMATION OF THE PLAN OF REORGANIZATION

      I, GERALD A. MORELL, JR., DECLARE AS FOLLOWS:

         1. I make this declaration of my own personal knowledge and could
competently testify thereto if called on to do so.

         2. I have been employed since 1993 as Manager of Taxes, and since May
1, 2000, as the Director of Taxes for Phar-Mor, Inc. ("Phar-Mor"), a debtor in
possession (and the ultimate parent company of the other debtors in possession)
in these cases. As such, I have supervisory responsibility for all areas of
federal, state and local taxation, including franchise, income, payroll,
property and sales and use taxes. A significant portion of my management
responsibility is the fulfillment of Phar-Mor's compliance requirements,
including all relevant computations. Prior to joining Phar-Mor, I was employed
by The Edward J. DeBartolo Corp. as a tax accountant.

<PAGE>

         3. At the inception of the current bankruptcy proceeding, Phar-Mor has
a Federal net operating loss ("NOL") of approximately $347 million, of which
approximately $39 million has been incurred after it emerged from its prior
bankruptcy on September 11, 1995.

         4. Prospectively, Phar-Mor's NOL can add significant value to the
Company through the realization of material future tax benefits. Generally, a
net operating loss may be carried over for a maximum of twenty years following
the year in which the loss arises to offset an equivalent amount of taxable
income. Phar-Mor's ability to realize "tax free" cash flow of approximately $35
million through the full utilization of its available $100 million NOL within
the twenty year carryover period is a valuable asset of the estates. This
potential cash flow is a vital asset to Phar-Mor and is a key to its successful
reorganization.

         Executed under penalty of perjury on February 14, 2002 at Youngstown,
Ohio.

                                       /s/ Gerald A. Morell
                                    -----------------------------
                                   GERALD A. MORELL, JR.

                                       2
<PAGE>
                                    Exhibit C

                                   RESOLUTION

                                     OF THE

                      BOARD OF DIRECTORS OF PHAR-MOR, INC.

                                February 14, 2002

                  WHEREAS, in order to preserve net operating loss carry overs
and other related tax attributes to which Phar-Mor, Inc. (the "Corporation") is
entitled (the "Tax Benefits") pursuant to the Internal Revenue Code of 1986 (the
"Code"), certain restrictions on the transfer of stock of the Corporation should
be imposed; and

                  WHEREAS, such restrictions must be authorized by the Board of
Directors of the Corporation.

                  NOW, THEREFORE, BE IT RESOLVED, that Abbey J. Butler and
Melvyn J. Estrin, Co-Chairmen and Co-Chief Executive Officers, John R. Ficarro,
Senior Vice President, Chief Administrative Officer and General Counsel, and
Martin S. Seekely, Vice President and Chief Financial Officer, of this
Corporation (the "Officers"), and each of them, are authorized hereby to
implement such restrictions on the transfer of stock of the Corporation as may
be required under Section 382 of the code to preserve the Tax Benefits; and

                  RESOLVED FURTHER, that the restrictions shall be of a nature
and form recommended by counsel and approved by the Officers, including, by way
of example but not by way of limitation, an amendment to the Corporation's
Articles of Incorporation, an amendment to the Corporation's Bylaws, a court
order providing for and enforcing such restrictions, or a combination thereof;
and

<PAGE>

                  RESOLVED FURTHER, that any of the officers are authorized
hereby on behalf of the Corporation to prepare, sign and file, or cause to be
filed, with any applicable state or federal regulatory, judicial or supervisory
body all applications, requests for approval, consent, interpretation, or other
determination, notices and other information and documents, and any
modifications or supplements thereto, as may be necessary or convenient to
preserve the Tax Benefits, together with all agreements and other information
and documents required or appropriate, and any publications required in
connection therewith.

                                       2
<PAGE>
                                    Exhibit D

                                   TRANSFEROR

                            LETTER OF REPRESENTATION

                                February __, 2002

Phar-Mor, Inc.
20 Federal Plaza West
Youngstown, Ohio  44503

            Re:    Transfer of ____ shares of common stock (the "Securities")
                   of Phar-Mor, Inc. (the "Company")
                   ---------------------------------

Gentlemen:

         The undersigned proposes to transfer to _______________ (the
"Transferee") the Securities. To induce the Company to register the transfer of
the Securities to the Transferee and to demonstrate that the acquisition and
transfer of the Securities will be in compliance with any applicable right of
first refusal in favor of the Company, will not result in "ownership change" for
the Company under Section 382 of the Internal Revenue Code of 1986, as amended
(the "Code"), and will not require registration under the federal Securities Act
of 1933, as amended (the "Securities Act"), or any applicable state securities
laws, the undersigned hereby represents and warrants to you that:

         1(a) The residence address and telephone number of the undersigned are
set forth below:

                        ---------------------------------

                        ---------------------------------

                        ---------------------------------

                        Telephone No. (day)
                                           --------------

                        Telephone No. (evening)
                                               ----------

         (b)      The Social Security or Taxpayer I.D. No. of the undersigned is
                  set forth below:

                        ---------------------------------

<PAGE>
Page 2 - Phar-Mor, Inc. - February __, 2002

         2.       The proposed disposition of the Securities is in compliance
                  with any applicable state securities laws and (check one):

         ___      (i) the Securities are to be transferred to an Eligible
                  Purchaser (as defined below), (ii) a certificate and other
                  documents reasonably satisfactory to the Company promptly will
                  be executed by the Transferor and furnished to the Company and
                  (iii) all offers and solicitations in connection with the
                  transfer, whether directly or through any agent acting on the
                  behalf of the undersigned, are limited to Eligible Purchasers
                  and are not made by means of any form of general solicitation
                  or general advertising whatsoever.

         ___      the Securities are to be transferred in compliance with Rule
                  144 under the Securities Act and the undersigned promptly will
                  furnish to the Company a certificate and other documents
                  reasonably satisfactory to the Company as to such compliance.

         ___      the Securities are to be transferred in compliance with Rule
                  144A under the Securities Act to a person who the undersigned
                  reasonably believes is a "qualified institutional buyer"
                  within the meaning of such Rule and the undersigned promptly
                  will furnish to the Company a certificate and other documents
                  reasonably satisfactory to the Company as to such compliance.

         ___      the Securities are to be transferred in compliance with
                  Regulation S under the Securities Act and the undersigned
                  promptly will furnish to the Company a certificate and other
                  documents reasonably satisfactory to the Company as to such
                  compliance.

         ___      the Securities are to be disposed of in any other transaction
                  that does not require registration under the Securities Act,
                  and the undersigned has furnished to the Company or its
                  designee an opinion of counsel experienced in securities law
                  matters to such effect, which opinion shall be reasonably
                  satisfactory to the Company.

         ___      the Securities are sold pursuant to an effective registration
                  statement under the Securities Act.

         "ELIGIBLE PURCHASER" means an individual, corporation, partnership or
other entity which executes and delivers to the Company a Transferee Letter of
Representation in form and substance satisfactory to the Company.

                                       2

<PAGE>
Page 3 - Phar-Mor, Inc. - February __, 2002

         3. The securities are not being offered or transferred by the
undersigned pursuant to any plan or arrangement with the Company or the
Transferee that existed or was contemplated by the undersigned at the time the
Securities were originally acquired by the undersigned.

         4. The offer of the undersigned to transfer the Securities to the
Transferee in the State of ________ was directed to the Transferee in such state
and the transfer and delivery of such Securities to the Transferee will be
consummated in such state.

         5. No selling commissions or other similar remuneration are being paid
by the undersigned, directly or indirectly, to any person for soliciting the
purchase of the Securities and no person has been engaged by the undersigned for
purposes of any such solicitation.

         6. The undersigned acknowledges that the Securities may currently be
subject to a right of first refusal in favor of the Company. A copy of the
instrument setting forth the terms of any applicable right of first refusal in
favor of the Company has been made available to the undersigned and is available
from the Company, upon request, at the address set forth above.

         7. The undersigned acknowledges that the Board of Directors of the
Company has authorized a limitation on the transfer of shares of capital stock
of the Company, in order to prevent the application of Section 382 of the Code,
and agrees that the Securities are subject to such limitation on transfer and
that certificates representing such Securities will be legended accordingly. The
undersigned acknowledges that a copy of the terms of such limitation on transfer
has been made available to the undersigned and is available from the Company,
upon request, at the address set forth above.

         8. The undersigned is transferring the Securities to the Transferee in
the following transaction (check one):

         ___      A transfer upon the death of the Transferor in which the
                  Transferee's basis in the Securities is determined under
                  Section 1014 of the Code.

         ___      A transfer by gift or transfer in trust in which the
                  Transferee's basis is determined under Section 1015 of the
                  Code.

         ___      A transfer between spouses OR incident to a divorce in which
                  the Transferee's basis is determined under Section 1041(b)(2)
                  of the Code. --

         ___      A transfer to the Transferee in satisfaction of a right to
                  receive a pecuniary bequest.

         ___      A transfer to the Transferee pursuant to a divorce or
                  separation instrument within the meaning of Section 71(b)(2)
                  of the Code.

                                       3

<PAGE>

Page 4 - Phar-Mor, Inc. - February __, 2002

         9. The undersigned (check one)

         ___      (i) now actually and/or constructively owns, in the aggregate,
                  (ii) upon the transfer of the Securities, will so own, OR,
                  (iii) during the three year period ending on the date of this
                  letter, has so owned 5% or more of the capital stock of the
                  Company, as determined in accordance with Section 382 of the
                  Code.

         ___*     (i) does not now actually and/or constructively own, in the
                  aggregate, (ii) upon the transfer of the Securities, will not
                  so own, AND, (iii) during the three-year period ending on the
                  date of this letter, has not at any time so owned, 5% or more
                  of the capital stock of the Company, as determined in
                  accordance with Section 382 of the Code.

         The undersigned understands that this letter is required in connection
with certain securities and tax legislation and related regulations in the
United States of America. If administrative or legal proceedings are commenced
or threatened in connection with which this letter is or would be relevant, the
undersigned irrevocably authorizes you to produce this letter or a copy thereof
to any interested party in such proceedings.

                                Very truly yours,

                                [NAME OF TRANSFEROR]

                                By:
                                   -----------------------------------------
                                Name:

                                Title:

--------
* The determination of constructive ownership under Section 382 of the Code is
extremely complex. Special attribution of ownership regulations adopted under
Section 382 of the Code generally require the owner to "look through" interests
held by entities to the ultimate beneficial owner, and treat an individual and
all members of the individual's family as one person. In addition, the owner of
a stock option generally is treated as owning the underlying stock. If you check
this statement, the Company or its agents or advisors may contact you to verify
the accuracy of such determination.

                                       4

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