<PAGE>
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
THE PENN TRAFFIC COMPANY
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(Name of Registrant as Specified in Its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-(6)(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
THE PENN TRAFFIC COMPANY
Notice of Annual Meeting of Stockholders
June 4, 1996
The Annual Meeting of Stockholders of The Penn Traffic Company (the
"Company") will be held on Tuesday, June 4, 1996, at 1:30 p.m., Columbus time,
at the Hyatt Capitol Square, 75 East State Street, Columbus, Ohio, 43215, for
the following purposes:
1. To elect two directors for terms expiring in 1999;
2. To consider and take action upon a proposal to approve the Company's
Amended and Restated Directors' Stock Option Plan;
3. To consider and take action upon a proposal to ratify the selection of
Price Waterhouse LLP, independent certified public accountants, as the
Company's auditors for the fiscal year ending February 1, 1997; and
4. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Holders of Common Stock of the Company are entitled to vote for the
election of directors and on each of the other matters set forth above.
The stock transfer books of the Company will not be closed. The Board of
Directors has fixed the close of business on April 17, 1996 as the record date
for determining stockholders entitled to notice of and to vote at the meeting.
You are cordially invited to attend the meeting in person. A report will be
made to you on the status of the Company's affairs. We will also provide you
with an opportunity for questions and comments.
By Order of the Board of Directors
EUGENE R. SUNDERHAFT
Senior Vice President - Finance
and Secretary
May 1, 1996
Syracuse, New York
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IMPORTANT
Whether or not you expect to attend the meeting in person, please complete,
date and sign the enclosed form of proxy and return it without delay in the
enclosed envelope. Your proxy can be revoked at any time prior to its being
voted by giving written notice of revocation to the Secretary of the Company, by
giving a later dated proxy, or by voting at the meeting in person.
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<PAGE>
THE PENN TRAFFIC COMPANY
1200 State Fair Boulevard
Syracuse, New York 13221-4737
PROXY STATEMENT
Annual Meeting of Stockholders
June 4, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of The Penn Traffic Company, a Delaware
corporation (the "Company" or "Penn Traffic"), for use at the Annual Meeting of
Stockholders to be held on Tuesday, June 4, 1996, at 1:30 p.m., Columbus time,
at the Hyatt Capitol Square, 75 East State Street, Columbus, Ohio, 43215. The
approximate date on which this Proxy Statement is first being mailed to
stockholders is May 1, 1996.
You are requested to complete, date and sign the accompanying proxy card
and return it promptly to the Company in the envelope provided. Proxies duly
executed and received in time for the meeting will be voted in accordance with
the instructions thereon. Any stockholder who has given a proxy may revoke it
at any time prior to its being voted by giving written notice of revocation to
the Secretary of the Company, by giving a later dated proxy, or by voting at the
meeting in person.
The Board of Directors has fixed the close of business on April 17, 1996 as
the record date for the determination of stockholders who are entitled to notice
of and to vote at the meeting. The stock transfer books of the Company will not
be closed. As of the record date, the Company had outstanding 10,911,345 shares
of common stock, par value $1.25 per share (the "Common Stock"), the holders of
which are entitled to one vote per share. The total amount of outstanding
shares includes 299,600 shares of restricted stock awarded to certain employees
under the Company's 1993 Long-Term Incentive Plan (the "1993 Plan"). Vesting of
the shares of restricted stock granted pursuant to such awards is contingent
upon the attainment of specified performance goals.
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<PAGE>
1. ELECTION OF DIRECTORS
Pursuant to the Company's certificate of incorporation and by-laws, the
Board of Directors is divided into three separate classes of directors, which
are required to be as nearly equal as practicable. At each annual meeting of
stockholders, one class of directors is elected to a term of three years. On
June 7, 1995, pursuant to the Company's certificate of incorporation and by-
laws, the Board of Directors determined that, effective upon the accession to
office of directors elected at the 1995 Annual Meeting, the total number of
directors would be fixed at eight.
Martin A. Fox and Harold S. Poster have been nominated by the Board of
Directors for election as directors at the 1996 Annual Meeting, each to serve
for a term of three years, until the 1999 Annual Meeting of Stockholders and
until his successor is duly elected and qualified.
The persons named in the accompanying proxy card have advised that, unless
a contrary direction is indicated on the proxy card, they intend to vote for the
election of the nominees proposed by the Board of Directors. If no directions
are indicated, such shares will be voted as recommended by the Board of
Directors. They have also advised that in the event any nominee is unable or
unwilling to serve for any reason not presently known, they will vote for such
substitute nominee as the Board of Directors may propose. Each nominee has
consented to be named as a nominee and has agreed to serve if elected.
Directors will be elected by an affirmative vote of a plurality of the
shares of Common Stock present in person or represented by proxy and entitled to
vote at the 1996 Annual Meeting. Thus, those nominees who receive the highest
and second-highest numbers of votes for their election as directors will be
elected, regardless of the number of shares that are not voted for the election
of such nominees. Shares with respect to which authority to vote for any
nominee or nominees is withheld will not be counted in the total number of
shares voted for such nominee or nominees.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" ELECTION OF
MARTIN A. FOX AND HAROLD S. POSTER AS DIRECTORS OF THE COMPANY.
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<PAGE>
The following information includes the age, the year in which first elected
as a director of the Company and the principal occupation and other
directorships of each of the nominees named for election as directors, and of
the other current directors of the Company whose terms will not expire until
1997 or 1998.
Nominee for Election: Mr. Fox has been Vice Chairman - Finance of
Martin A. Fox the Company since February 1993. Mr. Fox was
Age: 42 a Vice President of the Company from 1989
Director and Vice until February 1993. Mr. Fox has been
Chairman - Finance Assistant Secretary of Penn Traffic since
since 1993 1989. Mr. Fox has been Executive Vice
President of Miller Tabak Hirsch + Co.
("MTH") (broker-dealer) since 1988. Mr. Fox
was a Vice President of Grand Union Holdings
Corporation (food distribution holding
company) ("Grand Union Holdings") between
1989 and March 1996, a Director of Grand
Union Holdings between 1992 and March 1996
and a Director and Vice President of certain
of Grand Union Holdings' subsidiaries for
certain periods between 1989 and March 1996.
Nominee for Election: Mr. Poster has been a partner in the law firm
Harold S. Poster of Gilmartin, Poster & Shafto since
Age: 51 July 1991. He was a partner in the law firm
Director since 1988 of Solomon & Fornari, P.C. from January 1990
until July 1991.
Eugene A. DePalma Mr. DePalma has been Chief Executive Officer
Age: 60 of Sausage Acquisition Company (food
Director since 1987 processing) since April 1994. From October
Term Expires 1997 1991 until April 1994, Mr. DePalma was
engaged in the management of private affairs.
Mr. DePalma was Vice President, Sales for
Teledyne Continental Motors from January 1991
until October 1991. From April 1990 until
January 1991, Mr. DePalma was engaged in the
management of private affairs. Mr. DePalma
was the Chairman and Chief Executive Officer
of Van Dusen Airport Services Company,
Limited Partnership (aviation services) from
December 1986 until April 1990. Mr. DePalma
became President and Chief Operating Officer
of Van Dusen Air Incorporated ("VDAI")
(aviation services) in 1983 and held other
executive officer positions with VDAI between
1974 and 1983.
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<PAGE>
John T. Dixon Mr. Dixon has been President and Chief
Age: 56 Executive Officer of the Company since January
Director since 1995. Mr. Dixon was a Vice President of Penn
December 1994 Traffic and President of the P&C Foods division
Term Expires 1998 from 1993 until January 1995. He served as
President of the Quality Markets division from
January 1992 until August 1993 and held various
positions at the Big Bear division between 1957
and 1992.
Susan E. Engel Ms. Engel has been President and Chief
Age: 49 Operating Officer of Department 56, Inc.
Director since 1993 (collectibles and giftware) since September
Term Expires 1997 1994. From September 1993 until September
1994, Ms. Engel was engaged in the management
of private affairs. From July 1991 until
September 1993, Ms. Engel served as President
and Chief Executive Officer of Champion
Products (manufacture and distribution of
active wear), a division of Sara Lee
Corporation. She was a Vice President and
Partner with Booz Allen & Hamilton, Inc. ("Booz
Allen") (management consulting) from 1986 until
October 1991, where she led the firm's retail
consulting practice in the eastern United
States. Ms. Engel held various other positions
with Booz Allen between 1977 and 1986.
Gary D. Hirsch Mr. Hirsch has been Chairman of the Company
Age: 46 since 1987 and has been a general partner of
Director and Chairman the managing partner of MTH since 1982 and a
since 1987 Managing Director of MTH Holdings, Inc. ("MTH
Term Expires 1998 Holdings") since 1983. He is Chairman,
President and a Director of RAC Partners, Inc.
("RAC Partners"), the sole general partner of
Riverside Acquisition Company, Limited
Partnership ("RAC"). Mr. Hirsch was Chairman
and a Director of Grand Union Holdings between
1989 and March 1996 and of certain of Grand
Union Holdings' subsidiaries for certain
periods between 1992 and March 1996.
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<PAGE>
Claude J. Incaudo Mr. Incaudo has been engaged as a consultant to
Age: 62 the Company since January 29, 1995. From
Director since 1988 February 1990 until January 28, 1995, Mr.
Term Expires 1997 Incaudo was President and Chief Executive
Officer of the Company. Mr. Incaudo was the
President of the P&C division between 1982 and
April 1993. He joined P&C in 1977 as Director
of Store Operations and became Senior Vice
President of Store Operations in 1979. Mr.
Incaudo was a Director of Grand Union Holdings
between 1992 and March 1996.
Richard D. Segal Mr. Segal has been Chairman and/or Chief
Age: 42 Executive Officer of Seavest, Inc. (investment
Director since 1988 management) since 1981, Chairman of Encore
Term Expires 1998 Company, Inc. (investment banking) since 1983
and managing general partner of Seavest
Partners (investment portfolio management)
since 1980. Mr. Segal has been a Director of
Hudson General, Inc. (aviation services) since
1978.
There are no family relationships among the directors and executive
officers of the Company.
On January 25, 1995, The Grand Union Company ("Grand Union") filed a
voluntary petition for reorganization under Chapter 11 of the United States
Bankruptcy Code with the United States Bankruptcy Court, District of Delaware
(the "Bankruptcy Court"). Grand Union emerged from Chapter 11 reorganization on
June 15, 1995. On February 6, 1995, an involuntary Chapter 11 petition was
filed in the Bankruptcy Court against Grand Union Capital Corporation ("Grand
Union Capital"), of which Grand Union was a wholly owned subsidiary. On
February 16, 1995, Grand Union Capital consented to the entry of an order for
relief on the involuntary Chapter 11 petition and Grand Union Holdings filed a
voluntary Chapter 11 petition in the Bankruptcy Court. Grand Union Capital and
Grand Union Holdings' Bankruptcy Court proceedings were completed on March 27,
1996. Following completion of these proceedings, Grand Union Capital and Grand
Union Holdings were dissolved. At the time the Chapter 11 petitions were filed,
Messrs. Hirsch and Fox were directors and executive officers of Grand Union,
Grand Union Capital and Grand Union Holdings, and Mr. Incaudo was a director of
Grand Union Holdings. Messrs. Hirsch and Fox resigned as directors and officers
of Grand Union on June 15,
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<PAGE>
1995 and Messrs. Hirsch, Fox and Incaudo ceased to be directors and executive
officers of Grand Union Capital and Grand Union Holdings upon the dissolutions
of these companies on March 27, 1996 and March 28, 1996, respectively.
The Board of Directors of the Company held six meetings in the fiscal year
ended February 3, 1996 ("Fiscal 1996"). Each incumbent director attended more
than 75 percent of the aggregate number of meetings of the Board of Directors of
the Company and of the committees of such Board on which he or she served,
except for Ms. Engel. Ms. Engel was absent from certain meetings of the Board
of Directors and of the committees on which she served (each of which committee
meetings was held on the same day as a Board meeting) due to travel outside the
continental United States.
The current members of the Executive Committee are Messrs. Dixon and
Hirsch. The Executive Committee may exercise certain powers of the Board of
Directors regarding the management and direction of the business and affairs of
the Company when the Board of Directors is not in session. All action taken by
the Executive Committee is reported to and reviewed by the Board of Directors.
The current members of the Personnel and Compensation Committee of the
Board of Directors (the "Compensation Committee") are Messrs. DePalma and Segal.
Mr. Segal is the Chairman of the Compensation Committee. The Compensation
Committee reviews the annual recommendations of the Chief Executive Officer and
the Chairman of the Board of Directors concerning the compensation of officers
of the Company and of certain of the officers and employees of the Company's
divisions, including the compensation plans, retirement plans and fringe
benefits in which such persons participate, and makes reports and
recommendations with respect to such matters to the Board of Directors of the
Company. The Compensation Committee, which held three meetings in Fiscal 1996,
also administers the Company's 1993 Plan.
The current members of the Audit Committee are Mr. DePalma and Ms. Engel.
Mr. DePalma is the Chairman of the Audit Committee. The Audit Committee reviews
and makes reports and recommendations to the Board of Directors with respect to
the selection of the independent auditors of the Company and its subsidiaries,
the arrangements for and the scope of the audits to be performed by them, and
the internal audit activities, accounting procedures and controls of the Company
and its subsidiaries, and reviews the annual
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<PAGE>
consolidated financial statements of the Company and its subsidiaries. The
Audit Committee held three meetings in Fiscal 1996.
The Board of Directors does not have a nominating committee. The Board of
Directors of the Company will consider nominees proposed by stockholders for
election as directors. Stockholder nominations of persons for election as
directors are subject to the notice requirements described below under the
caption "Stockholder Nominations and Proposals."
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information known to Penn Traffic
with respect to beneficial ownership of the Common Stock as of May 1, 1996
(unless otherwise indicated) by: (i) each person who beneficially owns 5% or
more of the Common Stock; (ii) each of the nominees named for election as
director; (iii) each of the other current directors; (iv) each of the executive
officers named in the Summary Compensation Table set forth herein; and (v) all
directors and executive officers as a group. Except as otherwise indicated, the
holders listed below have sole voting and investment power with respect to all
shares beneficially owned by them. For purposes of this table, a person or
group of persons is deemed to have "beneficial ownership" of any shares which
such person or group of persons has the right to acquire within 60 days. For
purposes of computing the percentage of outstanding shares held by each person
or group of persons named below, any security which such person or persons has
the right to acquire within 60 days (including shares which may be acquired upon
exercise of vested portions of stock options) is deemed to be outstanding, but
is not deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.
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<PAGE>
Amount & Nature
Name and Address of of Beneficial Percent
Beneficial Owner Ownership of Class
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Gary D. Hirsch 1,982,028(1)(2) 18.2%
411 Theodore Fremd Avenue
Rye, New York 10580
Riverside Acquisition Company, 933,455(2) 8.6%
Limited Partnership
331 Madison Avenue
New York, New York 10017
Tiger Management Corporation 2,017,800(3) 18.5%
101 Park Avenue
New York, New York 10178
Cramer Rosenthal McGlynn, Inc. 816,768(4) 7.5%
707 Westchester Avenue
White Plains, New York 10604
J.P. Morgan & Co. Incorporated 553,100(5) 5.1%
60 Wall Street
New York, New York 10260
John T. Dixon 44,052(6) *
Martin A. Fox 62,250(2)(7) *
Eugene A. DePalma 12,769(2)(8) *
Susan E. Engel 4,500(9) *
Claude J. Incaudo 115,501(10)(11) 1.1%
Harold S. Poster 12,472(8)(12) *
Richard D. Segal 154,192(2)(8)(13) 1.4%
Stephen V. Breech 12,087(14) *
Roy M. Flood 23,475(15) *
Raymond J. Heath 29,922(16) *
Eugene R. Sunderhaft 21,245(17) *
John E. Josephson 38,223(18) *
All Directors and Executive
Officers as a Group (17 persons) 2,565,679(19) 23.5%
____________
* Less than 1.0%.
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<PAGE>
(1) Mr. Hirsch is Chairman, President and a Director of RAC Partners, the
sole general partner of RAC. Mr. Hirsch is also a limited partner of
RAC. Mr. Hirsch is deemed to be an indirect beneficial owner of
933,455 shares of Common Stock owned by RAC and 15,506 shares owned by
RAC Partners. Mr. Hirsch is also the Chairman, President and a
Director of Air Partners, Inc., the sole general partner of VII
Partners. Mr. Hirsch is deemed to be an indirect beneficial owner of
73,262 shares owned by VII Partners. Mr. Hirsch is a general partner
of the managing general partner of MTH and is deemed to be an indirect
beneficial owner of 328,906 shares owned by MTH and 244,228 shares of
Common Stock owned by MTH Funding, L.P. Includes 125,000 shares of
restricted stock, which shares are subject to forfeiture under certain
circumstances, awarded to Mr. Hirsch pursuant to the Company's 1993
Plan. Includes 2,880 shares owned by Mr. Hirsch's children. Also
includes a currently exercisable warrant held by Mr. Hirsch, and
warrants held by certain of his relatives, to purchase up to 63,800
and 84,800 shares of Common Stock, respectively, at $14.00 per share.
Mr. Hirsch disclaims beneficial ownership of 84,800 of the shares
subject to the warrants held by his relatives.
(2) The sole general partner of RAC is RAC Partners, a wholly owned
subsidiary of MTH Holdings, an affiliate of MTH. Messrs. DePalma,
Fox, Hirsch and Segal own limited partnership interests in RAC.
(3) According to a Schedule 13G statement filed by Tiger Management
Corporation, which statement was most recently amended on February 12,
1996, Tiger Management Corporation and Panther Management Company,
L.P., each an investment adviser registered under the Investment
Advisers Act of 1940, Panther Partners, L.P., an investment company
registered under the Investment Company Act of 1940, and Mr. Julian H.
Robertson, Jr., who is the ultimate controlling person of Tiger
Management Corporation and Panther Management Company, L.P., have
shared voting power and shared power to dispose of or direct the
disposition of an aggregate of 2,017,800 shares of Common Stock.
(4) According to information provided to the Company by Cramer Rosenthal
McGlynn, Inc., as of March 27, 1996, Cramer Rosenthal McGlynn, Inc.
has shared voting power and shared power to dispose of or direct the
disposition of 816,768 shares of Common Stock.
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<PAGE>
(5) According to a Schedule 13G statement filed by J.P. Morgan & Co.
Incorporated, dated December 29, 1995, J.P. Morgan & Co. Incorporated,
has sole power to vote 359,100 shares of Common Stock and sole power
to dispose of or direct the disposition of 553,100 shares of Common
Stock.
(6) Includes 27,500 shares of restricted stock, which shares are subject
to forfeiture under certain circumstances, awarded to Mr. Dixon
pursuant to the Company's 1993 Plan. Includes currently exercisable
options to purchase 1,000 shares of Common Stock at $25.25 per share,
500 shares of Common Stock at $26.75 per share and 5,000 shares of
Common Stock at $28.125 per share. Includes 720 shares of Common
Stock acquired through the Company's employee stock purchase plan and
341 shares of Common Stock owned through the Company's 401(k) plan.
(7) Includes 15,000 shares of restricted stock, which shares are subject
to forfeiture under certain circumstances, awarded to Mr. Fox pursuant
to the Company's 1993 Plan. Includes a currently exercisable warrant
held by Mr. Fox to purchase up to 13,000 shares of Common Stock at
$14.00 per share. Also includes currently exercisable options to
purchase 2,500 shares of Common Stock at $18.375 per share.
(8) Includes currently exercisable options to purchase 1,500 shares of
Common Stock at $20.50 per share, 1,500 shares of Common Stock at
$18.44 per share, 1,500 shares of Common Stock at $28.69 per share,
1,500 shares of Common Stock at $27.50 per share, 1,500 shares at
$42.00 per share, 1,500 shares at $36.06 per share and 1,500 shares at
$33.81 per share.
(9) Includes currently exercisable options to purchase 1,500 shares of
Common Stock at $41.88 per share, 1,500 shares at $36.06 per share and
1,500 shares at $33.81 per share.
(10) Includes currently exercisable options to purchase 10,435 shares of
Common Stock at $12.50 per share, 10,000 shares of Common Stock at
$18.375 per share and 40,000 shares of Common Stock at $24.25 per
share.
(11) Includes 1,915 shares owned by Mr. Incaudo's wife and three children.
(12) Includes 1,972 shares of Common Stock owned by Burrows + Poster Profit
Sharing Plan.
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<PAGE>
(13) Includes 30,000 shares of Common Stock owned by Fourth Generation
Partners, 87,782 shares of Common Stock owned by Seavest Partners and
2,610 shares of Common Stock acquired through the Company's employee
stock purchase plan.
(14) Includes 7,500 shares of restricted stock, which shares are subject to
forfeiture under certain circumstances, awarded to Mr. Breech pursuant
to the Company's 1993 Plan. Includes currently exercisable options to
purchase 4,000 shares of Common Stock at $25.25 per share and 500
shares of Common Stock at $26.75 per share.
(15) Includes 7,500 shares of restricted stock, which shares are subject to
forfeiture under certain circumstances, awarded to Mr. Flood pursuant
to the Company's 1993 Plan. Includes currently exercisable options to
purchase 2,500 shares of Common Stock at $18.375 per share and 500
shares at $26.75 per share. Also includes 83 shares of Common Stock
acquired through the Company's employee stock purchase plan and 96
shares of Common Stock owned through the Company's 401(k) plan.
(16) Includes 7,500 shares of restricted stock, which shares are subject to
forfeiture under certain circumstances, awarded to Mr. Heath pursuant
to the Company's 1993 Plan. Includes currently exercisable options to
purchase 6,000 shares of Common Stock at $12.50 per share and 500
shares of Common Stock at $26.75 per share. Includes 141 shares of
Common Stock acquired through the Company's employee stock purchase
plan and 536 shares of Common Stock owned through the Company's 401(k)
plan.
(17) Includes 5,000 shares of restricted stock, which shares are subject to
forfeiture under certain circumstances, awarded to Mr. Sunderhaft
pursuant to the Company's 1993 Plan. Includes currently exercisable
options to purchase 1,871 shares of Common Stock at $12.50 per share
and 1,000 shares of Common Stock at $26.75 per share. Includes 288
shares of Common Stock owned through the Company's 401(k) plan.
(18) Includes 7,500 shares of restricted stock, which shares are subject to
forfeiture under certain circumstances, awarded to Mr. Josephson
pursuant to the Company's 1993 Plan. Includes currently exercisable
options to
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<PAGE>
purchase 4,490 shares of Common Stock at $12.50 per share, 5,000
shares at $25.25 per share and 500 shares at $26.75 per share.
Includes 213 shares of Common Stock acquired through the Company's
employee stock purchase plan and 102 shares of Common Stock owned
through the Company's 401(k) plan.
(19) Includes shares of Common Stock owned by the immediate family of some
directors or officers of Penn Traffic, vested options and warrants and
933,455 shares of Common Stock held by RAC. Includes shares of
restricted stock awarded under the Company's 1993 Plan, all of which
shares are subject to forfeiture under certain circumstances, as
follows: Mr. Hirsch -- 125,000 shares, Mr. Dixon -- 27,500 shares,
Mr. Fox -- 15,000 shares, Mr. Heath -- 7,500 shares, Mr. Flood --
7,500 shares, Mr. Sunderhaft -- 5,000 shares, Mr. Glenn L. Goldberg --
4,000 shares, Mr. Francis D. Price, Jr. -- 3,000 shares, Mr. Randall
Sweeney -- 3,000 shares, Mr. Breech -- 7,500 shares and Mr. David A.
Adamsen -- 1,000 shares.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
Penn Traffic's directors and executive officers, and persons who own more than
10% of the Common Stock, to file with the Securities and Exchange Commission
(the "Commission") and the New York Stock Exchange initial reports of ownership
and reports of changes in ownership of Penn Traffic equity securities.
Executive officers, directors and 10% stockholders are also required to furnish
Penn Traffic with copies of all Section 16(a) reports they file. To Penn
Traffic's knowledge, based solely on a review of such reports furnished to Penn
Traffic and written representations that no other reports were required, all
Section 16(a) filing requirements applicable to its executive officers,
directors and 10% stockholders were complied with during Fiscal 1996.
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<PAGE>
EXECUTIVE COMPENSATION
See "Certain Transactions" for a description of the agreement pursuant to
which MTH provides financial consulting and business management services to the
Company. Mr. Hirsch is a general partner of the managing general partner of MTH
and Mr. Fox is an executive officer of MTH.
The information under this heading relates to the Chief Executive Officer
of Penn Traffic, the four other most highly-compensated executive officers of
the Company as of the end of Fiscal 1996 and one former executive officer of the
Company.
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<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
LONG-TERM COMPENSATION
-------------------------------------
ANNUAL COMPENSATION AWARDS PAYOUTS
--------------------------------------- ----------------------- ----------
Other Restricted Securities
Name and Annual Stock Underlying All Other
Principal Fiscal Compensation Award(s) Options/ LTIP Compensation
Position Year Salary ($) Bonus ($) ($)(1) ($)(2) SARs (#) Payouts($) ($)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
John T. Dixon 1996 $407,692 0 $1,404(1) $782,500 0 0 0
Director and 1995 235,600 $60,785(3) 1,404(1) 0 0 0 0
President and Chief 1994 178,800 73,364(3) 393(1) 281,250 0 0 0
Executive Officer
Eugene R. Sunderhaft 1996 $203,846 0 --- 0 0 0 0
Senior Vice President- 1995 170,000 $53,040(3) --- 0 0 0 0
Finance and Secretary 1994 132,615 66,313(3)(4) --- $199,750 0 0 0
(Chief Financial
Officer)
Raymond J. Heath (5) 1996 $224,230 0 --- 0 0 0
Senior Vice President 1995 200,000 $61,200(3) --- 0 0 0 0
1994 175,000 73,199(3) --- $281,250 0 0 0
Roy M. Flood 1996 $275,172 0 $4,699(1) $293,438 0 0 0
Senior Vice President 1995 218,575 $62,800(6) 2,938(1) 0 0 0 $4,500(7)
1994 208,773 89,617(6) 979(1) 150,000 0 0 8,351(7)
Stephen V. Breech 1996 $158,583 0 $ 929(1) 0 0 0 $4,950(7)
Senior Vice President 1995 114,878 $40,872(6) 1,337(1) 0 0 0 3,447(7)
1994 109,282 52,274(6) 446(1) $75,000 0 0 4,371(7)
John E. Josephson 1996 $190,385 0 --- 0 0 0 $496,934(7)(8)
Senior Vice President 1995 270,152 $79,019(6) --- 0 0 0 4,500(7)
until September 22, 1995 1994 262,446 104,978(6) --- $281,250 0 0 9,434(7)
</TABLE>
-14-
<PAGE>
___________________
(1) In the fiscal year ending January 29, 1994 ("Fiscal 1994"), the
Company provided each of Messrs. Dixon, Flood and Breech with a tax
loan to fund the payment of taxes arising primarily at the time of the
merger of Big Bear (formerly a subsidiary of the Company and currently
a division) ("Big Bear") into the Company. These loans have a
six-year term and bear no interest so long as their borrowers remain
employed by the Company. Mr. Breech repaid his loan in September
1995. Had these loans carried a market interest rate, Messrs. Dixon,
Flood and Breech would have paid $1,404, $2,938 and $929 in interest
during Fiscal 1996, respectively, $1,404, $2,938 and $1,337 in
interest during the fiscal year ending January 28, 1995, ("Fiscal
1995"), respectively, and $393, $979 and $446 in interest in Fiscal
1994, respectively.
In Fiscal 1996 the Company provided Mr. Flood with an
interest-free loan in connection with his relocation to Syracuse, New
York following his appointment as Senior Vice President of the
Company. This loan was repaid in July 1995. Had the loan carried a
market rate of interest, Mr. Flood would have paid $1,761 in interest
during Fiscal 1996. No other information is provided in the "Other
Annual Compensation" column since the aggregate amount of perquisites
and other personal benefits in respect of each of Fiscal 1996, Fiscal
1995 and Fiscal 1994 are less than the lower of $50,000 or 10% of the
total annual salary and bonus reported for each of the named officers
and no other compensation of the type required to be described in the
"Other Annual Compensation" column was paid in Fiscal 1996, Fiscal
1995 or Fiscal 1994, respectively.
(2) Awards of shares of restricted stock pursuant to the 1993 Plan.
Pursuant to Commission rules, these dollar values have been calculated
by multiplying the closing market price of the Company's Common Stock
on the date of the respective grants by the number of shares awarded
on such date. The aggregate number of shares of restricted stock held
by each of the named executives in the table and the dollar value of
such shares of restricted stock at the end of Fiscal 1996 were as
follows: Mr. Dixon -- 27,500 shares, $443,438 value; Mr. Heath --
7,500 shares, $120,938 value; Mr. Sunderhaft -- 5,000 shares, $80,625
value; Mr. Flood -- 7,500 shares, $120,938 value; Mr. Breech -- 2,000
shares, $32,250 value and Mr. Josephson -- 7,500 shares, $120,938
value.
-15-
<PAGE>
Vesting of the shares of restricted stock is contingent upon
attainment, subsequent to the date of grant, of EBITDA levels (as
defined) of $265 million in any four consecutive fiscal quarter
period, or $500 million in any eight consecutive fiscal quarter
period. Such shares will be forfeited if such performance levels are
not achieved by the end of the fiscal quarter which ends closest to
May 1, 1998. See "Executive Compensation - Compensation Committee
Report." Cash dividends will be paid on shares of restricted stock to
the same extent as cash dividends are paid on other shares of the
Company's Common Stock. Penn Traffic has not declared or paid any
cash dividends on Common Stock since 1987 and it is the Company's
present policy not to pay dividends on shares of its Common Stock but
to retain future earnings for reinvestment in its business or
reduction of its indebtedness. In addition, certain debt agreements
and the Company's revolving credit facility prohibit the payment of
dividends. Stock dividends paid on shares of restricted stock will be
retained by the Company and are subject to the same restrictions and
conditions (including vesting requirements) as the underlying shares
of restricted stock.
(3) Includes amounts earned in respect of the fiscal year indicated under
the Corporate Incentive Compensation Plan (the "Corporate Incentive
Plan"). See "Executive Compensation - Compensation Committee Report."
(4) Includes amounts earned in respect of the fiscal year indicated under
the P&C 1987 Executive Incentive Compensation Plan (the "P&C Incentive
Plan"). Payments of such awards under the P&C Incentive Plan are made
as follows: 40% of the amount earned is paid during the year in which
the bonus was earned and 20% of the amount earned is paid in each of
the following three years. See "Executive Compensation - Compensation
Committee Report."
(5) Mr. Heath served as Senior Vice President of the Company until his
retirement, effective April 26, 1996.
(6) Includes amounts earned in respect of the fiscal year indicated under
the Big Bear Supplemental Incentive Plan (the "Big Bear Supplemental
Plan"). See "Executive Compensation - Compensation Committee Report."
(7) "All Other Compensation" includes contributions to the Big Bear Profit
Sharing Plan for the fiscal years indicated.
(8) "All Other Compensation" for Fiscal 1996 includes amounts payable to
Mr. Josephson pursuant to an agreement
-16-
<PAGE>
entered into in connection with his departure from the Company,
effective as of September 22, 1995. Pursuant to this agreement, Mr.
Josephson will receive: (i) $334,615, equal to his weekly salary for
the period through November 1, 1996; (ii) continued group health care
benefits for him and his family until November 1, 1996, valued at
$3,000; (iii) continued use of his Company car, including maintenance
by the Company of existing insurance coverage on the car until
November 1, 1996, and transfer to him on November 1, 1996 of title to
his Company car, valued at $16,500; and (iv) continuation of all other
employee benefits to which he was entitled during the term of his
employment with the Company, valued at $655. The agreement also
provides that November 1, 1996 will be deemed Mr. Josephson's normal
retirement date for purposes of the Company's pension plans (see
"Pension Plans and Other Benefit Plans" below for a description of
certain Company plans in which Mr. Josephson participates) and that
Mr. Josephson will retain the award of 7,500 shares of restricted
stock previously granted to him under the Company's 1993 Plan and that
stock options previously granted to him under the Company's
Non-Qualified Stock Option Plan (the "Stock Option Plan") will remain
exercisable. For purposes of valuing the shares of restricted stock
and stock options held by Mr. Josephson for inclusion in the amount
reported under "All Other Compensation" in the Summary Compensation
Table for Fiscal 1996, (x) the 7,500 shares of restricted stock have
been valued at their fair market value at the end of Fiscal 1996
($120,938) and (y) the options to purchase 4,490 shares of Common
Stock have been valued at the difference between their exercise price
and the fair market value of $16.125 per share of Common Stock on
February 3, 1996 ($16,276). The shares of restricted stock held by
Mr. Josephson will be forfeited if the performance levels specified in
the award of restricted stock (described in Note (2) above) are not
achieved by the end of the fiscal quarter which ends closest to May 1,
1998.
-17-
<PAGE>
OPTIONS
The following table sets forth information concerning options exercised by
Mr. Flood in Fiscal 1996 and the value of unexercised options held by each of
the executives named in the Summary Compensation Table, as of February 3, 1996.
<TABLE>
<CAPTION>
AGGREGATED OPTIONS/SAR EXERCISES
IN LAST FISCAL YEAR, AND FY-END
OPTIONS/SAR VALUES
-------------------------------
Shares Number of Securities Value of Unexercised
Acquired on Value Underlying Unexercised In-the-Money Options/SARs
Exercise (#) Realized ($) Options/SARs At FY-End (#) At FY-End ($)
------------ ------------ ----------------------------- ----------------------------------
Name Exercisable Unexercisable Exercisable(1) Unexercisable(1)
- ---- ----------- ------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
John T. Dixon -- -- 6,500 0 0 0
Eugene R. Sunderhaft -- -- 2,871 0 6,782 0
Raymond J. Heath -- -- 6,500 0 21,750 0
Roy M. Flood 2,245 51,635 3,000 0 0 0
Stephen V. Breech -- -- 4,500 0 0 0
John E. Josephson -- -- 9,990 0 16,276 0
</TABLE>
____________________
(1) Based on the fair market value of $16.125 per share on February 3, 1996.
-18-
<PAGE>
PENSION PLANS AND OTHER BENEFIT PLANS
P&C PENSION PLAN
Messrs. Dixon, Sunderhaft and Flood participate in a defined benefit
pension plan for all regular full-time employees of P&C (formerly a subsidiary
of the Company and currently a division) ("P&C"), other than participants in
another pension plan to which P&C or any of its subsidiaries contributes and
other than those employees subject to a collective bargaining agreement (the
"P&C Pension Plan"). The normal monthly retirement benefit payable to Messrs.
Dixon, Sunderhaft and Flood under the P&C Pension Plan would equal (((a) times
(b)), plus ((c) times (d))), times (e), where:
(a) is .90% of average monthly compensation plus 1.35% of the average
monthly compensation in excess of the average social security wage
base;
(b) is credited service to normal retirement date, not to exceed 35 years;
(c) is .40% of average monthly compensation up to $2,500;
(d) is credited service to retirement date, not to exceed 20 years; and
(e) is the ratio of credited service to date to credited service to
retirement date.
The projected years of benefit service to age 65 for Messrs. Dixon, Sunderhaft
and Flood are 12, 41 and 23 years, respectively.
Contributions are not credited to individual participants' accounts and the
amount contributed on behalf of each individual is not and cannot readily be
separately or individually calculated by the P&C Pension Plan's regular actuary.
The following table sets forth the amount of annual pension benefit, calculated
as a straight life annuity, that would be available to individual retirees
retiring at age 65 after the stated number of years of service. The term
"average monthly compensation" as used in the calculation above means the
monthly average of a participant's highest aggregate compensation during a
period of five consecutive years of employment covered by the P&C Pension Plan.
("Remuneration" includes salary or wages and bonuses.)
-19-
<PAGE>
<TABLE>
<CAPTION>
P&C PENSION PLAN TABLE
----------------------
Years of Service
---------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35
- ------------ ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
$125,000 $25,575 $34,099 $42,024 $49,949 $57,874
150,000 30,636 40,848 50,460 60,072 69,684
175,000 35,698 47,597 58,896 70,195 81,495
200,000 40,762 54,350 67,336 80,324 93,311
225,000 45,824 61,098 75,773 90,447 105,122
250,000 50,885 67,847 84,209 100,570 116,932
300,000 61,011 81,348 101,085 120,822 140,559
400,000 81,260 108,347 134,834 161,320 187,807
450,000 91,386 121,848 151,710 181,572 211,434
500,000 101,512 135,349 168,587 201,824 235,061
550,000 111,635 148,847 185,459 222,070 258,682
600,000 121,761 162,348 202,335 242,322 282,309
650,000 131,887 175,849 219,211 262,574 305,936
700,000 142,010 189,347 236,084 282,820 329,557
</TABLE>
NOTE: The amounts shown above are not subject to offset for Social Security
benefits payable to participants in the P&C Pension Plan.
Additionally, the above table does not recognize statutory limitations
imposed by the Internal Revenue Code of 1986, as amended (the "Code")
which establish a maximum compensation level (increased by certain
cost of living adjustments) for determining the annual benefit amount.
BIG BEAR EMPLOYEES' PENSION PLAN AND TRUST
Mr. Breech participates in the Big Bear Employees' Pension Plan and Trust
(the "Big Bear Plan"). Generally, participants in the Big Bear Plan are
entitled to a monthly retirement benefit equal to the greater of (a) 1% of the
participant's average monthly compensation including overtime and other extra
compensation, but excluding bonuses, during the participant's highest five
consecutive calendar years of income during the last ten calendar years of
employment prior to attaining 62 years of age, multiplied by the number of years
of employment (not to exceed 35 years for purposes of this calculation) in which
the participant worked at least 1,000 hours or (b) $25 per month for each year
of credited full time service. The projected years of benefit service to
-20-
<PAGE>
age 62 for Mr. Breech is 44 years in the Big Bear Plan. In general, accrued
benefits vest after five years of service. The following table sets forth the
estimated annual benefits payable under the Big Bear Plan assuming payments made
on a straight-life annuity basis and not under any of the Big Bear Plan's
survivor options to a participant upon retirement at age 62 with indicated final
average annual compensation and years of service. ("Remuneration" includes
salary or wages but does not include bonuses.)
<TABLE>
<CAPTION>
BIG BEAR EMPLOYEES' PENSION PLAN TABLE
--------------------------------------
Years of Service
-----------------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 40
- ------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $18,750 $25,000 $31,250 $37,500 $43,750 $43,750
150,000 22,500 30,000 37,500 45,000 52,500 52,500
175,000 26,250 35,000 43,750 52,500 61,250 61,250
200,000 30,000 40,000 50,000 60,000 70,000 70,000
225,000 33,750 45,000 56,250 67,500 78,750 78,750
250,000 37,500 50,000 62,500 75,000 87,500 87,500
300,000 45,000 60,000 75,000 90,000 105,000 105,000
400,000 60,000 80,000 100,000 120,000 140,000 140,000
450,000 67,500 90,000 112,500 135,000 157,500 157,500
500,000 75,000 100,000 125,000 150,000 175,000 175,000
550,000 82,500 110,000 137,500 165,000 192,500 192,500
600,000 90,000 120,000 150,000 180,000 210,000 210,000
650,000 97,500 130,000 162,500 195,000 227,500 227,500
700,000 105,000 140,000 175,000 210,000 245,000 245,000
</TABLE>
NOTE: The amounts shown above are not subject to offset for Social Security
benefits payable to participants in the Big Bear Plan. Additionally,
the above table does not recognize statutory limitations imposed by
the Code which establish a maximum compensation level (increased by
certain cost of living adjustments) for determining the annual benefit
amount.
Mr. Dixon, who currently participates in the P&C Pension Plan, participated
in the Big Bear Plan for 34 years prior to joining Quality Markets (formerly a
subsidiary of the Company and currently a division) ("Quality Markets"). Mr.
Flood, who currently participates in the P&C Pension Plan, participated in the
Big Bear Plan for six years. Mr. Josephson participated in the P&C Pension Plan
for six years
-21-
<PAGE>
and as of the deemed date of his retirement (November 1, 1996) will have
participated in the Big Bear Plan for 7.5 years.
RIVERSIDE PENSION PLAN FOR NON-BARGAINING EMPLOYEES
Mr. Heath participates in the Pension Plan for Non-Bargaining Employees of
the Riverside Division of The Penn Traffic Company, a defined benefit pension
plan for the employees of the Riverside division of the Company who are not
covered by a collective bargaining agreement (the "Riverside Plan"). Under the
Riverside Plan, the compensation base is multiplied by 1% for each year of
service to determine the annual pension amount. The compensation base as
defined by the Riverside Plan is the highest average annual earnings for five
consecutive years of the last ten years preceding retirement. The following
table sets forth the estimated annual benefit, calculated as a straight-life
annuity, payable upon retirement under the Riverside Plan, assuming the average
annual earnings and years of service at retirement set forth therein.
("Remuneration" includes salary or wages, bonuses and any other payments that
may be run through Riverside's payroll, such as the value of any personal use of
company vehicles, moving expenses, any personal use of other company assets and
severance payments.)
-22-
<PAGE>
<TABLE>
<CAPTION>
RIVERSIDE PENSION PLAN TABLE
----------------------------
Years of Service
-----------------------------------------------------------------------------------------------
Remuneration 15 20 25 30 35 40
- ------------ ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
$125,000 $18,750 $25,000 $31,250 $37,500 $43,750 $50,000
150,000 22,500 30,000 37,500 45,000 52,500 60,000
175,000 26,250 35,000 43,750 52,500 61,250 70,000
200,000 30,000 40,000 50,000 60,000 70,000 80,000
225,000 33,750 45,000 56,250 67,500 78,750 90,000
250,000 37,500 50,000 62,500 75,000 87,500 100,000
300,000 45,000 60,000 75,000 90,000 105,000 120,000
400,000 60,000 80,000 100,000 120,000 140,000 160,000
450,000 67,500 90,000 112,500 135,000 157,500 180,000
500,000 75,000 100,000 125,000 150,000 175,000 200,000
550,000 82,500 110,000 137,500 165,000 192,500 220,000
600,000 90,000 120,000 150,000 180,000 210,000 240,000
650,000 97,500 130,000 162,500 195,000 227,500 260,000
700,000 105,000 140,000 175,000 210,000 245,000 280,000
</TABLE>
NOTE: The amounts shown above are not subject to offset for Social Security
benefits payable to participants in the Riverside Plan. Additionally,
the above table does not recognize statutory limitations imposed by
the Code which establish a maximum compensation level (increased by
certain cost of living adjustments) for determining the annual benefit
amount.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
In March 1995, the Board of Directors of the Company approved and
authorized the establishment of a Supplemental Executive Retirement Plan (the
"Supplemental Plan") pursuant to which employees of the Company whose benefits
under the Company's retirement plans described above are limited by Internal
Revenue Service regulations (including Messrs. Dixon, Sunderhaft, Heath, Flood
and Breech) will earn an additional pension benefit. The Supplemental Plan will
provide an annual pension benefit for an eligible employee with at least 30
years of credited service equal to 40% of the yearly average of the highest
aggregate compensation received by the employee during a period of five
consecutive years of employment, less offsets for benefits paid under the
Company's other retirement plans described above and for Social Security
benefits. The annual pension benefit payable under the Supplemental Plan will
be proportionately reduced for employees who retire with fewer than 30 years of
credited service.
-23-
<PAGE>
COMPENSATION OF DIRECTORS
In Fiscal 1996, directors who were not regularly employed by the Company
received an annual fee of $10,000. Each such director was also paid a fee of
$1,000 for attendance at each Board meeting or committee meeting he attended and
a fee of $500 for each committee meeting held in conjunction with a Board
meeting he attended. Directors were also paid $1,000 for each full day and $500
for each half day on which they performed duties on behalf of the Board at the
request of the Chief Executive Officer if such duties required them to be away
from their principal place of occupation. Directors who are officers of the
Company do not receive fees for attending meetings of the Board of Directors or
its committees.
During Fiscal 1996, Penn Traffic engaged MTH to provide financial
consulting and business management services, for which MTH received an annual
fee of $1,395,100, which fee was paid in twelve equal monthly installments. The
fee payable to MTH for the fiscal year ending February 1, 1997 ("Fiscal 1997")
will remain at the rate of $1,395,100 per annum until November 1, 1996, when it
will increase to $1,437,000 per annum. Mr. Hirsch is a general partner of the
managing general partner of MTH, and Mr. Fox is Executive Vice President of MTH.
During Fiscal 1996, Mr. Incaudo, who served as President and Chief
Executive Officer of the Company until his retirement on January 28, 1995, acted
as a consultant to the Company pursuant to an employment agreement entered into
with the Company in February 1992. This agreement provides that Mr. Incaudo
will provide advisory services concerning the business, affairs and management
of the Company during the two-year period following his retirement. Pursuant to
this agreement, Penn Traffic paid Mr. Incaudo $150,000 for his services during
Fiscal 1996 and will pay Mr. Incaudo an equal amount for his services during
Fiscal 1997.
Certain of the Company's directors have been awarded shares of restricted
stock under the 1993 Plan, which was approved by the vote of a majority of the
stockholders of Penn Traffic at the 1993 Annual Meeting of Stockholders. At the
beginning of Fiscal 1996, 20,000 shares of restricted stock were awarded to Mr.
Dixon under the 1993 Plan in connection with his appointment as President and
Chief
-24-
<PAGE>
Executive Officer of the Company. These shares were valued at $782,500 on the
date of grant. During Fiscal 1994, 125,000 shares of restricted stock were
awarded to Mr. Hirsch, 15,000 shares of restricted stock were awarded to Mr. Fox
and 7,500 shares of restricted stock were awarded to Mr. Dixon. These shares
were valued at $4,687,500, $562,000 and $281,250, respectively, on the date of
grant. Vesting of the shares of restricted stock granted pursuant to such
awards is contingent upon attainment, subsequent to the date of grant, of EBITDA
levels of $265 million in any four consecutive fiscal quarter period or $500
million in any eight consecutive fiscal quarter period. Such shares will be
forfeited if such levels are not achieved by the end of the fiscal quarter which
ends closest to May 1, 1998. Vesting of the shares of restricted stock awarded
to Mr. Dixon at the beginning of Fiscal 1996 is also conditioned upon his
remaining in the employ of the Company for an additional two years following the
last fiscal quarter in which the required EBITDA performance level was attained.
To encourage the retention of shares by participants, upon vesting of the
restricted stock, the Company will make a cash payment to each participant equal
to the amount of income tax payable by such participant in respect of the award
and the cash payment, if such participant agrees not to sell his shares for at
least two years beyond vesting and to refund the payment if he resigns within
such two-year period. No other directors have received awards of restricted
stock under the 1993 Plan. See "Executive Compensation - Compensation Committee
Report."
Pursuant to The Penn Traffic Company Directors' Stock Option Plan (the
"Directors' Plan"), each director of the Company who is not an employee of the
Company receives as of the date of appointment to the Board of Directors, and
thereafter annually, as of the first day after the conclusion of each Annual
Meeting of Stockholders of the Company, an option to purchase 1,500 shares of
Common Stock (subject to antidilution adjustments) at a price equal to the fair
market value (as defined in the Directors' Plan) of such shares on the date of
grant. On June 8, 1995, pursuant to the Directors' Plan, each of Messrs.
DePalma, Poster and Segal and Ms. Engel received an option to purchase 1,500
shares of Common Stock at a price of $33.81 per share.
The Penn Traffic Company Amended and Restated Directors' Stock Option Plan
(the "Restated Plan") was adopted by the Board of Directors on April 2, 1996, as
the successor to the Directors' Plan. The Restated Plan, which is
substantially
-25-
<PAGE>
similar to the Directors' Plan, provides for the automatic grant to non-employee
directors of an option to purchase 1,500 shares of Common Stock (subject to
antidilution adjustments) upon appointment to the Board of Directors, and
thereafter annually, as of the first business day after the conclusion of each
Annual Meeting of Stockholders at a price equal to the fair market value (as
defined in the Restated Plan) of such shares on the date of the grant. The
Restated Plan is being submitted to the stockholders of the Company for their
consideration at the 1996 Annual Meeting. See "Restated Directors' Stock Option
Plan" below.
EMPLOYMENT CONTRACTS AND TERMINATION AGREEMENTS
On January 29, 1995, the Company and Mr. Dixon entered into an employment
agreement providing for the employment of Mr. Dixon as President and Chief
Executive Officer of the Company. Pursuant to its terms, this employment
agreement expires on the last day of the Company's fiscal year and is thereupon
automatically renewed, unless the Company has given notice of termination not
later than 30 days prior to the end of the applicable fiscal year. Pursuant to
this agreement, Mr. Dixon was entitled to receive a base salary of not less than
$400,000 in Fiscal 1996 and will be entitled to receive a base salary not less
than $400,000 in Fiscal 1997. The agreement also provides that Mr. Dixon will
be eligible to receive, at the sole discretion of the Board of Directors, an
annual cash bonus award under the Corporate Incentive Plan of up to 50% of his
base salary for the applicable year.
The agreement provides that if the employment of Mr. Dixon is terminated
without cause following a change in control or if Mr. Dixon resigns for good
reason following a change in control, the Company will be required to make
certain payments to Mr. Dixon, including a lump-sum severance payment equal to
(x) an amount equal to his base salary for the year in which such termination or
resignation for good reason occurs plus (y) an amount equal to the maximum cash
bonus which he would be entitled to receive in respect of the year in which such
termination or resignation for good reason occurs (I.E., an amount equal to 50%
of his base salary). A resignation is deemed to be for good reason if it
results from, among other things, substantial change in Mr. Dixon's duties or
responsibilities, the material breach of the employment agreement by the
Company, the taking of any action that would adversely affect Mr. Dixon's
compensation or benefits, or the requirement that Mr. Dixon be based more than
25 miles from his current location. The agreement
-26-
<PAGE>
provides for reduction of the payments in the event any of the total payments or
benefits to be received by Mr. Dixon are not deductible by the Company for
federal income tax purposes by reason of Section 280G of the Code. Generally,
Section 280G disallows deductions for compensation payments made to certain
individuals which are both contingent upon a change in control and have an
aggregate present value equal to or greater than three times the executive's
average taxable compensation received during the five most recent taxable years
preceding the year of the change in control.
The Company entered into an agreement with Mr. Josephson in January 1996 in
connection with his departure from the Company, effective as of September 22,
1995. Pursuant to this agreement, Mr. Josephson will receive: (i) $334,615,
equal to his weekly salary for the period through November 1, 1996; (ii)
continued group health care benefits for him and his family until November 1,
1996; (iii) continued use of his Company car, including maintenance by the
Company of existing insurance coverage on the car until November 1, 1996, and
transfer to him on November 1, 1996 of title to his Company car; and (iv)
continuation of all other employee benefits to which he was entitled during the
term of his employment with the Company. The agreement also provides that
November 1, 1996 will be deemed Mr. Josephson's normal retirement date for
purposes of the Company's pension plans (see "Pension Plans and Other Benefit
Plans" above for a description of certain Company plans in which Mr. Josephson
participates) and that Mr. Josephson will retain the award of 7,500 shares of
restricted stock previously granted to him under the Company's 1993 Plan and
that stock options previously granted to him under the Company's Stock Option
Plan will remain exercisable. Mr. Josephson's restricted stock and stock
options will continue to be governed by the terms and conditions of the 1993
Plan and Stock Option Plan, respectively; provided, however, that Mr. Josephson
will not be entitled to the tax loan provided for upon the vesting of the
restricted shares granted to him under the 1993 Plan. See also Note 8 to the
Summary Compensation Table.
-27-
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The following directors are currently members of the Compensation
Committee: Messrs. Segal (Chairman) and DePalma. Mr. Poster served as a member
of the Compensation Committee until March 19, 1996.
Mr. Hirsch, Chairman of the Board of Directors of Penn Traffic, was
Chairman of the Board of Directors of Grand Union, Grand Union Capital and Grand
Union Holdings until June 15, 1995, March 27, 1996 and March 28, 1996,
respectively. Neither Grand Union Capital or Grand Union Holdings had a
separate compensation committee. During the period Mr. Hirsch served as
Chairman of the Board of Directors of Grand Union, Grand Union had no separate
compensation committee. Compensation decisions of Grand Union were considered
by the entire Board of Directors of Grand Union, subject to final approval by
the Board of Directors of Grand Union Holdings. Mr. Fox, who was an executive
officer of Grand Union, Grand Union Capital and Grand Union Holdings until June
15, 1995, March 27, 1996 and March 28, 1996, respectively, is a director of Penn
Traffic. Mr. McCaig, who is an executive officer of Grand Union and was an
executive officer of Grand Union Capital and Grand Union Holdings until March
27, 1996 and March 28, 1996, respectively, was a director of Penn Traffic until
June 1995. Mr. Fox, Vice Chairman - Finance of Penn Traffic, was a director of
Grand Union, Grand Union Capital and Grand Union Holdings until June 15, 1995,
March 27, 1996 and March 28, 1996, respectively. Mr. Hirsch, who was Chairman
of the Board of Directors of Grand Union, Grand Union Capital and Grand Union
Holdings until June 15, 1995, March 27, 1996 and March 28, 1996, respectively,
is Chairman of the Board of Directors of Penn Traffic. Mr. McCaig, an executive
officer of Grand Union and an executive officer of Grand Union Capital and Grand
Union Holdings until March 27, 1996 and March 28, 1996, respectively, was a
director of Penn Traffic until June 1995.
Mr. Incaudo, a director and formerly an executive officer of Penn Traffic,
was a director of Grand Union Holdings until March 28, 1996. Mr. Hirsch, who
was Chairman of the Board of Directors of Grand Union Holdings until March 28,
1996, is Chairman of the Board of Directors of Penn Traffic, and Mr. Fox, who
was an executive officer of Grand Union Holdings until March 28, 1996, is a
director of Penn Traffic. Mr. McCaig, who is an executive officer of Grand
Union and was an executive officer of Grand Union Capital and Grand Union
Holdings until March 27, 1996 and March 28, 1996, respectively, was a director
of Penn Traffic until June 1995.
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On January 25, 1995, Grand Union filed a voluntary petition for
reorganization under Chapter 11 of the United States Bankruptcy Code with the
Bankruptcy Court. Grand Union emerged from Chapter 11 reorganization on June
15, 1995. On February 6, 1995, an involuntary Chapter 11 petition was filed in
the Bankruptcy Court against Grand Union Capital, of which Grand Union was a
wholly owned subsidiary. On February 16, 1995, Grand Union Capital consented to
the entry of an order for relief on the involuntary Chapter 11 petition and
Grand Union Holdings filed a voluntary Chapter 11 petition in the Bankruptcy
Court. Grand Union Capital and Grand Union Holdings' Bankruptcy Court
proceedings were completed on March 27, 1996. Following completion of these
proceedings, Grand Union Capital and Grand Union Holdings were dissolved. At
the time the Chapter 11 petitions were filed, Messrs. Hirsch and Fox were
directors and executive officers of Grand Union, Grand Union Capital and Grand
Union Holdings, and Mr. Incaudo was a director of Grand Union Holdings. Messrs.
Hirsch and Fox resigned as directors and executive officers of Grand Union on
June 15, 1995. Messrs. Hirsch, Fox and Incaudo ceased to be directors and
executive officers of Grand Union Capital and Grand Union Holdings upon the
dissolutions of these companies on March 27, 1996 and March 28, 1996,
respectively.
Messrs. Hirsch and Fox do not receive salaries from Penn Traffic and do not
participate in cash bonus plans. Messrs. Hirsch and Fox have received awards of
restricted stock under the 1993 Plan. See "Compensation of Directors." Messrs.
Hirsch and Fox received no compensation in their capacities as executive
officers of Grand Union, Grand Union Capital and Grand Union Holdings. As
described below, Messrs. Hirsch and Fox receive compensation from MTH; MTH was
engaged as a financial adviser and investment banker to Grand Union until June
15, 1995. Mr. McCaig received no compensation in his capacity as an executive
officer of Grand Union Capital and Grand Union Holdings; Mr. McCaig does receive
compensation in his capacity as an executive officer of Grand Union. Mr.
Incaudo received no compensation in his capacity as a director of Grand Union
Holdings.
Messrs. Hirsch and Fox receive compensation from MTH. Mr. Hirsch is a
general partner of the managing partner of MTH, and Mr. Fox is Executive Vice
President of MTH. As described below, MTH was engaged by Penn Traffic to
provide financial consulting and business management services during Fiscal 1996
and MTH will continue to provide such services during Fiscal 1997. In addition,
it is anticipated that MTH will periodically provide investment banking services
to Penn
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Traffic in connection with acquisitions and other transactions, for which MTH
will receive reasonable and customary fees.
Penn Traffic engaged MTH to provide financial consulting and business
management services for Fiscal 1996, for which services MTH received an annual
fee of $1,395,100, which fee was paid in twelve equal monthly installments. The
fee payable to MTH for Fiscal 1997 will remain at the rate of $1,395,100 per
annum until November 1, 1996, when it will increase to $1,437,000 per annum.
During Fiscal 1996, Penn Traffic was represented by the law firm of
Gilmartin, Poster & Shafto in connection with various matters. Mr. Poster, who
served as a member of the Compensation Committee until March 19, 1996, has been
a partner in the firm of Gilmartin, Poster & Shafto since July 1991. During
Fiscal 1996, Gilmartin, Poster & Shafto received $251,877 in fees from Penn
Traffic for these services.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors is currently composed
of Messrs. Segal (Chairman) and DePalma.
An important objective of the Compensation Committee is to ensure that the
compensation practices of the Company are competitive and effectively designed
to attract, retain and motivate executive officers whose contributions are
critical to the long-term success of the Company. The Company uses a total
compensation program that consists of annual compensation paid in the form of
salary and cash bonuses under short-term incentive plans, and compensation paid
under long-term incentive plans.
ANNUAL COMPENSATION
SALARY
Salary adjustments for executive officers are generally made annually, and
are based on salary for the prior year, executive salary movement nationally
within the food distribution industry, individual performance, length of service
and internal comparability considerations. Pursuant to the employment agreement
entered into by the Company and
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Mr. Dixon in connection with Mr. Dixon's appointment as President and Chief
Executive Officer of the Company on January 29, 1995, Mr. Dixon was entitled to
receive a base salary of not less than $400,000 for Fiscal 1996. In Fiscal
1997, Mr. Dixon will be entitled to receive a base salary not less than his
Fiscal 1996 base salary.
CASH BONUS PLANS
Annual cash bonuses are paid to executive officers under the Company's
Corporate Incentive Plan, the P&C Incentive Plan and the Big Bear Supplemental
Plan. Most of the cash bonuses paid under these short-term incentive plans are
based upon the financial performance of the Company or its operating divisions.
During Fiscal 1996, Messrs. Dixon, Sunderhaft, Heath, Flood and Breech were
eligible to participate in the Corporate Incentive Plan. Participants in the
Corporate Incentive Plan are determined by the Board of Directors upon
recommendation of the Compensation Committee. Under the Corporate Incentive
Plan, bonuses are based on achievement of previously established financial
results for the Company or one of its divisions, and on achievement of
individual objectives. Bonus opportunities under the plan are generally
adjusted from year to year in proportion to changes in salaries.
Target annual bonus opportunity established for Fiscal 1996, measured as a
percentage of salaries established for that year, was 50% of salary in the case
of Mr. Dixon. Target annual bonus opportunities established for Fiscal 1996,
measured as a percentage of salaries established for that year, ranged from 33%
to 40% of salary in the case of other executive officers. Maximum bonus
opportunities for Mr. Dixon and other executive officers for exceeding
established objectives were 125% of target bonus. In the case of Mr. Dixon,
target bonus was allocated equally to financial objectives and personal
objectives. With respect to target bonus allocated to financial objectives,
100% of the target bonus was to be earned if the Company achieved its plan
EBITDA (earnings before interest expense, income taxes, depreciation,
amortization and LIFO provision) for the fiscal year, the maximum bonus of 125%
of the target bonus was to be earned if EBITDA was 125% of plan, and no bonus
was to be earned if EBITDA was less than 75% of plan. Financial objectives for
other executive officers reflected a variety
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of financial objectives, including EBITDA and return on managed assets, of the
Company and its divisions. For individual achievement, Mr. Dixon and other
executive officers could earn up to 125% of target bonus allocated to individual
objectives for outstanding performance. Achievement of individual objectives by
Mr. Dixon was assessed by the Board of Directors upon the recommendation of the
Compensation Committee, which received the recommendation of the Chairman of the
Board with respect to the attainment of such individual objectives. Achievement
of individual objectives by other executive officers was assessed by the Board
of Directors upon the recommendation of the Compensation Committee, which
received the recommendation of Mr. Dixon with respect to the attainment of such
individual objectives.
No awards were made to Messrs. Dixon, Sunderhaft, Heath, Flood or Breech
under the Corporate Incentive Plan in Fiscal 1996. For Fiscal 1995, Mr. Dixon
received $60,785, Mr. Heath received $61,200 and Mr. Sunderhaft received $53,040
under the Corporate Incentive Plan. For Fiscal 1994, Messrs. Dixon, Heath and
Sunderhaft were awarded $73,346, $73,199 and $45,602, respectively, under the
Corporate Incentive Plan. These amounts do not include the bonus received by
Mr. Sunderhaft (Fiscal 1994) under the P&C Incentive Plan, which is described
below. Messrs. Flood and Breech, who participated in the Big Bear Supplemental
Plan (described below), did not participate in the Corporate Incentive Plan in
Fiscal 1995 or Fiscal 1994. Messrs. Dixon, Sunderhaft, Flood and Breech will
be eligible to participate in the Corporate Incentive Plan in Fiscal 1997.
Prior to his transfer to Penn Traffic, Mr. Sunderhaft (whose employment was
deemed to be transferred from the P&C division to the Company at the end of
April 1993) participated in the P&C Incentive Plan. Under this plan, bonuses
are awarded to selected employees of the P&C division based upon the achievement
by P&C of certain objectives relating to P&C's return on net assets. The
Executive Committee of the Board of Directors of Penn Traffic determines the
participants in the plan each year, the goals against which performance will be
measured and the amount of the awards. This information is made available to
the Compensation Committee, but the Compensation Committee does not make any
determination in respect of such awards. Mr. Sunderhaft did not participate in
the P&C Incentive Plan in Fiscal 1996 or Fiscal 1995 and will not participate in
this plan in future years. For Fiscal 1994, Mr. Sunderhaft was awarded $20,711
under this plan.
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During Fiscal 1995, Messrs. Flood and Breech participated in the Big Bear
Supplemental Plan. Under this plan, incentive awards are made to employees of
the Big Bear division based on the achievement of previously established
performance objectives for EBITDA. The Executive Committee of the Board of
Directors of Penn Traffic determines the participants in the plan each year, the
goals against which performance will be measured and the amount of the awards.
This information is made available to the Compensation Committee, but the
Compensation Committee does not make any determination in respect of such
awards. The maximum bonus opportunity established for Fiscal 1995 was 50% of
salary in the case of Mr. Breech and 40% of salary in the case of Mr. Flood. If
Big Bear achieved its plan EBITDA, Messrs. Flood and Breech would earn 100% of
their respective bonus opportunities. Any variance in actual results from plan
EBITDA results in an adjustment of these awards. Messrs. Flood and Breech were
awarded $62,800 and $40,872 in Fiscal 1995, respectively, under this plan. In
Fiscal 1994, Messrs. Flood and Breech were awarded $89,617 and 52,274,
respectively, under this plan. Messrs. Flood and Breech, who were eligible to
participate in the Corporate Incentive Plan in Fiscal 1996, did not participate
in the Big Bear Supplemental Plan in Fiscal 1996 and will not participate in
this plan in future years.
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LONG-TERM INCENTIVE PLANS
In addition to annual compensation, the Company provides to its executive
officers and certain key employees long-term incentive compensation under the
Company's 1993 Long-Term Incentive Plan (the "1993 Plan"). The 1993 Plan was
adopted in March 1993 as the successor to the Company's 1988 Stock Option Plan
(the "1988 Plan"). No awards have been made under the 1988 Plan since Fiscal
1992, and no further awards will be made under the 1988 Plan.
The 1993 Plan was approved by the vote of a majority of the stockholders of
the Company at the 1993 Annual Meeting of Stockholders. The 1993 Plan provides
for long-term incentives based upon objective, quantifiable measures of the
Company's performance over time through the payment of incentive compensation of
the types commonly known as stock options, restricted stock, performance shares,
other forms of stock-based incentives, such as phantom stock and cash awards. A
maximum of 350,000 shares of Common Stock may be paid to participants under the
1993 Plan and/or purchased pursuant to stock options granted under the 1993
Plan, subject to antidilution and other adjustments specified in the 1993 Plan.
All awards made under the 1993 Plan to date have been in the form of
awards of shares of restricted stock or awards of options to purchase shares of
Common Stock. As of May 1, 1996, 299,600 shares of restricted stock and 3,000
options to purchase shares of the Company's Common Stock have been awarded under
the 1993 Plan (including 23,500 shares of restricted stock awarded to 14
officers and employees of the Company (including 5,500 shares awarded to Mr.
Breech) in April 1996). In September 1995, an option to purchase 3,000 shares
of the Company's Common Stock at an exercise price of $18.1875 per share (equal
to the fair market value of the Company's Common Stock on the date of grant) was
granted to one of the Company's officers pursuant to the 1993 Plan. At the
beginning of Fiscal 1996, 20,000 shares of restricted stock were awarded to Mr.
Dixon in connection with his appointment as President and Chief Executive
Officer and 3,500 shares were awarded to Mr. Flood in connection with his
appointment as Senior Vice President of the Company and President of the
Company's P&C and Quality Markets divisions.
For all awards of restricted stock made prior to the end of Fiscal 1995,
vesting of the shares of restricted stock granted pursuant to such awards is
contingent upon attainment, subsequent to the date of grant, of EBITDA levels of
$265 million in any four consecutive fiscal quarter period
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or $500 million in any eight consecutive fiscal quarter period. Such shares
will be forfeited if such performance levels are not achieved by the end of the
fiscal quarter which ends closest to May 1, 1998. Vesting of awards of
restricted stock made subsequent to the end of Fiscal 1995 is also conditioned
upon the recipient's remaining in the employ of the Company for an additional
two years following the last fiscal quarter in which the required EBITDA
performance level was attained. To encourage the retention of shares by
participants, upon vesting of the restricted stock the Company will make a cash
payment to each participant equal to the amount of income tax payable by such
participant in respect of the award and the cash payment, if such participant
agrees not to sell his shares for at least two years beyond vesting and to
refund the payment if he leaves the Company within such two-year period.
The Committee considered that the EBITDA vesting condition of the
restricted stock awards provides a performance incentive that is related to
stockholder value. With respect to awards of restricted stock made prior to the
end of Fiscal 1995, the Committee considered the EBITDA target, which was
recommended by management, in light of the Company's financial plan. The
Committee concluded that achievement of the EBITDA target in three years would
reflect outstanding performance by management, achievement of the EBITDA target
in four years would reflect above average performance and achievement of the
EBITDA target in five years would reflect average performance. The terms of the
awards provide that if the EBITDA targets are not achieved by the end of the
fiscal quarter which ends closest to May 1, 1998, the awards are forfeited. The
Committee considered permitting partial vesting of the shares at the end of the
fiscal quarter which ends closest to May 1, 1998, depending upon how close to
achieving the EBITDA target the Company had come, but ultimately decided upon
forfeiture rather than partial vesting so as not to diminish the incentive to
achieve the EBITDA target. With respect to awards of restricted stock made
subsequent to the end of Fiscal 1995, the Committee determined that it would be
advisable to maintain the same EBITDA target as was used for previous awards,
but to require the participant to remain in the employ of the Company for an
additional two years following the last fiscal quarter in which the required
EBITDA performance level was attained in order for the shares to vest.
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CHIEF EXECUTIVE OFFICER COMPENSATION
John T. Dixon became President and Chief Executive Officer of the Company
on January 29, 1995, the beginning of Fiscal 1996, and is compensated pursuant
to the terms of an employment agreement entered into between him and the Company
on that date. The employment agreement provides that Mr. Dixon was entitled to
a base salary of not less than $400,000 for Fiscal 1996.
The agreement also provides that Mr. Dixon is eligible to receive, at the
sole discretion of the Board of Directors, a yearly cash bonus award under the
Corporate Incentive Plan of up to 50% of his base salary for the year. See
"Employment Contracts and Termination Agreements" above. In addition, at the
time of his appointment as President and Chief Executive Officer, Mr. Dixon
received an award of 20,000 shares of restricted stock under the 1993 Plan.
These shares were valued at $782,500 on the date of the grant. In determining
the salary to be paid to Mr. Dixon, the Board of Directors considered Mr.
Dixon's salary prior to becoming President and Chief Executive Officer of the
Company, the salary paid to the Company's prior President and Chief Executive
Officer and the salaries paid to chief executive officers at other supermarkets
comparable in size to Penn Traffic.
The Revenue Reconciliation Act of 1993 added Section 162(m) to the Internal
Revenue Code of 1986, as amended (the "Code"). Section 162(m), which became
effective for tax years beginning January 1, 1994, disallows a deduction to the
Company for any compensation paid to a "covered employee" in excess of $1
million per year, subject to certain exceptions. In general, "covered
employees" include the chief executive officer and the four other most highly
compensated executive officers of the Company who are in the employ of the
Company at the end of the tax year. Among other exceptions, the deduction limit
does not apply to compensation that meets the specified requirements for
"performance-based compensation." Those requirements include the establishment
of objective performance goals by a committee of the Board of Directors composed
solely of two or more outside directors, stockholder approval of the material
terms of the performance goals under which the compensation is to be paid prior
to payment of such compensation, and certification by the Committee that the
performance goals have been achieved. Regulations issued under the Code, which
were recently finalized, provide transition rules and relief, as applicable, for
stockholder
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approval and other requirements with respect to awards under certain plans
previously approved by stockholders, including the 1993 Plan.
The Compensation Committee's policy is to award compensation for covered
executives that will be deductible without limitation where design of a
formula-based program will further the aims of the Company's executive
compensation programs described above. However, the Compensation Committee
considers it important to retain flexibility to design compensation programs
that recognize a full range of performance criteria important to the Company's
success, even where compensation payable under such programs may not be
deductible. In future determinations regarding compensation to be paid to
executive officers of the Company, the Compensation Committee will consider the
requirements of Section 162(m) and will make determinations based upon the best
interests of the Company.
The Company also provides to its executive officers other compensation,
such as retirement income, described elsewhere in this proxy statement. The
amounts of these benefits generally are tied directly to salaries, as variously
defined in the relevant plans. Such additional benefits are believed to be
typical of the benefits provided by other public companies to their executives.
Richard D. Segal, Chairman
Eugene A. DePalma
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PERFORMANCE GRAPH(1)
Following is a graph which compares for fiscal years 1992 through 1996 the
cumulative total stockholder return on the Common Stock, the cumulative total
return on Standard & Poor's 500 Stock Index (the "S&P 500 Index") and the
cumulative total return on Standard & Poor's Food Retail Index(2) (the "S&P
Food Retail Index").
[Graph]
Measurement
Period
(Fiscal Year
Covered) Penn Traffic S&P 500 Index S&P Food Retail Index
- ------------- ------------ ------------- ---------------------
1991 100 100 100
1992 156 119 96
1993 185 128 120
1994 206 140 112
1995 205 137 121
1996 90 185 151
- ---------------------------
(1) Assumes $100 invested on February 2, 1991 in Penn Traffic Common
Stock, S&P 500 Index and S&P Food Retail Index (also assumes
reinvestment of dividends).
(2) Includes Albertsons, American Stores, Bruno's, Giant Food, Great
Atlantic & Pacific, Kroger and Winn Dixie.
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CERTAIN TRANSACTIONS
During Fiscal 1997, MTH will provide financial consulting and business
management services to Penn Traffic, for which services MTH will be compensated
at the rate of $1,395,100 per annum until November 1, 1996, when this rate will
increase to $1,437,000 per annum. In addition to such financial consulting and
business management services, it is anticipated that MTH will periodically
provide investment banking services to the Company in connection with
acquisitions and other transactions, for which MTH will receive reasonable and
customary fees.
During Fiscal 1996 MTH provided financial consulting and business
management services to Penn Traffic, for which services MTH received an annual
fee of $1,395,100.
Until March 1995, the Company held an indirect ownership interest in the
common stock of Grand Union Holdings, which was the indirect corporate parent of
Grand Union until Grand Union emerged from Chapter 11 reorganization in June
1995. In July 1990, P&C and Grand Union entered into an agreement (the "New
England Operating Agreement") whereby Grand Union acquired the right to operate
thirteen P&C stores located in New England under the Grand Union name until
July 2000, with an option to extend the term of such operation for an additional
five years. Penn Traffic also granted Grand Union an option to purchase such
stores. In connection with these transactions, Grand Union agreed to pay Penn
Traffic a minimum annual fee averaging $10.7 million per year during the ten-
year lease term plus, beginning with the year commencing July 31, 1992,
additional contingent fees of up to $700,000 per year based upon sales
performance of the stores operated by Grand Union. In addition, Grand Union
paid Penn Traffic $7.5 million for the option to purchase the stores. Under the
terms of the New England Operating Agreement, the recapitalization of Grand
Union in July 1992 triggered a $15 million prepayment of the operating fee.
This prepayment reduced the future payments that Grand Union will make to Penn
Traffic pursuant to the terms of the Operating Agreement by approximately $3.2
million per year. The New England Operating Agreement was assumed by Grand
Union when it emerged from Chapter 11 reorganization in June 1995 and remains in
effect.
From September 1993 until September 1995, Penn Traffic participated in a
consolidated heath and beauty care and general merchandise purchasing program
with Grand Union. In
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Fiscal 1996, the amount of product sold by Penn Traffic to Grand Union was $55.6
million.
During Fiscal 1996, Penn Traffic was represented by the law firm of
Gilmartin, Poster & Shafto in connection with various matters. During Fiscal
1996, Gilmartin, Poster & Shafto received $251,877 in fees from Penn Traffic for
these services.
2. AMENDED AND RESTATED DIRECTORS' STOCK OPTION PLAN
The Board of Directors believes it to be in the best interests of the
Company and its stockholders to continue to encourage increased share ownership
by directors who are not employees of the Company or any of its subsidiaries, in
order to promote long-term stockholder value through continuing ownership of the
Company's Common Stock. To provide for such increased share ownership, the
Board of Directors in April 1990 adopted the Directors' Plan, which was approved
by the stockholders of the Company at the 1990 Annual Meeting of Stockholders.
The Directors' Plan provided for the automatic grant of nonqualified options to
purchase 1,500 shares of Common Stock of the Company to each non-employee
director of the Company in each year after 1989 as of the day after the Annual
Meeting of Stockholders. The Directors' Plan also provided for the grant of an
option to purchase 1,500 shares of Common Stock to any non-employee director
elected to fill a vacancy on the Board of Directors at any time other than at an
Annual Meeting of Stockholders, upon the election of such director.
The Directors' Plan provided for the issuance of a maximum of 50,000 shares
of Common Stock of the Company (subject to antidilution adjustments) pursuant to
exercise of options granted under the Directors' Plan. Since adoption of the
Directors' Plan, options to purchase 45,000 shares of Common Stock have been
awarded to non-employee directors. On April 2, 1996, the Board of Directors
adopted The Penn Traffic Company Amended and Restated Directors' Stock Option
Plan (the "Restated Plan"), which provides for the issuance to non-employee
directors of an additional 50,000 shares of Common Stock of the Company (subject
to antidilution adjustments). The Restated Plan, which is substantially similar
to the Directors' Plan, provides for the automatic grant of nonqualified stock
options to purchase 1,500 shares of Common Stock of the Company to each non-
employee director
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of the Company in each year as of the first business day after the Annual
Meeting of Stockholders of the Company. Like the Directors' Plan, the Restated
Plan also provides for the grant of an option to purchase 1,500 shares of Common
Stock to any non-employee director who is elected to fill a vacancy on the Board
of Directors at any time other than at an Annual Meeting of Stockholders, upon
the election of such director. The Restated Plan provides that it shall be
submitted to the stockholders of the Company for their approval.
There are currently four non-employee directors of the Company eligible to
receive grants of options under the Restated Plan. The Restated Plan is
administered by the Board of Directors of the Company. The Board of Directors,
subject to the provisions of the Restated Plan, has authority to prescribe the
form of agreement embodying awards of options, to construe the Restated Plan, to
determine all questions arising thereunder and to adopt and amend such rules and
regulations for the administration of the Restated Plan as it may deem
desirable.
Awards under the Restated Plan shall include only options to purchase
shares of Common Stock of the Company. The shares of Common Stock which may be
issued under the Restated Plan pursuant to the exercise of options may be either
authorized but unissued shares or shares held by the Company as treasury shares.
On April 17, 1996, the fair market value (as defined in the Restated Plan) of
the 50,000 additional shares of Common Stock which may be issued under the
Restated Plan was about $13.50 per share, or about $675,000 in the aggregate for
such additional 50,000 shares of Common Stock.
The Restated Plan provides that no option granted under the Restated Plan
shall be exercisable more than ten years after its grant and the price at which
shares of Common Stock may be purchased under any such option shall be the fair
market value of such shares on the date such option is granted, which is defined
as the average of the high and low sales prices of a share of the Company's
Common Stock on the date of grant as reported on the New York Stock Exchange
Composite Transactions Tape or, if the New York Stock Exchange is closed on that
date, the last preceding date on which the New York Stock Exchange was open for
trading. Upon exercise of an option, the option price is required to be paid in
cash or by check, or in shares of Common Stock valued at the fair market value
thereof on the date of payment, or in a combination of cash and shares of Common
Stock.
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The Board of Directors may amend or terminate the Restated Plan at any
time, provided, however, that no such action shall materially and adversely
affect the right of any participant with respect to any option theretofore
granted under the Restated Plan without his written consent, and provided,
further, that no amendment, without the further approval of the Company's
stockholders, shall increase the maximum number of shares of Common Stock as to
which options may be granted under the Restated Plan or change the class of
persons eligible to receive options under the Restated Plan. In addition, in
order to comply with rules and regulations promulgated by the Securities and
Exchange Commission, certain provisions of the Restated Plan may not be amended
more than once every six months, other than to comport with changes in the Code,
the Employee Retirement Income Security Act of 1974, as amended, or the rules
under either of such laws.
The Restated Plan is effective as of April 2, 1996, subject to approval
thereof by the stockholders of the Company at the 1996 Annual Meeting of
Stockholders. No options granted after the date of adoption of the Restated
Plan shall be exercisable unless and until the Restated Plan has been so
approved and adopted. No awards may be granted to directors under the Restated
Plan after December 31, 2005.
All options issued under the Restated Plan are "nonqualified" for federal
income tax purposes. In general, a recipient of an option will recognize no
income on the grant of the option. A recipient will recognize income upon the
exercise of the option in an amount equal to the excess of the fair market value
of the shares of Common Stock on the date over the exercise price of the option.
The Company will be entitled to a deduction for such amount in the year in which
the recipient recognizes such amount as income.
A copy of the Restated Plan is set forth in full in Exhibit A to this Proxy
Statement. The foregoing description is a summary of some, but not all, of the
essential provisions of the Restated Plan, and is qualified by reference to the
full text of the Restated Plan.
An affirmative vote of a majority of the shares of Common Stock present in
person or represented by proxy and entitled to vote at the 1996 Annual Meeting
of Stockholders is required to approve the Restated Plan. Shares the holders of
which abstain from voting for the approval of the Restated Plan, and broker
non-votes will be counted as present but
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will not be counted in the total number of shares voted for the approval of the
Restated Plan and, thus, will have the effect of votes against the approval of
the Restated Plan.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE RESTATED
PLAN. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A CONTRARY VOTE.
3. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors, upon the recommendation of the Company's Audit
Committee, has selected Price Waterhouse LLP, independent certified public
accountants, as independent auditors for the Company for the fiscal year ending
February 1, 1997. A resolution will be submitted to stockholders at the Annual
Meeting for ratification of such selection. Although ratification by
stockholders is not a prerequisite to the ability of the Board of Directors to
select Price Waterhouse LLP as the Company's independent auditors, the Company
believes such ratification to be desirable. If the stockholders do not ratify
the selection of Price Waterhouse LLP, the selection of independent auditors
will be reconsidered by the Board of Directors; however, the Board of Directors
may select Price Waterhouse LLP notwithstanding the failure of the stockholders
to ratify its selection.
Representatives of Price Waterhouse LLP will be present at the Annual
Meeting, will have the opportunity to make statements, if they desire to do so,
and will be available to respond to appropriate questions.
Price Waterhouse LLP has performed the annual examination of the Company's
financial statements since 1981.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS RESOLUTION. PROXIES
SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY
A CONTRARY VOTE. THE RESOLUTION MAY BE ADOPTED BY A MAJORITY OF THE VOTES CAST
WITH RESPECT THERETO.
4. ALL OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this statement, the Board of Directors knows of no
business that will be presented for consideration at the meeting other than that
referred to above. As to other business, if any, that may come before the
meeting,
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proxies in the enclosed form will be voted in accordance with the judgment of
the person or persons voting the proxies.
5. STOCKHOLDER NOMINATIONS AND PROPOSALS
The Company's by-laws require that there be furnished to the Company
written notice with respect to the nomination of a person for election as a
director (other than a person nominated at the direction of the Board of
Directors), as well as the submission of a proposal (other than a proposal
submitted at the direction of the Board of Directors), at a meeting of
stockholders. In order for any such nomination or submission to be proper, the
notice must contain certain information concerning the nominating or proposing
stockholder, and the nominee or the proposal, as the case may be, and must be
furnished to the Company generally not less than 30 days prior to the meeting.
A copy of the applicable by-law provisions may be obtained, without charge, upon
written request to the Secretary of the Company at its principal executive
offices.
In accordance with the rules of the Commission, any proposals which
stockholders intend to present at the Company's 1997 Annual Meeting of
Stockholders must be received by the Secretary of the Company by January 1, 1997
in order for the proposal to be considered for inclusion in the Company's notice
of meeting, proxy statement and proxy relating to the 1997 Annual Meeting of
Stockholders.
6. ADDITIONAL INFORMATION
At any time prior to their being voted, the enclosed proxies are revocable
by written notice to the Secretary of the Company, by giving a later dated proxy
or by appearance at the meeting and voting in person.
Solicitation of proxies will be made by mail, telephone and, to the extent
necessary, by telegrams and personal interviews. Expenses in connection with
the solicitation of proxies will be borne by the Company. Brokers, custodians
and fiduciaries will be requested to transmit proxy material
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<PAGE>
to the beneficial owners of Common Stock held of record by such persons, at the
expense of the Company. The Company has retained W.F. Doring to aid in the
solicitation of proxies, and for its services the Company expects to pay fees of
approximately $2,500 plus expenses.
By Order of the Board of Directors
EUGENE R. SUNDERHAFT
Senior Vice President - Finance
and Secretary
May 1, 1996
Syracuse, New York
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<PAGE>
Exhibit A
THE PENN TRAFFIC COMPANY
AMENDED AND RESTATED
DIRECTORS' STOCK OPTION PLAN
1. PURPOSE. The purpose of The Penn Traffic Company Amended and Restated
Directors' Stock Option Plan (the "Plan") is to advance the interests of The
Penn Traffic Company (the "Company") and its stockholders by encouraging
increased stock ownership by members of the Board of Directors (the "Board") of
the Company who are not employees of the Company or any of its subsidiaries, in
order to promote long-term stockholder value through continuing ownership of the
Company's common stock.
2. ADMINISTRATION. The Plan shall be administered by the Board. The Board
shall have all the powers vested in it by the terms of the Plan, such powers to
include authority (within the limitations described herein) to prescribe the
form of the agreement embodying awards of nonqualified stock options made under
the Plan ("Options"). The Board shall have the power to construe the Plan, to
determine all questions arising thereunder and, subject to the provisions of the
Plan, to adopt and amend such rules and regulations for the administration of
the Plan as it may deem desirable. Any decision of the Board in the
administration of the Plan shall be final and conclusive. The Board may act
only by a majority of its members in office, except that the members thereof may
authorize any one or more of their number or the Secretary or any other officer
of the Company to execute and deliver documents on behalf of the Company. No
member of the Board shall be liable for anything done or omitted to be done by
him or by any other member of the Board in connection with the Plan, except for
his own willful misconduct or as expressly provided by statute.
3. PARTICIPATION. Each member of the Board of the Company who is not an
employee or officer of the Company or any of its subsidiaries and has not been
such an employee or officer within five (5) years preceding the relevant date of
determination (a "Non-Employee Director") shall be eligible to receive an Option
in accordance with Paragraph 5 below. As used herein, the term "subsidiary"
means any corporation at least 40 percent of whose outstanding voting stock is
owned, directly or indirectly, by the Company.
<PAGE>
4. AWARDS UNDER THE PLAN.
(a) TYPES OF AWARDS. Awards under the Plan shall consist only of Options,
which are rights to purchase shares of common stock, par value $1.25 per share,
of the Company (the "Common Stock"). Such Options are subject to the terms,
conditions and restrictions specified in Paragraph 5 below.
(B) MAXIMUM NUMBER OF SHARES THAT MAY BE ISSUED. There may be issued
under the Plan pursuant to the exercise of Options granted on or after April 4,
1990 and prior to April 2, 1996 an aggregate of not more than 50,000 shares of
Common Stock, subject to adjustment as provided in Paragraph 6 below. There may
be issued under the Plan pursuant to Options granted on or after April 2, 1996
an aggregate of not more than 50,000 shares of Common Stock, subject to
adjustment as provided in Paragraph 6 below.
(C) RIGHTS WITH RESPECT TO SHARES. A Non-Employee Director to whom an
Option is granted (and any person succeeding to such a Non-Employee Director's
rights pursuant to the Plan) shall have no rights as a stockholder with respect
to any shares of Common Stock issuable pursuant to any such Option until the
date of the issuance of a stock certificate to him for such shares. Except as
provided in Paragraph 6 below, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash, securities or other property) for which the record date is prior to the
date such stock certificate is issued.
5. NONQUALIFIED STOCK OPTIONS. Each Option granted under the Plan shall be
evidenced by an agreement in such form as the Board shall prescribe from time to
time in accordance with the Plan and shall comply with the following terms and
conditions:
(a) The Option exercise price shall be the fair market value of the shares
of Common Stock subject to such Option on the date the Option is granted, which
shall be the average of the high and the low sales prices of a share of Common
Stock on the date of grant as reported on the New York Stock Exchange Composite
Transactions Tape or, if the New York Stock Exchange is closed on that date, on
the last preceding date on which the New York Stock Exchange was open for
trading.
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(b) The term of each Option shall be ten years from the date on which it
is granted, unless a shorter period is fixed by the Board of Directors in
respect of any Option prior to the date of grant of such Option.
(c) Each Non-Employee Director shall receive an initial grant of an Option
for 1,500 shares of Common Stock as of April 4, 1990; provided, however, that
any Options granted under the Plan prior to any required approval by the
stockholders of the Company shall be conditioned upon such approval.
(d) As of the first business day after the conclusion of each annual
meeting of stockholders of the Company, each Non-Employee Director shall
automatically receive an Option for 1,500 shares of Common Stock; provided,
however, that any Options granted under the Plan prior to any required approval
by the stockholders of the Company shall be conditioned upon such approval.
(e) Each Non-Employee Director who is elected to fill a vacancy on the
Board of Directors at any time other than at an annual meeting of stockholders
of the Company shall automatically receive, upon such election, an Option for
1,500 shares of Common Stock; provided, however, that any Options granted under
the Plan prior to any required approval by the stockholders of the Company shall
be conditioned upon such approval.
(f) Any Options granted under the Plan prior to any required approval by
the stockholders of the Company shall not be transferable by the optionee until
such required stockholder approval is obtained. Thereafter, the Option shall be
transferable only by will or the laws of descent and distribution, and shall be
exercisable during the optionee's lifetime only by him.
(g) The Option shall not be exercisable:
(i) before the expiration of six months from the date it is granted, at
which time, subject to prior stockholder approval in accordance with Paragraph
10 below, it shall be exercisable in full; provided that an Option shall
automatically become immediately exercisable in full when the Non-Employee
Director ceases to be a Non-Employee Director for any reason other than death;
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<PAGE>
(ii) after the expiration of ten years from the date it is granted;
(iii) unless payment in full is made for the shares of Common Stock being
acquired thereunder at the time of exercise; such payment shall be made
(A) in United States dollars by cash or check, or
(B) in lieu thereof, by tendering to the Company shares of Common
Stock owned by the person exercising the Option and having a fair market
value equal to the cash exercise price applicable to such Option, such fair
market value to be the average of the high and the low sales prices of a
share of Common Stock on the date of exercise as reported on the New York
Stock Exchange Composite Transactions Tape, or, if the New York Stock
Exchange is closed on that date, on the last preceding date on which the
New York Stock Exchange was open for trading, or
(C) by a combination of United States dollars and shares of Common
Stock as aforesaid; and
(iv) unless the person exercising the Option has been, at all times during
the period beginning with the date of grant of the Option and ending on the date
of such exercise, a Non-Employee Director of the Company, except that
(A) if such person shall cease to be such a Non-Employee Director for
reasons other than death, while holding an Option that has not expired and
has not been fully exercised, such person, at any time within one year of
the date he ceased to be such a Non-Employee Director (but in no event
after the Option has expired under the provisions of subparagraph 5 (g)
(ii) above) , may exercise the Option with respect to any shares of Common
Stock as to which he has not exercised the Option on the date he ceased to
be such a Non-Employee Director; or
(B) if any person to whom an Option has been granted shall die
holding an Option that has not been fully exercised, his executors,
administrators, heirs or distributees, as the case may be, may, at any time
within one year after the date of such death (but in no event after the
Option has expired under the provisions of subparagraph 5 (g) (ii) above),
exercise the Option
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<PAGE>
with respect to any shares of Common Stock as to which the decedent could
have exercised the Option at the time of death.
6. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding shares of Common Stock of the Company by reason of any stock split,
stock dividend, recapitalization, merger, consolidation, reorganization,
combination or exchange of shares or other similar event, the number or kind of
shares that may be issued under the Plan pursuant to subparagraphs 4(a) and 4(b)
above shall be automatically adjusted to give effect to the occurrence of such
event, and the number or kind of shares subject to, or the Option price per
share under, any outstanding Option shall be automatically adjusted so that the
proportionate interest of the participant shall be maintained as before the
occurrence of such event; such adjustment in outstanding Options shall be made
without change in the total Option exercise price applicable to the unexercised
portion of such Options and with a corresponding adjustment in the Option
exercise price per share, and such adjustment shall be conclusive and binding
for all purposes of the Plan.
7. MISCELLANEOUS PROVISIONS.
(a) Except as expressly provided for in the Plan, no Non-Employee Director
or other person shall have any claim or right to be granted an Option under the
Plan. Neither the Plan nor any action taken hereunder shall be construed as
giving any Non-Employee Director any right to be retained in the service of the
Company.
(b) A participant's rights and interest under the Plan may not be assigned
or transferred in whole or in part either directly or by operation of law or
otherwise (except, in the event of a participant's death, by will or the laws of
descent and distribution), including, but not by way of limitation, execution,
levy, garnishment, attachment, pledge, bankruptcy or in any other manner, and no
such right or interest of any participant in the Plan shall be subject to any
obligation or liability of such participant.
(c) No shares of Common Stock shall be issued hereunder unless counsel for
the Company shall be satisfied that such issuance will be in compliance with
applicable federal, state and other securities laws.
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<PAGE>
(d) It shall be a condition to the obligation of the Company to issue
shares of Common Stock upon exercise of an Option, that the participant (or any
beneficiary or person entitled to act under subparagraph 5(g)(iv)(B) above) pay
to the Company, upon its demand, such amount as may be requested by the Company
for the purpose of satisfying any liability to withhold federal, state, local or
foreign income or other taxes. If the amount requested is not paid, the Company
may refuse to issue shares of Common Stock.
(e) The expenses of the Plan shall be borne by the Company.
(f) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the issuance of shares upon exercise of any Option under the
Plan and issuance of shares upon exercise of Options shall be subordinate to the
claims of the Company's general creditors.
(g) By accepting any Option or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated acceptance and ratification of, and consent to, the
Plan, the terms and conditions of any agreement embodying awards of Options and
any action taken under the Plan by the Company or the Board.
(h) The masculine pronoun means the feminine and the singular means the
plural wherever appropriate.
(i) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Options hereunder or any shares
of Common Stock issued pursuant hereto as may be required by Section 13 or 15(d)
of the Securities Exchange Act of 1934, as amended, or any other applicable
statute, rule or regulation.
8. AMENDMENT OR DISCONTINUANCE. The Plan may be amended at any time and from
time to time by the Board as the Board shall deem advisable, provided, however,
that (a) except as provided in Paragraph 6 above, the Board may not, without
further approval by the stockholders of the Company in accordance with Paragraph
10 below, increase the maximum number of shares of Common Stock as to which
Options may be granted under the Plan or change the class of persons eligible to
receive Options under the Plan; and (b) Paragraph 3 and subparagraphs 5(a) and
5(d) shall not be amended more
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<PAGE>
than once every six months, other than to comport with changes in the Internal
Revenue Code of 1986, as amended, the Employee Retirement Income Security Act of
1974, as amended, or the rules under either of such laws. No amendment of the
Plan shall materially and adversely affect any right of any participant with
respect to any Option theretofore granted without such participant's written
consent.
9. TERMINATION. The Plan shall terminate upon the earlier of the following
dates or events to occur:
(a) upon the adoption of a resolution of the Board terminating the Plan;
or
(b) December 31, 2005.
No termination of the Plan shall materially and adversely affect any of the
rights or obligations of any person, without his consent, under any Option
theretofore granted under the Plan.
10. STOCKHOLDER APPROVAL. The Plan shall be submitted to the stockholders of
the Company for their approval. Except to the extent otherwise required by the
Company's Certificate of Incorporation or the Company's By-Laws, the
stockholders shall be deemed to have approved the Plan if and when it is
approved at a meeting of the stockholders by a majority of the shares of Common
Stock voted at such meeting.
Amended and Restated
April 2, 1996
<PAGE>
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PROXY THE PENN TRAFFIC COMPANY PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- JUNE 4, 1996
The undersigned hereby appoints Gary D. Hirsch and John T. Dixon and each
of them jointly and severally, attorneys and proxies of the undersigned, with
full power of substitution and hereby authorizes them to represent and to vote,
as designated below, all the shares of common stock of The Penn Traffic Company,
which the undersigned may be entitled to vote at the Annual Meeting of
Stockholders to be held at the Hyatt Capital Square, 75 East State Street,
Columbus, Ohio 43215 on Tuesday, June 4, 1996 at 1:30 P.M. Columbus time, and at
all adjournments thereof, on all matters coming before said meeting.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE ON THE
REVERSE SIDE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED ON THE REVERSE SIDE AND FOR PROPOSALS 2 AND 3.
PLEASE MARK, SIGN, DATE AND MAIL THE PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
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<PAGE>
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THE PENN TRAFFIC COMPANY
PLEASE MARK VOTE IN OVAL IN THE FOLLOWING MANNER USING DARK INK ONLY.
[ ]
The Board of Directors recommends a vote FOR all Nominees listed in Proposal 1
and FOR approval of Proposals 2 and 3. Unless otherwise specified, this Proxy
will be voted FOR all Nominees listed in Proposal 1 and FOR approval of
Proposals 2 and 3.
FOR ALL
1. Election Directors-- (EXCEPT
NOMINEES: Martin A. Fox NOMINEE(S)
and Harold S. Poster FOR WITHHOLD WRITTEN BELOW)
/ / / / / /
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2. The proposal to approve the FOR AGAINST ABSTAIN
Company's Amended and Restated / / / / / /
Directors' Stock Option Plan.
3. The proposal to ratify the FOR AGAINST ABSTAIN
appointment of Price Waterhouse / / / / / /
as the independent accountants
for The Penn Traffic Company
for the fiscal year ending
February 1, 1997.
4. To consider and approve such other matters as may properly come before the
meeting.
ALL PROXIES TO VOTE AT SAID MEETING OR ANY ADJOURNMENTS THEREOF HERETOFORE GIVEN
BY THE UNDERSIGNED ARE HEREBY REVOKED. RECEIPT OF NOTICE OF ANNUAL MEETING AND
PROXY STATEMENT IS HEREBY ACKNOWLEDGED.
Dated: _________________________, 1996
Signature(s) ___________________________________________________________________
________________________________________________________________________________
(Please sign as name(s) appears on this proxy card. If joint account, each
joint owner should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If corporation, please
sign in full corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.)
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