Exhibit 10.4


 


The Penn Traffic Company


 


[Date]


 


 


[Address]


 


 


 


Dear Mr.           :


 


The Penn Traffic Company offers a special bonus
arrangement (a “Transaction Bonus”) to provide you an incentive to stay
in the Company’s employ.


 


1.             Definitions.


 


The following definitions shall be applicable
throughout this Agreement:


 


(a)           “Agreement”
means this Agreement.


 


(b)           “Board”
means the Board of Directors of the Company.


 


(c)           “Committee”
shall have the meaning set forth in section 2(g) of The Penn Traffic
Company 2006 Omnibus Award Plan (the “Omnibus Award Plan”).


 


(d)           “Company”
means The Penn Traffic Company.


 


(e)           “Fair
Market Value” means the per share amount of cash or other consideration
paid to the stockholders of the Company for their Common Stock. The Fair Market
Value of any such non-cash consideration shall be determined by the Committee
in its sole discretion.


 


(f)            “Sale”
shall mean a “Change in Control”, as that term is defined in Section 2(e) of
the Omnibus Award Plan, as amended from time to time.


 


(g)           “Transaction
Bonus” means an amount equal to the value indicated on the chart attached
hereto as Exhibit A.


 


2.             Transaction
Bonus.


 


(a)           Timing
and Form of Payment.  If you are
actively employed by the Company when a Sale is consummated, you will receive a
Transaction Bonus in an amount determined under Exhibit A attached
hereto.  The Transaction Bonus will be payable
in a single lump sum no later than ten days following the consummation of the
Sale.


 


 

















 


(b)           Medium
of Payment.  The Committee, in its
sole discretion, will determine whether the Transaction Bonus will be paid (i) in
cash or (ii) in that number of shares of Common Stock with a Fair Market
Value equal to the value of the Transaction Bonus, or (iii) in a
combination of cash and such shares of Common Stock.  In determining whether to pay all or part of
the Transaction Bonus in shares of Common Stock, the Committee shall consider
the form of consideration to be received by the stockholders of the Company in
the Sale and not issue to you a greater percentage of Common Stock to cash than
is being issued to such stockholders pursuant to the definitive agreement governing
the Sale.  The Committee shall also
consider the withholding and other tax implications to you of receiving the
Transaction Bonus in the form of shares of Common Stock instead of cash.


 


(c)           Compliance
With Section 409A.  Notwithstanding
any provision of this Agreement to the contrary, it is intended that the
provisions of this Agreement comply with Section 409A of the Internal
Revenue Code of 1986, as amended (“Section 409A”), and all
provisions of this Agreement will be construed and interpreted in a manner
consistent with the requirements for avoiding taxes or penalties under Section 409A.  You are solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on you in
connection with this Agreement or any other Agreement maintained by the Company
(including any taxes and penalties under Section 409A), and neither the
Company nor any affiliate of the Company shall have any obligation to indemnify
or otherwise hold you (or any beneficiary) harmless from any or all of such
taxes or penalties.


 


(d)           Transaction
Bonus Limit.  You will only be
eligible to receive a Transaction Bonus, if any, with respect to the first Sale
to occur after the date of this Agreement. 
Additional Sales will not entitle you to additional Transaction Bonuses.


 


3.             Miscellaneous.


 


(a)           Your
eligibility for payment of a Transaction Bonus is in addition to, and not in
lieu of, your right to participate in any other bonus or incentive compensation
programs currently made available to you and shall not be deemed in any way to
limit or restrict the Company from making any bonus or other payments to you
under any other plan or agreement, whether now existing or hereinafter in
effect.


 


(b)           Unless
otherwise determined by the Board (and to the extent allowable under applicable
law), any payment of a Transaction Bonus shall not be taken into account in
computing your salary or compensation for the purposes of determining any
benefits or compensation under (i) any pension, retirement, life
insurance, severance or other benefit plan of the Company or its affiliates or (ii) any
agreement between you and the Company or its affiliates.


 


4.             Administration.  The Committee shall administer this
Agreement.


 


(a)           Subject
to the provisions of this Agreement and applicable law, the Committee shall
have the power, in addition to other express powers and 


 


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authorizations conferred on the Committee by this Agreement, to:  (i) designate individuals eligible to
receive a Transaction Bonus; (ii) determine the type of Transaction Bonus
to be granted to you; (iii) determine the amount of the Transaction Bonus;
(iv) determine the terms and conditions of any Transaction Bonus; (v) determine
whether, to what extent, and under what circumstances the Transaction Bonuses
may be canceled, forfeited, or suspended and the method or methods by which the
Transaction Bonus may be paid, canceled, forfeited, or suspended; (vi) determine
whether, once the Company is fully compliant with the reporting requirements of
the Securities Exchange Act of 1934, as amended (the “1934 Act”), and
has filed and had declared effective a Registration Statement on Form 10
under the 1934 Act, to replace the entire Transaction Bonus with an
equity-based award having substantially equivalent value to you (and
concurrently to unilaterally terminate this Agreement), all as determined by
the Committee in its sole, good faith discretion; (vii) determine whether,
to what extent, and under what circumstances the Transaction Bonus, and other
amounts payable with respect to the Transaction Bonus shall be deferred either
automatically or at the election of the holder thereof or of the Committee; (viii) interpret,
administer reconcile any inconsistency, correct any default and/or supply any
omission in this Agreement and any instrument or agreement relating to, or the
Transaction Bonus granted under this Agreement; (ix) establish, amend,
suspend, or waive such rules and regulations and appoint such agents as it
shall deem appropriate for the proper administration of this Agreement; and (x) make
any other determination and take any other action that the Committee deems necessary
or desirable for the administration of this Agreement.


 


(b)           Unless
otherwise expressly provided in this Agreement, all designations,
determinations, interpretations, and other decisions under or with respect to
this Agreement or any Transaction Bonus or any documents evidencing any and all
Transaction Bonuses shall be within the sole discretion of the Committee, may
be made at any time granted pursuant to this Agreement and shall be final,
conclusive, and binding upon all parties, including, without limitation, the
Company, an affiliate, you, your beneficiary, and any shareholder.


 


(c)           No
member of the Committee shall be liable for any action or determination made in
good faith with respect to this Agreement or any Transaction Bonus hereunder.


 


5.             Restrictive Covenants.


 


(a)           Non-Competition; Non-Solicitation.
At all times during
your employment by the Company and during the period of one year commencing on
and following the date as of which your employment with the Company terminates
for any reason, you agree that you will not, directly or indirectly, without
the prior written consent of the Committee, be employed by, or act as a
consultant or lender to or in association with, or as a director, officer,
employee, partner, owner, joint venturer, member or otherwise, of any person,
firm, corporation, partnership, limited liability company, association or other
entity that engages in the retail supermarket business or the business of
wholesale food distribution in New York, New Hampshire, Pennsylvania, or
Vermont (other than by beneficial ownership of up to 5% of the outstanding
voting stock 


 


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of a publicly-traded company that is or owns such a competitor).  You further agree that at all times during your
employment and for one year following the date as of which your employment with
the Company  terminates for any reason, you
will not directly or indirectly (i) solicit or hire or encourage the
solicitation or hiring of any person who was an employee of the Company at any
time on or after the date of such termination (unless more than 12 months shall
have elapsed between the last day of such person’s employment by the Company
and the first date of such solicitation or hiring) or (ii) induce or
attempt to induce any employee of the Company to leave the employ of the
Company or in any way interfere with the relationship between the Company and
any employee thereof.


 


(b)           Non-Disclosure
of Confidential Information.  You
recognize that the services you perform for the Company are special, unique and
extraordinary in that you may acquire confidential information, trade secrets
or other competitive information concerning the operations of the Company, the
use or disclosure of which could cause the Company substantial loss and damages
which could not be readily calculated, and for which no remedy at law would be
adequate.  Accordingly, you agree that
you will not at any time during your employment with the Company or thereafter,
except in performance of your obligations to the Company hereunder, disclose,
either directly or indirectly, any Confidential Information (as hereinafter
defined) that you may learn by reason of his association with the Company.  The term “Confidential Information”
shall mean any past, present or future confidential or secret plans, programs,
documents, agreements, internal management reports, financial information or
other material relating to the business, strategies, services or activities of
the Company, including, without limitation, information with respect to the
Company’s operations, processes, products, inventions, business practices,
finances, principals, vendors, suppliers, customers, potential customers,
marketing methods, costs, prices, contractual relationships, including leases,
regulatory status, compensation paid to employees or other terms of employment,
and trade secrets, market reports, customer investigations, customer lists and
other similar information that is proprietary information of the Company.  Notwithstanding the foregoing, you may
disclose such Confidential Information when required to do so by a court of
competent jurisdiction, by any governmental agency having supervisory authority
over the business of the Company and/or its affiliates, as the case may be, or
by any administrative body or legislative body (including a committee thereof)
with jurisdiction to order you to divulge, disclose or make accessible such
information; provided, further, that in the event that you are ordered by any
such court or other government agency, administrative body or legislative body
to disclose any Confidential Information, you shall (i) promptly notify
the Company of such order, (ii) at the written request of the Company,
diligently contest such order at the sole expense of the Company as expenses
occur, and (iii) at the written request of the Company, seek to obtain, at
the sole expense of the Company, such confidential treatment as may be
available under applicable laws for any information disclosed under such order.  As used in this Section 5(b), “Company”
shall mean the Company and its affiliates.


 


6.             Enforcement;
Forfeiture of Bonus.


 


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(a)           You
acknowledge and agree that any violation by you of any of the undertakings
contained in Section 5 of this Agreement would cause the Company
immediate, substantial and irreparable injury for which the Company has no
adequate remedy at law.  Accordingly, you
agree that, in the event of a breach or threatened breach by you of any of the
undertakings in Section 5 of this Agreement, the Company will be entitled
to temporary and permanent injunctive relief in any court of competent
jurisdiction (without the need to post bond and without proving that damages
would be inadequate).


 


(b)           You
further agree that, if the Company determines in good faith that you have
breached Section 5 of this Agreement, then:


 


(i)            the Transaction Bonus shall be
automatically forfeited as of the date of breach, and


 


(ii)           you shall promptly repay to the
Company an amount equal to any payment in respect of the Transaction Bonus
which you have received prior to the date of breach.


 


Payments required to be made pursuant to Section 6(b)(ii) above
must be (i) made within 90 days after receiving notice from the Company
that such amounts are due and (ii) paid in cash or by such other method
determined by Company in its sole discretion.


 


7.             No Right to Continued Employment.  Nothing in
this Agreement shall confer upon you any right to continue in the employ of the
Company interfere with or restrict in any way the right of the Company or,
which are hereby expressly reserved, to remove, terminate or discharge you at
any time for any reason whatsoever.


 


8.             Withholding
Taxes.  The Company may withhold from
any amounts payable under the Agreement such federal, state and local taxes as
may be required to be withheld pursuant to any applicable law or regulation.


 


9.             Governing
Law.  The interpretation,
construction and performance of this Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York without
regard to the principle of conflicts of laws.


 


10.           Entire Agreement; Amendments.  The Agreement states the entire agreement and
understanding of the parties on the subject matter of the Agreement and
supersedes all previous agreements, arrangements, communications, and
understandings relating to that subject matter. 
The Agreement may be amended, modified, superseded, or canceled, and any
of the terms thereof may be waived, only by a written document signed by each
party to the Agreement or, in the case of waiver, by the party or parties
waiving compliance.


 


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11.           Counterparts.  The Agreement may be signed in counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.


 


	
   

  	
   

  	
  The Penn Traffic
  Company

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  AGREED TO AND ACCEPTED BY:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated:
                      ,
  2008

  	
   

  	
   

  	
   

  



 


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Exhibit A


 




	
  Share Value

  	
   

  	
  Transaction Bonus Payment

  	
   

  
	
  $10.00

  	
   

  	
  $

  	
   

  
	
  $14.99

  	
   

  	
  $

  	
   

  
	
  $15.00

  	
   

  	
  $

  	
   

  
	
  $19.99

  	
   

  	
  $

  	
   

  
	
  $20.00

  	
   

  	
  $

  	
   

  






 


Transaction Bonus amounts for Share Values between $10.00
and $14.99 and $15.00 and $19.99 shall be determined by straight line
interpolation.  No Transaction Bonus will
be paid for Share Values below $10.00.


 


For the purposes of this Agreement, “Share Value”
means the per share consideration paid in a Sale for each share of Common Stock.


 


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