**Exhibit 10.3**

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**CHANGE IN CONTROL PROTECTION AGREEMENT**

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

 

**R**ECITALS

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The Company has employed the Key Employee in anofficer position and has determined that the Key Employee holds a criticalposition with the Company.

 

The Company believes that, in the event it isconfronted with a situation that could result in a change in ownership orcontrol of the Company, continuity of management will be essential to itsability to evaluate and respond to such situation in the best interests of itsshareholders, and the Company desires to assure itself of the Key Employee’sservices during the period in which it is confronting such a situation, and toprovide certain financial assurances to the Key Employee.

 

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

 

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

 

The Company and the Key Employee hereby agree asfollows:

 

1.             Operationof Agreement.

 

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

 

(b)           Effective Date. Notwithstandingthe provisions of Section 1(a) hereof, this Agreement shall governthe terms and conditions of the Key Employee’s employment and the benefits andcompensation to be provided to the Key Employee only if a Change in Control isconsummated prior to the Expiration Date. For purposes of this Agreement, the “EffectiveDate” shall mean the date, prior to the Expiration Date, on which a Changein Control is consummated; provided that if the Key Employee is notemployed 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 shallnot have any rights under this Agreement. For the avoidance of doubt, theparties acknowledge that the Key Employee shall not have any rights under, andthe terms, conditions and benefits of such Key Employee’s employment shall notbe governed by,

 

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

 

2.             Definitionof Change in Control.

 

“Change in Control” shall be deemed to occurupon:

 

### (i)            the acquisition byany individual, entity or group (a “Person”) (within the meaning of Section 13(d)(3) or14(d)(2) of the Securities Exchange Act of 1934 (the “Exchange Act”))of beneficial ownership (within the meaning of Rule 13d-3 promulgatedunder the Exchange Act) of 50% or more (on a fully diluted basis) of either (A) thethen outstanding shares of common stock of the Company (“Common Stock”),taking into account as outstanding for this purpose such Common Stock issuableupon the exercise of options or warrants, the conversion of convertible stockor debt, and the exercise of any similar right to acquire such Common Stock(the “Outstanding Company Common Stock”) or (B) the combined votingpower of the then outstanding voting securities of the Company entitled to votegenerally in the election of directors (the “Outstanding Company VotingSecurities”); provided, however, that for purposes of thisAgreement, the following acquisitions shall not constitute a Change in Control:(I) any acquisition by the Company or any entity that directly orindirectly is controlled by controls or is under common control with theCompany (an “Affiliate”), (II) any acquisition by any employeebenefit plan sponsored or maintained by the Company or any Affiliate, or (III) anyacquisition by the Key Employee or any group of persons including the KeyEmployee (or any entity controlled by the Key Employee or any group of personsincluding the Key Employee);

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

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### (iii)          the dissolution orliquidation of the Company;

 

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

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### (v)           the consummation ofa reorganization, recapitalization, merger, consolidation, statutory shareexchange or similar form of corporate transaction involving the Company thatrequires the approval of the Company’s stockholders, whether for suchtransaction or the issuance of securities in the transaction (a “BusinessCombination”), unless immediately following such Business Combination: (A) morethan 50% of the total voting power of (x) the entity resulting from suchBusiness Combination (the “Surviving Company”), or (y) ifapplicable, the ultimate parent entity that directly or indirectly hasbeneficial ownership of sufficient voting securities eligible to elect a majorityof the members of the board of directors (or the analogous governing body) ofthe Surviving Company (the “Parent Company”), is represented by theOutstanding Company Voting Securities that were outstanding immediately priorto such Business Combination (or, if applicable, is represented by shares intowhich the Outstanding Company Voting Securities were converted pursuant to suchBusiness Combination), and such voting power among the holders thereof is insubstantially the same proportion as the voting power of the OutstandingCompany Voting Securities among the holders thereof immediately prior to theBusiness Combination, and (B) at least a majority of the members of theboard of directors (or the analogous governing body) of the Parent Company (or,if there is no Parent Company, the Surviving Company) following theconsummation of the Business Combination were Board members at the time of theBoard’s approval of the execution of the initial agreement providing for suchBusiness Combination.

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

 

4.             Positionand Duties.

 

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

 

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Acquirer imposes upon theKey Employee additional or changed reporting obligations or other similar andcustomary responsibilities within the group structure of the Acquirer.

 

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

 

5.             Compensation.

 

(a)           Base Salary. During theProtected Period, the Key Employee shall receive a base salary at a monthlyrate at least equal to the monthly salary paid to the Key Employee by theCompany immediately prior to the Effective Date. The base salary shall bereviewed 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 orany committee thereof or any individual having authority to take such action inaccordance with the Company’s regular practices. The Key Employee’s basesalary, as it may be increased from time to time, shall hereafter be referredto as the “Base Salary.” Neither the Base Salary nor any increase in the BaseSalary after the Effective Date shall serve to limit or reduce any otherobligation of the Company hereunder.

 

(b)           Annual Bonus. During theProtected Period, in addition to the Base Salary, the Key Employee shall beeligible to receive discretionary annual bonuses or incentive compensation asmay be authorized from time to time by action of the Board or the Acquirer orany committee thereof or any individual having authority to take such action inaccordance with the Company’s or the Acquirer’s regular practices in their solediscretion (the “Annual Bonus Opportunity”). The Annual BonusOpportunity shall be an amount that provides the Key Employee with the samebonus opportunity as other employees of the Company or the Acquirer ofcomparable rank (“Similarly Situated Key Employees”). If any fiscal yearcommences but does not end during the Protected Period, the Key Employee shallreceive a pro-rated amount in respect of the Annual Bonus Opportunity for theportion of the fiscal year occurring during the Protected Period. Any amountpayable in respect of the Annual Bonus Opportunity shall be paid as soon aspracticable following the year for which the amount (or any prorated portion)is earned or awarded, unless electively deferred by the Key Employee pursuantto any deferral programs or arrangements that the Company or the Acquirer maymake available to the Key Employee.

 

(c)           Long-term Incentive CompensationPrograms. During the Protected Period, the Key Employee shall be eligibleto participate in all long-term incentive compensation programs that are madeavailable 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 overalladministration of such programs.

 

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

 

(e)           Expenses. During the ProtectedPeriod, the Key Employee shall be entitled to receive prompt reimbursement forall reasonable expenses incurred by the Key Employee (the “Expenses”) inaccordance with the policies and procedures of the Company as in effect fromtime to time with respect to expenses incurred by other Similarly Situated KeyEmployees.

 

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

 

(g)           Indemnification. During andafter the Protected Period, the Company shall indemnify the Key Employee andhold the Key Employee harmless from and against judgments, fines, amounts paidin settlement and reasonable expenses, including attorneys’ fees, on the sameterms and conditions applicable from time to time with respect to theindemnification of other Similarly Situated Key Employees.

 

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

 

6.             Termination.

 

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

 

(b)           Voluntary Termination; Terminationwithout Cause. Notwithstanding anything in this Agreement to the contrary,the Key Employee may voluntarily terminate employment with the Company, and theCompany may terminate the employment of the Key Employee, at any time for anyreason (including early retirement under the terms of any of the Company’sretirement 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) hereofon account of Good Reason (as defined therein) shall not be treated as avoluntary termination under this Section 6(b).

 

(c)           Cause. The Company mayterminate the Key Employee’s employment for Cause. For purposes of thisAgreement, “Cause” means (i) the commission by the Key Employee ofan act of fraud, dishonesty, embezzlement (including the unauthorizeddisclosure or use of confidential or proprietary information of the Company,the Acquirer or their respective Affiliates or clients) or other act oromission intended or with consequences that bring, or could reasonably beexpected to bring, the Company, the Acquirer or any of their respectiveAffiliates into disrepute or otherwise materially harm, or could reasonably beexpected to materially harm, their respective commercial or governmentalrelationships or licenses, (ii) the Key Employee pleads guilty or nocontest to or is convicted of any criminal offense for which a penalty ofimprisonment may be imposed (other than an offense under road trafficlegislation), (iii) material misconduct as an employee of the Company orany of its subsidiaries or other conduct tending to bring the Company, theAcquirer or any of their respective Affiliates or shareholders into disreputeor failure to comply with any written guidelines adopted or promulgated by theCompany or the Acquirer, (iv) abandonment or material neglect by the KeyEmployee of any of the duties for which he has been employed by the Company, (v) persistentfailure of the Key Employee to comply with or carry out the instructions of theCompany’s or the Acquirer’s Board of Directors or management if the ability tocomply with or carry out such instructions is reasonably within the control ofthe Employee, or (vi) material breach by the Key Employee of his dutiesunder this Agreement, or material failure to carry out any such duties;provided that any such breach or failure shall not have been remedied by theKey Employee within thirty days of receipt by the Key Employee of writtennotice from the Company of the occurrence of such breach or failure.

 

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

 

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

 

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

 

(g)           Other.

 

### (i)            Upon the termination of the Key Employee’s employmentwith the Company for any reason, the Key Employee (or, if applicable, hisestate) shall immediately deliver to the Company all documents, correspondence,memoranda, notes, records, reports, plans, designs, studies and any otherpapers or items made or received by the Key Employee in connection with hisemployment with the Company and including all copies of the foregoing), and allcomputer equipment, disks and software, keys, credit cards, books and otherproperty of or relating to the Company or any of its Affiliates (includingwithout limitation all documents prepared by the Key Employee or which may havecome into the Key Employee’s possession in the course of his employmenthereunder, and including copies thereof) then in the Key Employee’s (or, ifapplicable, his estate’s) possession.

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### (ii)           After the termination of the Key Employee’s employmentwith the Company for any reason, the Key Employee shall not at any timethereafter represent himself as being in any way connected with or interestedin the business of or employed by the Company or its Affiliates, or use fortrade or other purposes the name of the Company or its Affiliates, or any namecapable of confusion therewith.

 

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

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7.             Obligationsof the Company upon Termination.

 

(a)           Death or Disability. If,during the Protected Period or at any time during the ninety (90) day periodimmediately preceding the Effective Date, the Key Employee’s employment isterminated by reason of the Key Employee’s death or Disability, this Agreementshall terminate without further obligations to the Key Employee or the KeyEmployee’s legal representatives under this Agreement, except that the Companyshall 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 Salarythrough the Date of Termination (the “Earned Salary”), (ii) anyvested amounts or benefits owing to the Key Employee under or in accordancewith the terms and conditions of the Company’s otherwise applicable employeebenefit plans and programs, including any compensation previously deferred bythe Key Employee (together with any accrued earnings thereon) and not yet paidby the Company, any accrued vacation pay not yet paid by the Company, and anyunreimbursed Expenses (the “Accrued Obligations”), and (iii) anyother benefits payable due to the Key Employee’s death or Disability under theCompany’s applicable plans, policies or programs (the “Additional Benefits”).

 

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

 

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

 

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

 

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

 

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#### (A)                              the Key Employee’s Earned Salary;

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

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

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##### (2)                                  two times the average of the annual cashbonuses payable to the Key Employee under the Company’s annual incentive planfor each of the three fiscal years of the Company (or, if less, the number ofprior fiscal years during which the Key Employee was an employee of theCompany) ended immediately prior to the Effective Date for which an annualbonus amount had been determined prior to the Effective Date. If the KeyEmployee was employed by the Company for only a portion of any fiscal yearincluded in the period for which the average referred to in the immediatelypreceding sentence is determined and the bonus payable for such fiscal yeartook into account such partial period of employment, such bonus for such fiscalyear shall be annualized for purposes of calculating such average; and

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#### (C)                                any Accrued Obligations.

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The Earned Salary and Severance Amount shall be paidin cash in a single lump sum as soon as practicable, but in no event more than30 days (or at such earlier date required by law), following the Date ofTermination. Any Accrued Obligations shall be paid in accordance with the termsof the applicable plan, program or arrangement.

 

### (ii)           Continuation of Benefits. The Key Employee (and, tothe extent applicable, his dependents) shall be entitled, after the Date ofTermination (or, in the event of termination during the 90 days immediatelypreceding to the Effective Date, the Effective Date) until the firstanniversary of the Date of Termination (or, in the event of termination duringthe 90 days immediately preceding to the Effective Date, the Effective Date)(the “End Date”), to continue participation in all of the Company’splans providing medical, dental and longterm disability benefits for which theKey Employee was eligible as of the Date of Termination (collectively, the “ContinuingBenefit Plans”); provided, however, that the participation bythe Key Employee and, to the extent

 

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

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(d)           Discharge of the Company’sObligations. The Key Employee’s sole remedy for the Company’s breach ofthis Agreement during the Protected Period, to the extent constituting GoodReason, shall be to terminate this Agreement and to receive payments under thisSection 7. Except as expressly provided in this Section 7(d), theamounts payable to the Key Employee pursuant to this Section 7 (whether ornot reduced pursuant to Section 7(e) hereof) shall be in full andcomplete satisfaction of the Key Employee’s rights under this Agreementfollowing termination of his employment and any claims he may have in respectof employment by the Company or any of its Affiliates (or termination thereof),for breach by the Company of this Agreement or for severance payments. Suchamounts shall constitute liquidated damages with respect to any and all suchrights and claims and, subject to the Key Employee’s receipt of such amounts,the Company and its directors, officers, shareholders, affiliates and agentsshall be released and discharged from any and all liability to the Key Employeein connection with this Agreement, the breach thereof or otherwise inconnection with the Key Employee’s employment with the Company and itsAffiliates or the termination thereof. Notwithstanding the foregoing, theobligations of the Company under this Agreement are meant to supplement and notreplace any rights of the Key Employee under any equity incentive or stockoption plan, as such rights may be determined in accordance with the terms ofsuch plans, if any. As a condition to any payment under this Section 7, (1) theKey Employee shall be required to sign and deliver to the Company a waiver andrelease (to be provided by the Company following the termination of theemployment of the Key Employee) waiving and releasing any claims he or she mayhave against the Company and its parents, subsidiaries, affiliates, predecessors,assigns and representatives, and their respective present and former benefitand severance plans, plan administrators, insurers, agents, shareholders,officers, directors, attorneys and employees, except as expressly provided inthis Section 7(d) and payments and benefits due under this Section 7,and (2) seven days shall have elapsed following delivery of such releaseto the Company without such release being revoked by the Key Employee bywritten 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 arisingunder any Federal, state or local law or ordinance, tort, employment contract(express or implied), public policy, whisteblower law, wrongful discharge orany other obligation including any claims arising under the Civil Rights Act of1866, 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 bythe Older Workers Benefit

 

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Protection Act, theAmericans With Disabilities Act of 1990, the Employee Retirement IncomeSecurity Act of 1974, the Worker Adjustment Retraining and Notification Act, orState law, and all claims for wages, severance, bonuses, monetary or equitablerelief or other damages of any kind, vacation pay, other employee fringebenefits or attorneys’ fees.

 

(e)           ExciseTax Cutback.

 

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

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### (ii)           It is possible that after the determinations andselections made pursuant to Section 7(e)(i) the Key Employee willreceive Change in Control Benefits that are, in the aggregate, either more orless 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 promptlyrepay the Company an amount consistent with this Section 7(e)(ii). Ifthere is an Underpayment, the Company shall pay the Key Employee an amount consistentwith this Section 7(e)(ii).

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### (iii)          The determinations with respect to this Section 7(e)(iii) shallbe made by an independent auditor (the “Auditor”) compensated by theCompany. The Auditor shall be the Company’s regular independent auditor, unlessthe Key Employee objects to the use of that firm, in which event the Auditorshall be a nationally-recognized United States public accounting firm chosen bythe Company and approved by the Key Employee (which approval shall not beunreasonably 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 finalregulations promulgated thereunder and any reference to a particular section ofthe Code shall include any provision that modifies, replaces or supersedes suchsection.

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## (f)            Notwithstanding anything else in this Section 7 tothe contrary, nothing in this Section 7 shall be construed to release theCompany from (or to otherwise waive or modify) the Company’s obligation toindemnify 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 bythe Key Employee otherwise than by will or the laws of descent anddistribution. This Agreement shall inure to the benefit of and be enforceableby the Key Employee’s legal representatives.

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

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9.             Miscellaneous.

 

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

 

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

 

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

 

(c)           Amendments. This Agreement maynot be amended or modified otherwise than by a written agreement executed bythe parties hereto or their respective successors and legal representatives.

 

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

 

(e)           Notices. All notices and othercommunications hereunder shall be in writing and shall be given byhand-delivery to the other party or by registered or certified mail, returnreceipt 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 tosuch other address as either party shall have furnished to the other in writingin accordance herewith. Notice and communications shall be effective whenactually received by the addressee.

 

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

 

(g)           Severability: Reformation. Inthe event that one or more of the provisions of this Agreement shall becomeinvalid, illegal or unenforceable in any respect, the validity, legality andenforceability of the remaining provisions contained herein shall not beaffected thereby.

 

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

 

(i)            Captions; Pronouns. Thecaptions of this Agreement are not part of the provisions hereof and shall haveno force or effect. Any masculine personal pronoun shall be considered to meanthe corresponding feminine personal pronoun, as the context requires.

 

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

 

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

 

 

 
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|         |   | Print name:   |
|         |   | Title:        |
|         |   |          |
| ATTESTED:    |   |          |
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| Print name   |   |          |
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| Company Seal |   |          |
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|         |   |          |
|         |   | KEY EMPLOYEE: |
|         |   |          |
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|         |   | Print name:   |
|         |   |          |
|         |   |          |
| WITNESSED:   |   |          |
|         |   |          |
|         |   |          |
|         |   |          |
| Print name:  |   |          |

 

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