Exhibit 10.3


 


CHANGE IN CONTROL PROTECTION AGREEMENT


 


This Change in Control Protection Agreement, dated as
of
                            
(this “Agreement”), between The Penn Traffic Company (the “Company”)
and
                            
(the “Key Employee”).


 


R  E  C  I  T  A
L  S


 


The Company has employed the Key Employee in an
officer position and has determined that the Key Employee holds a critical
position with the Company.


 


The Company believes that, in the event it is
confronted with a situation that could result in a change in ownership or
control of the Company, continuity of management will be essential to its
ability to evaluate and respond to such situation in the best interests of its
shareholders, and the Company desires to assure itself of the Key Employee’s
services during the period in which it is confronting such a situation, and to
provide certain financial assurances to the Key Employee.


 


The Key Employee has had access to important
confidential information and important employee and customer relationships, all
of which the Key Employee agrees are valuable assets of the Company that the
Company and the Key Employee desire to reasonably protect.


 


To achieve these objectives, the Company and the Key
Employee desire to enter into an agreement providing the Company and the Key
Employee with certain rights and obligations upon the occurrence of a Change in
Control (as defined in Section 2 hereof);


 


The Company and the Key Employee hereby agree as
follows:


 


1.             Operation
of Agreement.


 


(a)           Term. This Agreement shall
become effective as of the date first set forth above (the “Commencement
Date”) and shall remain in effect until the third anniversary of the
Commencement Date (the “Expiration Date”).


 


(b)           Effective Date. Notwithstanding
the provisions of Section 1(a) hereof, this Agreement shall govern
the terms and conditions of the Key Employee’s employment and the benefits and
compensation to be provided to the Key Employee only if a Change in Control is
consummated prior to the Expiration Date. For purposes of this Agreement, the “Effective
Date” shall mean the date, prior to the Expiration Date, on which a Change
in Control is consummated; provided that if the Key Employee is not
employed by the Company on the Effective Date or at any time during the ninety
(90) days immediately prior to the Effective Date, then the Key Employee shall
not have any rights under this Agreement. For the avoidance of doubt, the
parties acknowledge that the Key Employee shall not have any rights under, and
the terms, conditions and benefits of such Key Employee’s employment shall not
be governed by,


 

















 


this Agreement prior to
the Effective Date, or if a Change in Control does not occur prior to the
Expiration Date.


 


2.             Definition
of Change in Control.


 


“Change in Control” shall be deemed to occur
upon:


 


(i)            the acquisition by
any individual, entity or group (a “Person”) (within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”))
of beneficial ownership (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) of 50% or more (on a fully diluted basis) of either (A) the
then outstanding shares of common stock of the Company (“Common Stock”),
taking into account as outstanding for this purpose such Common Stock issuable
upon the exercise of options or warrants, the conversion of convertible stock
or debt, and the exercise of any similar right to acquire such Common Stock
(the “Outstanding Company Common Stock”) or (B) the combined voting
power of the then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding Company Voting
Securities”); provided, however, that for purposes of this
Agreement, the following acquisitions shall not constitute a Change in Control:
(I) any acquisition by the Company or any entity that directly or
indirectly is controlled by controls or is under common control with the
Company (an “Affiliate”), (II) any acquisition by any employee
benefit plan sponsored or maintained by the Company or any Affiliate, or (III) any
acquisition by the Key Employee or any group of persons including the Key
Employee (or any entity controlled by the Key Employee or any group of persons
including the Key Employee);


 


(ii)           individuals who, on
the date hereof, constitute the Board of Directors of the Company (the “Incumbent
Directors”) cease for any reason to constitute at least a majority of the
Board of Directors (the “Board”), provided that any person becoming a
director subsequent to the date hereof, whose election or nomination for
election was approved by a vote of at least two-thirds of the Incumbent
Directors then on the Board (either by a specific vote or by approval of a
registration statement of the Company describing such person’s inclusion on the
Board, or a proxy statement of the Company in which such person is named as a
nominee for director, without written objection to such nomination) shall be an
Incumbent Director; provided, however, that no individual
initially elected or nominated as a director of the Company as a result of an
actual or threatened election contest, as such terms are used in Rule 14a-11
of Regulation A promulgated under the Exchange Act, with respect to directors
or as a result of any other actual or threatened solicitation of proxies or
consents by or on behalf of any person other than the Board shall be deemed to
be an Incumbent Director;


 


(iii)          the dissolution or
liquidation of the Company;


 


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(iv)          the sale, transfer
or other disposition of all or substantially all of the business or assets of
the Company; or


 


(v)           the consummation of
a reorganization, recapitalization, merger, consolidation, statutory share
exchange or similar form of corporate transaction involving the Company that
requires the approval of the Company’s stockholders, whether for such
transaction or the issuance of securities in the transaction (a “Business
Combination”), unless immediately following such Business Combination: (A) more
than 50% of the total voting power of (x) the entity resulting from such
Business Combination (the “Surviving Company”), or (y) if
applicable, the ultimate parent entity that directly or indirectly has
beneficial ownership of sufficient voting securities eligible to elect a majority
of the members of the board of directors (or the analogous governing body) of
the Surviving Company (the “Parent Company”), is represented by the
Outstanding Company Voting Securities that were outstanding immediately prior
to such Business Combination (or, if applicable, is represented by shares into
which the Outstanding Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the holders thereof is in
substantially the same proportion as the voting power of the Outstanding
Company Voting Securities among the holders thereof immediately prior to the
Business Combination, and (B) at least a majority of the members of the
board of directors (or the analogous governing body) of the Parent Company (or,
if there is no Parent Company, the Surviving Company) following the
consummation of the Business Combination were Board members at the time of the
Board’s approval of the execution of the initial agreement providing for such
Business Combination.


 


3.             Protected
Period. If the Key Employee is an employee of the Company on the Effective
Date, the Company agrees to continue the Key Employee in its employ, and the
Key Employee agrees to remain in the employ of the Company, on the terms and
subject to conditions of this Agreement, for a period commencing on the
Effective Date and ending on the earlier of (i) the termination of the Key
Employee’s employment with the Company in accordance with the terms hereof and (ii) two
years immediately following the Effective Date (the “Protected Period”).
For purposes of clarity and not by way of limitation, in the event of a Change
in Control after the Commencement Date but prior to the Expiration Date set
forth in Section l(a), the Expiration Date shall be adjusted to coincide
with the last day of the Protected Period.


 


4.             Position
and Duties.


 


(a)           No Reduction in Position. During
the Protected Period, the Key Employee’s position (including titles), authority
and responsibilities shall be at least commensurate with those held, exercised
and assigned immediately prior to the Effective Date. It is understood that,
for purposes of this Agreement, such position, authority and responsibilities
shall not be regarded as not commensurate merely by virtue of the fact that (i) an
entity or group of related entities shall have acquired all or substantially
all of the business, capital stock and/or assets of (an “Acquirer”) or (ii) the
Company or the


 


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Acquirer imposes upon the
Key Employee additional or changed reporting obligations or other similar and
customary responsibilities within the group structure of the Acquirer.


 


(b)           Business Time. During the
Protected Period, the Key Employee agrees to devote his full attention during
normal business hours to the business and affairs of the Company and to use his
best efforts to perform faithfully and efficiently the responsibilities
assigned to him hereunder, to the extent necessary to discharge such
responsibilities, except for (i) time spent in managing his personal,
financial and legal affairs and serving on corporate, civic or charitable
boards or committees, in each case only if and to the extent not interfering in
any material respect with the performance of such responsibilities and to the
extent permitted by the policies of the Company and the Acquirer, and (ii) periods
of vacation and sick leave to which he is entitled.


 


5.             Compensation.


 


(a)           Base Salary. During the
Protected Period, the Key Employee shall receive a base salary at a monthly
rate at least equal to the monthly salary paid to the Key Employee by the
Company immediately prior to the Effective Date. The base salary shall be
reviewed at least once each year after the Effective Date, and may be increased
(but not decreased) at any time and from time to time by action of the Board or
any committee thereof or any individual having authority to take such action in
accordance with the Company’s regular practices. The Key Employee’s base
salary, as it may be increased from time to time, shall hereafter be referred
to as the “Base Salary.” Neither the Base Salary nor any increase in the Base
Salary after the Effective Date shall serve to limit or reduce any other
obligation of the Company hereunder.


 


(b)           Annual Bonus. During the
Protected Period, in addition to the Base Salary, the Key Employee shall be
eligible to receive discretionary annual bonuses or incentive compensation as
may be authorized from time to time by action of the Board or the Acquirer or
any committee thereof or any individual having authority to take such action in
accordance with the Company’s or the Acquirer’s regular practices in their sole
discretion (the “Annual Bonus Opportunity”). The Annual Bonus
Opportunity shall be an amount that provides the Key Employee with the same
bonus opportunity as other employees of the Company or the Acquirer of
comparable rank (“Similarly Situated Key Employees”). If any fiscal year
commences but does not end during the Protected Period, the Key Employee shall
receive a pro-rated amount in respect of the Annual Bonus Opportunity for the
portion of the fiscal year occurring during the Protected Period. Any amount
payable in respect of the Annual Bonus Opportunity shall be paid as soon as
practicable following the year for which the amount (or any prorated portion)
is earned or awarded, unless electively deferred by the Key Employee pursuant
to any deferral programs or arrangements that the Company or the Acquirer may
make available to the Key Employee.


 


(c)           Long-term Incentive Compensation
Programs. During the Protected Period, the Key Employee shall be eligible
to participate in all long-term incentive compensation programs that are made
available from time to time to Similarly


 


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Situated Key Employees,
subject to and on a basis consistent with the terms, conditions, and overall
administration of such programs.


 


(d)           Benefit Plans. During the
Protected Period, the Key Employee (and, to the extent applicable, his
dependents) shall be entitled to participate in or be covered under all
pension, retirement, deferred compensation, savings, medical, dental, health,
disability, group life, accidental death and travel accident insurance plans
and programs of the Company and any Affiliate that are made available from time
to time to other Similarly Situated Key Employees, subject to and on a basis
consistent with the terms, conditions, and overall administration of such plans
and arrangements.


 


(e)           Expenses. During the Protected
Period, the Key Employee shall be entitled to receive prompt reimbursement for
all reasonable expenses incurred by the Key Employee (the “Expenses”) in
accordance with the policies and procedures of the Company as in effect from
time to time with respect to expenses incurred by other Similarly Situated Key
Employees.


 


(f)            Vacation and Fringe Benefits.
During the Protected Period, the Key Employee shall be entitled to paid
vacation and fringe benefits that are made available from time to time to other
Similarly Situated Key Employees.


 


(g)           Indemnification. During and
after the Protected Period, the Company shall indemnify the Key Employee and
hold the Key Employee harmless from and against judgments, fines, amounts paid
in settlement and reasonable expenses, including attorneys’ fees, on the same
terms and conditions applicable from time to time with respect to the
indemnification of other Similarly Situated Key Employees.


 


(h)           Office and Support Staff. The
Key Employee shall be entitled to an office with furnishings and other appointments,
and to secretarial and other assistance, that are made available to other
Similarly Situated Key Employees.


 


6.             Termination.


 


(a)           Death, Disability or Retirement.
The Key Employee’s employment with the Company shall terminate automatically
upon the Key Employee’s death, termination due to “Disability” (as defined
below) or voluntary retirement under any of the Company’s retirement plans as
in effect from time to time. For purposes of this Agreement, “Disability”
shall have the meaning set forth in the long-term disability plan then made
available to the Key Employee by the Company or the Acquirer.


 


(b)           Voluntary Termination; Termination
without Cause. Notwithstanding anything in this Agreement to the contrary,
the Key Employee may voluntarily terminate employment with the Company, and the
Company may terminate the employment of the Key Employee, at any time for any
reason (including early retirement under the terms of any of the Company’s
retirement plans as in effect from time to time), upon not less than 30 days’
written notice, provided any termination by the


 


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Key Employee pursuant to Section 6(d) hereof
on account of Good Reason (as defined therein) shall not be treated as a
voluntary termination under this Section 6(b).


 


(c)           Cause. The Company may
terminate the Key Employee’s employment for Cause. For purposes of this
Agreement, “Cause” means (i) the commission by the Key Employee of
an act of fraud, dishonesty, embezzlement (including the unauthorized
disclosure or use of confidential or proprietary information of the Company,
the Acquirer or their respective Affiliates or clients) or other act or
omission intended or with consequences that bring, or could reasonably be
expected to bring, the Company, the Acquirer or any of their respective
Affiliates into disrepute or otherwise materially harm, or could reasonably be
expected to materially harm, their respective commercial or governmental
relationships or licenses, (ii) the Key Employee pleads guilty or no
contest to or is convicted of any criminal offense for which a penalty of
imprisonment may be imposed (other than an offense under road traffic
legislation), (iii) material misconduct as an employee of the Company or
any of its subsidiaries or other conduct tending to bring the Company, the
Acquirer or any of their respective Affiliates or shareholders into disrepute
or failure to comply with any written guidelines adopted or promulgated by the
Company or the Acquirer, (iv) abandonment or material neglect by the Key
Employee of any of the duties for which he has been employed by the Company, (v) persistent
failure of the Key Employee to comply with or carry out the instructions of the
Company’s or the Acquirer’s Board of Directors or management if the ability to
comply with or carry out such instructions is reasonably within the control of
the Employee, or (vi) material breach by the Key Employee of his duties
under this Agreement, or material failure to carry out any such duties;
provided that any such breach or failure shall not have been remedied by the
Key Employee within thirty days of receipt by the Key Employee of written
notice from the Company of the occurrence of such breach or failure.


 


(d)           Good Reason. The Key Employee
may terminate his employment at any time for Good Reason, effective thirty days
after receipt by the Company of Notice of Termination (as defined below);
provided that the Good Reason shall not have been remedied by the Company prior
to the expiration of such 30-day period. For purposes of this Agreement, “Good
Reason” means the occurrence of any of the following, without the express
written consent of the Key Employee, after the Effective Date or at any time
during the ninety (90) day period immediately preceding the Effective Date: (1) a
material reduction in the Key Employee’s title, authority or responsibilities,
provided that such a reduction shall not be deemed to have occurred because the
Company or an Acquirer imposes upon the Key Employee additional or changed reporting
obligations or additional responsibilities, (2) a reduction in the salary
paid to the Key Employee by the Company, or (3) a more than 50 mile change
in the location of the Key Employee’s office (excluding travel required for the
performance of the Key Employee’s responsibilities) (in each case compared to
the state of affairs in effect immediately prior to the commencement of the
Protected Period or such 90-day period, as the case may be). In no event shall
the mere occurrence of a Change in Control, absent any further impact on the
Key Employee, be deemed to constitute Good Reason.


 


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(e)           Notice of Termination. Any
termination by the Company for Cause or by the Key Employee for Good Reason
shall be communicated by Notice of Termination to the other party hereto given
in accordance with Section 9(e) hereof. For purposes of this
Agreement, a “Notice of Termination” means a written notice given, (i) in
the case of a termination for Cause, by the Company at any time after discovery
of the events giving rise to such termination, or (ii) in the case of a
termination for Good Reason, within 30 days of the Key Employee’s having actual
knowledge of the events giving rise to such termination. Any such Notice of Termination
shall (i) indicate the specific termination provision in this Agreement
relied upon, (ii) set forth a general description of the facts and
circumstances claimed to provide a basis for termination of the Key Employee’s
employment under the provision so indicated, and (iii) if the termination
date is other than the date of receipt of such notice, specify the termination
date of this Agreement (which date shall be not more than 30 days after the
giving of such notice). The failure by the Company or the Key Employee to set
forth in a Notice of Termination any fact or circumstance which contributes to
a showing of Cause or Good Reason shall not waive any right of the Company or
the Key Employee hereunder or preclude the Company or the Key Employee from asserting
such fact or circumstances in enforcing its or his rights hereunder.


 


(f)            Date of Termination. For the
purpose of this Agreement, the term “Date of Termination” means (i) in
the case of a termination for Cause, the date of receipt of such Notice of
Termination or, if later, the date specified therein, as the case may be, (ii) in
the case of termination for Good Reason, thirty days after the date of receipt
by the Company of the Notice of Termination, subject to the proviso to the
first sentence of Section 6(d) and (iii) in all other cases, the
actual date on which the Key Employee’s employment terminates during the
Protected Period.


 


(g)           Other.


 


(i)            Upon the termination of the Key Employee’s employment
with the Company for any reason, the Key Employee (or, if applicable, his
estate) shall immediately deliver to the Company all documents, correspondence,
memoranda, notes, records, reports, plans, designs, studies and any other
papers or items made or received by the Key Employee in connection with his
employment with the Company and including all copies of the foregoing), and all
computer equipment, disks and software, keys, credit cards, books and other
property of or relating to the Company or any of its Affiliates (including
without limitation all documents prepared by the Key Employee or which may have
come into the Key Employee’s possession in the course of his employment
hereunder, and including copies thereof) then in the Key Employee’s (or, if
applicable, his estate’s) possession.


 


(ii)           After the termination of the Key Employee’s employment
with the Company for any reason, the Key Employee shall not at any time
thereafter represent himself as being in any way connected with or interested
in the business of or employed by the Company or its Affiliates, or use for
trade or other purposes the name of the Company or its Affiliates, or any name
capable of confusion therewith.


 


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(iii)          Upon the termination of the Key Employee’s employment with
the Company for any reason, the Key Employee shall immediately be deemed to
have resigned from all offices the Key Employee holds in the Company or any of
its Affiliates, and any directorships held at the request of or on the behalf
of the Company or its Affiliates.


 


7.             Obligations
of the Company upon Termination.


 


(a)           Death or Disability. If,
during the Protected Period or at any time during the ninety (90) day period
immediately preceding the Effective Date, the Key Employee’s employment is
terminated by reason of the Key Employee’s death or Disability, this Agreement
shall terminate without further obligations to the Key Employee or the Key
Employee’s legal representatives under this Agreement, except that the Company
shall be obligated to pay to the Key Employee (or his beneficiary or estate),
at the times determined below (i) the Key Employee’s full Base Salary
through the Date of Termination (the “Earned Salary”), (ii) any
vested amounts or benefits owing to the Key Employee under or in accordance
with the terms and conditions of the Company’s otherwise applicable employee
benefit plans and programs, including any compensation previously deferred by
the Key Employee (together with any accrued earnings thereon) and not yet paid
by the Company, any accrued vacation pay not yet paid by the Company, and any
unreimbursed Expenses (the “Accrued Obligations”), and (iii) any
other benefits payable due to the Key Employee’s death or Disability under the
Company’s applicable plans, policies or programs (the “Additional Benefits”).


 


Any Earned Salary shall be paid in cash in a single
lump sum as soon as practicable, but in no event more than 30 days (or at such
earlier date required by law), following the Date of Termination. Any Accrued
Obligations and Additional Benefits shall be paid in accordance with the terms
of the applicable plan, program or arrangement.


 


(b)           Cause and Voluntary Termination.
If, during the Protected Period or at any time during the ninety (90) day
period immediately preceding the Effective Date, the Key Employee’s employment
shall be terminated by the Company for Cause or voluntarily terminated by the
Key Employee (other than on account of Good Reason), the Company shall pay the
Key Employee (i) the Earned Salary in cash in a single lump sum as soon as
practicable, but in no event more than 30 days, following the Date of
Termination, and (ii) any Accrued Obligations in accordance with the terms
of the applicable plan, program or arrangement.


 


(c)           Termination by the Company without
Cause and Termination by the Key Employee for Good Reason. If, during the
Protected Period or at any time during the ninety (90) day period immediately
preceding the Effective Date, (x) the Company terminates the Key
Employee’s employment without Cause or (y) the Key Employee terminates his
employment for Good Reason, then:


 


(i)            Lump Sum Payments. The Company shall pay to the
Key Employee, at the times determined below, the following amounts:


 


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(A)                              the Key Employee’s Earned Salary;


 


(B)                                a cash amount (the “Severance Amount”)
equal to the sum of


 


(1)                                  two times the higher of (x) the Key
Employee’s annual rate of Base Salary as then in effect or (y) the average
annualized Base Salary of the Key Employee for each of the 24 months of employment
ended immediately prior to the Effective Date (or, if less, the number of
months during which the Key Employee was an employee of the Company); and


 


(2)                                  two times the average of the annual cash
bonuses payable to the Key Employee under the Company’s annual incentive plan
for each of the three fiscal years of the Company (or, if less, the number of
prior fiscal years during which the Key Employee was an employee of the
Company) ended immediately prior to the Effective Date for which an annual
bonus amount had been determined prior to the Effective Date. If the Key
Employee was employed by the Company for only a portion of any fiscal year
included in the period for which the average referred to in the immediately
preceding sentence is determined and the bonus payable for such fiscal year
took into account such partial period of employment, such bonus for such fiscal
year shall be annualized for purposes of calculating such average; and


 


(C)                                any Accrued Obligations.


 


The Earned Salary and Severance Amount shall be paid
in cash in a single lump sum as soon as practicable, but in no event more than
30 days (or at such earlier date required by law), following the Date of
Termination. Any Accrued Obligations shall be paid in accordance with the terms
of the applicable plan, program or arrangement.


 


(ii)           Continuation of Benefits. The Key Employee (and, to
the extent applicable, his dependents) shall be entitled, after the Date of
Termination (or, in the event of termination during the 90 days immediately
preceding to the Effective Date, the Effective Date) until the first
anniversary of the Date of Termination (or, in the event of termination during
the 90 days immediately preceding to the Effective Date, the Effective Date)
(the “End Date”), to continue participation in all of the Company’s
plans providing medical, dental and longterm disability benefits for which the
Key Employee was eligible as of the Date of Termination (collectively, the “Continuing
Benefit Plans”); provided, however, that the participation by
the Key Employee and, to the extent


 


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applicable, his dependents) in any Continuing
Benefit Plan shall cease on the date, if any, prior to the End Date on which
the Key Employee becomes eligible for comparable benefits under a similar plan,
policy or program of a subsequent employer (the “Prior Date”). The Key
Employee’s participation in the Continuing Benefit Plans will be on the same
terms and conditions that are made available to employees of the Company who
have a rank similar to the Key Employee’s rank prior to termination. To the
extent any such benefits cannot be provided under the terms of the applicable
plan, policy or program, the Company shall provide a cash payment to the Key
Employee in an amount equal to the employer contribution that would have been
made in accordance with the terms of such plan, policy or program.


 


(d)           Discharge of the Company’s
Obligations. The Key Employee’s sole remedy for the Company’s breach of
this Agreement during the Protected Period, to the extent constituting Good
Reason, shall be to terminate this Agreement and to receive payments under this
Section 7. Except as expressly provided in this Section 7(d), the
amounts payable to the Key Employee pursuant to this Section 7 (whether or
not reduced pursuant to Section 7(e) hereof) shall be in full and
complete satisfaction of the Key Employee’s rights under this Agreement
following termination of his employment and any claims he may have in respect
of employment by the Company or any of its Affiliates (or termination thereof),
for breach by the Company of this Agreement or for severance payments. Such
amounts shall constitute liquidated damages with respect to any and all such
rights and claims and, subject to the Key Employee’s receipt of such amounts,
the Company and its directors, officers, shareholders, affiliates and agents
shall be released and discharged from any and all liability to the Key Employee
in connection with this Agreement, the breach thereof or otherwise in
connection with the Key Employee’s employment with the Company and its
Affiliates or the termination thereof. Notwithstanding the foregoing, the
obligations of the Company under this Agreement are meant to supplement and not
replace any rights of the Key Employee under any equity incentive or stock
option plan, as such rights may be determined in accordance with the terms of
such plans, if any. As a condition to any payment under this Section 7, (1) the
Key Employee shall be required to sign and deliver to the Company a waiver and
release (to be provided by the Company following the termination of the
employment of the Key Employee) waiving and releasing any claims he or she may
have against the Company and its parents, subsidiaries, affiliates, predecessors,
assigns and representatives, and their respective present and former benefit
and severance plans, plan administrators, insurers, agents, shareholders,
officers, directors, attorneys and employees, except as expressly provided in
this Section 7(d) and payments and benefits due under this Section 7,
and (2) seven days shall have elapsed following delivery of such release
to the Company without such release being revoked by the Key Employee by
written notice to the Company to the addresses set forth for notices in Section 9(e).
The waiver and release will include, but not be limited to, any claims arising
under any Federal, state or local law or ordinance, tort, employment contract
(express or implied), public policy, whisteblower law, wrongful discharge or
any other obligation including any claims arising under the Civil Rights Act of
1866, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991,
the Age Discrimination in Employment Act of 1967 (“ADEA”), as amended by
the Older Workers Benefit


 


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Protection Act, the
Americans With Disabilities Act of 1990, the Employee Retirement Income
Security Act of 1974, the Worker Adjustment Retraining and Notification Act, or
State law, and all claims for wages, severance, bonuses, monetary or equitable
relief or other damages of any kind, vacation pay, other employee fringe
benefits or attorneys’ fees.


 


(e)           Excise
Tax Cutback.


 


(i)            If the aggregate of all amounts and benefits due to the
Key Employee, under this Agreement or any other plan, program, agreement or
arrangement of the Company or any of its Affiliates, which, if received by the
Key Employee in full, would constitute “parachute payments” as such term is
defined in and under Section 280G of the Code (collectively, “Change in
Control Benefits”), reduced by all Federal, state and local taxes
applicable thereto, including the excise tax imposed pursuant to Section 4999
of the Code, is less than the amount the Key Employee would receive, after all
such applicable taxes, if the Key Employee received aggregate Change in Control
Benefits equal to an amount which is $1.00 less than three times the Key
Employee’s “base amount”, as defined in and determined under Section 280G
of the Code then such cash Change in Control Benefits shall be reduced or
eliminated to the extent necessary so that the Change in Control Benefits
received by the Key Employee will not constitute parachute payments. If a
reduction in the Change in Control Benefits is necessary, reduction shall occur
in the following order unless the Key Employee elects in writing a different
order, subject to the Company’s consent (which consent shall not be
unreasonably withheld): first, a reduction of cash payments not attributable to
stock awards which vest on an accelerated basis; second, the cancellation of
accelerated vesting of stock awards; third, the reduction of employee benefits
and fourth a reduction in any other “parachute payments”. If acceleration of
vesting of stock award compensation is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of the date of grant of the Key
Employee’s stock awards unless the Key Employee elects in writing a different
order for cancellation.


 


(ii)           It is possible that after the determinations and
selections made pursuant to Section 7(e)(i) the Key Employee will
receive Change in Control Benefits that are, in the aggregate, either more or
less than the amounts contemplated by Section 7(e)(i) above
(hereafter referred to as an “Excess Payment” or “Underpayment”,
respectively). If there is an Excess Payment, the Key Employee shall promptly
repay the Company an amount consistent with this Section 7(e)(ii). If
there is an Underpayment, the Company shall pay the Key Employee an amount consistent
with this Section 7(e)(ii).


 


(iii)          The determinations with respect to this Section 7(e)(iii) shall
be made by an independent auditor (the “Auditor”) compensated by the
Company. The Auditor shall be the Company’s regular independent auditor, unless
the Key Employee objects to the use of that firm, in which event the Auditor
shall be a nationally-recognized United States public accounting firm chosen by
the Company and approved by the Key Employee (which approval shall not be
unreasonably withheld or


 


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delayed). For purposes of this Agreement, the term “Code”
shall mean the Internal Revenue Code of 1986, as amended, including all final
regulations promulgated thereunder and any reference to a particular section of
the Code shall include any provision that modifies, replaces or supersedes such
section.


 


(f)            Notwithstanding anything else in this Section 7 to
the contrary, nothing in this Section 7 shall be construed to release the
Company from (or to otherwise waive or modify) the Company’s obligation to
indemnify the Key Employee pursuant to Section 5(g) hereof.


 


8.             Successors.


 


(a)           This Agreement is personal to the Key Employee and,
without the prior written consent of the Company, shall not be assignable by
the Key Employee otherwise than by will or the laws of descent and
distribution. This Agreement shall inure to the benefit of and be enforceable
by the Key Employee’s legal representatives.


 


(b)           This Agreement shall inure to the benefit of and be binding
upon the Company and their successors. The Company shall require any successor
to all or substantially all of the business and/or assets of the Company,
whether direct or indirect, by purchase, merger, consolidation, acquisition of
stock, or otherwise, expressly to assume and agree to perform this Agreement in
the same manner and to the same extent as the Company would be required to
perform if no such succession had taken place.


 


9.             Miscellaneous.


 


(a)           Applicable Law. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York applied without reference to principles of conflict of laws.


 


(b)           Arbitration. Any dispute,
alleged breach, interpretation, or disagreement whatsoever arising out of this
Agreement that the parties are unable to resolve shall be resolved by final and
binding arbitration before a panel of three arbitrators pursuant to the
Commercial Arbitration Rules of the American Arbitration Association in
the County of Onondaga, State of New York. The party demanding arbitration
shall have thirty days in which to select an arbitrator. Thereafter, the other
party shall have thirty days in which to select an arbitrator, failing which
the American Arbitration Association shall select such arbitrator. Such arbitrators
shall, thereafter, within thirty days, jointly select a third arbitrator,
failing which the American Arbitration Association shall select such
arbitrator. Such arbitration shall be the exclusive means for settling any
disputes hereunder. The majority decision of the panel of arbitrators may, but
need not, be entered as judgment in accordance with the provisions of
applicable law. The parties shall share equally the costs and expenses in
connection with any arbitration or other proceeding hereunder, provided that a
panel of arbitrators acting in accordance with the provisions of this Section 9
shall have the power to award attorneys’ fees in


 


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connection with the
issuance of any final decision by such panel. If this arbitration provision is
for any reason held to be invalid or otherwise inapplicable to any dispute, the
parties hereto agree that any action or proceeding brought with respect to any
dispute arising under this Agreement, or to interpret or clarify any rights or
obligations arising hereunder, shall be maintained solely and exclusively in
courts located in the County of Onondaga, State of New York.


 


(c)           Amendments. This Agreement may
not be amended or modified otherwise than by a written agreement executed by
the parties hereto or their respective successors and legal representatives.


 


(d)           Entire Agreement. This
Agreement constitutes the entire agreement between the parties hereto with
respect to the matters referred to herein and, except as expressly provided
herein, supersedes any and all prior agreements or understandings. No other
agreement relating to the terms of the Key Employee’s employment by the
Company, oral or otherwise, shall be binding between the parties unless it is
in writing and signed by the party against whom enforcement is sought. There
are no promises, representations, inducements or statements between the parties
respecting the subject matter hereof other than those that are expressly
contained herein. The Key Employee acknowledges that he is entering into this
Agreement of his own free will and accord, and with no duress, that he has read
this Agreement and has had at least 21 days to review this Agreement with his
attorney and that he understands it and its legal consequences.


 


(e)           Notices. All notices and other
communications hereunder shall be in writing and shall be given by
hand-delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, addressed as follows:


 


	
  If to the Key Employee:

  	
   

  	
  at the home address of the Key Employee 

  
	
   

  	
   

  	
  noted on the records of the Company

  
	
   

  	
   

  	
   

  
	
  If to the Company

  	
   

  	
  The Penn Traffic Company

  
	
   

  	
   

  	
  PO Box 4737

  
	
   

  	
   

  	
  Syracuse NY 13221-4737

  
	
   

  	
   

  	
  Attn: General Counsel

  



or to
such other address as either party shall have furnished to the other in writing
in accordance herewith. Notice and communications shall be effective when
actually received by the addressee.


 


(f)            Tax Withholding. The Company
shall withhold from any amounts payable under this Agreement such Federal,
state or local taxes as shall be required to be withheld pursuant to any
applicable law or regulation.


 


(g)           Severability: Reformation. In
the event that one or more of the provisions of this Agreement shall become
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.


 


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(h)           Waiver. Waiver by any party
hereto of any breach or default by the other party of any of the terms of this
Agreement shall not operate as a waiver of any other breach or default, whether
similar to or different from the breach or default waived. No waiver of any
provision of this Agreement shall be implied from any course of dealing between
the parties hereto or from any failure by either party hereto to assert its or
his rights hereunder on any occasion or series of occasions.


 


(i)            Captions; Pronouns. The
captions of this Agreement are not part of the provisions hereof and shall have
no force or effect. Any masculine personal pronoun shall be considered to mean
the corresponding feminine personal pronoun, as the context requires.


 


(j)            Counterparts. This Agreement
may be executed in counterparts, each of which shall be deemed an original but
all of which together shall constitute one and the same instrument.


 


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IN WITNESS WHEREOF, the Key Employee has executed this
Agreement and the Company has caused this Agreement to be executed in its name
on its behalf, and its corporate seal to be hereunto affixed and attested by
its Secretary, all as of the date first above written.


 


 


 


	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
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