EXHIBIT 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
This Employment Agreement (the "AGREEMENT") is entered into as of this 19th
day of December, 2001, by and between The Penn Traffic Company (the "COMPANY")
and Xxxxxx X. Xxxxxx (the "EXECUTIVE").
WHEREAS, the Executive entered into an employment agreement with the
Company on October 30, 1998, which was amended on June 29, 1999 and December 2,
1999 and amended and restated in its entirety on January 31, 2000 (such
employment agreement, as amended and restated, is referred to herein as the
"ORIGINAL EMPLOYMENT AGREEMENT") to provide for the employment of the Executive;
and
WHEREAS, the Original Employment Agreement shall expire on January 31, 2002
and the Executive wishes to continue in the employ of the Company, and the
Company wishes to provide for the continued employment of the Executive.
NOW, THEREFORE, the parties hereby amend and restate the Original
Employment Agreement in its entirety as follows:
1. EMPLOYMENT.
(a) The Company hereby agrees that the Executive shall, during the
Term (as defined herein), continue to act as the President and Chief Executive
Officer of the Company.
(b) The Executive hereby accepts his continued employment as the
President and Chief Executive Officer of the Company and agrees to continue to
provide the Company his full-time service as President and Chief Executive
Officer of the Company performing such duties as shall reasonably be required of
a President and Chief Executive Officer and otherwise on the terms and subject
to the conditions set forth in the Agreement. In such capacity, the Executive
will report to, and serve under the direction
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of, the Board of Directors of the Company (the "BOARD"). Throughout the Term,
the Executive shall utilize his best efforts and all of his skills, experience
and knowledge to promote the interests of the Company. During the Term, the
Executive shall continue to serve as a member of the Board. Other than services
to be rendered in connection with charitable activities, trade association
activities and passive investment activities which do not interfere with the
Executive's day-to-day responsibilities to the Company, without limiting the
generality of Section 6, the Executive shall not, directly or indirectly, engage
in or participate in the operation or management of, or render any services to,
any other business, enterprise or individual.
2. TERM. The term of employment of the Executive under the Original
Employment Agreement commenced on November 23, 1998 (the "ORIGINAL EFFECTIVE
DATE") and the term of employment of the Executive under this Agreement shall
commence on the date hereof (the "EFFECTIVE DATE") and will continue under this
Agreement until the earlier of (i) January 31, 2005, (ii) the date that the
Executive or the Company terminates his employment pursuant to Section 7, 8 or 9
or (iii) the occurrence of a Change of Control (as defined herein) (the "TERM").
3. LOCATION OF EMPLOYMENT. The Executive shall render services primarily
at the Company's offices that are located in Syracuse, New York. Notwithstanding
the foregoing, the Executive acknowledges and agrees that the Executive's duties
hereunder will include travel outside the Syracuse, New York area, including
frequent travel to such geographic locations where the Company owns or operates
supermarkets or retail grocery stores, as well as other locations within and
outside the United States, to attend meetings and other functions as the
performance of the Executive's duties hereunder may require.
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4. COMPENSATION.
(a) BASE SALARY. The Company shall pay the Executive a base salary at
a rate of $1,000,000 per annum ("BASE SALARY"). The Executive's Base Salary will
be reviewed periodically by the Board and may be increased (but not decreased)
at such times as the Board, in its sole discretion, determines that an increase
is warranted. The Base Salary shall be paid in accordance with the Company's
standard payroll practices and will be subject to withholding and other
applicable taxes.
(b) BONUS.
(i) With respect to each fiscal year beginning with the
fiscal year ending February 1, 2003, the Executive shall be eligible to earn an
annual bonus (the "BONUS"). The Bonus, if any, awarded to the Executive each
year shall be based on the extent to which the Company achieves annual
performance criteria which shall be determined by the Compensation and Stock
Option Committee of the Board of Directors of the Company (the "COMMITTEE")
prior to the beginning of each such year; PROVIDED, HOWEVER, that such Bonus
shall not in any year exceed 75% of the Executive's Base Salary. Such Bonus as
to any fiscal year, if any, shall be paid to the Executive at the same time that
bonuses or incentive compensation with respect to that fiscal year are paid to
other executive employees of the Company. The Executive understands and agrees
that the Company may provide this bonus opportunity under a shareholder approved
arrangement that is intended to qualify under Section 162(m) of the Internal
Revenue Code ("IRC"); provided, however, that the Company's agreements hereunder
shall apply irrespective of whether such bonus so qualifies.
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(ii) In addition, the Executive may receive such other
discretionary bonuses or other incentive compensation as the Committee may
determine in its discretion.
(c) OPTIONS. The Company and the Executive acknowledge that the
Executive was granted options to purchase shares of the common stock, $.01 par
value per share, of the Company (the "COMMON STOCK") generally as follows:
(i) Effective as of October 24, 2001, pursuant to the Company's
1999 Equity Incentive Plan (the "EQUITY PLAN"), the Executive was granted
options to purchase 260,000 shares of the Common Stock with an exercise price
equal to $4.35 per share (the "2001 OPTION AWARD") subject to a vesting schedule
and other terms as set forth in the 2001 Option Award.
(ii) Effective as of September 22, 1999, pursuant to the Equity
Plan, the Executive was granted options to purchase 140,000 shares of the Common
Stock with an exercise price equal to $8.75 per share (the "1999 OPTION AWARD")
subject to a vesting schedule and other terms as set forth in the 1999 Option
Award.
(iii) The 2001 Option Award and the 1999 Option Award are subject
to the terms of their respective awards and the Equity Plan. Copies of the 1999
Option Award and the 2001 Option Award (the "AWARDS") are attached hereto as
EXHIBIT A and EXHIBIT B and such Awards shall remain in full force and effect.
(iv) As a condition of the 2001 Option Award, all other stock
options, other than the 1999 Option Award, granted by the Company to or on
behalf of the Executive were cancelled on October 24, 2001.
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(v) To the extent permitted by the IRC, such options qualify as
incentive stock options under the IRC.
5. FRINGE BENEFITS.
(a) The Executive shall, from and after the Effective Date, have the
right to participate in the Company's medical, dental, disability, life and
other insurance plans maintained during the Term by the Company for executives
of the stature and rank of the Executive, and any other plans and benefits, if
any, generally maintained by the Company for executives of the stature and rank
of the Executive during the Term, in each case in accordance with the terms and
conditions of such plan as from time-to-time in effect (collectively referred to
herein as "FRINGE BENEFITS").
(b) To the extent permitted by law and the terms of The Penn Traffic
Company Cash Balance Pension Plan (the "CORPORATE PLAN"), the Executive shall
have the right to participate in the Corporate Plan. In addition, the Executive
shall participate in The Penn Traffic Company Supplemental Retirement Plan for
Xxxxxx X. Xxxxxx (the "SERP"). The SERP is attached hereto as EXHIBIT C and such
SERP shall remain in full force and effect. The SERP is intended to provide
benefits that are supplemental to those contained in the Corporate Plan. It is
the Company's present intent to amend the Corporate Plan to provide as much of
the service credit benefits contemplated under the SERP under the Corporate Plan
without causing (i) the Corporate Plan to fail to satisfy the requirements of
Section 401(a) of the Code or (ii) the Company to incur additional costs or to
change the timing of Corporate Plan payouts; PROVIDED, that the Company will not
be obligated to make or continue in effect any such amendment.
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(c) Further, upon the termination of the Agreement (and following
such time that the Fringe Benefits are no longer being provided to the Executive
by the Company at its cost), the Executive shall be entitled, at his own cost
and expense (at the same rate as the Company may charge for coverage pursuant to
the Consolidated Omnibus Budget Reconciliation Act of 1985), to continued
coverage under the medical and dental plans maintained by the Company until the
earlier to occur of (i) the date that both the Executive and his spouse reach
the age of 65, or (ii) the date the Executive is provided medical and dental
coverage by a different employer; PROVIDED, that such benefits shall be provided
only to the extent permitted under the Company's medical and dental plans and
insurance policies and in accordance with any applicable laws.
(d) Subject to the requirements of the Executive's office, the
Executive shall be entitled to four weeks annual vacation to be taken in
accordance with the vacation policy of the Company.
(e) The Company will, upon being provided with reasonable supporting
documentation thereof, promptly reimburse the Executive for (i) actual, ordinary
and necessary travel and accommodation cost, entertainment and other business
expenses incurred as a necessary part of discharging the Executive's duties
hereunder, including, without limitation, allowance for one-time initiation fees
and annual dues for a membership in a country club of the Executive's choice and
(ii) all legal fees and expenses incurred in connection with the negotiation of
the Agreement in the amount of $35,000.
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6. NO COMPETITION; CONFIDENTIALITY.
(a) The Executive agrees that while the Agreement is in effect and
for a period of 12 months after termination of the Agreement pursuant to Section
2, the Executive shall not, directly or indirectly, for his own account or as
agent, employee, officer, director, trustee, consultant or shareholder of any
corporation, or any member of any firm or otherwise divulge, furnish or make
accessible to any person, or himself make use of other than for the sole benefit
of the Company, any material confidential or proprietary information of the
Company obtained by him while in the employ of the Company other than
disclosures made by the Executive based on the Executive's reasonable belief
that such disclosures were in furtherance of his duties as set forth herein,
including, without limitation, information with respect to any products,
services, improvements, formulas, designs, styles, processes, research,
analyses, suppliers, customers, methods of distribution or manufacture, contract
terms and conditions, pricing, financial condition, organization, personnel,
business activities, budgets, plans, objectives or strategies of the Company or
its proprietary products or of any subsidiary or affiliate of the Company and
that he will, prior to or upon the termination of his employment by the Company,
return to the Company all such confidential or non-public information, whether
in written or other physical form or stored electronically on computer disks or
tapes or any other storage medium, and all copies thereof, in his possession or
custody or under his control; PROVIDED, HOWEVER, that (x) the restrictions of
this Section shall not apply to publicly available information or information
known generally to the public (without any action on the part of the Executive
prohibited by the restrictions of this Section), (y) the Executive may disclose
such information known
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generally to the public (without any action on the part of the Executive
prohibited by the restrictions of this Section), and (z) the Executive may
disclose such information as may be required pursuant to any subpoena or other
lawful process issued pursuant to any applicable law, rule or regulation.
(b) Notwithstanding the foregoing, in the event that the Executive
receives a subpoena or other process or order which may require him to disclose
any confidential information, the Executive agrees (i) to notify the Company
promptly of the existence, terms and circumstances surrounding such process or
order, and (ii) to cooperate with the Company, at the Company's reasonable
request and at its expense, including, but not limited to, attorneys' fees and
expenses, in taking legally available steps to resist or narrow such process or
order and to obtain an order (or other reliable assurance reasonably
satisfactory to the Company) that confidential treatment will be given to such
information as is required to be disclosed.
(c) The obligations of the Executive under this Section 6 shall
survive any termination of the Agreement.
(d) The Executive agrees that while the Agreement is in effect and
for a period of 12 months after termination of the Agreement pursuant to
Section 2, the Executive agrees that he will not, directly or indirectly, for
his own account or as agent, employee, officer, director, trustee, consultant or
shareholder of any corporation or a member of any firm or otherwise: (i) engage
in any way in any wholesale and/or retail food business which operates within 30
miles of any retail store operated by the Company at any time during the
restricted period, provided, that this clause (i) shall only apply in the event
a Change of Control occurs prior to termination of the Agreement and
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the Change of Control Payment or the Carryover Change of Control Payment
described below is made; (ii) induce or attempt to induce any person that is a
salaried employee (including, without limitation, any person who is a store
manager or a district manager) who is in the employ of the Company or any
subsidiary or affiliate thereof to leave the employ of the Company or such
subsidiary or affiliate; or (iii) induce or attempt to induce or assist any
other person, firm or corporation to do any of the actions referred to in (i) or
(ii) above (provided, that this Section 6 shall not prohibit (A) the Executive
from owning less than 5% of the equity of any entity that engages in the actions
described in (i), (ii) or (iii) above and (B) the Executive from providing
references for employees of the Company or its subsidiaries or affiliates who
have been solicited by a prospective employer without violation of (ii) above).
Notwithstanding the foregoing, the provisions of this subsection (d) shall
terminate, and the Executive shall have no obligations hereunder, if, and
following such time that the Company fails to make timely payment of any
material amounts owing to the Executive pursuant to Section 11 or Section 12
hereof.
(e) In view of the services which the Executive will perform for the
Company and its subsidiaries and affiliates, which are special, unique,
extraordinary and intellectual in character and will place him in a position of
confidence and trust with the customers and employees of the Company and its
subsidiaries and affiliates and will provide him with access to confidential
financial information, trade secrets, "know-how" and other confidential and
proprietary information of the Company and its subsidiaries and affiliates, and
recognizing the substantial sums paid and to be paid to the Executive pursuant
to the terms hereof, the Executive expressly acknowledges that the restrictive
covenants set forth in this Section 6 are necessary in order to protect and
maintain the
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proprietary interests and other legitimate business interests of the Company and
its subsidiaries and affiliates. The Executive understands that the enforcement
of this Section 6 may limit the Executive's ability to earn a livelihood in a
business similar to the business of the Company but nevertheless agrees and
hereby acknowledges that (i) such provisions do not impose a greater restraint
than is necessary to protect the goodwill or other business interests of the
Company, (ii) such provisions contain reasonable limitations as to time and
scope of activity to be restrained, (iii) such provisions are not harmful to the
general public, and (iv) such provisions are not unduly burdensome to the
Executive and the consideration provided hereunder is sufficient to compensate
the Executive for the restrictions contained in such provisions. In
consideration thereof and in light of the Executive's education, skills and
abilities, the Executive agrees that the Executive will not assert in any forum
that such provisions prevent the Executive from earning a living or otherwise
are void or unenforceable or should be held void or unenforceable. The Executive
acknowledges that the remedy at law for any breach or threatened breach of this
Section 6 will be inadequate and, accordingly, that the Company shall, in
addition to all other available remedies (including, without limitation, seeking
damages sustained by reason of such breach), be entitled to specific performance
or injunctive relief without being required to post bond or other security and
without having to prove the inadequacy of the available remedies at law.
7. GROUNDS FOR TERMINATION BY COMPANY. The Company may terminate the
Agreement and the Executive's employment hereunder for "Cause" by written notice
to the Executive setting forth the grounds for termination with specificity.
"Cause" shall mean the termination of the Executive because of (i) his willful
and continued failure
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(other than by reason of incapacity due to physical or mental illness) to
perform the material duties of his employment after notice from the Company of
such failure and his inability or unwillingness to correct such failure
(prospectively) within 30 days following such notice, (ii) his conviction of a
felony or plea of no contest to a felony or (iii) perpetration by the Executive
of a material dishonest act of fraud against the Company or any subsidiary
thereof; PROVIDED, that before the Company may terminate the Executive for
Cause, the Board shall deliver to him a written notice of the Company's intent
to terminate him for Cause, including the reasons for such termination, and the
Company must provide him an opportunity to meet once with the Board prior to
such termination.
8. GROUNDS FOR TERMINATION BY THE EXECUTIVE. The Executive may terminate
the Agreement and his employment hereunder for Good Reason (as defined herein)
by written notice to the Company setting forth the grounds for termination with
specificity. "Good Reason" shall mean (a) the failure to elect or appoint the
Executive as President and Chief Executive Officer and to continue to elect or
appoint the Executive to the Board of Directors of the Company or (b) the
failure by the Company to pay any compensation or other amount due to the
Executive under the Agreement, which failure is not remedied within ten (10)
business days after written notice thereof is delivered to the Company by the
Executive. Any termination for Good Reason shall be effective as of the business
day immediately following the date upon which the Company was required to (but
did not) remedy such failure.
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9. TERMINATION FOR DEATH OR DISABILITY.
(a) If during the Term, the Executive should die, the Executive's
employment shall be deemed to have terminated as of the date of death.
(b) If during the Term, the Executive should suffer a disability
which, in fact, prevents the Executive from substantially performing his duties
hereunder for a period of 180 consecutive days or 230 or more days in the
aggregate, in any period of 12 consecutive months, then and in any such event
the Company may terminate the Executive's services hereunder by a written notice
to the Executive setting forth the grounds for such termination with
specificity, which termination will take effect 30 days after such notice is
given. The Executive may only be terminated for disability if the Company's
termination notice is given within 60 days following the end of the
aforementioned 180- or 230-day period, whichever the Company relies upon. The
existence of the Executive's disability for the purposes of the Agreement shall
be determined by a physician mutually selected by the Company and the Executive,
and the Executive agrees to submit to an examination by such physician for
purposes of such determination.
10. DESIGNATION OF BENEFICIARY OR BENEFICIARIES. As to any payment to be
made under the Agreement to a beneficiary designated by the Executive, it is
agreed that the Executive shall designate such beneficiary (or beneficiaries) or
change his designation of such beneficiary (or beneficiaries) from time-to-time
by written notice to the Company. In the event the Executive fails to designate
a beneficiary (or beneficiaries) as herein provided, any payments which are to
be made to the Executive's designated beneficiary (or beneficiaries) under the
Agreement shall be made to the
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Executive's widow, if any, during her lifetime, thereafter to his issue, if any,
including legally adopted children, and then to the Executive's personal
representative.
11. EFFECT OF COMPANY'S TERMINATION OTHER THAN UNDER SECTIONS 7 OR 9 OR
EFFECT OF THE EXECUTIVE'S TERMINATION UNDER SECTION 8.
(a) If the Company terminates the Executive's employment under the
Agreement for any reason other than Cause, or other than due to his death or
disability, or the Executive terminates the Agreement for Good Reason, the
Executive shall be entitled to receive a lump sum payment equal to the aggregate
amount of his Base Salary, as then in effect, for the period from the date of
such termination through January 31, 2005; PROVIDED, that if such termination
occurs between January 31, 2004 and January 31, 2005, the Executive shall be
entitled to receive a lump sum payment equal to the aggregate of twelve (12)
months Base Salary. Such payment shall be made within thirty (30) days following
the date of such termination.
(b) In addition, if at any time prior to January 31, 2005 or the
Carryover Determination Date (as defined herein) but following a termination
described in Section 11(a), the Company shall have entered into a definitive
agreement in respect of a Change of Control (as defined herein) or a Change of
Control shall have occurred, then in the case of, and notwithstanding (i) the
termination of the Agreement by the Company for any reason other than Cause or
(ii) the termination of the Agreement by the Executive for Good Reason, the
Company shall make the payment as provided in Section 12(a) or Section 12(b), as
the case may be, on the dates provided in such Section, LESS that portion of the
lump sum payment the Executive received pursuant to Section 11(a) that is
attributable to the period following the Change of Control.
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(c) The Company shall continue to provide to the Executive the
benefits described in Section 5(a) hereof for a period of 12 months from the
date of termination to the extent not prohibited by law or the terms of such
benefit arrangements; the Executive shall continue his participation in the
Corporate Plan and the Awards in accordance with the provisions thereof; the
Company shall continue to make the payments required to be made pursuant to the
SERP and reimbursements contemplated by Section 5(e) hereof; and without
limiting the Executive's rights under Section 5(a) as set forth in the first
clause of this paragraph (c), the Executive shall be entitled to continue
coverage under the medical and dental plans maintained by the Company on the
terms set forth in Section 5(c) hereof.
12. EFFECT OF CHANGE OF CONTROL.
(a) If at any time prior to January 31, 2005 the Company shall have
entered into a definitive agreement in respect of a Change of Control or a
Change of Control shall have occurred, then (assuming the Executive has not
voluntarily terminated the Agreement for other than Good Reason and the Company
has not terminated the Agreement for Cause, in either case prior to the Change
of Control) the Executive shall be entitled to receive the "Change of Control
Payment" (as defined herein) (subject to offset as set forth in the last clause
of Section 11(b) herein, if applicable) on the date of the occurrence or
consummation of a Change of Control irrespective of whether the Term has expired
or has terminated by reason of the Company's termination of the Agreement
without Cause or the Executive's termination of the Agreement for Good Reason.
Upon the Executive's receipt of the Change of Control Payment in full (subject
to offset as set forth in the last clause of Section 11(b) herein, if
applicable), the Agreement shall be
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terminated automatically and the Executive shall no longer be entitled to any
further payments described herein except for payments required to be made
pursuant to the SERP and reimbursements contemplated by Section 5(e) of the
Agreement; the Executive shall continue his participation in the Corporate Plan
and the Awards in accordance with the provisions thereof; and the Executive
shall be entitled to continue coverage under the medical and dental plans
maintained by the Company on the terms set forth in Section 5(c) hereof. The
payment contemplated by this Section 12(a) shall not be duplicative to the
payment contemplated by Section 11(b) herein.
(b) If at any time prior to the Carryover Determination Date the
Company shall have entered into a definitive agreement in respect of a Change of
Control or a Change of Control shall have occurred, then the Executive shall
(assuming the Executive has not voluntarily terminated the Agreement for other
than Good Reason or the Company has not terminated the Agreement for Cause, in
either case prior to the Change of Control) be entitled to elect, at his option,
to receive either the Change of Control Payment or the Carryover Change of
Control Payment (as defined herein) (subject to offset as set forth in the last
clause of Section 11(b) herein, if applicable) on the date of the occurrence or
consummation of a Change of Control irrespective of whether the Term has
previously expired or terminated by reason of the Company's termination of the
Agreement without Cause or the Executive's termination for Good Reason. Upon the
Executive's receipt of either the Change of Control Payment or the Carryover
Change of Control Payment in full (subject to offset as set forth in the last
clause of Section 11(b) herein, if applicable), the Agreement shall be
terminated automatically and the Executive shall no longer be entitled to any
further payments
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described herein except for payments as required to be made pursuant to the SERP
and reimbursements of expenses contemplated by Section 5(e) of the Agreement;
and the Executive shall continue his participation in the Corporate Plan and the
Awards in accordance with the provisions thereof; and the Executive shall be
entitled to continue coverage under the medical and dental plans maintained by
the Company on the terms set forth in Section 5(c) hereof. The payment
contemplated by this Section 12(b) shall not be duplicative to the payment
contemplated by Section 11(b) herein.
(c) Notwithstanding any other provision herein, the Executive shall
not receive both the Change of Control Payment provided in Section 12(a) and the
Carryover Change of Control Payment provided in Section 12(b).
(d) For purposes of the Agreement, the following terms shall have the
following meanings:
(i) "Carryover Change of Control Payment" shall mean an amount
equal to the greater of (x) a lump sum payment equal to the aggregate amount of
the Base Salary as then in effect for the period from the date of the Change of
Control through January 31, 2005 (but not less than one-year's Base Salary) and
(y) $4,900,000 MINUS the "in-the-money" value on the date of the occurrence of a
Change of Control of all of the options granted to the Executive under the
Awards that are vested and exercisable (i.e., the number of such vested and
exercisable options MULTIPLIED by the DIFFERENCE between (1) the closing price
of the Common Stock on the Nasdaq National Market on the last trading date
immediately prior to the date of the occurrence of a Change of Control (or if
the transaction which triggers the Change of Control is a cash
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tender offer, the cash tender offer per share price) AND (2) $4.35, as to the
2001 Option Award, and $8.75, as to the 1999 Option Award).
(ii) "Carryover Determination Date" shall mean the later of (x)
January 31, 2002, or (y) one (1) year following termination of any engagement or
similar agreement entered into between the Company and any investment banking
firm retained prior to January 31, 2002 for purposes of advising the Company in
connection with any transaction that would constitute a Change of Control.
(iii) "Change of Control" shall mean the occurrence of any event
where (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) is or becomes the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Securities Exchange Act of 1934, except that a person shall
be deemed to have "beneficial ownership" of all shares that any such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of 50% or more of the
outstanding shares of common stock of the Company or securities representing 50%
or more of the combined voting power of the Company's voting stock, or (b) the
Company consolidates with or merges into another person or conveys, transfers,
sells or leases all or substantially all of its assets to any person, or any
person consolidates with or merges into the Company, in either event pursuant to
a transaction in which the outstanding voting stock of the Company is changed
into or exchanged for cash, securities or other property, other than any such
transaction between the Company and its wholly owned subsidiaries (which wholly
owned subsidiaries are United States corporations), with the effect that any
"person" becomes the "beneficial owner," directly or indirectly, of 50% or more
of the outstanding shares of common stock
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of the Company or securities representing 50% or more of the combined voting
power of the Company's voting stock or (c) during any consecutive two-year
period, individuals who at the beginning of such period constituted the Board
(together with any new directors whose election by the Board, or whose
nomination for election by the Company's stockholders, was approved by a vote of
at least a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the directors then in office.
(iv) "Change of Control Payment" shall mean an amount equal to
the greater of (x) a lump sum payment equal to the aggregate amount of the Base
Salary as then in effect for the period from the date of the Change of Control
through January 31, 2005 and (y) three (3) times the Executive's Base Salary.
(e) GROSS-UP PAYMENT. In the event it shall be determined that any
payment or distribution of any type to or for the benefit of the Executive, by
the Company, any of its affiliates, any Person who acquires ownership or
effective control of the Company or ownership of a substantial portion of the
Company's assets (within the meaning of IRC Section 280G and the regulations
thereunder) or any affiliate of such Person, whether paid or payable or
distributed or distributable pursuant to the terms of the Agreement or otherwise
(the "TOTAL PAYMENTS"), would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "CODE"), or any
interest or penalties with respect to such excise tax (such excise tax, together
with any such interest and penalties, are collectively referred to as the
"EXCISE TAX"), then the Executive shall be entitled to receive an additional
payment (a "GROSS-UP
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PAYMENT") in an amount such that after payment by the Executive of all taxes
(including any interest or penalties imposed with respect to such taxes),
including any Excise Tax, imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Total Payments.
13. EFFECT OF THE COMPANY'S TERMINATION FOR CAUSE, THE EXECUTIVE'S
TERMINATION WITHOUT GOOD REASON, TERMINATION UPON DEATH OR DISABILITY. If the
Company terminates the Executive's employment under the Agreement for Cause or
the Executive terminates his employment under the Agreement other than for Good
Reason, or if the Executive's employment is terminated due to his death or
disability, then the Company shall continue to pay the Executive (or his
designated beneficiary) his Base Salary through the effective date of
termination, and the Executive shall continue to be entitled to payments
required to be made pursuant to the SERP and the reimbursements contemplated by
Section 5(c) of the Agreement; the Executive shall continue his participation in
the Corporate Plan and the Awards in accordance with the provisions thereof; and
the Executive shall be entitled to continue coverage under the medical and
dental plans maintained by the Company on the terms set forth in Section 5(c)
hereof.
14. THE EXECUTIVE'S REPRESENTATIONS AND WARRANTIES. The Executive
represents and warrants to the Company as follows:
(a) The Executive has the unfettered right to enter into the Agreement
on the terms and subject to the conditions hereof, and the Executive has not
done or permitted to be done anything which may curtail or impair any of the
rights granted to the Company herein.
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(b) Neither the execution and delivery of the Agreement by the
Executive nor the performance by the Executive of any of the Executive's
obligations hereunder constitute or will constitute a violation or breach of, or
a default under, any agreement, arrangement or understanding, or any other
restriction of any kind, to which the Executive is a party or by which the
Executive is bound.
15. INDEMNIFICATION, ETC. The Company agrees to indemnify the Executive to
the fullest extent permitted by law from and against all losses, liabilities,
damages, deficiencies, demands, claims, actions, judgments or causes of action,
assessments, costs or expenses (including, without limitation, interest,
penalties and reasonable fees, expenses and disbursements of attorneys, experts,
personnel and consultants reasonably incurred by the Executive in any action or
proceeding) based upon, arising out of or otherwise in respect of the
Executive's services as, and/or for activities engaged in by the Executive while
the Executive is, an officer and/or employee and/or director of the Company or
any affiliate thereof, including either paying or reimbursing the Executive,
promptly after request, for any reasonable and documented expenses and
attorney's fees and costs actually incurred by the Executive in connection with
defending, or himself instituting and/or maintaining, any claim, action, suit or
proceeding arising from circumstances to which the Company's above
indemnification relates; PROVIDED, HOWEVER, that no such indemnification shall
be paid for damages or losses incurred by the Executive that result from actions
by him that Delaware law explicitly prohibits a corporation from indemnifying
its directors or officers against, including, without limitation, to the extent
any such damages or losses arise through the gross negligence, bad faith or
misconduct of the Executive or the breach by the Executive of any of the
21
Executive's obligations under or representations and warranties made pursuant to
the Agreement. This indemnity shall survive the termination of the Agreement.
The Company represents and warrants that it (i) has $30 million of director's
and officer's insurance available on the date hereof, (ii) will use its
reasonable commercial efforts to maintain such policy throughout the Term, and
(iii) has obtained "tail" coverage under its existing director's and officer's
policy covering its current directors and officers for any claims brought
against them, which coverage shall extend until June 29, 2005.
16. NOTICES. Any notice, consent, termination or other communication under
the Agreement shall be in writing and shall be considered given on the date when
hand delivered or, if sent by registered or certified mail, on the fifth day
after such notice is mailed or, if sent by overnight courier guaranteeing
overnight delivery, on the day after such notice is so sent, in each case to the
parties at the following addresses (or at such other address as a party may
specify by notice in accordance with the provisions hereof to the other):
IF TO THE EXECUTIVE, TO THE EXECUTIVE AT:
Xx. Xxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
IF TO THE COMPANY:
The Penn Traffic Company
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxx, General Counsel
17. COMPLETE AGREEMENT AND MODIFICATION. The Agreement contains a complete
statement of all the arrangements between the parties with respect to the
Executive's employment by the Company, supersedes all existing agreements or
22
arrangements between them concerning the Executive's employment and can only be
amended or modified by a written instrument signed by the Company and the
Executive.
18. SEVERABILITY PROVISIONS. If any provision of the Agreement is declared
invalid, illegal or incapable of being enforced by any court of competent
jurisdiction, all of the remaining provisions of the Agreement shall
nevertheless continue in full force and effect and no provisions shall be deemed
dependent upon any other provision unless expressly set forth herein.
19. GOVERNING LAW. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York applicable to agreements
entered into and performed entirely within such State, without regard to
principles of conflicts of laws.
20. WAIVER. The failure of a party to insist upon strict adherence to any
term of the Agreement shall not be considered a waiver or deprive that party of
the right thereafter to insist upon strict adherence to that term or any other
term of the Agreement.
21. HEADING. The headings in the Agreement are solely for the convenience
of reference and shall not affect its interpretation.
22. WITHHOLDING. Any amount payable under the Agreement shall be reduced
by any amount that the Company is obligated by law or regulation to withhold in
respect of any such payment.
23. HEIRS, SUCCESSORS AND ASSIGNS. The Agreement will inure to the benefit
of, and be enforceable by, the Executive's heirs and the Company's successors
and assigns. The Company shall have the right to assign the Agreement or any
part hereof or any rights hereunder to any successor-in-interest to the Company
and to any affiliate of
23
the Company; PROVIDED, that in the event of any such assignment the assignee
shall expressly agree in writing to assume all of the Company's obligations
under the Agreement, and Company shall remain secondarily liable to the
Executive for the performance of all such obligations.
24
WHEREFORE, the parties hereto have executed the Agreement as of the day and
year first above written.
THE PENN TRAFFIC COMPANY
By: /s/ Xxxxx Xxxxxx By: /s/ Xxxxxx X. Xxxxxx
--------------------------------- ------------------------------------
Name: Xxxxx Xxxxxx Xxxxxx X. Xxxxxx
Title: Chairman of the Board
Exhibit A
AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made effective as of the 22nd day
of September, 1999, (hereinafter called the "Date of Grant"), between Penn
Traffic Company, a Delaware corporation (hereinafter called the "Company"), and
Xxxxxx X. Xxxxxx (hereinafter called the "Participant"):
R E C I T A L S:
WHEREAS, the Company has adopted the Penn Traffic Company 1999 Equity
Incentive Plan (the "Plan"), which Plan is incorporated herein by reference and
made a part of this Agreement. Capitalized terms not otherwise defined herein
shall have the same meanings as in the Plan; and
WHEREAS, the Committee has determined that it would be in the best
interests of the Company and its stockholders to grant the option provided for
herein (the "Option") to the Participant pursuant to the Plan and the terms set
forth herein.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. GRANT OF THE OPTION. The Company hereby grants to the Participant the
right and option (the "Option") to purchase, on the terms and conditions
hereinafter set forth, all or any part of an aggregate of 140,000 Common Shares,
subject to adjustment as set forth in the Plan. The purchase price of the Shares
subject to the Option shall be $8.75 per Share (the "Exercise Price"). The
Option is intended to be treated as an Incentive Stock Option that complies with
section 422 of the Internal Revenue Code of 1986, as amended. The Option is
intended to be treated as an Incentive Stock Option that complies with section
422 of the Internal Revenue Code of 1986, as amended, as to 57,143 Shares and as
Non-Qualified Stock Option as to 82,857 Shares.
The Company cannot guarantee that the special tax treatment described
in section 422 of the Internal Revenue Code will apply. For example, if the
Participant sells the Common Stock acquired pursuant to the exercise of this
Option either within two years after the date of this Agreement or within one
year after the date this Option (or part thereof) is exercised, this special tax
treatment will not apply.
If the Option (or any part thereof) does not qualify for Incentive
Stock Option treatment for any reason, then, to the extent of such
nonqualification, the Option (or portion) shall be treated as a Non-Qualified
Stock Option granted under the Plan.
2. VESTING.
2
The Option shall be vested and exercisable with respect to 20% of the
Shares initially covered by the Option upon grant. Subject to the Participant's
continued employment with the Company, the Option shall vest with respect to an
additional 20% of the Shares initially subject to the Option on each of the
first, second, third and fourth anniversaries of the date of grant. Any portion
of the Option which is not vested as of the Participant's termination of
employment shall immediately terminate and expire.
(a) At any given time, the portion of the Option which has become
vested and exercisable as described above is hereinafter referred to as the
"Vested Portion."
(b) In the event of a Change of Control (as defined in the Plan) or a
Section 11(c) Change of Control (as defined in the Employment Agreement dated as
of October 30, 1998, as amended to the date hereof and from time to time
hereafter, between the Company and Participant), the Option shall, to the extent
not then vested or previously canceled, vest and become immediately exercisable
in full.
3. EXERCISE OF OPTION.
(a) PERIOD OF EXERCISE. Subject to the provisions of the Plan and this
Agreement, the Participant may exercise all or any part of the Vested Portion of
the Option at any time prior to the earliest to occur of:
(i) the tenth anniversary of the Date of Grant;
(ii) sixty days following the date of the Participant's
termination of employment by the Company for "Cause;" or
(iii) (a) in the case of the Participant's termination of
employment for death or disability (within the meaning of Section
422(e)(3) of the Code), one year following such termination or (b) in
the case of the Participant's termination of employment for any reason
other than death, disability or "Cause," 90 days following such
termination.
For purposes of this agreement:
"Cause" shall mean (i) a felony conviction or guilty plea or (ii) a
conviction or guilty plea of any crime involving fraud or embezzlement.
(b) Method of Exercise.
(i) Subject to Section 3(a), the Option may be exercised by
delivering to the Company at its principal office written notice of intent to so
exercise; PROVIDED that, the Option may be exercised with respect to whole
Shares only. Such notice shall specify the number of Shares for which the Option
is being exercised and shall be accompanied by payment in full of the Exercise
Price. The payment of the Exercise Price may be made in cash, or its equivalent,
or (x) by exchanging Shares owned by the Participant (which are not the subject
of any pledge or other security
3
interest and which have been owned by the Participant for at least 6 months),
(y) subject to such rules as may be reasonably established by the Committee,
through delivery of irrevocable instructions to a broker to sell a portion of
the Shares otherwise deliverable upon the exercise of the Option and to deliver
promptly to the Company an amount equal to the aggregate exercise price of the
portion of the Option so exercised or (z) by the promissory note and agreement
of the Participant providing for the payment with interest of the unpaid balance
accruing at a rate not less than needed to avoid the imputation of income under
Code section 7872 and upon such terms and conditions (including the furnishing
of security, if any therefor) as the Committee may determine, or by a
combination of the foregoing.
(ii) Notwithstanding any other provision of the Plan or this
Agreement to the contrary, the Option may not be exercised prior to the
completion of any registration or qualification of the Option or the Shares
under applicable state and federal securities or other laws, or under any ruling
or regulation of any governmental body or national securities exchange that the
Committee shall in its sole discretion determine to be necessary or advisable.
(iii) Upon the Company's determination that the Option has been
validly exercised as to any of the Shares, the Company shall issue certificates
in the Participant's name for such Shares. However, the Company shall not be
liable to the Participant for damages relating to any delays in issuing the
certificates to him, any loss of the certificates, or any mistakes or errors in
the issuance of the certificates or in the certificates themselves.
(iv) In the event of the Participant's death, the Option shall
remain exercisable by the Participant's executor or administrator, or the person
or persons to whom the Participant's rights under this Agreement shall pass by
will or by the laws of descent and distribution as the case may be, to the
extent set forth in Section 3(a). Any heir or legatee of the Participant shall
take rights herein granted subject to the terms and conditions hereof.
4. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Plan nor this Agreement
shall be construed as giving the Participant the right to be retained in the
employ of, or in any consulting relationship to, the Company or any Affiliate.
Further, the Company or an Affiliate may at any time dismiss the Participant or
discontinue any consulting relationship, free from any liability or any claim
under the Plan or this Agreement, except as otherwise expressly provided herein.
5. LEGEND ON CERTIFICATES. The certificates representing the Shares
purchased by exercise of the Option shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares are listed, and any
applicable Federal or state laws, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.
4
6. TRANSFERABILITY. The Option may not be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by the Participant
otherwise than by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that the designation of a beneficiary shall not constitute
an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No
such permitted transfer of the Option to heirs or legatees of the Participant
shall be effective to bind the Company unless the Committee shall have been
furnished with written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions hereof.
During the Participant's lifetime, the Option is exercisable only by the
Participant.
Notwithstanding the foregoing, the vested portion of this Option, insofar
as such vested portion is not intended to be treated as an Incentive Stock
Option that complies with section 422 of the Internal Revenue Code of 1986, as
amended, may be transferred by the Participant (the "Grantee") without
consideration, subject to such rules as the Committee may adopt to preserve the
purposes of the Plan, to:
(A) any or all of the Grantee's spouse, children or grandchildren
(including adopted and stepchildren and grandchildren) (collectively,
the "Immediate Family");
(B) a trust solely for the benefit of the Grantee and/or his or her
Immediate Family (a "Family Trust"); or
(C) a partnership or limited liability company whose only partners or
shareholders are the Grantee and/or his or her Immediate Family and/or
a Family Trust;
(each transferee described in clauses (A), (B) and (C) above is hereinafter
referred to as a "Permitted Transferee"); PROVIDED that the Grantee gives
the Committee advance written notice describing the terms and conditions of
the proposed transfer and the Committee notifies the Grantee in writing
that such a transfer would comply with the requirements of the Plan and
this Agreement.
If any portion of this Option is transferred in accordance with the
immediately preceding sentence, the terms of this Option shall apply to the
Permitted Transferee and any reference in this Agreement to an optionee,
Grantee or Participant shall be deemed to refer to the Permitted
Transferee, except that (a) Permitted Transferees shall not be entitled to
transfer this Option, other than by will or the laws of descent and
distribution; (b) Permitted Transferees shall not be entitled to exercise
the transferred Option unless there shall be in effect a registration
statement on an appropriate form covering the shares to be acquired
pursuant to the exercise of such Option if the Committee determines that
such registration statement is necessary or appropriate, (c) the Committee
or the Company shall not be required to provide any notice to a Permitted
Transferee,
5
whether or not such notice is or would otherwise have been required to be
given to the Grantee under the Plan or otherwise and (d) the consequences
of termination of the Grantee's employment by, or services to, the Company
under the terms of the Plan and this Agreement shall continue to be applied
with respect to the Grantee, following which the Option shall be
exercisable by the Permitted Transferee only to the extent, and for the
periods, specified in the Plan and this Agreement.
7. WITHHOLDING.
(a) The Participant may be required to pay to the Company or any
Affiliate and the Company or any Affiliate shall have the right and is hereby
authorized to withhold from any Shares or other property deliverable under the
Option or from any compensation or other amount owing to a Participant the
amount (in cash, Shares, or other property) of any applicable withholding taxes
in respect of the Option, its exercise, or any payment or transfer under the
Option or under the Plan and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes.
(b) Without limiting the generality of Section 7(a) above, the
Participant may satisfy, in whole or in part, the foregoing withholding
liability by delivery of Shares owned by the Participant (which are not subject
to any pledge or other security interest and which have been owned by the
Participant for at least 6 months) with a Fair Market Value equal to such
withholding liability or by having the Company withhold from the number of
Shares otherwise issuable pursuant to the exercise of the option a number of
Shares with a Fair Market Value equal to such withholding liability.
(c) The Company may, as a condition of Option exercise, require that
satisfactory arrangements have been made in advance to satisfy all tax
withholding obligations.
8. SECURITIES LAWS. Upon the acquisition of any Shares pursuant to the
exercise of the Option, the Participant will make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement.
9. NOTICES. Any notice necessary under this Agreement shall be addressed to
the Company in care of its Secretary at the principal executive office of the
Company and to the Participant at the address appearing in the personnel records
of the Company for the Participant or to either party at such other address as
either party hereto may hereafter designate in writing to the other. Any such
notice shall be deemed effective upon receipt thereof by the addressee.
10. CHOICE OF LAW. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
6
11. ANTI-DILUTION. The provisions of Section 4(b) and Section 7(c) of the
Plan, shall be applied in a manner that is no less favorable than if the Option
granted hereunder were subject to the anti-dilution and adjustment provisions of
warrants granted pursuant to the Warrant Agreement, dated as of June 29, 1999,
among the Company and Xxxxxx Bank and Trust, as Warrant Agent. In addition, if
there occurs any consolidation or merger of the Company with or into any other
person or entity (other than a merger consolidation of the Company in which the
Company is the continuing corporation and which does not result in any
reclassification or change of the outstanding Common Shares) or sale, transfer
or other disposition of all or substantially all of the assets of the Company to
another person or entity, then each Option shall thereafter be exercisable into
the same kind and amount of securities (including shares of stock) or other
assets, or both, which were issuable or distributable to holders of outstanding
Common Shares upon such consolidation, merger, sale or conveyance in respect of
that number of Common Shares into which the Options might have been converted
immediately prior to such consolidation, merger, sale or conveyance and in any
such case appropriate adjustments shall be made to insure that the provisions
set forth herein shall be thereafter applicable as reasonably may be practicable
in relation to any securities or other assets thereafter deliverable upon
exercise of the Options. In addition, in the event the Change of Control or
Section 11(c) Change of Control which resulted (or would result upon
consummation) in the Options vesting pursuant to Section 2 is a tender offer or
exchange offer, the Company, at the Participant's option, shall (i) in the case
of a cash tender offer, pay the Participant the difference between the cash
consideration in the tender offer and the exercise price of the Options and (ii)
in the case of any other tender offer or exchange offer, provide,
notwithstanding the provisions of Section 2 hereof, that the Participant shall
be permitted to exercise the Options immediately prior to the consummation of
such tender offer or exchange offer so that the Participant may tender any or
all of the Shares received upon exercise of the Options in such tender offer or
exchange offer.
12. OPTION SUBJECT TO PLAN. By entering into this Agreement the Participant
agrees and acknowledges that the Participant has received and read a copy of the
Plan. The Option is subject to the Plan. The terms and provisions of the Plan as
it may be amended from time to time are hereby incorporated herein by reference.
In the event of a conflict between any term or provision contained herein and a
term or provision of the Plan, the applicable terms and provisions of the Plan
will govern and prevail.
13. SIGNATURE IN COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PENN TRAFFIC COMPANY
-------------------------------------------
By:
Title:
7
OPTIONEE
-------------------------------------------
Exhibit B
PENN TRAFFIC COMPANY
1999 EQUITY INCENTIVE PLAN
AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made effective as of the 24th day
of October, 2001, (hereinafter called the "Date of Grant"), between Penn Traffic
Company, a Delaware corporation (hereinafter called the "Company"), and Xxxxxx
X. Xxxxxx (hereinafter called the "Participant"):
R E C I T A L S:
WHEREAS, the Company has adopted the Penn Traffic Company 1999 Equity
Incentive Plan (the "Plan"), which Plan is incorporated herein by reference and
made a part of this Agreement. Capitalized terms not otherwise defined herein
shall have the same meanings as in the Plan; and
WHEREAS, the corporation and stock option Committee of the Board of
Directors of the Company (the "Committee") has determined that it would be in
the best interests of the Company and its stockholders to grant the option to
purchase shares of the Company Common Stock ("Shares") provided for herein (the
"Option") to the Participant pursuant to the Plan and the terms set forth
herein.
NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. GRANT OF THE OPTION. The Company hereby grants to the Participant the
right and option to purchase, on the terms and conditions hereinafter set forth,
all or any part of an aggregate of 260,000 Shares, subject to adjustment as set
forth in the Plan (the "Option"). The purchase price of the Shares subject to
the Option shall be $4.35 per Share (the "Exercise Price"). The Option is
intended to be qualified as an Incentive Stock Option, within the meaning of
section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), with
respect to 22,988 Shares and as Non-Qualified Stock Option with respect to
237,012 Shares.
The Company cannot guarantee that the special tax treatment described
in section 422 of the Code will apply. For example, if the Participant sells the
Shares acquired pursuant to the exercise of this Option either within two years
after the date of this Agreement or within one year after the date this Option
(or part thereof) is exercised, this special tax treatment will not apply.
If the Option (or any part thereof) does not qualify for Incentive
Stock Option treatment for any reason, then, to the extent of such
nonqualification, the Option (or such portion thereof) shall be treated as a
Non-Qualified Stock Option granted under the Plan.
2
2. VESTING.
Subject to the Participant's continued employment with the Company,
the Option shall vest with respect to 20% of the Shares initially subject to the
Option on the Grant Date hereof, 20% of the Shares initially subject to the
Option on each of the first and second anniversaries of the Grant Date and 40%
of the Shares initially subject to the Option on the third anniversary of the
Grant Date. Any portion of the Option which is not vested as of the
Participant's termination of employment shall immediately terminate and expire.
(a) At any given time, the portion of the Option which has become
vested and exercisable as described above is hereinafter referred to as the
"Vested Portion."
(b) In the event of (i) a "Change of Control" (as defined in the
Plan); (ii) a "Change of Control" (as defined in the Employment Agreement dated
as of December 19, 2001, as amended to the date hereof and from time to time
hereafter, between the Company and Participant (as amended, the "Employment
Agreement")); (iii) the termination by the Company of the Participant's
employment with the Company other than for "Cause" (as defined in the Employment
Agreement); or (iv) termination by the Participant of the Participants
employment with the Company for "Good Reason" (as defined in the Employment
Agreement), the Option shall, to the extent not then vested or previously
canceled, vest and become immediately exercisable in full.
3. EXERCISE OF OPTION.
(a) PERIOD OF EXERCISE. Subject to the provisions of the Plan and this
Agreement, the Participant may exercise all or any part of the Vested Portion of
the Option at any time prior to the earliest to occur of:
(i) 11:59pm Eastern Standard Time on the tenth anniversary of the
Date of Grant;
(ii) sixty (60) days following either (a) the date of the
Participant's termination of employment by the Company for "Cause" (as
defined in the Employment Agreement) or (b) the date of the
Participant's voluntary termination of employment without "Good
Reason" (as defined in the Employment Agreement); or
(iii) (a) in the case of the Participant's termination of
employment for death or disability (within the meaning of section
22(e)(3) of the Code), one year following such termination.
(b) Method of Exercise.
(i) Subject to Section 3(a) of this Agreement, the Option may be
exercised by delivering to the Company at its principal office written notice of
intent to so exercise; PROVIDED that, the Option may be exercised with respect
to whole Shares
3
only. Such notice shall specify the number of Shares for which the Option is
being exercised and shall be accompanied by payment in full of the Exercise
Price. The payment of the Exercise Price may be made in cash, or its equivalent,
or (x) by exchanging Shares owned by the Participant (which are not the subject
of any pledge or other security interest and which have been owned by the
Participant for at least 6 months), (y) subject to such rules as may be
reasonably established by the Committee, through delivery of irrevocable
instructions to a broker to sell a portion of the Shares otherwise deliverable
upon the exercise of the Option and to deliver promptly to the Company an amount
equal to the aggregate exercise price of the portion of the Option so exercised
or (z) by a recourse promissory note and agreement of the Participant providing
for the payment with interest of the unpaid balance accruing at a rate not less
than needed to avoid the imputation of income under section 7872 of the Code and
upon such terms and conditions (including the furnishing of security, if any
therefor) as the Committee may determine, or by a combination of the foregoing.
(ii) Notwithstanding any other provision of the Plan or this
Agreement to the contrary, the Option may not be exercised prior to the
completion of any registration or qualification of the Option or the Shares
under applicable state and federal securities or other laws, or under any ruling
or regulation of any governmental body or national securities exchange that the
Committee shall in its sole discretion determine to be necessary or advisable.
(iii) Upon the Company's determination that the Option has been
validly exercised as to any of the Shares, the Company shall issue certificates
in the Participant's name for such Shares. However, the Company shall not be
liable to the Participant for damages relating to any delays in issuing the
certificates to him, any loss of the certificates, or any mistakes or errors in
the issuance of the certificates or in the certificates themselves.
(iv) In the event of the Participant's death, the Option shall
remain exercisable by the Participant's executor or administrator, or the person
or persons to whom the Participant's rights under this Agreement shall pass by
will or by the laws of descent and distribution as the case may be, to the
extent set forth in Section 3(a) of this Agreement. Any heir or legatee of the
Participant shall take rights herein granted subject to the terms and conditions
hereof.
4. NO RIGHT TO CONTINUED EMPLOYMENT. Neither the Plan nor this Agreement
shall be construed as giving the Participant the right to be retained in the
employ of, or in any consulting relationship to, the Company or any Affiliate.
Further, the Company or an Affiliate may at any time dismiss the Participant or
discontinue any consulting relationship, free from any liability or any claim
under the Plan or this Agreement, except as otherwise expressly provided herein.
5. LEGEND ON CERTIFICATES. The certificates representing the Shares
purchased by exercise of the Option shall be subject to such stop transfer
orders and other restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon
4
which such Shares are listed, and any applicable Federal or state laws, and the
Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.
6. TRANSFERABILITY. The Option may not be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by the Participant
otherwise than by will or by the laws of descent and distribution, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that the designation of a beneficiary shall not constitute
an assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No
such permitted transfer of the Option to heirs or legatees of the Participant
shall be effective to bind the Company unless the Committee shall have been
furnished with written notice thereof and a copy of such evidence as the
Committee may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions hereof.
During the Participant's lifetime, the Option is exercisable only by the
Participant.
Notwithstanding the foregoing, the vested portion of this Option, insofar
as such vested portion is not intended to be treated as an Incentive Stock
Option that complies with section 422 of the Internal Revenue Code of 1986, as
amended, may be transferred by the Participant (the "Grantee") without
consideration, subject to such rules as the Committee may adopt to preserve the
purposes of the Plan, to:
(A) any or all of the Grantee's spouse, children or grandchildren
(including adopted and stepchildren and grandchildren) (collectively,
the "Immediate Family");
(B) a trust solely for the benefit of the Grantee and/or his or her
Immediate Family (a "Family Trust"); or
(C) a partnership or limited liability company whose only partners or
shareholders are the Grantee and/or his or her Immediate Family and/or
a Family Trust;
(each transferee described in clauses (A), (B) and (C) above is hereinafter
referred to as a "Permitted Transferee"); PROVIDED that the Grantee gives
the Committee advance written notice describing the terms and conditions of
the proposed transfer and the Committee notifies the Grantee in writing
that such a transfer would comply with the requirements of the Plan and
this Agreement.
If any portion of this Option is transferred in accordance with the
immediately preceding sentence, the terms of this Option shall apply to the
Permitted Transferee and any reference in this Agreement to an optionee,
Grantee or Participant shall be deemed to refer to the Permitted
Transferee, except that (a) Permitted Transferees shall not be entitled to
transfer this Option, other than by will or the laws of descent and
distribution; (b) Permitted Transferees shall not be entitled to exercise
the transferred Option unless there shall be in effect a
5
registration statement on an appropriate form covering the shares to be
acquired pursuant to the exercise of such Option if the Committee
determines that such registration statement is necessary or appropriate,
(c) the Committee or the Company shall not be required to provide any
notice to a Permitted Transferee, whether or not such notice is or would
otherwise have been required to be given to the Grantee under the Plan or
otherwise and (d) the consequences of termination of the Grantee's
employment by, or services to, the Company under the terms of the Plan and
this Agreement shall continue to be applied with respect to the Grantee,
following which the Option shall be exercisable by the Permitted Transferee
only to the extent, and for the periods, specified in the Plan and this
Agreement.
7. WITHHOLDING.
(a) The Participant may be required to pay to the Company or any
Affiliate and the Company or any Affiliate shall have the right and is hereby
authorized to withhold from any Shares or other property deliverable under the
Option or from any compensation or other amount owing to a Participant the
amount (in cash, Shares, or other property) of any applicable withholding taxes
in respect of the Option, its exercise, or any payment or transfer under the
Option or under the Plan and to take such other action as may be necessary in
the opinion of the Company to satisfy all obligations for the payment of such
taxes.
(b) Without limiting the generality of Section 7(a) above, the
Participant may satisfy, in whole or in part, the foregoing withholding
liability by delivery of Shares owned by the Participant (which are not subject
to any pledge or other security interest and which have been owned by the
Participant for at least 6 months) with a Fair Market Value equal to such
withholding liability or by having the Company withhold from the number of
Shares otherwise issuable pursuant to the exercise of the option a number of
Shares with a Fair Market Value equal to such withholding liability.
(c) The Company may, as a condition of Option exercise, require that
satisfactory arrangements have been made in advance to satisfy all tax
withholding obligations.
8. SECURITIES LAWS. Upon the acquisition of any Shares pursuant to the
exercise of the Option, the Participant will make or enter into such written
representations, warranties and agreements as the Committee may reasonably
request in order to comply with applicable securities laws or with this
Agreement.
9. NOTICES. Any notice necessary under this Agreement shall be addressed to
the Company in care of its Secretary at the principal executive office of the
Company and to the Participant at the address appearing in the personnel records
of the Company for the Participant or to either party at such other address as
either party hereto may hereafter designate in writing to the other. Any such
notice shall be deemed effective upon receipt thereof by the addressee.
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10. CHOICE OF LAW. THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS
AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAW.
11. ANTI-DILUTION. If there occurs any consolidation or merger of the
Company with or into any other person or entity (other than a merger
consolidation of the Company in which the Company is the continuing corporation
and which does not result in any reclassification or change of the outstanding
Shares) or sale, transfer or other disposition of all or substantially all of
the assets of the Company to another person or entity, then each Option shall
thereafter be exercisable into the same kind and amount of securities (including
shares of stock) or other assets, or both, which were issuable or distributable
to holders of outstanding Shares upon such consolidation, merger, sale or
conveyance in respect of that number of Shares into which the Options might have
been converted immediately prior to such consolidation, merger, sale or
conveyance and in any such case appropriate adjustments shall be made to insure
that the provisions set forth herein shall be thereafter applicable as
reasonably may be practicable in relation to any securities or other assets
thereafter deliverable upon exercise of the Options. In addition, in the event
the Change of Control (as defined in the Plan) or a Change of Control (as
defined in the Employment Agreement) which resulted (or would result upon
consummation) in the Options vesting pursuant to Section 2 of this Agreement is
a tender offer or exchange offer, the Company, at the Participant's option,
shall (i) in the case of a cash tender offer, pay the Participant the difference
between the cash consideration in the tender offer and the exercise price of the
Options and (ii) in the case of any other tender offer or exchange offer,
provide, notwithstanding the provisions of Section 2 hereof, that the
Participant shall be permitted to exercise the Options immediately prior to the
consummation of such tender offer or exchange offer so that the Participant may
tender any or all of the Shares received upon exercise of the Options in such
tender offer or exchange offer.
12. OPTION SUBJECT TO PLAN. By entering into this Agreement the Participant
agrees and acknowledges that the Participant has received and read a copy of the
Plan. The Option is subject to the Plan including without limitation the
anti-dilution provisions set out in Section 4(b) thereof. The terms and
provisions of the Plan as it may be amended from time to time are hereby
incorporated herein by reference. In the event of a conflict between any term or
provision contained herein and a term or provision of the Plan, the applicable
terms and provisions of the Plan will govern and prevail.
13. DISQUALIFYING DISPOSITION. The Participant agrees and covenants that if
he disposes of any of the Shares acquired pursuant to the exercise of this
Option in a "disqualifying disposition," as described in section 422 of the
Code, he will immediately contact the Company to inform it of such event.
14. RIGHTS AS STOCKHOLDER. The Participant shall not be deemed to be the
owner of any Shares subject to this Option unless, until and to the extent that
(i) this Option shall have been exercised pursuant to its terms, (ii) the
Company shall have issued and delivered to the Participant the Shares, and (iii)
the Participant's name shall have been
7
entered as a stockholder of record with respect to such Shares on the books of
the Company.
15. SIGNATURE IN COUNTERPARTS. This Agreement may be signed in
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
16. SUCCESSORS. The terms of the Agreement shall be binding upon and inure
to the benefit of the Company, its successors and assigns, and of the
Participant and the beneficiaries, executors, administrators, heirs and
successors of the Participant.
17. INVALID PROVISION. The invalidity or unenforceability of any particular
provision hereof shall not affect the other provisions hereof, and the Agreement
shall be construed in all respects as if such invalid or unenforceable provision
had been omitted.
18. MODIFICATIONS. No change, modification or waiver of any provision of
the Agreement shall be valid unless the same be in writing and signed by the
parties hereto.
19. ENTIRE AGREEMENT. The Agreement and the Plan contain the entire
agreement and understanding of the parties hereto with respect to the subject
matter contained herein and therein and supersede all prior communications,
representations and negotiations in respect thereto.
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20. HEADINGS. The headings of the Sections hereof are provided for
convenience only and are not to serve as a basis for interpretation or
construction, and shall not constitute a part, of the Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PENN TRAFFIC COMPANY
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By:
Title:
PARTICIPANT
------------------------------
Exhibit C
THE PENN TRAFFIC COMPANY
SUPPLEMENTAL RETIREMENT PLAN
FOR
XXXXXX X. XXXXXX
ARTICLE I
ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN
1.1 ESTABLISHMENT. The Penn Traffic Company, a Delaware corporation, hereby
establishes a supplemental retirement program for Xxxxxx X. Xxxxxx, which
shall be known as The Penn Traffic Company Supplemental Retirement Plan For
Xxxxxx X. Xxxxxx (the "Plan").
1.2 PURPOSE. The purpose of the Plan is to provide Xxxxxx X. Xxxxxx with
retirement income. Payment of the retirement benefit under the Plan shall
be made from the general assets of the Company, or by such other method as
is consistent with Section 7.2 of the Plan and which is agreed to by Xxxxxx
X. Xxxxxx and the Company.
1.3 BENEFITS UNDER THE CORPORATE PLAN. As indicated below, the Plan is intended
to provide benefits that are supplemental to those contained in the
Corporate Plan. It is the Company's present intent to amend the Corporate
Plan to provide as much of the Retirement Benefit contemplated hereunder as
possible under the Corporate Plan without causing (i) the Corporate Plan to
fail to satisfy the requirements of Section 401(a) of the Code or (ii) the
Company to incur additional costs; PROVIDED, that the Company will not be
obligated to make or continue in effect any such amendment.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. Whenever used herein, the following terms shall have their
respective meanings set forth below:
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(A) "Account" means the bookkeeping account established and maintained
with respect to the Executive pursuant to Section 4.1.
(B) "Account Value" means, on any given date the value of the Account as
determined under Article IV.
(C) "Applicable Termination Event" means a Termination (i) by the
Executive for Good Reason, (ii) by reason of a Change of Control
pursuant to Section 12(a) of the Employment Agreement, or (iii) by the
Company without Cause.
(D) "Beneficiary" means the person(s) properly designated to receive,
under provisions of the Plan, benefits payable in the event of the
Executive's death.
(E) "Board" means the Board of Directors of the Company.
(F) "Cause" means Cause under the terms of the Employment Agreement.
(G) "Change of Control" means Change of Control under the terms of the
Employment Agreement.
(H) "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any regulations relating thereto.
(I) "Committee" means the Compensation and Stock Option Committee of the
Board.
(J) "Company" means The Penn Traffic Company, a Delaware corporation.
(K) "Corporate Plan" means The Penn Traffic Company Cash Balance Pension
Plan.
(L) "Disability" means being Disabled under the terms of the Employment
Agreement.
(M) "Effective Date" means January 31, 2001.
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(N) "Employment Agreement" means the employment agreement between the
Company and the Executive dated December 19, 2001, and any extension
or renewal thereof, or successor agreement thereto.
(O) "Executive" means Xxxxxx X. Xxxxxx.
(P) "Good Reason" means Good Reason under the terms of the Employment
Agreement.
(Q) "Interest Credits" means additions to the Account determined pursuant
to Section 4.3.
(R) "Opening Account Balance" means the initial amount credited to the
Account in accordance with Section 4.4.
(S) "Plan Year" means the twelve month period ending on January 31 of each
year.
(T) "Retirement Benefit" means the benefit payable to the Executive on or
after his Termination Date, but prior to his death, pursuant to
Article V of the Plan.
(U) "Service Credits" means additions to the Account determined pursuant
to Section 4.2.
(V) "Termination" means a termination of the Executive's services to the
Company under the Employment Agreement irrespective of the reason
therefor.
(W) "Termination Date" means the date on which the Executive ceases to
provide services to the Company under the Employment Agreement for any
reason.
2.2 OTHER DEFINED TERMS. Any capitalized terms that are used in the Plan, which
are not defined in this Article, shall have the meaning stated in the
Corporate Plan.
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2.3 GENDER AND NUMBER. Except when otherwise indicated by the context, words in
the masculine gender when used in the Plan shall include the feminine
gender, the singular shall include the plural, and the plural shall include
the singular.
ARTICLE III
VESTING
3.1 VESTING. All benefits under the Plan shall be fully vested and
nonforfeitable at all times.
ARTICLE IV
ACCOUNTS AND CREDITS TO ACCOUNTS
4.1 ACCOUNT. As of the Effective Date, the Account shall be credited with an
Opening Account Balance in accordance with Section 4.4.
4.2 SERVICE CREDITS.
(a) On the January 31 of each of 2002, 2003, 2004 and 2005, the Account
shall be increased by a Service Credit of $100,028 if the Executive is
employed by the Company on such date.
(b) If prior to January 31, 2005, there is a Termination that is not by
reason of an Applicable Termination Event but is rather by reason of:
(i) a Termination by the Executive other than for Good Reason, (ii)
Termination by the Company for Cause, or (iii) the Executive's death
or Disability, then the Account shall be increased by a Service Credit
for the fiscal year of the Termination equal to a pro-rated portion of
$100,028, based on the Executive's employment through the end of the
month prior to the month in which the Termination Date occurs; the
Account shall be increased by this pro-rata Service Credit on the
January 31 coincident or following the Termination; provided, that if
the Executive submits a
5
claim for benefits in accordance with the provisions of Section 5.2
prior to such January 31 then the Account shall be increased by the
pro-rata Service Credit on the date of the distribution of the
Account. If the Account is increased by a Service Credit pursuant to
this paragraph (b), no further Service Credits will be added to the
Account.
(c) If prior to January 31, 2005, there is a Termination by reason of an
Applicable Termination Event, the Account shall be increased by the
Service Credits as otherwise provided for under paragraph (a) of this
Section 4.2 notwithstanding that the Executive is not employed on the
applicable January 31. The Service Credits so provided for may be
credited to the Account earlier than as set forth in paragraph (a) of
this Section 4.2, in accordance with the requirements of the proviso
to the first sentence of Section 5.2.
4.3 INTEREST CREDITS. Each Plan Year the Account shall be automatically
increased as of the last day of such Plan Year by crediting the balance in
such Account as of the last day of the previous Plan Year (or, in the case
of the first Plan Year, as of the Effective Date), with an Interest Credit
equal to said Account balance multiplied by 6%. Such Interest Credits shall
continue after the Executive's Termination Date, PROVIDED, however, that no
Interest Credits shall be made to the Account for any Plan Year beginning
on or after the date on which his benefit is paid. For the Plan Year in
which the Executive's benefit is paid, an Interest Credit shall be made on
a pro rata basis through the end of the month prior to the month in which
the date of benefit is paid.
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4.4 OPENING ACCOUNT BALANCE. The Executive shall have an Opening Account
Balance as of the Effective Date of $318,449.
ARTICLE V
RETIREMENT BENEFITS
5.1 RETIREMENT BENEFIT. The Executive's Retirement Benefit on any given date
shall be the Account Value as of such date less the Executive's vested
accrued benefit under the Corporate Plan (or any successor or replacement
plan); PROVIDED, that (i) for this purpose the Executive's vested accrued
benefit under the Corporate Plan (or any successor or replacement plan)
shall not include any benefits (or related interest thereon) accrued after
the last day of the Plan Year ending on January 31, 2005, and (ii) the
determination of the amount of the Executive's vested accrued benefit under
the Corporate Plan (or any successor or replacement plan) shall be made in
the reasonable judgment of the Committee.
5.2 PAYMENT OF RETIREMENT BENEFIT. The Executive shall receive the payment of
his Retirement Benefit as of the first day of the month following the later
to occur of (a) the Termination Date, and (b) the date on which the
Executive submits a claim for benefits pursuant to Section 6.1; PROVIDED,
that (i) in the case of the Executive's Termination by reason of an
Applicable Termination Event, the Executive may elect for payment of his
Retirement Benefit to be made either (x) on the Termination Date in which
case the Retirement Benefit shall include the sum of the then Account Value
less the Executive's vested accrued benefit under the Corporate Plan,
increased by Service Credits that would otherwise be made hereunder through
January 31, 2005, but excluding any Interest Credits following such
Termination, or (y) on or after January 31, 2005, in which case he
7
shall be paid the sum of the then Account Value less the Executive's vested
accrued benefit under the Corporate Plan, i.e. including Service Credits
through January 31, 2005 and Interest Credits through the date of payment,
and (ii) the Executive shall receive the payment no later than the first
business day of February 2008. The Executive shall elect to receive the
payment of his Retirement Benefit in the form of either a (a) lump sum
payment, or (b) an annuity purchasable from his Account Balance.
5.3 DEATH OR DISABILITY PRIOR TO RETIREMENT. If the Executive dies or suffers a
Disability prior to the commencement of any benefit payments under the Plan
whether before or after his Termination Date, the Executive's Beneficiary
shall be entitled to payment of a benefit as of the first day of any month
after the Executive's death or Disability. The death or Disability benefit
shall be payable in a single lump sum in an amount which is equal to the
Executive's Retirement Benefit at the date of his death or Disability
increased by any Interest Credits made under the Plan prior to the date on
which distribution of the benefit is made or commences.
ARTICLE VI
CLAIMS PROCEDURE
6.1 WRITTEN REQUEST. Any claim for benefits by the Executive or his
Beneficiaries shall be made in writing to the Committee.
ARTICLE VII
GENERAL PROVISIONS
7.1 ADMINISTRATION. The Committee shall be responsible for the general
operation and administration of the Plan and for carrying out the
provisions hereof. The Committee shall be entitled to rely conclusively
upon all certificates, opinions and reports furnished
8
by any accountant, controller, counsel or other person employed or engaged
by the Company with respect to the Plan.
7.2 FUNDING. The Board, in its sole discretion, may elect to fund the benefits
payable under the Plan, through various investments. However, any such
investment shall remain the property of the Company and be subject to the
claims of general creditors of the Company. The Executive shall have only
the rights of a general unsecured creditor of the Company with respect to
any rights under the Plan. The Executive may not pledge as collateral any
investments purchased to fund benefits under the Plan. Nothing contained in
the Plan shall constitute a guaranty by the Company or any other entity or
person that assets of the Company will be sufficient to pay any benefit
hereunder. It is the intention of the parties that the Plan will be an
unfunded deferred compensation plan solely for the benefit of the Executive
and thus would not be subject to the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"). However, if the plan is interpreted to
be subject to ERISA, it is the intention of the parties that the Plan be an
unfunded deferred compensation plan solely for the benefit of management
and highly compensated employees for tax purposes and for purposes of Title
I of ERISA.
7.3 NO EMPLOYMENT CONTRACT. Nothing contained in the Plan shall be construed as
a contract of employment between the Company and the Executive or as a
limitation on the right of the Company to terminate, or fail to renew or
extend the Employment Agreement, subject to the terms and conditions
thereof, and without regard to the effect that such discontinuity may have
upon the Executive's rights or potential rights, if any, under the Plan.
9
7.4 SPENDTHRIFT PROVISION. No interest of any person or entity in, or right to
receive a benefit under, the Plan shall be subject in any manner to sale,
transfer, assignment, pledge, attachment, garnishment or other alienation
or encumbrance of any kind; nor may such interest or right to receive a
benefit be taken, either voluntarily or involuntarily, for the satisfaction
of the debts of or other obligations or claims against, such person or
entity, including claims for alimony, support, separate maintenance and
claims in bankruptcy proceedings.
7.5 BINDING EFFECT. The Plan shall be binding upon and inure to the benefit of
the Executive, his Surviving Spouse and Beneficiaries, the Company and any
successor to the Company, whether by merger, consolidation, purchase, or
otherwise.
7.6 APPLICABLE LAW. The Plan shall be governed by and construed in accordance
with the laws of the State of New York, except to the extent preempted by
ERISA, if it is determined that the Plan is subject to ERISA, without
regard to principles of conflict of laws.
7.7 WITHHOLDING. Any payment made pursuant to the Plan shall be reduced by
federal and state income, FICA or other employee payroll, withholding or
other similar taxes that the Executive's employer may be required to
withhold by law. In addition, as the Retirement Benefit accrues during the
period of time that the Executive provides services to the Company under
the Employment Agreement, the regular payments that the Company makes to
Executive with respect to the Executive's services to the Company shall be
subject to FICA or other employee payroll, withholding or other similar
taxes which the Company may be required by law to withhold on the accrual
of benefits.
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7.8 SEVERABILITY. If one or more provisions of the Plan, or any part thereof,
shall be determined by a court of competent jurisdiction to be invalid or
unenforceable, then the Plan shall be administered as if such invalid or
unenforceable provision had not been contained in the Plan. The invalidity
or unenforceability of any Plan provision, or any part thereof, shall not
affect the validity and enforceability of any other Plan provision or any
part thereof.
7.9 TERMINATION OF THE PLAN. The Company intends to maintain the Plan until all
benefit payments are made pursuant to the Plan. The Company may not amend
or terminate the Plan without the written consent of the Executive.
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7.10 TITLES AND HEADINGS NOT TO CONTROL. The titles to the Articles and the
headings of Sections in the Plan are placed herein for convenience of
reference only, and in case of any conflict, the text of this instrument,
rather than such titles or headings, shall control.
THE PENN TRAFFIC COMPANY
By:
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