Exhibit 10.23(a)
AMENDED AND RESTATED MANAGEMENT AGREEMENT
AMENDED AND RESTATED MANAGEMENT AGREEMENT (the"Agreement"), dated as of
December 2, 1999 among THE PENN TRAFFIC COMPANY, a Delaware corporation, (the
"COMPANY"), XXXXXX & XXX, L.L.C., a Delaware limited liability company
("MANAGER"), Xxxx X. Xxxxxx ("XXXXXX") and Xxxxxx X. Xxx ("XXX"; and
collectively with Xxxxxx, the "EXECUTIVES"), amending and restating that certain
Management Agreement, dated June 29, 1999 (the "ORIGINAL AGREEMENT"), by and
among the parties hereto.
WHEREAS, on June 29, 1999, the Company successfully completed the
reorganization of certain outstanding indebtedness and liabilities of, and
equity interests in, the Company and certain of its subsidiaries through
confirmation of a "pre-negotiated" plan of reorganization for the Company (the
"PLAN") under Chapter 11 of Title 11 of the United States Code, 11 X.X.X.xx. 101
et seq., (the "BANKRUPTCY COde");
WHEREAS, concurrently with the consummation of the Plan, the Company,
the Manager and the Executives entered into the Original Agreement, which sets
forth the terms and conditions upon which the Manager would provide services to
the Company; and
WHEREAS, the Company, Manager and the Executives now desire to amend
and restate the Original Agreement upon the terms and conditions contained
herein.
NOW, THEREFORE, for good and valuable consideration, the receipt of
which is hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT. The Company hereby engages Manager for the services of
the Executives, and Manager hereby agrees under the terms and conditions set
forth herein, to provide the services of the Executives to the Company as
described in Section 3 herein. Manager agrees to assign to the Executives the
engagement hereunder and Xxxxxx and Xxx agree to accept such assignment to
fulfill the Manager's duties hereunder.
2. TERM. The initial term (the "INITIAL TERM") of this Agreement
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shall be two years from the date of the Original Agreement (the "EFFECTIVE
DATE"). This Agreement shall be renewed automatically for one additional
two-year term (the "RENEWAL TERM") thereafter unless the Board of Directors of
the Company (the "BOARD") or Manager shall give notice in writing to the other
within 120 days before the expiration of the Initial Term of its desire to
terminate this Agreement upon expiration of such Initial Term. Notwithstanding
anything to the contrary set forth herein, Sections 5 and 8 shall survive any
termination of this Agreement.
3. SERVICES. From and after the Effective Date until the termination of
the Initial Term or the Renewal Term, as the case may be, Manager shall provide
the services of Xxxxxx and Fox as (i) members of the Board of Directors of the
Company and (ii) Chairman of the Executive Committee of the Board of Directors
of the Company (the "EXECUTIVE COMMITTEE") and Vice Chairman of the Executive
Committee, respectively. These positions shall constitute corporate offices of
the Company and the Company's Amended and Restated By-laws shall so provide. In
these positions, Xxxxxx and Xxx shall (i) report directly and only to the
Company's Board of Directors, (ii) have all authority customarily delegated to
the most senior executive officers of a corporation, subject to the reasonable
oversight of the entire Board and (iii) perform such other duties as may be
requested from time to time by the Board as are consistent with their positions
as Chairman and Vice Chairman of the Executive Committee and senior executive
officers of the Company. Xxxxxx and Fox agree to perform their duties, as set
forth herein, in a faithful manner and to the best of their abilities. Xxxxxx
and Xxx also agree to devote predominantly all of their full working time and
energy to the business and affairs of the Company and to use their best efforts
and all of their skills, experience and knowledge to promote the interests of
the Company. During the Initial Term and the Renewal Term, if any, the Executive
Committee shall at all times consist of three members, Xxxxxx, Fox and Xx.
Xxxxxx X. Xxxxxx.
4. COMPENSATION; EARLY TERMINATION; CHANGE OF CONTROL. (a) In
consideration of the services to be provided in accordance with Section 3, the
Company shall pay to the Manager a management fee at the annual rate of
$1,450,000 (the "MANAGEMENT FEE"), accruing from the Effective Date and payable
monthly in advance (or such pro rata amounts for partial months) on the first
day of each month, commencing on the Effective Date. In addition, the Company
shall pay to the Manager an annual bonus of $350,000 (the "ANNUAL BONUS") for
the fiscal year ended January 29, 2000. If Xxxxxx Xxx continues to serve as the
Company's Chief Financial Officer during a subsequent fiscal year, the Company
shall pay to the Manager an additional $350,000 Annual Bonus, which shall be
appropriately prorated for that portion of the fiscal year that Xx. Xxx serves
as the Company's Chief Financial Officer. The Annual Bonus shall be paid to the
Manager on the same date bonuses are paid to the Company's senior executive
officers, but in no event later than April 30th of each such year. Neither the
Manager nor the Executives shall be considered employees of the Company. The
Manager and the Executives, as the case may be, shall bear sole responsibility
for payment on behalf of itself and Executives for any
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federal, state and/or local income tax withholding, social security, workers'
compensation coverage and unemployment insurance and, other than as expressly
provided herein, employee benefits. To this end, Manager and the Executives
shall provide the Company with reasonable proof demonstrating compliance with
the foregoing at the Company's request. Further, the Manager and the Executives
agree to indemnify and hold harmless the Company from and against any claims,
liabilities, or expenses, including reasonable attorney's fees and
disbursements, relating to such compensation, tax, insurance and/or benefit
matters.
(b) In the event this Agreement is terminated by the Company before the
expiration of the Initial Term or the Renewal Term, as the case may be, for
reasons other than for Cause (as defined) or the occurrence of a Section 4(d)
Change of Control (as defined), then the Company shall immediately pay to
Manager the entire amount of all remaining unpaid Management Fees and Annual
Bonus that would have been payable through the end of such term but for such
early termination. In addition, if a Section 4(d) Change of Control (as defined
below) occurs on or before the Determination Date (as defined below) but after
such termination, then notwithstanding the termination of this Agreement by the
Company for any reason other than for Cause, the Company shall, in addition to
the payments required pursuant to this Section 4(b), make the Change of Control
Payment as provided in Section 4(d) on the dates provided in such section, LESS
the amount of any Management Fees previously paid by the Company to the Manager
pursuant to this Section 4(b) with respect to any period following the date the
Change of Control Payment is made until the end of the Initial Term or the
Renewal Term, as the case may be. For purposes of this Agreement, "CAUSE" shall
mean a conviction or guilty plea of a felony or any other crime involving fraud
or embezzlement.
The Company may immediately terminate this Agreement in the event both
Xxxxxx and Fox shall do or cause to be done any act which constitutes Cause. If
only one of Xxxxxx or Xxx does or causes to be done any act which constitutes
Cause (other than any such act that relates to the services to be provided for
herein by Xxxxxx and Fox) (a "CAUSE REDUCTION EVENT"), then the Agreement may
not be terminated by the Company but the Management Fee paid to Manager under
Section 4(a) shall be reduced in accordance with Section 8(c); PROVIDED,
HOWEVER, that the Agreement may be terminated if such act constitutes Cause and
relates to the services to be provided for herein by Xxxxxx and Xxx. Should this
Agreement be terminated by the Company for Cause, the Company shall only be
required to pay the Manager the portion of Management Fee provided for in
Section 4(a) that has accrued to the effective date of such termination and
shall reimburse all expenses incurred by the Manager that are reimbursable
pursuant to Section 5 through such effective date.
(c) If at any time prior to the expiration of the Initial Term or the
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Renewal Term, as the case may be, a "CHANGE OF CONTROL" (as defined) occurs,
Manager shall have the option, within 12 months from the date of such occurrence
and only in the event that the Executives' duties and responsibilities provided
for herein have been significantly reduced, diminished, altered or amended
following such Change of Control, to terminate this Agreement and continue to
receive its Management Fee in accordance with Section 4(a) for the remainder of
such term as if the Agreement were still in effect.
For purposes of this Agreement, "Change of Control" shall mean the
occurrence of any event where (i) 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, (ii) 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
of the Company or securities representing 50% or more of the combined voting
power of the Company's voting stock or (iii) 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.
(d) If at any time prior to the "DETERMINATION DATE" (as defined below)
a "SECTION 4(D) CHANGE OF CONTROL" (as defined below) occurs, then in lieu of
the payments provided under Section 4(a) or (c) above, the Manager shall be
entitled to receive the "CHANGE OF CONTROL PAYMENT" (as defined) on the date of
the occurrence of a Section 4(d) Change of Control. Upon the Manager's receipt
of the Change of Control Payment in full (subject to offset as set forth in
Section 4(b)), the Agreement shall be terminated automatically and none of
Xxxxxx, Fox or Manager shall be entitled to any further Management Fees or other
payments under Section 4(a) or Section 4(c).
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For purposes of this Agreement, the following terms shall have the
following meanings:
(i) "DETERMINATION DATE" shall mean December 31, 2000; PROVIDED, THAT,
if a definitive agreement (as such agreement may be amended, modified or
supplemented from time to time) with respect to an event which would constitute
a Section 4(d) Change of Control is executed on or before August 31, 2000, or if
such definitive agreement is terminated and within six months of the date of
such termination the Company enters into another definitive agreement with
respect to an event which would constitute a Section 4(d) Change of Control with
the same entity (or such entity's affiliate) that was a party to the first such
agreement, then the Determination Date for purposes of determining Hirsch's and
Xxx'x rights under this Section 4(d) shall be the date on which the transaction
contemplated by such definitive agreement is consummated.
(ii) "SECTION 4(D) CHANGE OF CONTROL" shall have the same meaning as
clauses (i) and (ii) of the definition of "Change of Control" in Section 4(c)
above and shall also include an event that results in Xxxxx Xxxxxxxxxx, Xxxxx
Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxxx, Xxxx Xxxxxxx and
Xxxxx Xxxxxx, who at the Effective Date constituted the independent directors of
the Board, ceasing to constitute a majority of the independent directors then in
office.
(iii) "CHANGE OF CONTROL PAYMENT" shall mean: the sum of
(a) the greater of (I) the PRODUCT of (x) 79,166 MULTIPLIED BY
(y) number of full months remaining in the Initial Term and (II) $5,000,000,
MINUS the SUM of (A) the "in-the-money" value on the date of the occurrence of a
Section 4(d) Change of Control of Hirsch's options granted under Section 6(c)
below (I.E., 240,000 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 Section 4(d)
Change of Control (or if the transaction which triggers the Section 4(d) Change
of Control is a cash tender offer, the cash tender offer per share price) AND
(2) $8.75) PLUS (B) the "in-the-money" value on the date of the occurrence of a
Section 4(d) Change of Control of Hirsch's options granted under Section 6(b)
below (I.E., 360,000 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 Section 4(d)
Change of Control (or if the transaction which triggers the Section 4(d) Change
of Control is a cash tender offer, the cash tender offer per share price) AND
(2) $18.30); PLUS
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(b) the greater of (I) the PRODUCT of (x) 41,666 MULTIPLIED BY
(y) the number of full months remaining in the Initial Term and (II) $2,000,000
MINUS the SUM of (A) the "in-the-money" value on the date of the occurrence of a
Section 4(d) Change of Control of Fox's options granted under Section 6(c) below
(I.E., 87,000 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 Section 4(d) Change of
Control (or if the transactions which triggers the Section 4(d) Change of
Control is a cash tender offer, the cash tender offer price per share) AND (2)
$8.75) PLUS (B) the "in-the-money" value on the date of the occurrence of a
Section 4(d) Change of Control of Fox's options granted under Section 6(b) below
(I.E. 130,000 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 Section 4(d) Change of
Control (or if the transaction which triggers the Section 4(d) Change of Control
is a cash tender offer, the cash tender offer price per share) AND (2) $18.30);
PLUS
(c) the amount of the prorated Annual Bonus payable through
the date of the occurrence of a Section 4(d) Change of Control.
In the event of a stock split, combination or subdivision of shares of
the Company's common stock, the number of options and exercise prices utilized
in subclauses (a)(II) and (b)(II) of this clause (iii) shall be adjusted in the
same manner as the number of options and exercise prices applicable to the
options granted pursuant to Section 6(c) below are adjusted pursuant to the EIP
(as defined below).
5. REIMBURSEMENT. Manager, Xxxxxx and Xxx shall be entitled to
reimbursement of all reasonable out-of-pocket expenses (including travel
expenses) incurred in connection with the performance of this Agreement, which
amounts shall be promptly reimbursed by the Company upon request, provided that
the Manager shall be required to account to the Company for such expenses in the
manner prescribed by the Company.
6. EQUITY PURCHASE; OPTIONS. (a) Subject to the restrictions and
limitations imposed by federal securities law (including Rule 10b-5 promulgated
under Section 16 of the Securities Exchange Act of 1934, as amended), Xxxxxx,
within six months from the Effective Date, will acquire in a public or private
transaction shares of Common Stock or warrants to acquire such Common Stock that
have an initial acquisition price of at least $500,000 in the aggregate.
(b) Pursuant to the terms of The Penn Traffic Company 1999 Equity
Incentive Plan (the "EIP"), Xxxxxx and Xxx will, on the Effective Date hereof,
receive fully-vested options to acquire 360,000 and 130,000 shares of Common
Stock,
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respectively, at an exercise price equal to $18.30 per share pursuant to Option
Agreements attached hereto as Exhibits A-1 and A-2. In addition, Xxxxxx and Fox
will, on the Effective Date, receive options to purchase 240,000 and 87,000
shares of Common Stock, respectively, 50% of which will vest on each of the 3rd
and 4th anniversaries of the Effective Date, assuming Messrs. Fox and Xxxxxx
continue to provide services to the Company on such dates pursuant to the Option
Agreements attached hereto as Exhibits B-1 and B-2. The exercise price for the
unvested options granted to each of Fox and Xxxxxx under this Section will also
be $18.30 per share. The options referred to in this paragraph and Section 6(c)
shall be granted pursuant to stock option agreements, which shall be in a form
attached hereto and otherwise be governed by the terms and conditions of the
EIP. To the extent permitted by the Internal Revenue Code of 1986, as amended
("IRC") all such options granted to Xxxxxx and Fox will qualify as incentive
stock options under the IRC. The shares of Common Stock issuable upon exercise
of such options shall be registered by the Company pursuant to a Registration
Statement on Form S-8 under the Securities Act of 1933, as amended.
(c) Xxxxxx and Xxx will, pursuant to the terms of EIP, also receive,
effective as of September 22, 1999, options to acquire 240,000 and 87,000 shares
of Common Stock, respectively, at an exercise price equal to $8.75 per share
(the "EXERCISE PRICE") pursuant to Option Agreements attached hereto as Exhibits
C-1 and C-2. These options will vest in full and be fully exercisable only upon
the consummation of a Section 4(d) Change of Control transaction that occurs on
or before the Determination Date. If no Section 4(d) Change of Control occurs on
or before that date, the options shall expire. In the event the options vest,
they will only be exercisable for the 180-day period following consummation of
the Section 4(d) Change of Control transaction.
7. EMPLOYEE BENEFITS. During the Initial Term or the Renewal
Term, as the case may be, Xxxxxx and Fox shall have the right to participate in
the Company's medical, dental, disability, life and other insurance plans
maintained during such time by the Company for executives of similar stature and
rank, and any other plans and benefits, if any, generally maintained by the
Company for executives of similar stature and rank, in each case in accordance
with the terms and conditions of such plan as from time-to-time in effect or
have the Company reimburse Xxxxxx and Xxx for such benefits at a annual cost not
to exceed $25,000 per Executive. In connection with the execution of this
Agreement, the Company agrees to provide Fox and Xxxxxx with pension benefits in
accordance with the terms of The Penn Traffic Supplemental Retirement Plan for
Non-Employee Executives, attached hereto as Exhibit D.
8. TERMINATION OF AGREEMENT BY REASON OF DEATH OR DISABILITY.
(a)
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If either Xxxxxx or Fox shall die or become Disabled (as defined below) during
either the Initial Term or the Renewal Term, as the case may be, the Manager's
engagement and this Agreement shall continue, subject to Section 8(c), for the
balance of such term; PROVIDED, HOWEVER, that if Xxxxxx and Xxx both die or
become Disabled during the Initial Term or the Renewal Term, then the Manager's
engagement and this Agreement shall terminate automatically as of the date both
Xxxxxx and Fox are terminated as a result of their being deceased or the date
that either is terminated in accordance with Section 8(b) due to their
disability, whichever date is later. If both Xxxxxx and Xxx'x engagement are
terminated due either to their respective deaths and/or disabilities, then the
Company shall only be obligated to pay the Manager the portion of the Management
Fee provided for in Section 4(a) that has accrued to the effective date of such
termination; PROVIDED, HOWEVER, that upon such termination, their respective
options and other rights that would have vested within one year of such date
shall be deemed vested.
(b) For purposes of this Agreement, the term "Disabled" shall mean that
Xxxxxx or Fox has suffered a disability which, in fact, prevents him from
substantially performing his duties hereunder for a period of 180 consecutive
days or 230 days in the aggregate, in any period of 12 consecutive months. In
such event, the Company may terminate Hirsch's or Xxx'x services hereunder only
by a written notice to either, as applicable, setting forth the grounds for such
termination with specificity, which termination will take effect 30 days after
such notice is given. Xxxxxx or Fox 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 Hirsch's or Xxx'x disability for the purposes of this Agreement
shall be determined by a physician mutually selected by the Company and Xxxxxx
or Fox, as the case may be, and Xxxxxx and Xxx agree to submit to an examination
by such physician for purposes of such determination.
(c) If Hirsch's engagement is terminated due to his death or disability
or due to a Cause Reduction Event during either the Initial Term or the Renewal
Term, as the case may be (and Fox's engagement continues), then the Management
Fee to be paid under Section 4(a) shall be reduced to $500,000 as of the date of
such termination. If Fox's engagement is terminated due to his death or
disability or due to a Cause Reduction Event during either the Initial Term or
the Renewal Term, as the case may be (and Hirsch's engagement continues), then
the Management Fee to be paid under Section 4(a) shall be reduced to $950,000 as
of the date of termination.
9. NO LIABILITY. The Company hereby agrees to indemnify each
Indemnified Party to the fullest extent permitted by law from and against all
losses, liabilities, damages, deficiencies, demands, claims, actions, judgments
or causes of
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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 Indemnified Party in any
action or proceeding) based upon, arising out of or otherwise in respect of each
Executive's services as, and/or for activities engaged in by each Executive
while each Executive is, an officer and/or director of the Company or any
affiliate thereof, including either paying or reimbursing each Executive,
promptly after request, for any reasonable and documented expenses and
attorney's fees and costs actually incurred by each 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 (other than any claim, action, suit or proceeding
brought by the former principals of Xxxxxx Xxxxx & Xxxxxx + Company against the
Manager or the Executives); PROVIDED, however, that no such indemnification
shall be paid for damages or losses incurred by each 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 gross negligence, bad
faith or misconduct. This indemnity shall survive the termination of this
Agreement. The Company represents and warrants that it has $15 million dollars
of director's and officer's insurance available on the date hereof and that it
will use its reasonable commercial efforts to maintain such policy throughout
the Term; provided further that the Company shall obtain "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 for a
period of not less than six (6) years after the Effective Date.
10. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
facsimile transmission or sent by certified, registered or express mail, postage
prepaid. Any such notice shall be deemed given when so delivered personally or
sent by facsimile transmission or, if mailed, five days after the date of
deposit in the United States mails, as follows:
(A) IF TO THE COMPANY TO:
The Penn Traffic Company
0000 Xxxxx Xxxx Xxxxxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
(B) IF TO MANAGER OR THE EXECUTIVES TO:
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Xxxxxx & Fox, L.L.C.
000 Xxxxxxxx Xxxxx Xxxxxx
Xxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
TELEPHONE: (000) 000-0000
FACSIMILE: (000) 000-0000
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
11. GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAW (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
NEW YORK.
12. ASSIGNMENT. This Agreement shall not be assignable by either party
hereto without the express written consent of the other party; PROVIDED, THAT,
Manager may assign this Agreement to any other entity that is controlled by the
Manager or Xxxxxx and Xxx and which entity assumes the obligations of Manager
and provides the services of Xxxxxx and Fox under this Agreement.
13. CONFIDENTIALITY. (a) During the Initial Term, the Renewal Term and
thereafter, each of the Executives and the Manager agree that they shall not,
directly or indirectly, for their 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 or itself make use other than for the sole benefit of the Company, any
material confidential or proprietary information of the Company obtained by him
or it while in the employ or engagement of the Company other than disclosures
made by Executive based on 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 or it will, prior to or
upon the termination of his or its engagement 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 or its possession or
custody or under his or its
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control; PROVIDED, however, that (x) the restrictions of this Paragraph 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 paragraph), (y) the Executive may disclose such information
known generally to the public (without any action on the part of the Executive
prohibited by the restrictions of this paragraph), 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 Manager and/or
either Executive receives a subpoena or other process or order which may require
it or him to disclose any confidential information, the Manager and Executive
agree (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 that is required to be disclosed.
(c) The obligations of the Manager and the Executives under this
Section 13 shall survive any termination of this Agreement.
14. NON-COMPETITION. During the Initial Term and the Renewal Term, if
this Agreement is extended pursuant to Section 2, each of the Executives and
Manager agree that they will not, directly or indirectly, for their 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 the time during the Initial Term or the
Renewal Term, as the case may be, that the Executives or the Manager wish to so
engage; (ii) induce or attempt to induce any person with an annual salary in
excess of $75,000 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 14 shall not prohibit (A) 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 Executives 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); provided,
however, that in the event the Company terminates the Agreement prior to the end
of the Initial Term or the Renewal Term, if
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this Agreement is extended pursuant to Section 2, for reasons other than Cause
and fails to provide the Executives with the payments required by Section 4(b)
and in the manner provided therein, the provisions of this Section shall not
survive such termination.
15. EQUITABLE REMEDIES. The Executives acknowledge that the remedy at
law for any breach or threatened breach of Sections 13 or 14 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. In addition, the Executives
acknowledge and agree that in the event the time limitation or geographic scope
of the restriction set forth in Section 14 is found to be unreasonable by a
court of competent jurisdiction, such time limitation and geographic scope shall
be deemed to be reduced to the broadest area or period as the court may
determine to be reasonable.
16. INTEGRATION. This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior negotiations, understandings and writings, whether oral or
written between the parties hereto relating to the subject matter hereof.
17. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which, when so executed and delivered, shall be an original, but all of which
together constitute one document.
18. 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 Executives, 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 ss. 280G and the regulations
thereunder) or any affiliate of such Person, whether paid or payable or
distributed or distributable pursuant to the terms of this 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 Executives shall be entitled to receive an
additional payment (a "GROSS-UP PAYMENT") in an amount such that after payment
by the Executives 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 Executives retain an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Total Payments.
13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
THE PENN TRAFFIC COMPANY
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President, General Counsel
XXXXXX & XXX, LLC
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Managing Member
/s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxx X. Xxx
-----------------------------------------
Xxxxxx X. Xxx
Ex A-1
AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made effective as of the 29th day
of June, 1999, (hereinafter called the "Date of Grant"), between Penn Traffic
Company, a Delaware corporation (hereinafter called the "Company"), and Xxxx 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 360,000 Common Shares,
subject to adjustment as set forth in the Plan. The purchase price of the Shares
subject to the Option shall be $18.30 per Share (the "Exercise Price").
2. VESTING.
Upon grant, one hundred percent (100%) of the Shares initially covered
by the Option shall be immediately vested and exercisable.
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 Option at any
time prior to the earliest to occur of:
2
(i) the sixth anniversary of the Date of Grant;
(ii) sixty days following the date that the Participant no
longer provides services to the Company pursuant to the Management
Agreement, any amendment, modification or successor to such agreement
or any other similar management or employment agreement for "Cause;" or
(iii) the later of (x) sixty days following the date the
Participant no longer provides services to the Company pursuant to the
Management Agreement, any amendment, modification or successor to such
agreement or any other similar management or employment agreement for
any reason other than "Cause" and (y) the sixth anniversary of the
effective date of the Date of Grant.
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 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
3
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 (i) giving the Participant the right to be
retained in the employ of, or in any consulting relationship to, the Company or
any Affiliate or (ii) in any way affecting the rights of the parties under the
Management Agreement. 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
5
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, 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 the Participant or to
Xxxxxx & Xxx, L.L.C. 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.
6
(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.
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
7
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.
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.
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PENN TRAFFIC COMPANY
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President, General Counsel
OPTIONEE
/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
Ex A-2
AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made effective as of the 29th day
of June, 1999, (hereinafter called the "Date of Grant"), between Penn Traffic
Company, a Delaware corporation (hereinafter called the "Company"), and Xxxxxx
X. Xxx (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 130,000 Common Shares,
subject to adjustment as set forth in the Plan. The purchase price of the Shares
subject to the Option shall be $18.30 per Share (the "Exercise Price").
2. VESTING.
Upon grant, one hundred percent (100%) of the Shares initially covered
by the Option shall be immediately vested and exercisable.
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 Option at any
time prior to the earlier to occur of:
2
(i) the sixth anniversary of the Date of Grant;
(ii) sixty days following the date that the Participant no
longer provides services to the Company pursuant to the Management
Agreement, any amendment, modification or successor to such agreement
or any other similar management or employment agreement for "Cause;" or
(iii) the later of (x) sixty days following the date the
Participant no longer provides services to the Company pursuant to the
Management Agreement, any amendment, modification or successor to such
agreement or any other similar management or employment agreement for
any reason other than "Cause" and (y) the sixth anniversary of the
effective date of the Date of Grant.
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 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
3
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 (i) giving the Participant the right to be
retained in the employ of, or in any consulting relationship to, the Company or
any Affiliate or (ii) in any way affecting the rights of the parties under the
Management Agreement. 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
4
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.
5
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, 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 under the Plan or from any compensation or other amount owing to a
Participant or to Xxxxxx & Xxx, L.L.C. 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.
6
(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.
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
7
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.
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.
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PENN TRAFFIC COMPANY
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President, General Counsel
OPTIONEE
/s/ Xxxxxx X. Xxx
--------------------------------------
Xxxxxx X. Xxx
Ex B-1
AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made effective as of the 29th day
of June, 1999, (hereinafter called the "Date of Grant"), between Penn Traffic
Company, a Delaware corporation (hereinafter called the "Company"), and Xxxx 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 240,000 Common Shares,
subject to adjustment as set forth in the Plan. The purchase price of the Shares
subject to the Option shall be $18.30 per Share (the "Exercise Price").
2. VESTING.
(a) Subject to the Participant's continued employment with the Company,
the Option shall vest and become exercisable with respect to fifty percent (50%)
of the Shares initially covered by the Option on each of the third and fourth
anniversaries of the Date of Grant.
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) If the Participant ceases to provide services to the Company under
2
the Management Agreement for any reason other than the Participant's death or
disability, the Option shall, to the extent not then vested, be canceled by the
Company without consideration and the Vested Portion of the Option shall remain
exercisable for the period set forth in Section 3(a).
(c) Notwithstanding any provision of this Agreement to the contrary, in
the event that the Participant ceases to render services to the Company pursuant
to the Management Agreement as a result of the Participant's death or permanent
disability (as determined in accordance with the Management Agreement), the
Participant (or his beneficiaries) shall be immediately vested in such
additional Shares as would have become vested if the Participant had continued
to render service to the Company pursuant to the Management Agreement for a
period of one year beyond the date the Participant ceases to provide services
pursuant to the Management Agreement.
(d) In the event of a Change of Control (as defined in the Plan) the
Option shall, to the extent not then vested and not previously canceled,
continue to vest and become exercisable in accordance with Section 2(a) and (b)
above notwithstanding such Change of Control.
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 that the Participant no
longer provides services to the Company pursuant to the Management
Agreement, any amendment, modification or successor to such agreement
or any other similar management or employment agreement for "Cause;" or
(iii) the later of (x) sixty days following the date the
Participant no longer provides services to the Company pursuant to the
Management Agreement, any amendment, modification or successor to such
agreement or any other similar management or employment agreement for
any reason other than "Cause" and (y) the sixth anniversary of the
3
effective date of the Date of Grant.
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 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
4
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 Vested Portion of 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 (i) giving the Participant the right to be
retained in the employ of, or in any consulting relationship to, the Company or
any Affiliate or (ii) in any way affecting the rights of the parties under the
Management Agreement. 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.
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.
5
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 or (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, 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
6
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 or Xxxxxx
& Xxx, L.L.C. 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
7
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.
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.
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.
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PENN TRAFFIC COMPANY
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President, General Counsel
OPTIONEE
/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
Ex B-2
AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made effective as of the 29th day
of June, 1999, (hereinafter called the "Date of Grant"), between Penn Traffic
Company, a Delaware corporation (hereinafter called the "Company"), and Xxxxxx
X. Xxx (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 87,000 Common Shares,
subject to adjustment as set forth in the Plan. The purchase price of the Shares
subject to the Option shall be $18.30 per Share (the "Exercise Price").
2. VESTING.
(a) Subject to the Participant's continued employment with the Company,
the Option shall vest and become exercisable with respect to fifty percent (50%)
of the Shares initially covered by the Option on each of the third and fourth
anniversaries of the Date of Grant.
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) If the Participant ceases to provide services to the Company under
2
the Management Agreement for any reason other than the Participant's death or
disability, the Option shall, to the extent not then vested, be canceled by the
Company without consideration and the Vested Portion of the Option shall remain
exercisable for the period set forth in Section 3(a).
(c) Notwithstanding any provision of this Agreement to the contrary, in
the event that the Participant ceases to render services to the Company pursuant
to the Management Agreement as a result of the Participant's death or permanent
disability (as determined in accordance with the Management Agreement), the
Participant (or his beneficiaries) shall be immediately vested in such
additional Shares as would have become vested if the Participant had continued
to render service to the Company pursuant to the Management Agreement for a
period of one year beyond the date the Participant ceases to provide services
pursuant to the Management Agreement.
(d) In the event of a Change of Control (as defined in the Plan) the
Option shall, to the extent not then vested and not previously canceled,
continue to vest and become exercisable in accordance with Section 2(a) and (b)
above notwithstanding such Change of Control.
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 earlier to occur of:
(i) the tenth anniversary of the Date of Grant;
(ii) sixty days following the date that the Participant no
longer provides services to the Company pursuant to the Management
Agreement, any amendment, modification or successor to such agreement
or any other similar management or employment agreement for "Cause;" or
(iii) the later of (x) sixty days following the date the
Participant no longer provides services to the Company pursuant to the
Management Agreement, any amendment, modification or successor to such
agreement or any other similar management or employment agreement for
any reason other than "Cause" and (y) the sixth anniversary of the
3
effective date of the Date of Grant.
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 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
4
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 Vested Portion of 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 (i) giving the Participant the right to be
retained in the employ of, or in any consulting relationship to, the Company or
any Affiliate or (ii) in any way affecting the rights of the parties under the
Management Agreement. 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.
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.
5
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 or (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, 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
6
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 or Xxxxxx
& Xxx, L.L.C. 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
7
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.
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.
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.
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PENN TRAFFIC COMPANY
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President, General Counsel
OPTIONEE
/s/ Xxxxxx X. Xxx
--------------------------------------
Xxxxxx X. Xxx
Ex C-1
AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made effective as of September 22,
1999, (hereinafter called the "Date of Grant"), between Penn Traffic Company, a
Delaware corporation (hereinafter called the "Company"), and Xxxx 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;
WHEREAS, the Company and Xxxxxx & Fox L.L.C. have amended and restated
the Management Agreement between them as of the date hereof (as so amended and
restated, the "Management Agreement");
WHEREAS, 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 240,000 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").
2. VESTING.
One hundred percent (100%) of the Shares initially covered by the
Option shall be immediately vested and exercisable upon the occurrence of a
Section 4(d) Change of Control (as defined in the Management Agreement) on or
before the
2
Determination Date (as defined in the Management Agreement).
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 Option at any
time prior to 180 days following consummation of the Section 4(d) Change of
Control.
(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 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
3
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 (i) giving the Participant the right to be
retained in the employ of, or in any consulting relationship to, the Company or
any Affiliate or (ii) in any way affecting the rights of the parties under the
Management Agreement. 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.
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
4
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, 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
5
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 the Participant or to
Xxxxxx & Xxx, L.L.C. 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
6
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.
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 Section 4(d) 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
7
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.
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PENN TRAFFIC COMPANY
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President, General Counsel
OPTIONEE
/s/ Xxxx X. Xxxxxx
--------------------------------------
Xxxx X. Xxxxxx
Ex. C-2
AWARD AGREEMENT
THIS AGREEMENT (the "Agreement"), is made effective as of September 22,
1999, (hereinafter called the "Date of Grant"), between Penn Traffic Company, a
Delaware corporation (hereinafter called the "Company"), and Xxxxxx X. Xxx
(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;
WHEREAS, the Company and Xxxxxx & Fox L.L.C. have amended and restated
the Management Agreement between them as of the date hereof (as so amended and
restated, the "Management Agreement");
WHEREAS, 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 87,000 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").
2. VESTING.
One hundred percent (100%) of the Shares initially covered by the
Option shall be immediately vested and exercisable upon the occurrence of a
Section 4(d) Change of Control (as defined in the Management Agreement) on or
before the
2
Determination Date (as defined in the Management Agreement).
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 Option at any
time prior to 180 days following consummation of the Section 4(d) Change of
Control.
(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 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
3
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 (i) giving the Participant the right to be
retained in the employ of, or in any consulting relationship to, the Company or
any Affiliate or (ii) in any way affecting the rights of the parties under the
Management Agreement. 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.
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
4
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, whether or not such
notice is or would otherwise have
5
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 under the Plan or from any compensation or other amount owing to a
Participant or to Xxxxxx & Xxx, L.L.C. 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
6
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.
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 Section 4(d) 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.
7
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.
8
IN WITNESS WHEREOF, the parties hereto have executed this Agreement.
PENN TRAFFIC COMPANY
/s/ Xxxxxxx X. Xxxxx
--------------------------------------
By: Xxxxxxx X. Xxxxx
Title: Vice President, General Counsel
OPTIONEE
/s/ Xxxxxx X. Xxx
--------------------------------------
Xxxxxx X. Xxx
Ex D
THE PENN TRAFFIC COMPANY
SUPPLEMENTAL RETIREMENT PLAN
FOR
NON-EMPLOYEE EXECUTIVES
TABLE OF CONTENTS
Article I Establishment, Purpose and Effective Date of Plan....................1
1.1 Establishment........................................................1
1.2 Purpose..............................................................1
1.3 Effective Date.......................................................1
Article II Definitions.........................................................1
2.1 Definitions..........................................................1
2.2 Other Defined Terms..................................................4
2.3 Gender and Number....................................................4
Article III Vesting............................................................4
3.1 Vesting..............................................................4
Article IV Accounts and Credits To Accounts....................................4
4.1 Accounts.............................................................4
4.2 Basic Pay-Based Credits..............................................4
4.3 Interest Credits.....................................................5
4.4 Opening Account Balance..............................................5
Article V Retirement Benefits..................................................6
5.1 Normal Retirement Benefit............................................6
5.2 Late Retirement Benefit..............................................6
5.3 Early Retirement Benefit.............................................6
5.4 Disability Benefit...................................................7
5.5 Form of Benefit......................................................7
5.6 Payment of Normal Retirement Benefit.................................8
5.7 Termination Prior to Normal Retirement...............................8
5.8 Limitation on Annual Benefits.......................................10
Article VI Claims Procedure...................................................11
6.1 Written Request.....................................................11
6.2 Notice of Denial....................................................11
6.3 Content of Notice...................................................11
6.4 Review Procedures...................................................12
6.5 Decision on Review..................................................12
Article VII General Provisions................................................13
7.1 Administration......................................................13
7.2 Funding.............................................................13
7.3 No Employment Contract..............................................13
7.4 Spendthrift Provision...............................................14
7.5 Binding Effect......................................................14
i
7.6 Applicable Law......................................................14
7.7 Administrative Discretion...........................................14
7.8 Withholding.........................................................14
7.9 Severability........................................................15
7.10 Amendment and Termination...........................................15
7.11 Titles and Headings Not to Control..................................16
7.12 Small Benefits......................................................16
EXHIBIT A Actuarial Equivalence Factors
EXHIBIT B Beneficiary Designations
FORM I Beneficiary Designation
FORM II Beneficiary Designation for 50% or 100% Joint and Survivor Annuity
FORM III Beneficiary Designation for 10 Year Certain Life Annuity
ii
THE PENN TRAFFIC COMPANY
SUPPLEMENTAL RETIREMENT PLAN
FOR
NON-EMPLOYEE EXECUTIVES
ARTICLE I
ESTABLISHMENT, PURPOSE AND EFFECTIVE DATE OF PLAN
1.1 ESTABLISHMENT. The Penn Traffic Company ("Company"), a Delaware
corporation, hereby establishes a supplemental retirement program for
certain non-employee executives, which shall be known as The Penn
Traffic Company Supplemental Retirement Plan For Non-Employee
Executives ("Plan").
1.2 PURPOSE. The purpose of the Plan is to provide to the Executives named
in Exhibit "A", as amended from time to time, retirement income.
Payment of the retirement benefits under this Plan shall be made from
the general assets of the Company, or by such other method as is
consistent with Section 7.2 of this Plan and which is agreed to by the
Executives and the Company.
1.3 EFFECTIVE DATE. The Plan shall be effective as of June 29, 1999.
ARTICLE II
DEFINITIONS
2.1 DEFINITIONS. Whenever used herein, the following terms shall have their
respective meanings set forth below:
(A) "Account" means the bookkeeping account established and
maintained with respect to an Executive pursuant to Section
4.1.
(B) "Accrued Benefit" means, with respect to an Executive, the
monthly benefit determined in accordance with Section 5.1,
payable in the form of a single life annuity commencing at
Normal Retirement Date, or, if later, actual Termination Date.
(C) "Actuarial Equivalent", means with respect to a specified
annuity or benefit, another annuity or benefit commencing at a
different date and/or payable in a different form, but which
has the same present value when computed using the applicable
mortality and interest rate assumptions set forth in Exhibit
A, attached hereto.
(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) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any regulations relating thereto.
(G) "Committee" means the Compensation and Stock Option Committee
of the Board.
(H) "Company" means The Penn Traffic Company, a Delaware
corporation.
(I) "Compensation" means (i) with respect to Xxxx X. Xxxxxx,
$950,000 per annum and (ii) with respect to Xxxxxx X. Xxx,
$500,000 per annum, prorated by days for the short year in
which their Termination Date occurs.
(J) "Corporate Plan" means The Penn Traffic Company Cash Balance
Pension Plan.
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(K) "Disability" means being Disabled under Section 8(b) of the
Management Agreement.
(L) "Effective Date" means June 29, 1999.
(M) "Executive" means Xxxx X. Xxxxxx ("Xxxxxx") and Xxxxxx X. Xxx
("Fox").
(N) "Interest Credits" means additions to an Executive's Account
determined pursuant to Section 4.3. Interest Credits shall be
earned each Plan Year based on the "Applicable Interest Rate"
as defined in Exhibit A, attached hereto.
(O) "Management Agreement" means the management agreement between
the Company and Xxxxxx & Xxx, L.L.C. dated June 29, 1999 and
any extension or renewal thereof, or successor agreement
thereto.
(P) "Normal Retirement Date" means the first day of the month
coinciding with or next following the date the Executive
attains age 65.
(Q) "Opening Account Balance" means the initial bookkeeping
account established pursuant to Section 4.4 of the Plan.
(R) "Pay-Based Credit" means additions to an Executive's Account
determined pursuant to Section 4.2.
(S) "Plan" means The Penn Traffic Company Supplemental Retirement
Plan for Non-Employee Executives, as amended from time to
time.
(T) "Plan Year" means the period June 29, 1999 through December
31, 1999 and each subsequent twelve-month period from January
1st through December 31st for which this Plan is in effect.
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(U) "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.
(V) "Surviving Spouse" means a person who is married to the
Executive at the date of his death, provided the Executive was
married to that person throughout the one-year period ending
on the date of his death.
(W) "Termination Date" means the date on which the Executive
ceases to provide services to the Company under the Management
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.
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 this Plan shall be fully vested and
nonforfeitable at all times.
ARTICLE IV
ACCOUNTS AND CREDITS TO ACCOUNTS
4.1 Accounts.
(B) When an Account is initially established for an Executive, the
Account shall be credited with an Opening Account Balance in accordance
with Section 4.4
4.2 BASIC PAY-BASED CREDITS. An Executive shall accrue a Pay-Based Credit
under this Section 4.2 for each Plan Year. The amount of the Pay-Based
Credit for an Executive shall be three percent (3%) of the Executive's
Compensation for such Plan Year. The
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determination of the amount creditable hereunder for a Plan Year shall
be made as of the last day of the Plan Year.
4.3 INTEREST CREDITS. Each Plan Year each Executive's 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 5%. Such Interest Credits shall continue after the
Executive's Termination Date, provided, however, that no Interest
Credits shall be made to an Executive's Account for any Plan Year
beginning on or after the date on which payment of his benefit
commences. For the Plan Year in which the Executive's benefit
commencement date occurs, 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 commencement occurs.
4.4 OPENING ACCOUNT BALANCE. Fox shall have an Opening Account Balance as
of the Effective Date which shall be reflected in an initial
bookkeeping account established on his behalf. Fox's Opening Account
Balance shall be $175,000.
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ARTICLE V
RETIREMENT BENEFITS
5.1 NORMAL RETIREMENT BENEFIT. An Executive whose Termination Date is on or
after his Normal Retirement Date shall be entitled to receive a "Normal
Retirement Benefit" commencing on his Normal Retirement Date. An
Executive's Normal Retirement Benefit shall be the monthly benefit
payable as a single life annuity which is the Actuarial Equivalent of
the Executive's Account value as of the Executive's Normal Retirement
Date. An Executive's Accrued Benefit as of any date prior to the
Executive's Normal Retirement Date shall be the monthly benefit payable
as a single life annuity which is the Actuarial Equivalent of the
Executive's Account value at the date of determination projected to the
value it would have at the Executive's Normal Retirement Date assuming
additional Interest Credits continue to be made to the Account through
the Executive's Normal Retirement Date.
5.2 LATE RETIREMENT BENEFIT. If an Executive remains employed beyond his
Normal Retirement Date, he shall be entitled to receive a retirement
benefit equal to the greater of (i) the monthly benefit payable as a
single life annuity that is the Actuarial Equivalent of the value of
his Account as of his actual retirement date, considering all Pay-Based
Credits and Interest Credits thereto after his Normal Retirement Date,
or (ii) the Actuarial Equivalent of his Normal Retirement Benefit
computed at Normal Retirement Date, but based on payment commencing at
the time of actual retirement.
5.3 EARLY RETIREMENT BENEFIT. An Executive who has attained age 55 may
elect to retire prior to his Normal Retirement Date. Such an Executive
shall receive a retirement benefit commencing at Normal Retirement Date
equal to his Normal Retirement Benefit.
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5.4 DISABILITY BENEFIT. An Executive who incurs a Disability prior to his
Termination Date has a right to a Retirement Benefit. Such a Disabled
Executive, or an Executive who, subsequent to his Termination Date
becomes Disabled, shall be entitled to receive a Retirement Benefit
payable as of the first day of any month subsequent to the
determination of Disability under the Management Agreement. The amount
of the disability benefit shall be the Actuarial Equivalent of the
Normal Retirement Benefit.
5.5 FORM OF BENEFIT. At least six months prior to the Executive's
Termination Date, or, subject to the consent of the Committee, at any
time prior to the Executive's Termination Date, the Executive may elect
to receive his Retirement Benefit in one of the following forms:
(B) a 50% joint and survivor annuity, payable monthly,
(D) a single life annuity, payable monthly, with 10 years
certain; or Each of the optional forms of benefit under Sections 5.5(B)
through (E) above, shall be the Actuarial Equivalent of the Executive's
Retirement Benefit. Unless the Executive shall have otherwise elected
as described above, the Executive's Retirement Benefit shall be paid in
a single lump sum, notwithstanding any other provision of the Plan. For
the joint and survivor options in Section 5.5(B) and (C) above, the
Executive shall designate a single Beneficiary before the commencement
date described in Section 5.6 ("commencement date"). The designation
may be changed up to the commencement date, but not thereafter. Thus,
no survivor benefits shall be payable if the Beneficiary predeceases
the Executive after the commencement date. For purposes of any benefit
payable upon the Executive's death prior to the commencement of his
benefit payments
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and for purposes of the 10-year certain option in Section 5.5(D), (i)
the Executive may designate one or more primary Beneficiaries and one
or more secondary Beneficiaries; (ii) the designation may be changed up
to the Executive's date of death; and (iii) if no designated
Beneficiary survives the Executive, any payments due as the result of
the Executive's death prior to the commencement of payments or due for
the remainder of the10-year period shall be paid to the Executive's
estate. Sample Beneficiary designations are attached at Exhibit B.
5.6 PAYMENT OF NORMAL RETIREMENT BENEFIT. Once the Executive has reached
the Executive's Normal Retirement Date, payment of the Retirement
Benefit shall commence on the first day of the month following the
month in which the Termination Date occurs. Other than in the case of a
lump sum payment, payment of the Retirement Benefit shall cease as of
the first day of the month following the death of the Executive or the
Executive's Beneficiary, as the case may be, except when paid in the
form of a single life annuity with 10 years certain and the Executive
dies prior to the receipt of 120 monthly payments, in which case
payments shall cease upon payment of the 120th monthly payment.
5.7 TERMINATION PRIOR TO NORMAL RETIREMENT. In the event the Executive's
Termination Date is prior to the Executive's Normal Retirement Date,
the Executive shall be entitled to be paid his Retirement Benefit
pursuant to this Article V as follows:
(A) EARLY RETIREMENT. In the event the Executive's Termination
Date is after he has attained at least age fifty-five (55),
the Executive shall be entitled to receive his Retirement
Benefit. The Retirement Benefit shall be determined by: (i)
applying
8
the formula in Section 4.1 as of the date benefits commence
("early retirement date"); and (ii) reducing the resulting
amount by one-third of one percent (1/3%) for each month by
which the early retirement date precedes the Executive's
sixty-fifth (65th) birthday. In the event the Executive's
Termination Date is before January 1, 2003 and before he has
attained age 55, the Executive shall be entitled to receive,
upon reaching age 55, the reduced Retirement Benefit described
in the preceding sentence.
(B) EARLY PAYMENT. In lieu of a Retirement Benefit commencing at
Normal Retirement Date or an Early Retirement Benefit,
described in Subsection (A), above, an Executive may elect
early payment of the Actuarial Equivalent of his Normal
Retirement Benefit in a lump sum or annuity form of payment.
Such benefit may commence at the later of January 1, 2003 or
the first day of the month following his Termination Date.
(C) DEATH. If the Executive dies prior to the commencement of any
benefit payments under this Plan whether before or after his
Termination Date, the Executive's Beneficiary shall be
entitled to commence payment of a death benefit as of the
first day of any month after the Executive's death. Unless the
Beneficiary elects a form of benefit payment listed under
Section 5.5(A) through (D), the death benefit shall be payable
in a single lump sum in an amount which is the Actuarial
Equivalent of the Executive's Account value at the date of his
death increased by any Interest Credits made under the Plan
prior to the date on which distribution of the benefit is made
or commences. The foregoing rules regarding the payment of
9
death benefits under the Plan also shall apply if the
Executive's Termination Date is after his Normal Retirement
Date and the Executive dies before the payment of benefits
commences under the Plan.
(D) DEATH AFTER BENEFIT PAYMENTS Commence. If the Executive dies
after the commencement of benefit payments under this Plan,
benefits shall continue to the extent called for under the
optional form of benefit which had previously commenced.
5.8 LIMITATION ON ANNUAL BENEFITS. Notwithstanding anything to the contrary
set forth herein, the annual "pension expense" of the Company with
respect to this Plan for any Plan Year with respect to the Executives
as of the Effective Date shall not exceed $100,000 (or, for any Plan
Year consisting of less than twelve (12) months, the product of (A)
$100,000 and (B) a fraction, the numerator of which is the number of
full months in such short Plan Year, and the denominator of which is
twelve) ("Annual Limit"). For purposes of this Section 5.8, the term
"pension expense" shall mean the annual pension expense of the Company
as determined pursuant to Financial Accounting Standard #87, as
calculated by the Company's regular independent accounting firm. In the
event the Company's annual pension expense, determined in the absence
of this Section 5.8, would exceed the Annual Limit (the "Excess Pension
Expense"), the benefit of the Executives accrued for such Plan Year
shall be reduced in the following manner:
(i) by reducing the Interest Credits under Section 4.1 by
50% of the Excess Pension Expense and allocating the
reduction in proportion to the amount
10
of such Interest Credits attributable to each
Executive prior to the reduction mandated by this
Section 5.8; and
(ii) by reducing the Pay-Based Credits under Section 4.2
by 50% of the Excess Pension Expense and allocating
the reduction in proportion to the Pay-Based Credit
for each Executive prior to the application of the
reduction mandated by this Section 5.8.
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. In this
Article VI, the Executive and his Beneficiaries are referred to
collectively as claimants.
6.2 NOTICE OF DENIAL. If the Committee denies a claim in whole or in part,
it shall send the claimant a written notice of the denial within 90
days after the date if receives a claim, unless it needs additional
time to make its decision. In that case, the Committee may authorize an
extension of up to an additional 90 days, if it notifies the claimant
of the extension within the initial 90-day period. The extension notice
shall state the reasons for the extension and the expected decision
date.
6.3 CONTENT OF NOTICE. A denial notice shall be written in a manner
calculated to be understood by the claimant and shall contain:
(A) the specific reason or reasons for the denial of the claim;
(B) specific reference to pertinent Plan provisions upon which the
denial is based ;
(C) a description of any additional material or information
necessary to perfect the claim, with an explanation of why the
material or information is necessary; and
11
(D) an explanation of the review procedures provided below.
6.4 REVIEW PROCEDURES.
(A) Within 60 days after the claimant receives a denial notice,
the claimant may file a request for review with the Committee.
Any such request must b made in writing.
(B) A Claimant who timely requests a review shall have the right
to review pertinent documents, to submit additional
information or written comments, and to be represented.
6.5 DECISION ON REVIEW.
(a) The Committee shall send the claimant a written decision on
any request for review within 60 days after the date it
receives a request for review, unless an extension of time is
needed, due to special circumstances. In that case, the
Committee may authorize an extension of up to an additional 60
days, provided it notifies the claimant of the extension
within the initial 60-day period.
(b) The review decision shall be written in a manner calculated to
be understood by the claimant and shall contain:
(i) the specific reason or reasons for the decision; and
(ii) specific reference to the pertinent Plan provisions
upon which the decision is based.
(c) If the Committee does not send the claimant a review decision
within the applicable time period, the claim shall be deemed
denied on review.
(d) The review decision (including a deemed decision) shall be the
Committee's final decision.
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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 tables, valuations certificates, opinions and reports
furnished by any actuary, 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 this 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 this Plan will be an unfunded deferred
compensation plan solely for the benefit of non-employee executives 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 this
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 this Plan shall be
construed as a contract of employment between the Company and the
Executive or as a limitation on the right of
13
the Company to terminate, discontinue , or fail to renew or extend the
Management 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 this Plan.
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. This Plan shall be binding upon and inure to the
benefit of the Executives, their Surviving Spouses 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.
7.7 ADMINISTRATIVE DISCRETION. The Plan shall be administered by the
Committee.
7.8 WITHHOLDING. Any payment made pursuant to this 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. In addition, as the Retirement Benefit accrues during the
period of time that the Executive provides services to the Company
14
under the Management Agreement, the regular payments that the Company
makes to Xxxxxx & Xxx LLC 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 to
withhold on the accrual of benefits. The Company and Xxxxxx & Fox LLC
shall make such arrangements as are necessary and appropriate, in the
judgment of the Committee, to assure that the proper amount of federal
and state income, FICA or other employee payment, withholding or
similar tax has been withheld and reported to the appropriate
governmental authority or authorities without duplication.
7.9 SEVERABILITY. If one or more provisions of this 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 effect the validity and enforceability of any
other Plan provision or any part thereof.
7.10 AMENDMENT AND TERMINATION. The Company intends to maintain this Plan
until all benefit payments are made pursuant to the Plan. However,
except as otherwise required by the Management Agreement, the Company
reserves the right, in its sole discretion, to amend, suspend, or
terminate the Plan at any time or from time to time, in whole or in
part. Any such amendment, suspension or termination shall be made
pursuant to resolutions of the Board. No amendment, suspension, or
termination of the Plan shall affect directly or indirectly the rights
of an Executive who has become vested in his Plan benefits prior to the
effective date of the resolution amending, suspending, or terminating
15
the Plan. (However, if the Plan is terminated, an Executive's benefit
shall be based on Compensation and Years of Service as of the
termination date.) Further, the Company, in the sole discretion of the
Board, may pay such Executive, in a lump sum, the actuarial equivalent
of the benefit provided by the Plan in complete satisfaction of its
obligations under the Plan. Notwithstanding any other provision in the
Plan to the contrary, the Plan shall terminate automatically upon the
final payment of all amounts payable hereunder.
7.11 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 that such titles or headings, shall control.
7.12 SMALL BENEFITS. If any monthly benefit that shall be payable to any
person under the Plan shall be less than $400, then, if the Committee
shall so direct, the aggregate of the amounts which shall be payable to
such person in any year shall be paid in quarterly, semiannual or
annual installments. If the present value of the accrued benefit of any
Executive whose Termination Date is prior to age 55 is less than
$3,500, then the Committee may at any time direct that the actuarial
equivalent of such benefits (determined using the assumptions under
Section 7.10 hereof) shall be paid to his in a lump sum in lieu of any
benefits to which he may be entitled under this Plan.
THE PENN TRAFFIC COMPANY
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx, Xx.
Vice President and Assistant Secretary
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EXHIBIT A
ACTUARIAL EQUIVALENCE FACTORS
The interest rate, mortality table and other factors, if any, applicable for
purposes of determining an Actuarial Equivalent benefit under Plan shall be
determined in accordance with the applicable section of this Exhibit A as set
forth below.
For purposes of this Exhibit A, "APPLICABLE MORTALITY TABLE" means the mortality
table prescribed by the Internal Revenue Service, which shall be based on the
prevailing commissioner's standard table (described in ss.807(d)(5)(A) of the
Code) used to determine reserves for group annuity contracts issued on the date
as of which a present value is determined (without regard to any other
subparagraph of ss.807(d)(5) of the Code) as specified by the Internal Revenue
Service.
Also for purposes of this Exhibit A, "APPLICABLE INTEREST RATE" means, for a
Plan Year, the annual rate of interest on 30-year Treasury securities as
specified by the Internal Revenue Service for August of the preceding Plan Year,
in revenue rulings, notices or other guidance published in the Internal Revenue
Bulletin.
LUMP SUM VALUE OF ACCRUED BENEFIT - For purposes of determining the Actuarially
Equivalent lump sum value as of any determination date of a Participant's
Accrued Benefit under the Plan, Actuarial Equivalence will be based upon
the following:
MORTALITY: Applicable Mortality Table
INTEREST RATE: Applicable Interest Rate
CONVERSION OF ACCOUNT TO SINGLE-LIFE ANNUITY - For purposes of determining the
Actuarially Equivalent single life annuity value of a Participant's Account
under the Plan, Actuarial Equivalence will be based upon the following:
MORTALITY: Applicable Mortality Table
INTEREST RATE: Applicable Interest Rate
OPTIONAL FORMS - For purposes of converting a single life annuity to an
Actuarially Equivalent optional form of payment under the Plan, other than
a lump sum, Actuarial Equivalence will be based upon the following:
MORTALITY: 1983 GAM (Unisex Table)
INTEREST RATE: 7%
REDUCTION FOR EARLY RETIREMENT BENEFIT PAYMENTS PRIOR TO NORMAL RETIREMENT AGE -
A Participant's Accrued Benefit shall be reduced by 5% for each year (or
5/12% for each full month) prior to Normal Retirement Date that such
benefit is paid.
OTHER ACTUARIAL EQUIVALENCE DETERMINATIONS. The Applicable Interest Rate and
the Applicable Mortality Table shall be used for all other actuarial
equivalence determinations.
2
EXHIBIT B
Beneficiary Designations
1. Sample Beneficiary Form I is to be used for the Executive to designate
one or more Beneficiaries to receive his benefit under the Plan if he
dies prior to commencement of his benefit payments.
2. Sample Beneficiary Form II is to be used if the Executive's benefits
will be paid as a 50% or 100% joint and survivor annuity.
3. Sample Beneficiary Form III is to be used if the Executive's benefits
will be paid as a single life annuity with 10 years certain life
annuity.
3
FORM I
THE PENN TRAFFIC COMPANY
EXECUTIVES' RETIREMENT PLAN
BENEFICIARY DESIGNATION
Executive:_____________________ Social Security Number:_______________
Primary Beneficiary:__________________________________________
Social Security Number:_______________________________________
Relationship:___________________________________________________________________
Address:________________________________________________________________________
INSTRUCTION: USE THE FOLLOWING SPACE TO PROVIDE THIS SAME INFORMATION ABOUT
ADDITIONAL PRIMARY BENEFICIARIES, IF YOU WISH TO NAME MORE THAN ON PRIMARY
BENEFICIARY. FOLLOWING THIS SAME INSTRUCTION BELOW, IF YOU WISH TO NAME MORE
THAN ONE CONTINGENT BENEFICIARY.
Contingent Beneficiary:_______________________________________
Social Security Number:_______________________________________
Relationship:___________________________________________________________________
Address:________________________________________________________________________
Date:___________________ ____________________________________
FORM II
THE PENN TRAFFIC COMPANY
EXECUTIVES' RETIREMENT PLAN
BENEFICIARY DESIGNATION FOR 50% OR 100% JOINT AND SURVIVOR ANNUITY
Executive:_____________________________________
Social Security Number:________________________
Beneficiary:___________________________________
Social Security Number:________________________
Relationship:___________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
Date:___________________ ___________________________________
FORM III
THE PENN TRAFFIC COMPANY
EXECUTIVES' RETIREMENT PLAN
BENEFICIARY DESIGNATION FOR 10 YEAR CERTAIN LIFE ANNUITY
Executive:________________ Social Security Number:_______________
Primary Beneficiary:__________________________________________
Social Security Number:_______________________________________
Relationship:___________________________________________________________________
Address:________________________________________________________________________
INSTRUCTION: USE THE FOLLOWING SPACE TO PROVIDE THIS SAME INFORMATION ABOUT
ADDITIONAL PRIMARY BENEFICIARIES, IF YOU WISH TO NAME MORE THAN ON PRIMARY
BENEFICIARY. FOLLOWING THIS SAME INSTRUCTION BELOW, IF YOU WISH TO NAME MORE
THAN ONE CONTINGENT BENEFICIARY.
Contingent Beneficiary:__________________________________
Social Security Number:__________________________________
Relationship:___________________________________________________________________
Address:________________________________________________________________________
Date:___________________ ________________________________
