**Exhibit 10.4**

** **

**The Penn Traffic Company**

 

[Date]

 

 

[Address]

 

 

 

Dear Mr.           :

 

The Penn Traffic Company offers a special bonusarrangement (a “Transaction Bonus”) to provide you an incentive to stayin the Company’s employ.

 

### 1.             Definitions.

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The following definitions shall be applicablethroughout this Agreement:

 

#### (a)           “Agreement”means this Agreement.

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

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

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

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

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

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#### (g)           “TransactionBonus” means an amount equal to the value indicated on the chart attachedhereto as Exhibit A.

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### 2.             TransactionBonus.

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#### (a)           Timingand Form of Payment.  If you areactively employed by the Company when a Sale is consummated, you will receive aTransaction Bonus in an amount determined under Exhibit A attachedhereto.  The Transaction Bonus will be payablein a single lump sum no later than ten days following the consummation of theSale.

 

 

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#### (b)           Mediumof Payment.  The Committee, in itssole discretion, will determine whether the Transaction Bonus will be paid (i) incash or (ii) in that number of shares of Common Stock with a Fair MarketValue equal to the value of the Transaction Bonus, or (iii) in acombination of cash and such shares of Common Stock.  In determining whether to pay all or part ofthe Transaction Bonus in shares of Common Stock, the Committee shall considerthe form of consideration to be received by the stockholders of the Company inthe Sale and not issue to you a greater percentage of Common Stock to cash thanis being issued to such stockholders pursuant to the definitive agreement governingthe Sale.  The Committee shall alsoconsider the withholding and other tax implications to you of receiving theTransaction Bonus in the form of shares of Common Stock instead of cash.

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#### (c)           ComplianceWith Section 409A.  Notwithstandingany provision of this Agreement to the contrary, it is intended that theprovisions of this Agreement comply with Section 409A of the InternalRevenue Code of 1986, as amended (“Section 409A”), and allprovisions of this Agreement will be construed and interpreted in a mannerconsistent with the requirements for avoiding taxes or penalties under Section 409A.  You are solely responsible and liable for thesatisfaction of all taxes and penalties that may be imposed on you inconnection with this Agreement or any other Agreement maintained by the Company(including any taxes and penalties under Section 409A), and neither theCompany nor any affiliate of the Company shall have any obligation to indemnifyor otherwise hold you (or any beneficiary) harmless from any or all of suchtaxes or penalties.

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

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### 3.             Miscellaneous.

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#### (a)           Youreligibility for payment of a Transaction Bonus is in addition to, and not inlieu of, your right to participate in any other bonus or incentive compensationprograms currently made available to you and shall not be deemed in any way tolimit or restrict the Company from making any bonus or other payments to youunder any other plan or agreement, whether now existing or hereinafter ineffect.

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#### (b)           Unlessotherwise determined by the Board (and to the extent allowable under applicablelaw), any payment of a Transaction Bonus shall not be taken into account incomputing your salary or compensation for the purposes of determining anybenefits or compensation under (i) any pension, retirement, lifeinsurance, severance or other benefit plan of the Company or its affiliates or (ii) anyagreement between you and the Company or its affiliates.

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### 4.             Administration.  The Committee shall administer thisAgreement.

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#### (a)           Subjectto the provisions of this Agreement and applicable law, the Committee shallhave 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 toreceive a Transaction Bonus; (ii) determine the type of Transaction Bonusto be granted to you; (iii) determine the amount of the Transaction Bonus;(iv) determine the terms and conditions of any Transaction Bonus; (v) determinewhether, to what extent, and under what circumstances the Transaction Bonusesmay be canceled, forfeited, or suspended and the method or methods by which theTransaction Bonus may be paid, canceled, forfeited, or suspended; (vi) determinewhether, once the Company is fully compliant with the reporting requirements ofthe Securities Exchange Act of 1934, as amended (the “1934 Act”), andhas filed and had declared effective a Registration Statement on Form 10under the 1934 Act, to replace the entire Transaction Bonus with anequity-based award having substantially equivalent value to you (andconcurrently to unilaterally terminate this Agreement), all as determined bythe Committee in its sole, good faith discretion; (vii) determine whether,to what extent, and under what circumstances the Transaction Bonus, and otheramounts payable with respect to the Transaction Bonus shall be deferred eitherautomatically or at the election of the holder thereof or of the Committee; (viii) interpret,administer reconcile any inconsistency, correct any default and/or supply anyomission in this Agreement and any instrument or agreement relating to, or theTransaction Bonus granted under this Agreement; (ix) establish, amend,suspend, or waive such rules and regulations and appoint such agents as itshall deem appropriate for the proper administration of this Agreement; and (x) makeany other determination and take any other action that the Committee deems necessaryor desirable for the administration of this Agreement.

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

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#### (c)           Nomember of the Committee shall be liable for any action or determination made ingood faith with respect to this Agreement or any Transaction Bonus hereunder.

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### 5.             Restrictive Covenants.

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#### (a)           Non-Competition; Non-Solicitation.At all times duringyour employment by the Company and during the period of one year commencing onand following the date as of which your employment with the Company terminatesfor any reason, you agree that you will not, directly or indirectly, withoutthe prior written consent of the Committee, be employed by, or act as aconsultant 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 otherentity that engages in the retail supermarket business or the business ofwholesale food distribution in New York, New Hampshire, Pennsylvania, orVermont (other than by beneficial ownership of up to 5% of the outstandingvoting 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 youremployment and for one year following the date as of which your employment withthe Company  terminates for any reason, youwill not directly or indirectly (i) solicit or hire or encourage thesolicitation or hiring of any person who was an employee of the Company at anytime on or after the date of such termination (unless more than 12 months shallhave elapsed between the last day of such person’s employment by the Companyand the first date of such solicitation or hiring) or (ii) induce orattempt to induce any employee of the Company to leave the employ of theCompany or in any way interfere with the relationship between the Company andany employee thereof.

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#### (b)           Non-Disclosureof Confidential Information.  Yourecognize that the services you perform for the Company are special, unique andextraordinary in that you may acquire confidential information, trade secretsor other competitive information concerning the operations of the Company, theuse or disclosure of which could cause the Company substantial loss and damageswhich could not be readily calculated, and for which no remedy at law would beadequate.  Accordingly, you agree thatyou 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 hereinafterdefined) 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 orother material relating to the business, strategies, services or activities ofthe Company, including, without limitation, information with respect to theCompany’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 andother similar information that is proprietary information of the Company.  Notwithstanding the foregoing, you maydisclose such Confidential Information when required to do so by a court ofcompetent jurisdiction, by any governmental agency having supervisory authorityover the business of the Company and/or its affiliates, as the case may be, orby any administrative body or legislative body (including a committee thereof)with jurisdiction to order you to divulge, disclose or make accessible suchinformation; provided, further, that in the event that you are ordered by anysuch court or other government agency, administrative body or legislative bodyto disclose any Confidential Information, you shall (i) promptly notifythe Company of such order, (ii) at the written request of the Company,diligently contest such order at the sole expense of the Company as expensesoccur, and (iii) at the written request of the Company, seek to obtain, atthe sole expense of the Company, such confidential treatment as may beavailable 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.

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### 6.             Enforcement;Forfeiture of Bonus.

 

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#### (a)           Youacknowledge and agree that any violation by you of any of the undertakingscontained in Section 5 of this Agreement would cause the Companyimmediate, substantial and irreparable injury for which the Company has noadequate remedy at law.  Accordingly, youagree that, in the event of a breach or threatened breach by you of any of theundertakings in Section 5 of this Agreement, the Company will be entitledto temporary and permanent injunctive relief in any court of competentjurisdiction (without the need to post bond and without proving that damageswould be inadequate).

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#### (b)           Youfurther agree that, if the Company determines in good faith that you havebreached Section 5 of this Agreement, then:

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##### (i)            the Transaction Bonus shall beautomatically forfeited as of the date of breach, and

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

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

 

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

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### 8.             WithholdingTaxes.  The Company may withhold fromany amounts payable under the Agreement such federal, state and local taxes asmay be required to be withheld pursuant to any applicable law or regulation.

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### 9.             GoverningLaw.  The interpretation,construction and performance of this Agreement shall be governed by andconstrued and enforced in accordance with the laws of the State of New York withoutregard to the principle of conflicts of laws.

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### 10.           Entire Agreement; Amendments.  The Agreement states the entire agreement andunderstanding of the parties on the subject matter of the Agreement andsupersedes all previous agreements, arrangements, communications, andunderstandings relating to that subject matter. The Agreement may be amended, modified, superseded, or canceled, and anyof the terms thereof may be waived, only by a written document signed by eachparty to the Agreement or, in the case of waiver, by the party or partieswaiving 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 signaturesthereto and hereto were upon the same instrument.

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|                                                                                                                                    |   | 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 $10.00and $14.99 and $15.00 and $19.99 shall be determined by straight lineinterpolation.  No Transaction Bonus willbe 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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