Document:

Exhibit 10.5

 

TOPS HOLDING CORPORATION 2007 STOCK INCENTIVE PLAN

 

 

TABLE OF CONTENTS

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I BACKGROUND AND
  PURPOSE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  
	
  ARTICLE II DEFINITIONS

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.1

  	
   

  	
  Affiliate

  	
   

  	
  1

  
	
   

  	
  Section 2.2

  	
   

  	
  Beneficial Owner or Beneficial Ownership

  	
   

  	
  1

  
	
   

  	
  Section 2.3

  	
   

  	
  Board

  	
   

  	
  1

  
	
   

  	
  Section 2.4

  	
   

  	
  Change Effective Date

  	
   

  	
  1

  
	
   

  	
  Section 2.5

  	
   

  	
  Change of Control

  	
   

  	
  1

  
	
   

  	
  Section 2.6

  	
   

  	
  Code

  	
   

  	
  2

  
	
   

  	
  Section 2.7

  	
   

  	
  Committee

  	
   

  	
  2

  
	
   

  	
  Section 2.8

  	
   

  	
  Company

  	
   

  	
  2

  
	
   

  	
  Section 2.9

  	
   

  	
  Credit Agreements

  	
   

  	
  2

  
	
   

  	
  Section 2.10

  	
   

  	
  Director

  	
   

  	
  2

  
	
   

  	
  Section 2.11

  	
   

  	
  Eligible Employee

  	
   

  	
  2

  
	
   

  	
  Section 2.12

  	
   

  	
  Fair Market Value

  	
   

  	
  3

  
	
   

  	
  Section 2.13

  	
   

  	
  1933 Act

  	
   

  	
  3

  
	
   

  	
  Section 2.14

  	
   

  	
  1934 Act

  	
   

  	
  3

  
	
   

  	
  Section 2.15

  	
   

  	
  Option

  	
   

  	
  3

  
	
   

  	
  Section 2.16

  	
   

  	
  Option Agreement

  	
   

  	
  3

  
	
   

  	
  Section 2.17

  	
   

  	
  Option Price

  	
   

  	
  3

  
	
   

  	
  Section 2.18

  	
   

  	
  Permitted Transferee

  	
   

  	
  3

  
	
   

  	
  Section 2.19

  	
   

  	
  Person

  	
   

  	
  3

  
	
   

  	
  Section 2.20

  	
   

  	
  Plan

  	
   

  	
  4

  
	
   

  	
  Section 2.21

  	
   

  	
  Public Offering

  	
   

  	
  4

  
	
   

  	
  Section 2.22

  	
   

  	
  Rule 16b-3

  	
   

  	
  4

  
	
   

  	
  Section 2.23

  	
   

  	
  Stock

  	
   

  	
  4

  
	
   

  	
  Section 2.24

  	
   

  	
  Subsidiary

  	
   

  	
  4

  
	
   

  	
  Section 2.25

  	
   

  	
  Voting Securities

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE III STOCK

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 3.1

  	
   

  	
  Shares Reserved

  	
   

  	
  4

  
	
   

  	
  Section 3.2

  	
   

  	
  Source of Shares

  	
   

  	
  4

  
	
   

  	
  Section 3.3

  	
   

  	
  Use of Proceeds

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV EFFECTIVE DATE

  	
   

  	
  4

  
	
   

  	
   

  	
   

  
	
  ARTICLE V COMMITTEE

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI ELIGIBILITY

  	
   

  	
  5

  

 

i

 

	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII OPTIONS

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 7.1

  	
   

  	
  Committee Action

  	
   

  	
  5

  
	
   

  	
  Section 7.2

  	
   

  	
  Option Price

  	
   

  	
  5

  
	
   

  	
  Section 7.3

  	
   

  	
  Payment

  	
   

  	
  5

  
	
   

  	
  Section 7.4

  	
   

  	
  Exercise

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII
  NON-TRANSFERABILITY

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX SECURITIES
  COMPLIANCE

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 9.1

  	
   

  	
  Stock Held for Investment

  	
   

  	
  6

  
	
   

  	
  Section 9.2

  	
   

  	
  Cooperation

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE X LIFE OF PLAN

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  ARTICLE XI ADJUSTMENT

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 11.1

  	
   

  	
  Capital Structure

  	
   

  	
  7

  
	
   

  	
  Section 11.2

  	
   

  	
  Corporate Transactions

  	
   

  	
  7

  
	
   

  	
  Section 11.3

  	
   

  	
  Fractional Shares of Stock

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE XII CHANGE OF CONTROL

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 12.1

  	
   

  	
  Change of Control

  	
   

  	
  8

  
	
   

  	
  Section 12.2

  	
   

  	
  Amount of Cashout Payment

  	
   

  	
  8

  
	
   

  	
  Section 12.3

  	
   

  	
  Other Consideration

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIII AMENDMENT OR
  TERMINATION

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  ARTICLE XIV MISCELLANEOUS

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 14.1

  	
   

  	
  Governing Law; Limitations on Liability

  	
   

  	
  9

  
	
   

  	
  Section 14.2

  	
   

  	
  Compliance with Code

  	
   

  	
  10

  
	
   

  	
  Section 14.3

  	
   

  	
  Parachute Payments

  	
   

  	
  10

  
	
   

  	
  Section 14.4

  	
   

  	
  Stockholder Rights

  	
   

  	
  11

  
	
   

  	
  Section 14.5

  	
   

  	
  No Contract of Employment

  	
   

  	
  11

  
	
   

  	
  Section 14.6

  	
   

  	
  Withholding

  	
   

  	
  11

  
	
   

  	
  Section 14.7

  	
   

  	
  Construction

  	
   

  	
  11

  
	
   

  	
  Section 14.8

  	
   

  	
  Other Conditions

  	
   

  	
  11

  
	
   

  	
  Section 14.9

  	
   

  	
  Rule 16b-3

  	
   

  	
  12

  
	
   

  	
  Section 14.10

  	
   

  	
  Coordination with Employment Agreements and Other
  Agreements

  	
   

  	
  12

  

 

ii

 

ARTICLE I

BACKGROUND AND PURPOSE

 

The
purpose of this Plan is to promote the interest and long-term success of Tops
Holding Corporation, a Delaware corporation (the “Company”), by
authorizing the Committee to grant Options to Eligible Employees and Directors
in order to (1) attract and retain Eligible Employees and Directors, (2) provide
an additional incentive to each Eligible Employee or Director to work to
increase the value of the Stock and (3) provide each Eligible Employee or
Director with a stake in the future of the Company which corresponds to the
stake of each of the Company’s stockholders. 
This Plan is intended to satisfy the requirements for a “plan” described
in Rule 701 promulgated under the 1933 Act, and the Company intends that
this Plan be interpreted in accordance with that intent.

 

ARTICLE II

DEFINITIONS

 

Section 2.1                                      Affiliate — means any organization (other than a Subsidiary)
that would be treated as under common control with the Company under § 414(c) of
the Code if “50 percent” were substituted for “80 percent” in the income tax
regulations under § 414(c) of the Code.

 

Section 2.2                                      Beneficial Owner or Beneficial Ownership — has the meaning ascribed to such term
in Rule 13d-3 of the General Rules and Regulations under the 1934
Act.

 

Section 2.3                                      Board — means the Board of Directors of the Company.

 

Section 2.4                                      Change Effective Date — means the date which includes the “closing” of the
transaction which makes a Change of Control effective.

 

Section 2.5                                      Change of Control — means that any of the following events has occurred
with respect to the Company, and the effective date of the Change of Control
shall be as of the first day that any one or more of the following events shall
have been fully and unconditionally effected:

 

(1)                                  Any Person, other than (A) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or an Affiliate; or (B) a corporation owned directly or indirectly
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company; or (C) a Permitted Transferee
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing more than 50% of the total voting power represented by the
Company’s Voting Securities.

 

(2)                                  After the date this Plan becomes
effective, the Company consummates a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation that would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to 

 

 

represent (either by
remaining outstanding or by being converted into Voting Securities of the
surviving entity) more than 50% of the total voting power represented by the
Voting Securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation;

 

(3)                                  The Company consummates a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company (in one transaction or a series of transactions) of  all or substantially all of the Company’s
assets; or

 

(4)                                  Any other condition or event (i) that
the Committee determines to be a “Change of Control” within the meaning of this
Section 2.5 and (ii) that is set forth as a supplement to this Section 2.5
in an Option Agreement.

 

(5)                                  Notwithstanding the foregoing, a “Change
of Control” shall not include any acquisition of securities or voting power
directly from the Company through a Public Offering.

 

Section 2.6                                      Code — means the Internal Revenue Code of 1986, as amended.

 

Section 2.7                                      Committee — means a committee of the Board, each member of which
shall be appointed by and shall serve at the pleasure of the Board or, if no
such Committee is appointed, the Board as a whole.

 

Section 2.8                                      Company — means Tops Holding Corporation and any successor to
Tops Holding Corporation.

 

Section 2.9                                      Credit Agreements — means, together (i) the First
Lien Credit Agreement, dated as of December 1, 2007, among HSBC Bank USA,
National Association, as Administrative Agent and Collateral Agent, the
Company, Hank Acquisition Company, LLC, Tops Markets, LLC, the several banks
and other financial institutions or entities from time to time party thereto
and HSBC Securities (USA) Inc., as Sole Lead Arranger and Sole Bookrunner, and (ii) the
Second Lien Credit Agreement, dated as of December 1, 2007, among the
Company, Hank Acquisition Company, LLC, Tops Markets, LLC, the several banks
and other financial institutions or entities from time to time party thereto,
HSBC Bank USA, National Association, as Administrative Agent and Collateral
Agent, and HSBC Securities (USA) Inc., as Sole Lead Arranger and Sole
Bookrunner, in each case, as such agreement may be amended, modified, extended,
refinanced or replaced from time to time.

 

Section 2.10                                Director — means any member of the Board.

 

Section 2.11                                Eligible Employee — means an employee, consultant or independent
contractor of the Company or any Affiliate to whom the Committee decides for
reasons sufficient to the Committee to make a grant under this Plan.

 

2

 

Section 2.12                                Fair Market Value — means, on any given date, the current fair market
value of a share of Stock, as determined pursuant to (1) or (2) below
as applicable:

 

(1)                                  if the Stock is not publicly traded, the
price that the Committee acting in good faith determines through any reasonable
valuation method which satisfies the requirements of Section 409A of the
Code for which a share of Stock might change hands between a willing buyer and
a willing seller, neither being under any compulsion to buy or to sell and both
having reasonable knowledge of the relevant facts, or

 

(2)                                  if the Stock is publicly traded, the
closing price on any date for a share of Stock as reported by The Wall
Street Journal or, if The Wall Street Journal does not report such
closing price, such closing price as reported by a newspaper or trade journal
selected by the Committee or, if no such closing price is available on such
date, such closing price as so reported for the immediately preceding business
day on which the Stock is traded.

 

Section 2.13                                1933 Act — means the Securities Act of 1933, as amended, or any
successor statute, and the rules and regulations promulgated thereunder.

 

Section 2.14                                1934 Act — means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations
promulgated thereunder.

 

Section 2.15                                Option — means an option that is granted under Article VII.

 

Section 2.16                                Option Agreement — means an agreement (whether in electronic or written
form) that sets forth the terms and conditions of an Option granted under this
Plan.

 

Section 2.17                                Option Price — means the price that shall be paid to purchase one
share of Stock upon the exercise of an Option granted under this Plan.

 

Section 2.18                                Permitted Transferee — means, with respect to an Eligible Employee, (i) a
spouse, sibling or any lineal descendant (including adopted children), or (ii) any
trust, partnership or limited liability company established solely for the
benefit of the Eligible Employee and/or that of his spouse or lineal
descendants (including adopted children) or for estate planning purposes
provided such family trust, partnership or limited liability company remains
under the control of such Eligible Employee.

 

Section 2.19                                Person — means any natural person and any company, government
or political subdivision, agency or instrumentality of a government; provided, that if two or more Persons act as a partnership,
limited partnership, joint venture, syndicate or other group for the purpose of
acquiring, holding or disposing of securities of the Company, such partnership,
limited partnership, joint venture, syndicate or group shall be deemed to be a
single Person for purposes of this Plan.

 

3

 

Section 2.20                                Plan — means this Tops Holding Corporation 2007 Stock
Incentive Plan as effective as of the date described in Article IV and as
amended, restated or otherwise supplemented from time to time thereafter.

 

Section 2.21                                Public Offering — means the sale, in a public offering registered
under the 1933 Act, of Stock, or of any other security of the Company which is
substituted for Stock under Article XI.

 

Section 2.22                                Rule 16b-3— means Rule 16b-3 of Section 16(b) of
the 1934 Act, or any successor to such rule.

 

Section 2.23                                Stock — means the common stock of the Company, par value
$0.001 per share.

 

Section 2.24                                Subsidiary — means a corporation that is a subsidiary corporation
(within the meaning of § 424(f) of the Code) of the Company.

 

Section 2.25                                Voting Securities — means the Company’s then outstanding securities that
are entitled to vote generally in the election of Directors.

 

ARTICLE III

STOCK

 

Section 3.1                                      Shares Reserved.  There shall
(subject to Article XI) be reserved for issuance under this Plan 11,111
shares of Stock, which shall be the maximum number of shares issuable under
this Plan.  The Committee may determine,
in its discretion, any limits on the maximum number of Options that may be
granted under this Plan to any individual in any calendar year.

 

Section 3.2                                      Source of Shares.  The shares of
Stock described in Section 3.1 shall be reserved to the extent that the
Company deems appropriate from authorized but unissued shares of Stock and from
shares of Stock that have been reacquired by the Company.  All shares of Stock described in Section 3.1
shall remain available for issuance under this Plan until issued pursuant to
the exercise of an Option, and any such shares of Stock that are issued
pursuant to an Option and that are forfeited thereafter shall again become
available for issuance under this Plan.

 

Section 3.3                                      Use of Proceeds.  The proceeds
that the Company receives from the exercise of any Option under this Plan shall
be used for general corporate purposes and shall be added to the general funds
of the Company.

 

ARTICLE IV

EFFECTIVE DATE

 

The
effective date of this Plan shall be the date of its adoption by the Board
contingent on approval by the stockholders of the Company.  Any Option granted before such stockholder
approval automatically shall be granted subject to such approval.

 

4

 

ARTICLE V

COMMITTEE

 

This
Plan shall be administered by the Committee. 
The Committee acting in its absolute discretion shall exercise such
powers and take such action as expressly called for under this Plan and,
further, the Committee shall have the power to interpret this Plan and (subject
to Article XI, Article XII and Article XIII of this Plan and Rule 16b-3)
to take such other action in the administration and operation of this Plan as
the Committee deems equitable under the circumstances, which action shall be
binding on the Company, on each affected Eligible Employee or Director and on
each other Person directly or indirectly affected by such action.  Furthermore, the Committee as a condition to
making any grant under this Plan to any Eligible Employee or Director shall
have the right to require him or her to execute a counterpart signature page to
the Shareholders’ Agreement, dated as of December 1, 2007, among the
Company, Morgan Stanley Capital Partners V Funding LP, HSBC Private Equity
Partners USA, LP, HSBC Private Equity Partners II USA, LP and the other persons
named therein (as amended from time-to-time, the “Shareholders’ Agreement”)
and/or an agreement that makes the Eligible Employee or Director subject to
non-competition provisions and other restrictive covenants which run in favor
of the Company.

 

ARTICLE VI

ELIGIBILITY

 

All
Eligible Employees and Directors shall be eligible for the grant of Options
under this Plan.

 

ARTICLE VII

OPTIONS

 

Section 7.1                                      Committee Action.  The Committee
acting in its absolute discretion shall have the right to grant Options to
Eligible Employees and to Directors under this Plan from time to time to
purchase Stock, but the Committee shall not, absent the approval of a majority
of the Company’s Voting Securities, take any action, whether through amendment,
cancellation, replacement grants, or any other means, to reduce the Option
Price of any outstanding Options.  Each
grant of an Option to an Eligible Employee or Director shall be evidenced by an
Option Agreement, and each Option Agreement shall set forth the terms and
conditions of such grant as the Committee acting in its absolute discretion
deems consistent with the terms of this Plan.

 

Section 7.2                                      Option Price.  The Option
Price for each share of Stock subject to an Option may be greater than or equal
to the Fair Market Value of a share of Stock on the date an Option is granted.

 

Section 7.3                                      Payment.  The Option
Price for the portion of the Option being exercised shall be payable in full
upon the exercise of any Option and, at the discretion of the Committee, an
Option Agreement can provide for the payment of the Option Price either in
cash, by check, or through any cashless exercise procedure that is acceptable
to the Committee, or in any combination of such forms of payment.

 

5

 

Section 7.4                                      Exercise.

 

(1)                                  Exercise Period. 
Each Option granted under this Plan shall be exercisable in whole or in
part at such time or times as set forth in the related Option Agreement.

 

(2)                                  Termination of Status as Eligible
Employee or Director.  Subject to this Section 7.3, an Option
Agreement may provide for the exercise of an Option after an Eligible Employee’s
or a Director’s status as such has terminated for any reason whatsoever,
including death or disability.  In the
case of a consultant or an independent contractor, the meaning of “termination”
or “termination of employment” includes the date that the individual ceases to
provide services to the Company or its Subsidiaries.  An Option Agreement may provide for the
repurchase of shares of Stock following termination of employment at the discretion
of the Committee; provided, however, that in no
event shall any such repurchase be made at a time when it would be prohibited
by the Credit Agreements, or either of them.

 

(3)                                  Restrictions Imposed on Stock. 
As a condition precedent to the Company’s obligation to issue Stock upon
exercise by an Eligible Employee of the Option, the Eligible Employee shall
have agreed to be bound by and to comply with the provisions of the
Shareholders’ Agreement, to the extent then in effect.

 

ARTICLE VIII

NON-TRANSFERABILITY

 

No
Option shall (absent the Committee’s consent) be transferable by an Eligible
Employee or a Director other than by will or by the laws of descent and
distribution, and any Option shall (absent the Committee’s consent) be
exercisable during a Eligible Employee’s or Director’s lifetime only by such
Eligible Employee or Director or his or her legal representative in the event
of his or her incapacity.  The Person or
Persons to whom an Option is transferred by will or by the laws of descent and
distribution (or with the Committee’s consent) thereafter shall be treated as
the Eligible Employee or Director.

 

ARTICLE IX

SECURITIES COMPLIANCE

 

Section 9.1                                      Stock Held for Investment. 
As a condition to the receipt of Stock under this Plan, the Eligible
Employee or Director shall, if so requested by the Company, agree to hold such
Stock for investment and not with a view of resale or distribution to the
public and, if so requested by the Company, shall deliver to the Company a
written statement satisfactory to the Company to that effect.  Furthermore, the Eligible Employee or
Director shall make a written representation to the Company that he or she will
not sell or offer for sale any of such Stock unless a registration statement
shall be in effect with respect to such Stock under the 1933 Act and any
applicable state securities law or he or she shall have furnished to the 

 

6

 

Company an opinion in form and substance satisfactory
to the Company of legal counsel satisfactory to the Company that such
registration is not required. 
Certificates or other evidence of ownership representing the shares of
Stock transferred upon the exercise of an Option may at the discretion of the
Company bear a legend to the effect that such shares of Stock have not been
registered under the 1933 Act or any applicable state securities law and that
such shares of Stock cannot be sold or offered for sale in the absence of an
effective registration statement as to such shares of Stock under the 1933 Act
and any applicable state securities law or an opinion in form and substance
satisfactory to the Company of legal counsel satisfactory to the Company that
such registration is not required.

 

Section 9.2                                      Cooperation.  All shares of
Stock delivered to any Eligible Employee or Director under this Plan shall be
delivered subject to the condition that such Person (or such Person’s successor
in interest) cooperate to the extent reasonably necessary and customary for
stockholders in like circumstances to effect a Public Offering if a majority of
the Board approves a Public Offering, and if any such Person (or such Person’s
successor in interest) fails to do so, the Company shall have the right to
cancel the shares of Stock held by such Person (or such Person’s successor in
interest) in exchange for a payment to such Person (or such Person’s successor
in interest) equal to the then Fair Market Value of such Stock, or, if less,
the price paid for such Stock.

 

ARTICLE X

LIFE OF PLAN

 

No
Option shall be granted under this Plan on or after the earlier of the tenth
anniversary of the effective date of this Plan (as determined under Article IV)
or a Change of Control, in which event this Plan otherwise thereafter shall
continue in effect until all outstanding Options have been exercised in full or
no longer are exercisable.

 

ARTICLE XI

ADJUSTMENT

 

Section 11.1                                Capital Structure.  The number,
kind or class (or any combination thereof) of shares of Stock reserved under Section 3.1,
the grant cap described in Section 3.1, the number, kind or class (or any
combination thereof) of shares of Stock subject to Options and the Option Price
of such shares of Stock shall be adjusted by the Committee in an equitable
manner to preserve immediately after any corporate transaction, equity
restructuring or change in the capitalization of the Company, including, but
not limited to, mergers, spin offs or stock splits, the aggregate intrinsic
value of each such outstanding Option immediately before such corporate
transaction, equity restructuring or change in the capitalization of the
Company.

 

Section 11.2                                Corporate Transactions.  Subject to
this Article XI, the Committee shall have the authority to make any Option
grants to effect the assumption of, or the substitution for, options previously
made by any other corporation or entity to the extent that such substitution or
assumption of such options is required pursuant to a corporate transaction
involving such other corporation or entity.

 

7

 

Section 11.3                                Fractional Shares of Stock. 
If any adjustment under this Article XI would create a fractional
share of Stock or a right to acquire a fractional share of Stock under any
Option, such fractional share of Stock shall be disregarded and the number of
shares of Stock reserved under this Plan and the number subject to any Options
shall be rounded to the closest whole number or the Fair Market Value of the
fractional share shall be paid to the individual in cash, as determined by the
Committee.  An adjustment made under this
Article XI by the Committee shall be conclusive and binding on all
affected Persons.

 

ARTICLE XII

CHANGE OF CONTROL

 

Section 12.1                                Change of Control.

 

(1)                                  If there is a Change of Control, and if
an Eligible Employee’s employment with the purchaser or entity resulting from
or surviving such Change of Control is terminated without Cause (as defined in
such Eligible Employee’s Option Agreement) within one year of the Change
Effective Date for such Change of Control, any and all conditions to the exercise
of all outstanding Options automatically shall be deemed 100% satisfied as of
the effective date of such termination.

 

(2)                                  If there is a Change of Control, then the
Board shall have the discretion either (i) to cancel Options after
providing each Eligible Employee and Director a reasonable period (which period
shall not be more than seven (7) calendar days) to elect to exercise his
or her Options as of the Change Effective Date or (ii) provide that all
outstanding Options shall terminate as of the Change Effective Date and that
each holder of an Option shall receive a cash payment in exchange for the
cancellation of the Option (in accordance with Section 12.2 below); provided, however, that in the event that the consideration
paid in exchange for shares of Stock in connection with any Change of Control
includes any securities, then the Board shall have the discretion to provide
that each holder of an Option shall receive the consideration set forth in Section 12.3
below (subject to the provisions thereof) in lieu of such cash payment in
exchange for the cancellation of the Option.

 

Section 12.2                                Amount of Cashout Payment. 
If the Board provides for a cash payment to holders of unexercised
Options pursuant to Section 12.1(2)(ii), then with respect to each share
of Stock subject to the unexercised Option, such cash payment shall equal the
amount, if any, by which the payment for each share of Stock surrendered in the
Change of Control exceeds the Option Price for such share of Stock (subject to
adjustments as determined by the Board in good faith) (the “Cashout Amount”).

 

Section 12.3                                Other Consideration. 
If the Board provides that each holder of an Option shall receive
consideration other than cash in accordance with the proviso set forth in Section 12.1(2)(ii),
then with respect to each share of Stock subject to the unexercised Option, the
holder of the Option shall be entitled to receive securities issued in the
applicable 

 

8

 

Change of Control
transaction having a value, determined in good faith by the Board, equal to the
Cashout Amount .  Notwithstanding the
foregoing, if the receipt of such securities would require under applicable law
(i) the registration or qualification of such securities or of any Person as
a broker or dealer or agent with respect to such securities or (ii) the
provision to any holder of an Option of any information other than such
information as a prudent issuer would generally furnish in an offering made
solely to “accredited investors” as defined in Regulation D promulgated under
the 1933 Act, the Board will use reasonable efforts to cause such requirements
to be complied with to the extent necessary to permit such holder to receive
such securities, it being understood and agreed that the Board will not be
under any obligation to effect a registration of such securities under the 1933
Act (or any similar statute).  In
furtherance of the foregoing, any such holder of an Option shall, at the
request of the Board, execute such documents and instruments, and take such
other actions (including appointing a purchaser representative (as such term is
defined in Rule 501 promulgated under Regulation D)) reasonably acceptable
to the Board as may be reasonably necessary for such requirements to be complied
with.  Notwithstanding the foregoing, any
holder of an Option with respect to which such requirements cannot be complied
with will receive, with respect to each share of Stock subject to the
unexercised Option, the Cashout Amount in lieu of any securities in connection
with the cancellation of any Option pursuant to Section 12.1(2)(ii).

 

ARTICLE XIII

AMENDMENT OR TERMINATION

 

This
Plan may be amended by the Board from time to time to the extent that the Board
deems necessary or appropriate; provided, however, that (a) no amendment shall be made absent the
approval of a majority of the Voting Securities of the Company to the extent
such approval is required under applicable law or the rules of any
securities exchange or market on which shares of Stock are then listed and (b) no
amendment shall be made to Article XII on or after the date of any Change
of Control that might adversely affect any rights which otherwise would vest on
the related Change Effective Date.  The
Board also may suspend granting Options under this Plan at any time and may
terminate this Plan at any time; provided, however,
that the Board shall not have the right unilaterally to modify, amend or cancel
any Option made before such suspension or termination unless (1) the
Eligible Employee or Director consents in writing to such modification,
amendment or cancellation; provided, that
such consent is not required for the adjustment or cancellation of an Option
pursuant to the provisions of Article XI or XII, or for an amendment or
modification of an Option to the extent deemed necessary to comply with any
applicable law, the listing requirements of any principal securities exchange
or market on which the Shares are then traded, or to preserve favorable
accounting treatment of any Option for the Company; or (2) there is a
dissolution or liquidation of the Company or a transaction described in Section 11.2
or Article XII.

 

ARTICLE XIV

MISCELLANEOUS

 

Section 14.1                                Governing Law; Limitations on Liability. 
This Plan and the Options shall be governed by the laws of the State of
Delaware without reference to conflict of law principles.  IN NO EVENT SHALL THE COMPANY BE LIABLE FOR
ANY INDIRECT DAMAGES, INCLUDING WITHOUT LIMITATION, LOST PROFITS OR LOST 

 

9

 

OPPORTUNITY, OR ANY INDIRECT, SPECIAL, INCIDENTAL OR
CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING LEGAL FEES.

 

Section 14.2                                Compliance with Code.  The Company
intends that this Plan meet the requirements of Section 409A of the Code
and the regulations and other guidance issued thereunder (the “Requirements”)
and be operated in accordance with such Requirements so that benefits under
this Plan shall not be included in income under Section 409A of the
Code.  Any ambiguities in this Plan shall
be construed to effect the intent as described in this Section 14.2.  If any provision of this Plan is found to be
in violation of the Requirements, then such provision shall be deemed to be
modified or restricted to the extent and in the manner necessary to render such
provision in conformity with the Requirements, or shall be deemed excised from
this Plan, and this Plan shall be construed and enforced to the maximum extent
permitted by the Requirements as if such provision had been originally
incorporated in this Plan as so modified or restricted, or as if such provision
had not been originally incorporated in this Plan, as the case may be.

 

Section 14.3                                Parachute Payments.

 

(1)                                  Notwithstanding any other provision of
this Plan or of any other agreement, contract, or understanding heretofore or
hereafter entered into by an Eligible Employee or Director with the Company or
any Affiliate (an “Other Agreement”), except an agreement, contract, or
understanding entered into on or about the effective date hereof or hereafter
entered into that expressly modifies or excludes application of this paragraph,
and notwithstanding any formal or informal plan or other arrangement for the
direct or indirect provision of compensation to the Eligible Employee or
Director (including groups or classes of participants or beneficiaries of which
the Eligible Employee or Director is a member), whether or not such
compensation is deferred, is in cash, or is in the form of a benefit to or for
the Eligible Employee or Director (a “Benefit Arrangement”), if the
Eligible Employee or Director is a “disqualified individual,” as defined in Section 280G(c) of
the Code, any Options held by such Eligible Employee or Director and any right
to receive any payment or other benefit under this Plan shall not become
exercisable or vested (or, to the extent that all outstanding Options are
cancelled as a part of a transaction which constitutes a “change in the
ownership or effective control” of the Company or a “change in the ownership of
a substantial portion of the assets” of the Company (each as described in Section 280G
of the Code), shall be forfeited as of the effective date of such transaction):
(1) to the extent that such right to exercise, vesting, payment, or
benefit, taking into account all other rights, payments, or benefits to or for
the Eligible Employee or Director under this Plan, all Other Agreements, and
all Benefit Arrangements, would cause any payment or benefit to the Eligible
Employee or Director under this Plan to be considered a “parachute payment”
within the meaning of Section 280G(b)(2) of the Code (a “Parachute
Payment”) and (2) if, after paying the excise tax imposed by Section 4999
of the Code, the aggregate after-tax amounts received by the 

 

10

 

Eligible Employee or
Director under this Plan, all Other Agreements, and all Benefit Arrangements
would be less than the maximum after-tax amount that could be received by the
Eligible Employee or Director without causing any such payment or benefit to be
considered a Parachute Payment.

 

(2)                                  Section 14.3(1) shall not apply
if (1) the Eligible Employee or Director waives his right to any vesting,
payment or benefit under one or more Other Agreements or Benefit Arrangements
and (2) as a result of such waiver, the Eligible Employee or Director,
taking into account all rights, payments, or benefits to or for the Eligible
Employee or Director remains entitled under this Plan, all Other Agreements,
and all Benefit Arrangements, is not entitled to a Parachute Payment.

 

Section 14.4                                Stockholder Rights.  No Eligible
Employee or Director shall have any rights as a stockholder of the Company as a
result of the grant of an Option pending the actual issuance of the shares of
Stock subject to such Option to such Eligible Employee or Director.

 

Section 14.5                                No Contract of Employment. 
The grant of an Option to an Eligible Employee or Director under this
Plan shall not constitute a contract of employment or a right to serve on the
Board and shall not confer on an Eligible Employee or Director any rights upon
his or her termination of employment or service in addition to those rights, if
any, expressly set forth in this Plan or the related Option Agreement.

 

Section 14.6                                Withholding.  Each Option
shall be made subject to the condition that the Eligible Employee or Director
consents to whatever action the Committee directs to satisfy the federal and
state tax withholding requirements, if any, which the Company determines are
applicable to the exercise of such Option issued in the name of the Eligible
Employee or Director; provided, that
no withholding shall be effected under this Plan which exceeds the minimum
statutory federal and state withholding requirements to the extent deemed
necessary by the Committee to avoid adverse accounting consequences to the
Company.

 

Section 14.7                                Construction.  All
references to sections are to sections of this Plan unless otherwise
indicated.  Each term set forth in Article II
shall, unless otherwise stated, have the meaning set forth opposite such term
for purposes of this Plan and, for purposes of such definitions, the singular
shall include the plural and the plural shall include the singular.  Unless otherwise specifically provided in an
Option Agreement, if there is any conflict between the terms of this Plan and
the terms of any Option Agreement, the terms of this Plan shall control.

 

Section 14.8                                Other Conditions.  Each Option
Agreement may require that an Eligible Employee or a Director (as a condition
to the exercise of an Option) enter into any agreement (which may be the
Stockholders’ Agreement) or make such representations as may be required by the
Committee, including (without limitation) any agreement which restricts the
transfer of Stock acquired pursuant to the exercise of an Option or provides
for the repurchase of such Stock by the Company.

 

11

 

Section 14.9                                Rule 16b-3.  The Committee
shall have the right to amend any Option to withhold or otherwise restrict the
transfer of any shares of Stock or cash under this Plan to an Eligible Employee
or Director as the Committee deems appropriate in order to satisfy any
condition or requirement under Rule 16b-3 to the extent Rule 16 of
the 1934 Act might be applicable to such grant or transfer.

 

Section 14.10                          Coordination with Employment Agreements and Other
Agreements.  If the Company enters into an employment
agreement or other agreement with an Eligible Employee or Director that
expressly provides for the acceleration in vesting of an outstanding Option or
for the extension of the deadline to exercise any rights under an outstanding
Option, any such acceleration or extension shall (to the extent such
acceleration or extension is consistent with Section 14.2) be deemed
effected pursuant to, and in accordance with, the terms of such outstanding
Option and this Plan even if such employment agreement or other agreement is
first effective after the date the outstanding Option was granted.

 

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left blank]

 

12

 

IN
WITNESS WHEREOF,
the Company has caused its duly authorized officer to execute this Plan to
evidence its adoption of this Plan.

 

	
   

  	
  TOPS HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gary
  S. Matthews

  
	
   

  	
   

  	
  Gary
  S. Matthews

  
	
   

  	
   

  	
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:
  January 24, 2008

  

 

13Exhibit 10.6

 

AMENDMENT NO. 1 TO 2007 STOCK
INCENTIVE PLAN

 

AMENDMENT
NO. 1 (this “Amendment”),
effective as of October 27, 2009, to the 2007 Stock Incentive Plan (the “Plan”)
of Tops Holding Corporation (the “Company”).  Capitalized terms used but not otherwise
defined herein shall have the respective meanings ascribed to such terms in the
Plan.

 

WHEREAS, pursuant to Article XIII of the
Plan, the Plan may be amended by the Board from time to time to the extent the
Board deems necessary or appropriate; and

 

WHEREAS, the Board has authorized the amendment
of the Plan as set forth below.

 

NOW,
THEREFORE, it is
agreed:

 

1.                                     Amendment of Section 2.5.  Section 2.5
of the Plan is hereby deleted in its entirety and replaced with the following:

 

“Section 2.5                                Change of Control — means that any of the following events
has occurred with respect to the Company, and the effective date of the Change
of Control shall be as of the first day that any one or more of the following
events shall have been fully and unconditionally effected:

 

(1)                                  Any Person, other than (A) a trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or an Affiliate; or (B) a corporation owned directly or indirectly
by the stockholders of the Company in substantially the same proportions as
their ownership of stock of the Company; or (C) a Permitted Transferee
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing more than 50% of the total voting power represented by the
Company’s Voting Securities;

 

(2)                                  After the date this Plan becomes
effective, the Company consummates a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation that would
result in the Voting Securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into Voting Securities of the surviving entity) more than 50% of the
total voting power represented by the Voting Securities of the Company or such
surviving entity outstanding immediately after such merger or consolidation;

 

(3)                                  The Company consummates a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company (in one transaction or a series of transactions) of all or
substantially all of the Company’s assets;

 

 

(4)                                  The Morgan Stanley Investors (as defined
in the Shareholders’ Agreement (as defined below)), or any one of them,
Transfer(s) a number of shares of Stock equal to eighty percent (80%) multiplied by the aggregate number of shares of Stock then
owned by the Morgan Stanley Investors, to any Person(s) other than a
Permitted Transferee(s) (as defined in the Shareholders’ Agreement); or

 

(5)                                  Any other condition or event (i) that
the Committee determines to be a “Change of Control” within the meaning of this
Section 2.5 and (ii) that is set forth as a supplement to this Section 2.5
in an Option Agreement.

 

(6)                                  Notwithstanding the foregoing, a “Change
of Control” shall not include any acquisition of securities or voting power
directly from the Company through a Public Offering.”

 

2.                                     Amendment of Section 12.1.  Section 12.1
of the Plan is hereby deleted in its entirety and replaced with the following:

 

“Section 12.1                          Change of Control.

 

(1)                                  If there is a Change of Control, then as
of the Change Effective Date for such Change of Control, any and all conditions
to the exercise of all outstanding Options automatically shall be deemed 100%
satisfied as of such Change Effective Date.

 

(2)                                  If  there is a
Change of Control, then the Board shall have the discretion either (i) to
cancel Options after providing each Eligible Employee and Director a reasonable
period (which period shall not be more than seven (7) calendar days) to
elect to exercise his or her Options as of the Change Effective Date or (ii) in
the event of a Change in Control under the terms of which the stockholders of
the Company will receive a cash payment for each share of Stock surrendered in
such Change in Control, to provide that all outstanding Options shall terminate
as of the Change Effective Date and that each holder of an Option shall receive
a cash payment in exchange for the cancellation of the Option (in accordance
with Section 12.2 below); provided, however,
that in the event that the consideration paid in exchange for shares of Stock
in connection with any Change of Control includes any securities, then the
Board shall have the discretion to provide that each holder of an Option shall
receive the consideration set forth in Section 12.3 below (subject to the
provisions thereof) in lieu of such cash payment in exchange for the
cancellation of the Option.”

 

3.                                     Conflict.  In the event
of any conflict between this Amendment and the Plan, the terms of this
Amendment shall prevail.

 

 

4.                                     References to the Plan. 
From and after the effective date hereof, all references to the Plan
contained in the Plan and each other agreement entered into in connection
therewith shall be deemed to be references to the Plan after giving effect to
this Amendment.

 

5.                                     No Other Amendments. 
The Board hereby acknowledges and agrees that this Amendment constitutes
an amendment to the Plan in accordance with Article XIII thereof.  Except as specifically amended by this
Amendment, all other terms and provisions of the Plan shall remain in full
force and effect in accordance with its terms and nothing contained herein
shall be deemed: (i) to be a waiver, amendment, modification or other
change of any term, condition or provision of the Plan or any agreement entered
into in connection therewith (or a consent to any such waiver, amendment,
modification or other change), (ii) to be a consent to any transaction, or
(iii) to prejudice any right or rights which the Company or the holder of
any Option may have under the Plan and/or any agreement entered into in
connection therewith.

 

6.                                     Further Assurances. 
The Board shall do such further acts and things, and execute and deliver
such additional conveyances, assignments, agreements and instruments, as may be
reasonably requested in connection with the administration and enforcement of
this Amendment and to permit the exercise thereof in compliance with any laws.

 

7.                                     Captions.  The captions of
the Sections of this Amendment are solely for convenient reference and shall
not be deemed to affect the meaning or interpretation of any Section hereof.

 

[Remainder of the page intentionally
left blank]

 

 

IN
WITNESS WHEREOF, the Company has caused it duly authorized officer to execute
below to evidence of the Board’s adoption of this Amendment effective as of the
date set forth above.

 

	
   

  	
  COMPANY

  
	
   

  	
   

  
	
   

  	
  TOPS HOLDING CORPORATION

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ 

  
	
   

  	
  Name:

  
	
   

  	
  Title:

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