SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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 Section240.14a-12
THE PENN TRAFFIC COMPANY
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(Name of Registrant as Specified In Its Charter)
NOT APPLICABLE
- -----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
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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(4) Date Filed:
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[LOGO]
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
JULY 11, 2001
The Annual Meeting of Stockholders of The Penn Traffic Company (the
"Company") will be held on Wednesday, July 11, 2001, at 1:00 p.m., Eastern
Standard Time, at the Wyndham Hotel, 6301 Route 298, East Syracuse, New York,
13057, for the following purposes:
1. To elect nine directors for terms expiring at the 2002 Annual Meeting
of Stockholders;
2. To consider and take action upon a proposal to ratify the selection of
PricewaterhouseCoopers LLP, independent certified public accountants,
as the Company's auditors for the fiscal year ending February 2, 2002;
and
3. 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 May 18, 2001, 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
FRANCIS D. PRICE, JR.
Secretary
May 25, 2001
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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T H E P E N N T R A F F I C C O M P A N Y
1200 State Fair Boulevard
Syracuse, New York 13221-4737
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
JULY 11, 2001
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 Wednesday, July 11, 2001, at 1:00 p.m., Eastern
Standard Time, at the Wyndham Hotel, 6301 Route 298, East Syracuse, New York
13057. The approximate date on which this Proxy Statement is first being mailed
to stockholders is May 25, 2001.
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 May 18, 2001 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 20,054,112 shares
of common stock, par value $.01 per share (the "Common Stock"), the holders of
which are entitled to one vote per share.
1. ELECTION OF DIRECTORS
Pursuant to the Company's certificate of incorporation and by-laws, the
terms of office of each director shall expire at the next Annual Meeting
following the director's election. The Company's certificate of incorporation
and by-laws fix the total number of members of the Company's Board of Directors
at no less than two or more than ten. Currently, the Board of Directors
consists of nine members. The Board of Directors has decided that it will
nominate the nine current directors for election at the Annual Meeting. Your
proxy cannot be voted at the Annual Meeting for a greater number of nominees.
The following individuals have been nominated by the Board of Directors
for election as directors at the 2001 Annual Meeting, each to serve for a term
of one year, until the 2002 Annual Meeting of Stockholders and until his
successor is duly elected and qualified:
Byron E. Allumbaugh Gabriel S. Nechamkin
Kevin P. Collins Lief D. Rosenblatt
Joseph V. Fisher Mark D. Sonnino
Martin A. Fox Peter L. Zurkow
David B. Jenkins
Proxies in the enclosed form received from holders of Common Stock will be
voted for the election of the nine nominees named above as directors of the
Company unless stockholders indicate otherwise. If any of the foregoing
nominees is unable to serve for any reason (which event is not anticipated), the
shares represented by the enclosed proxy may be voted for such other person or
persons as determined by the holders of such proxy, unless stockholders indicate
otherwise. 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 Annual Meeting. Thus, those nominees who receive the
nine 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 or broker non-votes 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" THE ELECTION OF
ITS NINE NOMINEES AS DIRECTORS OF THE COMPANY.
2
The following information includes the age, the year in which first
elected as a director of the Company, the principal occupation, and other
directorships of each of the nominees named for election as directors.
Byron E. Allumbaugh Mr. Allumbaugh was the Chairman and Chief Executive
Age: 69 Officer of the former Ralphs Grocery Company from 1976
Director since 1999 until he retired in 1997. Mr. Allumbaugh serves as a
Director of CKE Restaurants, Inc. (food service
company), El Paso Energy Company (natural gas and
energy company) and Ultramar Diamond Shamrock
Incorporated (oil refining company).
Kevin P. Collins Mr. Collins has been a member and a Principal of The
Age: 50 Old Hill Company LLC (financial advisory services
Director since 1999 company) since 1997. Mr. Collins was a Principal of
JHP Enterprises, Ltd. (financial advisory services)
from 1991 to 1997. Mr. Collins serves as a Director
of Key Energy Services, Inc. (provider of technology
services to the petroleum industry), London Fog
Industries, Inc. (apparel company), and Metretek
Technologies, Inc. (provider of information services
to the energy industry).
Joseph V. Fisher Mr. Fisher has been a Director and the President and
Age: 59 Chief Executive Officer of the Company since
Director since 1998 November 1998. From 1992 to November 1998
Mr. Fisher held senior management positions with Big V
Supermarkets Inc. ("Big V"), a regional supermarket
company operating primarily under the ShopRite name,
including President and Chief Executive Officer from
1995 to 1998, Executive Vice President - Marketing and
Operations and Chief Operating Officer from 1994 to
1995, Senior Vice President - Marketing and Operations
from 1993 to 1994 and Vice President - Store
Operations from 1992 to 1993. He also served as a
Director of Big V from 1993 to 1998. Prior to joining
Big V, Mr. Fisher was employed by Purity
Supreme, Inc. (supermarket company) from 1973 to 1991
in various management positions including Senior Vice
President - Supermarkets from 1985 to 1991.
3
Martin A. Fox Mr. Fox has been Executive Vice President of the
Age: 48 Company since February 2000 and Chief Financial
Director since 1993 Officer since June 1999. Mr. Fox was also Vice
Chairman of the Executive Committee from June 1999
until January 2000 and Vice Chairman - Finance of the
Company from 1993 until June 1999. Mr. Fox was a Vice
President of the Company from 1989 until
1993. Mr. Fox was a First Vice President of
PaineWebber Inc. from 1986 to 1988. From 1979 to
1986, Mr. Fox was employed by Citicorp in various
positions, including Vice President.
David B. Jenkins Mr. Jenkins is a business consultant. Mr. Jenkins was
Age: 70 President and Chief Executive Officer of Shaw's
Director since 2000 Supermarkets, Inc., from 1982 until his retirement as
President and CEO in 1993, and was Chairman of the
Board until 1995. Mr. Jenkins serves as a Director of
Aai.Foster Grant (jewelry and eyeglass company),
Citizens Capital Incorporated, (venture capital
company), KaBloom, Ltd. (flower distribution company),
and The Foreside Company (home furnishings
company). Mr. Jenkins served as a Director of J.
Sainsbury International (parent company of Shaw's and
a British supermarket company) from 1994 to
1995. Mr. Jenkins served as a Director of Nabisco
Holdings Corp. and Nabisco Group Holdings Corp. (food
manufacturing company), from 1996 to 2000.
Gabriel S. Nechamkin Mr. Nechamkin is a Principal of Satellite Asset
Age: 43 Management, L.P. He was previously employed at Soros
Director since 1999 Fund Management LLC from 1988 through 1999, most
recently as Managing Director and Head of Trading for
the Arbitrage, High Yield and Distressed Securities
Department.
Lief D. Rosenblatt Mr. Rosenblatt is a Principal of Satellite Asset
Age: 47 Management, L.P. He was previously employed at Soros
Director since 1999 Fund Management LLC from 1988 through 1999, most
recently as Managing Director and Head of the
Arbitrage, High Yield and Distressed Securities
Department.
4
Mark D. Sonnino Mr. Sonnino is a Principal of Satellite Asset
Age: 40 Management, L.P. He was previously employed at Soros
Director since 1999 Fund Management LLC from 1988 through 1999, most
recently as Managing Director and Head of Research for
the Arbitrage, High Yield and Distressed Securities
Department.
Peter L. Zurkow Mr. Zurkow has been Chairman of the Board of the
Age: 47 Company since June 1999. Mr. Zurkow is a private
Director since 1999 investor. From 1992 to April 2001, Mr. Zurkow was a
Managing Director of UBS Warburg (January 2001 to
April 2001) and its predecessor firm, PaineWebber Inc.
(1992 to 2000). He served as a Director of
Streamline, Inc. (online grocery company) from 1997 to
1998, Kash N' Karry Supermarkets from 1994 to 1996 and
E-artgroup.com (online art dealer) from 1999 to 2000.
There are no family relationships among the directors and executive
officers of the Company.
On March 1, 1999 (the "Petition Date"), Penn Traffic and certain of its
subsidiaries filed petitions for relief (the "Bankruptcy Cases") under Chapter
11 of the United States Bankruptcy Code in the United States Bankruptcy Court
for the District of Delaware (the "Bankruptcy Court"). On May 27, 1999 the
Bankruptcy Court confirmed the Company's Chapter 11 plan of reorganization (the
"Plan") and on June 29, 1999, the Plan became effective. The Bankruptcy Cases
were commenced in order to implement a prenegotiated financial
restructuring. Messrs. Fisher and Fox served as executive officers and
directors of Penn Traffic on the Petition Date.
The Board of Directors held twelve meetings in the fiscal year ended
February 3, 2001 ("Fiscal 2001"). Each director in office attended at least 75%
of the total number of meetings of the Board of Directors of the Company and of
the committees of such Board on which he served, except for Mr. Rosenblatt.
The current members of the Executive Committee are Messrs. Fisher and Fox.
The Executive Committee did not hold any formal meetings during Fiscal 2001 but
did act by its written consent. 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.
5
The current members of the Compensation Committee are Messrs. Allumbaugh,
Jenkins, Nechamkin and Zurkow. Mr. Zurkow is Chairman of the Compensation
Committee. The Compensation Committee reviews the annual recommendations of the
Chief Executive Officer concerning the compensation of officers and of certain
of the employees of the Company, including the compensation plans, retirement
plans and fringe benefit plans 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 four meetings
during Fiscal 2001, also administers the Company's 1999 Equity Incentive Plan
(the "Equity Plan") and 1999 Directors' Stock Option Plan (the "Directors
Plan").
The current members of the Audit Committee are Messrs. Collins, Jenkins,
Sonnino and Zurkow. Mr. Collins is Chairman of the Audit Committee. The Audit
Committee held two meetings in Fiscal 2001. In addition, the Chairman of the
Audit Committee held discussions with the Company's financial management and the
Company's independent auditors regarding the Company's Consolidated Statement of
Operations and Consolidated Balance Sheet and matters required by the Statement
of Auditing Standards ("SAS") No. 61, as amended by SAS 89 and 90, prior to the
public announcement of the Company's financial results for the first, second and
third quarters of Fiscal 2001.
The current members of the Nominating Committee are Messrs. Allumbaugh and
Rosenblatt. Stockholder nominations of persons for election as directors are
subject to the notice requirements described below under the caption
"Stockholder Nominations and Proposals." The Nominating Committee did not meet
during Fiscal 2001.
6
EXECUTIVE OFFICERS
Set forth below are the names, ages and positions with the Company of the
Executive Officers of the Company as of the date hereof.
NAME AGE POSITION WITH PENN TRAFFIC
- ---------------------- -------- ---------------------------------------------------------
Joseph V. Fisher 59 President and Chief Executive Officer
Martin A. Fox 48 Executive Vice President and Chief Financial Officer
Leslie H. Knox 54 Senior Vice President and Chief Marketing Officer
Randy P. Martin 45 Vice President - Finance and Chief Accounting Officer
Francis D. Price Jr. 52 Vice President, General Counsel and Secretary
Mr. Fisher has been a Director and the President and Chief Executive
Officer of the Company since November 1998. From 1992 to November 1998
Mr. Fisher held senior management positions with Big V, a regional supermarket
company operating primarily under the ShopRite name, including President and
Chief Executive Officer from 1995 to 1998, Executive Vice President - Marketing
and Operations and Chief Operating Officer from 1994 to 1995, Senior Vice
President - Marketing and Operations from 1993 to 1994 and Vice President -
Store Operations from 1992 to 1993. He also served as a Director of Big V from
1993 to 1998. Prior to joining Big V, Mr. Fisher was employed by Purity
Supreme, Inc. (supermarket company) from 1973 to 1991 in various management
positions including Senior Vice President - Supermarkets from 1985 to 1991.
Mr. Fox has been Executive Vice President of the Company since February
2000 and Chief Financial Officer since June 1999. Mr. Fox was also Vice
Chairman of the Executive Committee from June 1999 until January 31, 2000 and
Vice Chairman - Finance of the Company from 1993 until June 1999. Mr. Fox was a
Vice President of the Company from 1989 until 1993. From 1986 to 1988, Mr. Fox
was a First Vice President of PaineWebber Inc. From 1979 to 1986, Mr. Fox was
employed by Citicorp in various positions, including Vice President.
7
Mr. Knox has been Senior Vice President and Chief Marketing Officer since
May 1999. From 1995 until May 1999, Mr. Knox held the position of Vice
President - Merchandising with Weis Markets Inc. From 1984 until 1995,
Mr. Knox held various management positions with ABCO Markets Inc., including
Senior Vice President of Sales and Marketing from 1988 to 1995. From 1969 to
1984, Mr. Knox was employed by Alpha Beta Company, a division of American Stores
Company, in various management positions.
Mr. Martin has been Vice President - Finance and Chief Accounting Officer
of Penn Traffic since January 1999. From 1997 until January 1999, he served as
the Company's Vice President of Strategic Planning and Treasurer. From 1993 to
1997, Mr. Martin served as the Company's Director of Taxes. From 1984 to 1993,
Mr. Martin was employed by Price Waterhouse, in various positions including
Senior Tax Manager from 1991 to 1993.
Mr. Price has been Vice President and General Counsel since 1993 and
became Secretary in 1997. Mr. Price was Vice President and General Counsel of
the Company's P&C division from 1985 until 1993. From 1978 to 1985, Mr. Price
served in various other management positions at P&C.
8
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 April 27, 2001
(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 persons named in the Summary Compensation Table set
forth herein; and (iv) all Directors and Executive Officers as a group. The
information set forth below for 5% stockholders was derived from publicly
available reports made by the persons listed below on Forms 13G and 13D. The
Company has not attempted to verify any of this information. 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 warrants or 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. On April 27, 2001, there were 20,054,112 shares of Common Stock
outstanding.
9
AMOUNT & NATURE OF
NAME AND ADDRESS OF BENEFICIAL PERCENT OF
BENEFICIAL OWNER OWNERSHIP CLASS
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Soros Fund Management LLC 9,032,768 (1) 45.0%
888 Seventh Avenue, 33rd Floor
New York, NY 10106
Satellite Asset Management, L.P. 9,032,768 (2) 45.0%
10 East 50th Street, 21st Floor
New York, NY 10022
DDJ Capital Management, LLC 4,021,269 (3) 20.1%
141 Linden Street, Suite 4
Wellesley, MA 02482-7910
B III Capital Partners, L.P. 2,237,092 (3) 11.2%
141 Linden Street, Suite 4
Wellesley, MA 02482-7910
DDJ Capital III, LLC 2,237,092 (3) 11.2%
141 Linden Street, Suite 4
Wellesley, MA 02482-7910
Northeast Investors Trust 1,906,164 (4) 9.5%
50 Congress Street
Boston, MA 02109-4096
Oaktree Capital Management, LLC 1,724,305 (5) 8.6%
333 South Grand Ave., 28th Floor
Los Angeles, CA 90071
Byron E. Allumbaugh 21,000 (6) *
Kevin P. Collins 21,000 (6) *
Joseph V. Fisher 339,500 (7) 1.7%
Martin A. Fox 131,677 (8) *
David B. Jenkins 21,000 (9) *
Gabriel S. Nechamkin 9,053,768 (10) 45.1%
Lief D. Rosenblatt 9,053,768 (10) 45.1%
Mark D. Sonnino 9,053,768 (10) 45.1%
Peter L. Zurkow 26,000 (11) *
Leslie B. Knox 20,000 (12) *
C. John Kistel, Jr. 10,000 (13) *
Gerald P. Suppa 6,000 (14) *
Roy M. Flood 0 (15) *
All Directors and Executive Officers as a Group (12
persons) 9,690,177 46.8%
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* Less than 1.0%
10
(1) Soros Fund Management LLC ("SFM") serves as the principal investment
manager of Quantum Partners LDC ("Quantum") and Quota Fund N.V.
("Quota"). SFM on behalf of each of Quantum and Quota, granted investment
discretion over the securities owned by such entities to Satellite Asset
Management, L.P. ("Satellite L.P.") pursuant to an investment advisory
contract between Quantum and Satellite L.P. (the "Quantum - Satellite
Contract") and between Quota and Satellite L.P. (the "Quota - Satellite
Contract"). As a consequence of SFM's ability to terminate the Quantum -
Satellite Contract and the Quota - Satellite Contract with respect to the
securities within 60 days, SFM may be deemed to have voting and
dispositive power over the securities held for the accounts of Quantum and
Quota at Satellite L.P. George Soros, as Chairman of SFM, may be deemed
to have beneficial ownership of securities held for accounts of Quota and
Quantum.
(2) Satellite L.P. holds 9,032,768 shares of securities for the accounts of
the following entities: (i) 7,854,032 shares held for the account of
Quantum and (ii) 1,178,736 shares held for the account of
Quota. Satellite L.P. has been granted investment discretion over the
shares of Common Stock held for the accounts of Quantum and Quota pursuant
to the Quantum - Satellite Contract and the Quota - Satellite Contract,
respectively.
(3) According to the Schedule 13D filed by DDJ Capital Management, LLC
("DDJ"), dated March 29, 2001, B III Capital Partners, L.P. (the "Fund")
owns, and DDJ Capital III, LLC and DDJ beneficially own, as general
partner and investment manager, respectively of the Fund, 2,237,092 shares
of Common Stock, or approximately 11.2% of the outstanding shares of
Common Stock. B III-A Capital Partners, L.P. ("B III-A") owns, and GP
III-A, LLC and DDJ, beneficially own, as general partner and investment
manager, respectively of B III-A, 280,037 shares of Common Stock, or
approximately 1.4% of the outstanding shares of Common Stock. The October
Fund, Limited Partnership ("October"), and October G.P., LLC and DDJ
beneficially own, as general partner and investment manager, respectively
of October, 29,000 shares of Common Stock, or approximately 0.1% of the
outstanding shares of Common Stock. DDJ, as investment manager to the
Fund, B III-A, October and an institutional investor, and as investment
advisor to DDJ Canadian may be deemed to beneficially own 4,021,269
shares, or approximately 20.1% of the outstanding shares of Common Stock.
(4) According to the Schedule 13G filed by Northeast Investors Trust, dated
February 12, 2001.
(5) According to the Schedule 13G filed by Oaktree Capital Management, LLC,
dated February 10, 2000, Oaktree Capital Management LLC is the general
partner of OCM Opportunities Fund, L.P. (the "Oaktree Fund") and the
investment manager of a third-party managed account (the "Oaktree
Account"). The Oaktree Fund and the Oaktree Account together beneficially
own 1,724,305 shares of Common Stock.
(6) Mr. Allumbaugh and Mr. Collins are deemed to each beneficially own (i)
20,000 shares of Common Stock by virtue of currently exercisable options
granted on July 7, 1999, to purchase 20,000 shares of Common Stock at
$12.13 per share and (ii) 1,000 shares of Common Stock by virtue of
currently exercisable options granted July 12, 2000 to purchase 1,000
shares of Common Stock at $6.16 per share.
(7) Mr. Fisher beneficially owns 3,000 shares of Common Stock and is also
deemed to beneficially own (i) 280,000 fully vested options granted on
July 7, 1999, with an exercise price of $18.30, (ii) 56,000 options, which
represents the vested portion of the 140,000
11
options granted to Mr. Fisher on September 22, 1999, with an exercise
price of $8.75 per share; and (iii) 500 shares owned by Mr. Fisher's wife.
(8) Mr. Fox obtained 1,289 shares of Common Stock by virtue of his exchange of
$50,000 principal amount of the former 11 1/2% senior notes due 2006 as
part of the Plan. In addition, the Plan also resulted in a 100-to-1
reverse stock split such that the 38,750 shares of the Company's former
common stock Mr. Fox owned prior to consummation of the Plan became 388
shares of the post-reorganization Common Stock. Additionally, Mr. Fox is
deemed to beneficially own 130,000 shares of Common Stock by virtue of
fully vested options granted on June 29, 1999, with an exercise price of
$18.30 per share.
(9) Mr. Jenkins is deemed to beneficially own (i) 20,000 shares of Common
Stock by virtue of currently exercisable options granted on May 10, 2000,
with an exercise price of $5.89 per share and (ii) 1,000 shares of Common
Stock, by virtue of currently exercisable options granted July 12, 2000,
to purchase 1,000 shares of Common Stock at $6.16 per share.
(10) 9,053,768 shares of Common Stock are held for the accounts of the
following entities: (i) 7,854,032 shares are held for the account of
Quantum and (ii) 1,178,736 shares are held for the account of
Quota. Satellite L.P. has been granted investment discretion over the
shares held for the accounts of Quantum and Quota pursuant to the
Quantum - Satellite Contract and the Quota - Satellite
Contract. Satellite Fund Management LLC ("Satellite LLC") is the general
partner of Satellite L.P. Messrs. Nechamkin, Rosenblatt and Sonnino are
managing members of Satellite LLC and in such capacity may be deemed to
have voting and dispositive power over the shares of Common Stock held
for the accounts of Quantum and Quota. In addition, each of
Messrs. Nechamkin, Rosenblatt and Sonnino is deemed to beneficially own
(i) 20,000 shares of Common Stock by virtue of currently exercisable
options granted on July 7, 1999 to purchase 20,000 shares of Common Stock
at $12.13 per share and (ii) 1,000 shares of Common Stock by virtue of
currently exercisable options granted July 12, 2000, to purchase 1,000
shares of Common Stock at $6.16 per share.
(11) Mr. Zurkow owns 5,000 shares of Common Stock, and he is also deemed to
beneficially own (i) 20,000 shares of Common Stock by virtue of currently
exercisable options granted on July 7, 1999 to purchase 20,000 shares of
Common Stock at $12.13 per share and (ii) 1,000 shares of Common Stock by
virtue of currently exercisable options granted July 12, 2000, to
purchase 1,000 shares of Common Stock at $6.16 per share.
(12) Mr. Knox is deemed to beneficially own 20,000 shares of Common Stock,
which represents the vested portion of the 50,000 options granted to
Mr. Knox on July 7, 1999, with an exercise price of $12.13 per share.
(13) Mr. Kistel is deemed to beneficially own 10,000 shares of Common Stock,
which represents the vested portion of 25,000 options granted to
Mr. Kistel on July 7, 1999, with an exercise price of $12.13 per share.
(14) Mr. Suppa is deemed to beneficially own 6,000 shares of Common Stock,
which represents the vested portion of 15,000 options granted to
Mr. Suppa on July 7, 1999, with an exercise price of $12.13 per share.
(15) Mr. Flood was deemed to beneficially own 10,000 shares of Common Stock,
which represents the vested portion of 25,000 options granted to
Mr. Flood on July 7, 1999, with an exercise price of $12.13 per
share. All of Mr. Flood's options were forfeited upon his retirement
from the Company on December 1, 2000.
12
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
The Company has determined that, no person who at any time during Fiscal
2001 was a director, officer or beneficial owner of more than 10% of the
Company's Common Stock failed to file on a timely basis reports required by
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Such determination is based solely upon the Company's review of Forms 3,
4 and 5, and written representations that no Form 5 was required, submitted to
it during or with respect to Fiscal 2001.
13
EXECUTIVE COMPENSATION
The following table sets forth the compensation paid or accrued by the
Company to (i) persons serving as President and Chief Executive Officer of the
Company during Fiscal 2001 and (ii) the four other most highly compensated
executive officers of the Company (collectively, the "Named Executive Officers")
during Fiscal 2001 for services rendered to the Company in all capacities during
the fiscal year ended January 30, 1999 ("Fiscal 1999"), the fiscal year ended
January 29, 2000 ("Fiscal 2000"), and Fiscal 2001 (53-weeks).
For Fiscal 1999 and from February 1, 1999 through February 28, 1999, Penn
Traffic engaged Miller Tabak Hirsch + Co. ("MTH") to provide financial
consulting and business management services. Mr. Fox was an Executive Vice
President of MTH until February 28, 1999. During Fiscal 1999, the Company paid
MTH $1,437,000 for such financial consulting and business management
services. From March 1, 1999, until June 29, 1999, Hirsch & Fox LLC (an entity
formed by Mr. Gary D. Hirsch the former chairman of the Executive Committee of
the Company and Mr. Fox) provided financial consulting and business management
services to the Company for which Hirsch & Fox LLC received fees of
$483,333. From June 29, 1999, through January 31, 2000, Hirsch & Fox LLC
provided the same services to the Company under a management agreement (the
"Management Agreement") and received fees of $845,833. On January 31, 2000, the
Management Agreement was terminated. As required by the rules of the Securities
and Exchange Commission, the amounts set forth below for Mr. Fox represents the
Company's best estimate of the allocable portions of such management fees paid
to the entities for the services of Mr. Fox to Penn Traffic.
14
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION AWARDS
---------------------------------- -------------
SECURITIES ALL
UNDERLYING OTHER
NAME AND PRINCIPAL FISCAL SALARY BONUS OPTIONS/ COMPENSATION
POSITION YEAR ($) ($)(6) SARS(#)(7)(8) ($)
- --------------------------------------- ---- ------------- ------------ ----------- -------------
Joseph V. Fisher 2001 $ 1,021,781(2)
President and Chief Executive Officer 2000 500,723(2) $ 250,000 420,000 $ 1,110,965(9)
1999 96,154(3) 48,072 500,000 1,060,000(10)
Martin A. Fox 2001 $ 1,019,520(2)
Executive Vice President and Chief 2000 458,333(4) $ 350,000 304,000 $ 1,204,167(11)
Financial Officer 1999 495,517(4)
Leslie B. Knox 2001 $ 282,084(2)
Senior Vice President and Chief 2000 206,250(3)(5) $ 55,000 50,000 $ 70,562(12)
Marketing Officer
C. John Kistel, Jr. 2001 $ 259,739(2) $ 98,436(12)
Vice President - General Merchandise 2000 180,000(3)(5) $ 43,500 25,000 79,562(12)
Gerald P. Suppa 2001 $ 215,769
Vice President & General Manager 2000 144,000 $ 27,360 $ 34,092(13)
of New York Operations 1999 39,600(3)
Roy M. Flood(1) 2001 $ 231,598(2) $ 383,875(14)
Former - Senior Vice President and 2000 211,442 $ 42,750 25,000 94,366(15)
General Manager of Big Bear 1999 71,584 102,981(15)
- ------------------------
(1) Mr. Flood retired from the Company as of December 1, 2000.
(2) Amounts shown include the Company sponsored contribution to 401(k) Plan.
(3) Amounts shown represent allocable portion of base salary for the subject
year.
(4) Amounts shown represent the Company's best estimate of the allocable
portion of management fees paid to entities that provided services of the
Named Executive Officer for such services rendered to Penn Traffic.
(5) As the Named Executive Officer did not serve as an executive officer in
prior fiscal years, such fiscal years have been omitted from the Summary
Compensation Table.
(6) As of May 25, 2001, the Company has not determined the amount (if any) of
the bonus attributable to Fiscal 2001.
(7) The options granted to Mr. Fisher in Fiscal 1999 were made pursuant to the
Company's former Performance Incentive Plan. On June 29, 1999, pursuant
to the Plan, all pre-existing options and warrants were canceled.
15
(8) On June 29, 1999, pursuant to the Plan, the Company adopted the Equity
Plan. Pursuant to the Equity Plan: (i) on June 29, 1999, Mr. Fisher was
awarded fully vested options to purchase 280,000 shares of Common Stock
with an exercise price equal to $18.30 per share; on September 22, 1999,
Mr. Fisher was awarded options to purchase 140,000 shares of Common Stock
with an exercise price of $8.75 per share and a four-year vesting period;
(ii) Mr. Fox was awarded (a) on June 29, 1999, fully vested options to
purchase 130,000 shares of Common Stock with an exercise price of $18.30
per share (b) on June 29, 1999, options to purchase 87,000 shares of
Common Stock with an exercise price of $18.30 per share that vest 50% on
each of the third and fourth anniversaries of the date of grant and
(c) on September 22, 1999, options to purchase 87,000 shares of Common
Stock with an exercise price of $8.75 per share that vest upon certain
specified changes of control; (iii) on July 7, 1999, Mr. Knox was awarded
options to purchase 50,000 shares of Common Stock with an exercise price
of $12.13 per share and a four-year vesting period; (iv) on July 7, 1999,
Mr. Kistel was awarded options to purchase 25,000 shares of Common Stock
with an exercise price of $12.13 per share and a four-year vesting period;
(v) on July 7, 1999, Mr. Suppa was awarded options to purchase 15,000
shares of Common Stock with an exercise price of $12.13 per share and a
four-year vesting period and (vi) on July 7, 1999, Mr. Flood was awarded
options to purchase 25,000 shares of Common Stock with an exercise price
of $12.13 per share which were forfeited upon his retirement.
(9) The amount for Fiscal 2000 includes (i) $1,002,838 for the complete
forgiveness of all remaining outstanding principal and interest due with
respect to a loan made to Mr. Fisher in connection with the commencement
of his employment with the Company and (ii) $108,127 for reimbursement of
certain relocation expenses.
(10) The amount for Fiscal 1999 includes $1 million in the form of a signing
bonus paid to Mr. Fisher upon the commencement of his employment with the
Company. The amount also includes interest and principal forgiven in
Fiscal 1999 with respect to a $1 million loan made to Mr. Fisher upon the
commencement of his employment with the Company.
(11) On January 31, 2000, $4.9 million was paid in a lump sum to Hirsch & Fox
LLC in connection with the termination of the Management Agreement. $1.55
million of this amount was allocated to Mr. Fox as follows (i) $1.2
million in respect of management fees allocable to Mr. Fox under the
Management Agreement and (ii) $350,000 in respect of Mr. Fox's annual
bonus for Fiscal 2000.
(12) Reimbursement of certain relocation expenses.
(13) Mr. Suppa was paid $34,092 in Fiscal 1999 by the Company in connection
with the elimination of his position as Vice President - Operations, P&C
Foods in the fiscal year ended January 31, 1998 ("Fiscal 1998") as part of
a management reorganization of the Company.
(14) Mr. Flood received (i) $338,248 as a lump sum payment of his pension and
(ii) $45,627 for forgiveness of a loan made to Mr. Flood.
(15) Includes payments to Mr. Flood of $90,385 and $100,000 in Fiscal 2000 and
Fiscal 1999, respectively, by the Company in connection with the
elimination of his position as President of the Company's P&C and Quality
divisions in Fiscal 1998 as part of a management reorganization of the
Company.
16
AGGREGATED OPTIONS/SAR EXERCISES
IN LAST FISCAL YEAR, AND FY-END
OPTIONS/SAR VALUES
The following table sets forth information concerning the value of
unexercised options held by each of the persons named in the Summary
Compensation Table, as of February 3, 2001. No options were exercised by such
persons during Fiscal 2001.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT FY-END IN-THE-MONEY OPTIONS/SARS
(#) AT FY-END ($)
--------------------------- ---------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE(1) UNEXERCISABLE(1)
- ---- ----------- ------------- -------------- ----------------
Joseph V. Fisher 336,000 84,000 N/A N/A
Martin A. Fox 130,000 174,000 N/A N/A
Leslie B. Knox 20,000 30,000 N/A N/A
C. John Kistel, Jr. 10,000 15,000 N/A N/A
Gerald P. Suppa 6,000 9,000 N/A N/A
- ---------------------
(1) Based on the fair market value of $4.13 per share on February 3, 2001.
17
PENSION PLANS AND OTHER BENEFIT PLANS
THE PENN TRAFFIC CASH BALANCE PENSION PLAN
Messrs. Fisher, Flood, Fox, Knox, Kistel and Suppa participated in a
tax-qualified, defined benefit pension plan (the "Cash Balance Plan") for all
eligible employees of the Company other than employees subject to a collective
bargaining agreement. The Cash Balance Plan took effect on June 1, 1998,
replacing several other plans covering nonunion employees. Under the Cash
Balance Plan, employees' pensions are measured by reference to account balances
to which credits are made based on a fixed percentage of compensation paid for
the year, plus interest at a rate comparable to the yield on long-term treasury
securities. Upon retirement, employees are permitted to take a lump-sum
distribution equal to their account balance, or receive an annuity benefit,
based on formulas set forth in the plan. The estimated annual benefits payable
at normal retirement age for Messrs. Fisher, Fox, Knox, Kistel and Suppa are
$9,107, $25,798, $14,668, $22,796 and $41,644, respectively, based upon
projected amounts accrued to normal retirement age. Mr. Flood received a lump
sum of $338,248 upon his retirement pursuant to the Cash Balance Plan.
In connection with the Cash Balance Plan, effective June 1, 1998, the
Company also began making certain matching contributions to its 401(k) profit
sharing plan for those employees who are also participants in the Cash Balance
Plan. The amounts contributed for the benefit of the Named Executive Officers
under this plan are included in the Summary Compensation Table under the heading
"Salary."
SUPPLEMENTAL RETIREMENT PLAN FOR CERTAIN EXECUTIVES
Effective June 29, 1999, Penn Traffic established the Supplemental
Retirement Plan for Non-Employee Executives (the "Non-Employee Plan"), an
unfunded deferred compensation plan, pursuant to which certain non-employee
executives would be able to earn retirement benefits. Pursuant to the
Non-Employee Plan, Messrs. Hirsch and Fox would be able to accrue pay-based
retirement benefits in the amount of 3% of the management fees allocable to
Messrs. Hirsch and Fox during a plan year, plus accrue interest credits on the
outstanding balance of their accumulated pay-based credits in the amount of 5%
each year. During Fiscal 2001, in accordance with Mr. Fox's employment
agreement, the Company established a supplemental retirement plan under which
Mr. Fox is entitled to (i) retain all of his accrued benefits under the
Non-Employee Plan (including service from 1988 to the date the new plan was
established) and (ii) continue to accrue retirement benefits in a comparable
fashion to the manner in which his retirement benefits were accrued under the
Non-Employee Plan.
18
EMPLOYMENT CONTRACTS
EMPLOYMENT AGREEMENT WITH JOSEPH V. FISHER
On October 30, 1998, the Company and Mr. Fisher entered into an employment
agreement which provided for Mr. Fisher to assume the position of President and
Chief Executive Officer of the Company for a term commencing on November 23,
1998 and ending on February 1, 2002. On June 29, 1999, Mr. Fisher's employment
agreement was amended in connection with the consummation of the Plan. On
December 2, 1999, and January 31, 2000, the agreement was further amended. The
following describes the principal terms of Mr. Fisher's employment agreement in
its original form and the effects the amendments have had.
Under his original employment agreement, Mr. Fisher was entitled to
receive an annual base salary of $500,000, and a bonus ranging from 0 to 100% of
his base salary depending on performance (provided that Mr. Fisher was
guaranteed to receive at least a 50% bonus for the fiscal year ended
January 30, 1999 (pro rata based on days employed), and the fiscal year ended
January 29, 2000). As an inducement to enter into the employment agreement,
Mr. Fisher received (i) a signing bonus of $1 million, (ii) a loan in the amount
of $1 million which was scheduled to be forgiven over 12 consecutive quarterly
periods (or immediately, in the event the Company terminates Mr. Fisher's
employment other than for cause or due to his death or disability, Mr. Fisher
terminates his employment for "good reason" or, in certain circumstances,
following a change of control) and (iii) ten-year options with a four-year
vesting period to purchase 500,000 shares of Penn Traffic's former common stock
at an exercise price equal to fair market value at the grant date. The
employment agreement further provided that upon the occurrence of a "change of
control" all unvested options would immediately vest.
The employment agreement also provided that if Mr. Fisher's employment is
terminated by the Company other than (i) as a result of disability or (ii) for
cause, or if Mr. Fisher terminates his employment for "good reason," the Company
will continue to pay Mr. Fisher his base salary then in effect (in the manner in
which his salary payments had been paid) for the lesser of (x) 24 months from
the date of termination and (y) the number of months remaining from the
effective date of termination until February 1, 2002; provided that, if the
termination occurs between February 1, 2001, and February 1, 2002, his base
salary payments will continue for 12 months from the date of termination. In
addition, if during Mr. Fisher's employment a "change of control" occurs, and
following that event Mr. Fisher resigns from his position with the Company or is
terminated from his position within six months from the date of that event,
Mr. Fisher will be entitled to enter into a consulting agreement with the
Company and receive a lump sum payment in an amount equal to 24 months of his
base salary.
19
The June 29, 1999, amendment to Mr. Fisher's employment agreement had the
following effects: (i) Mr. Fisher was appointed to the newly constituted Board
of Directors and Executive Committee of the Company and (ii) Mr. Fisher's
options to purchase 500,000 shares of the Company's former common stock (as
described in the paragraph above) were canceled and he received ten-year, fully
vested options to purchase 280,000 shares of new Common Stock of the reorganized
Company with an exercise price of $18.30 per share. Otherwise, Mr. Fisher's
original employment agreement with the Company remains in full force and effect
throughout its term.
The December 2, 1999, amendment had the following effects:
(i) Mr. Fisher was granted, as of September 22, 1999, options to purchase
140,000 shares of Common Stock with an exercise price of $8.75 per share and a
four-year vesting period, (ii) an additional "change of control" concept was
added (a "Section 12 Change of Control," which is described below) and
(iii) Mr. Fisher's right to receive continuing base salary payments in certain
specified circumstances after his termination was modified to account for the
addition of the Section 12 Change of Control provision. Pursuant to the
December 2, 1999, amendment, if prior to the "Determination Date" (as described
below) a Section 12 Change of Control occurs, in lieu of the lump sum payments
in connection with the consulting agreement described above, Mr. Fisher will be
entitled to receive the payment described below on the date of the occurrence of
the Section 12 Change of Control. Under the amendment, the "Determination Date"
means December 31, 2000; provided that if a definitive agreement (as such
agreement may be amended, modified or supplemented from time to time) with
respect to an event which would constitute a Section 12 Change of Control is
executed on or before August 31, 2000, or if such definitive agreement is
terminated and within six months of the date of such termination the Company
enters into another definitive agreement with respect to an event which would
constitute a Section 12 Change of Control with the same entity (or such entity's
affiliate) that was a party to the first such agreement, then the "Determination
Date" will be the date on which the transaction contemplated by such definitive
agreement is consummated. The payment to which Mr. Fisher will be entitled upon
a Section 12 Change of Control will be the greater of (a) Mr. Fisher's base
salary for the remainder of his term (but not less than one year's base salary)
and (b) $5 million minus the sum of (A) the "in-the-money" value on the date of
the occurrence of a "change of control" of the options granted to Mr. Fisher on
June 29, 1999, plus (B) the "in-the-money" value on the date of the occurrence
of a "change of control" of Mr. Fisher's options granted on September 22, 1999,
that are vested and exercisable. In addition, the amendment provides that, in
the event that any payment made to Mr. Fisher pursuant to a "change of control"
is subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended, Mr. Fisher shall be entitled to an additional payment
in an amount such that, after payment of all taxes by Mr. Fisher, including any
excise tax imposed on such additional payment, he will retain an amount equal to
the excise tax imposed on the payment made to him upon a "change of control."
20
The January 31, 2000 amendment had the following effects:
(i) Mr. Fisher's salary was increased to $1,000,000 per year,
(ii) Mr. Fisher's target bonus was changed to a discretionary bonus, (iii) the
definition of "Determination Date" was changed to December 31, 2001, or such
later date set forth in an engagement letter entered into between the Company
and an investment bank regarding the investment bank's success fee, (iv) the
definition of "cause" was changed in a manner more advantageous to Mr. Fisher
and (v) the $5 million amount referred to in clause (b) in the paragraph above
was changed to $4.9 million.
EMPLOYMENT AGREEMENT WITH MARTIN A. FOX
Upon the termination of the management agreement with Hirsch & Fox LLC (as
described below), the Company entered into an employment agreement with
Mr. Fox, one of the members of Hirsch & Fox LLC, which provides for Mr. Fox to
be the Executive Vice President and Chief Financial Officer of the Company for a
term ending March 31, 2001 (the term was extended to December 31, 2001, by an
amendment to the agreement between the Company and Mr. Fox dated November 15,
2000). Under his employment agreement (as amended), Mr. Fox is entitled to
receive an annual base salary of $1,000,000 and a discretionary bonus to be
determined by the Board of Directors in its sole discretion. In addition,
Mr. Fox holds the following options to purchase Common Stock: (i) fully vested
options to purchase 130,000 shares of the Common Stock with an exercise price
equal to $18.30 per share; (ii) options to purchase 87,000 shares of Common
Stock with an exercise price equal to $18.30 per share, such options to vest 50%
on the third anniversary of the date of grant (i.e., June 29, 1999) and 50% on
the fourth anniversary of such date and (iii) options to purchase 87,000 shares
of Common Stock with an exercise price equal to $8.75 per share, such options to
vest upon the occurrence of a change of control if the agreement relating to the
change of control is entered into prior to December 31, 2001, or such later date
set forth in an engagement letter entered into between the Company and an
investment bank prior to December 31, 2001 (the "Determination Date"), regarding
the bank's success fee.
The employment agreement (as amended) also provides that if Mr. Fox's
employment is terminated by the Company other than (i) as a result of death or
disability or (ii) cause, or if Mr. Fox terminates his employment for "good
reason," the Company will make a lump sum payment to Mr. Fox of his salary then
in effect in an amount that Mr. Fox would have been entitled to receive from the
date of such termination until December 31, 2001, had a termination not occurred
prior to such date. In addition, if a change of control occurs prior to the
Determination Date but following such termination of employment, the Company
will make the "change of control payment" (described below) less that portion of
the lump sum payment which Mr. Fox receives that is attributable to the period
following the change of control.
21
The employment agreement (as amended) also provides that Mr. Fox will be
entitled to receive a certain lump sum payment upon certain specified changes of
control. Specifically, if prior to the Determination Date the Company enters
into a definitive agreement with respect to a change of control (as defined) or
a change of control occurs, then Mr. Fox will be entitled to receive a lump sum
payment (subject to offset as set forth in the paragraph above) on the date of
the occurrence of a change of control in the following amount: the greater of
(i) Mr. Fox's salary for the remainder of the term (but not less than one year's
salary) and (ii) $2.9 million, minus the sum of (A) the "in-the-money" value on
the date of the occurrence of a change of control of the options granted to
Mr. Fox on June 29, 1999, plus (B) the "in-the-money" value on the date of the
occurrence of a change of control of the options granted to Mr. Fox on
September 22, 1999. In addition, in the event that any payment made to Mr. Fox
pursuant to a change of control is subject to the excise tax imposed by
Section 4999 of the Internal Revenue Code of 1986, as amended, Mr. Fox will
receive an additional payment in an amount such that after payment of all taxes,
including any excise tax imposed on such additional payment, he will retain an
amount equal to the excise tax imposed on the payment made to him upon a change
of control.
EMPLOYMENT AGREEMENT WITH LESLIE B. KNOX
On August 14, 1999, the Company and Mr. Leslie Knox entered into an
employment agreement which provided for Mr. Knox to assume the position of
Senior Vice President and Chief Marketing Officer of the Company for a term
commencing on May 3, 1999, and ending on May 3, 2001. Under his employment
agreement, Mr. Knox is entitled to receive an annual base salary of $275,000,
and a bonus ranging from 0 to 40% of his base salary depending on performance
(provided that Mr. Knox was guaranteed to receive at least $55,000 for the
fiscal year ended January 29, 2000). In addition, on July 7, 1999, Mr. Knox was
granted 10-year options to purchase 50,000 shares of Common Stock with an
exercise price equal to $12.13 per share, such options to vest 20% on the grant
date and 20% on each of the four succeeding anniversaries of the grant date.
The employment agreement also provides that if the Company terminates
Mr. Knox's employment other than (i) as a result of death or disability or
(ii) for cause, or if Mr. Knox terminates his employment for "good reason," the
Company will continue to pay to Mr. Knox his base salary then in effect for a
period of 12 months from the date of termination.
22
TERMINATION OF MANAGEMENT AGREEMENT WITH HIRSCH & FOX LLC
On January 31, 2000, the Company and Hirsch & Fox LLC entered into an
agreement terminating the management agreement pursuant to which Hirsch & Fox
LLC provided management and consulting services to the Company (the "Termination
Agreement"). Under the Termination Agreement, Hirsch & Fox LLC received, among
other things, a lump sum payment of $4.9 million (the "Cash Payment") and
reimbursement for all of their documented expenses incurred through
January 31, 2000. The Cash Payment was allocated as follows: (i) $1.35 million
in full satisfaction of management fees allocable to Mr. Hirsch under the
Management Agreement, (ii) $1.7 million in full satisfaction of Mr. Hirsch's
right to receive a payment upon a change of control as contemplated by the
Management Agreement, (iii) $300,000 in exchange for the cancellation of his
then-exercisable options to purchase 360,000 shares of Common Stock and (iv)
$1.55 million in full satisfaction of management fees and annual bonus allocable
to Mr. Fox under the Management Agreement. In exchange for these payments and
other non-cash consideration, Hirsch & Fox LLC agreed to forego the remainder of
the term under the Management Agreement, which was scheduled to expire on June
30, 2001. In addition, Mr. Fox entered into a separate employment agreement
with the Company to act as the Company's Executive Vice President and Chief
Financial Officer. The principal terms of this agreement are described above
under the heading "Employment Agreement with Martin A. Fox."
CHANGE OF CONTROL POLICY
The Company's Executive Enhanced Severance Policy, effective from
January 1, 2000, through December 31, 2002, provides that in the event of a
"Change of Control" (as defined in the policy), certain executives of the
Company will be eligible to receive severance payments ranging from six months
to 18 months of base salary if such executive's employment is terminated within
one year of such change in control for reasons other than "Cause" or "Total
Disability" (each as defined in the policy) or if executive terminates his/her
employment for "Good Reason" (as defined in the policy) within one year of such
change in control. Under the policy, each executive has the option of receiving
his/her severance payment in a lump sum or in the same manner as base salary
would have been paid to the executive had he/she remained employed by the
Company within one year of such change of control.
23
COMPENSATION OF DIRECTORS
In Fiscal 2001, directors who were not regularly employed by the Company
received an annual fee of $20,000 ($5,000 per quarter). 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 who are officers of the
Company do not receive fees for attending meetings of the Board of Directors or
its committees. On May 10, 2000, upon his appointment to the Board of
Directors, Mr. Jenkins was awarded options to purchase 20,000 shares at $5.89
per share in accordance with the terms of the Company's Directors Plan. On
July 12, 2000, Messrs. Allumbaugh, Collins, Jenkins, Nechamkin, Rosenblatt,
Sonnino and Zurkow each received a grant of 1,000 fully vested options to
purchase Common Stock with an exercise price of $6.16 per share pursuant to the
Directors Plan.
In the fiscal year ending February 2, 2002, directors who are not
regularly employed by the Company will receive an annual fee of $25,000 ($6,250
per quarter). Each such director will also be paid a fee of $2,500 for
attendance at each Board meeting or committee meeting plus $1,500 for attending
telephonic meetings of the Board. Committee members of the Board receive $5,000
per annum ($1,250 per quarter) plus $1,000 for attending in person meetings of
committees and $500 for attending meetings of the committee held in conjunction
with the Board Meeting attended.
On March 29, 2001, the Board created the position of Lead Outside Director
and appointed Mr. Collins to that position. The Lead Outside Director will be
responsible for, among other things, coordinating the activities of the
independent directors and serving as Chairman of the Audit Committee. The Lead
Outside Director will receive an annual fee of $25,000 ($6,250 per quarter) in
addition to the fees described above.
In July 1999, the Company adopted the Directors Plan. The Directors Plan
makes available to the Company's directors, who are not employees of the
Company, options to acquire in the aggregate up to 250,000 shares of new Common
Stock. Under the terms of the Directors Plan, each eligible director receives
as of the date of appointment to the Board of Directors an option to purchase
20,000 shares of new 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. The Directors Plan also provides for the issuance
of additional options annually thereafter as of the first business day after the
conclusion of each Annual Meeting of Stockholders of the Company. In
July 2000, the directors received an option to purchase an additional 1,000
shares. The options expire 10-years after the date of grant and vest
immediately upon issuance. Options to acquire an additional 83,000 shares may
be granted under the Directors Plan.
24
COMPENSATION AND STOCK OPTION COMMITTEE
The Compensation and Stock Option Committee (the "Compensation Committee")
of the Board of Directors is currently composed of Messrs. Allumbaugh, Jenkins,
Nechamkin and Zurkow with Mr. Zurkow as Chairman.
The Compensation Committee reviews the annual recommendations of the Chief
Executive Officer concerning the compensation of officers and of certain of the
employees of the Company, 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 also administers the Equity Plan and
Directors Plan.
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 and
within the food distribution industry, individual performance, length of service
and internal comparability considerations.
CASH BONUS PLANS
Cash bonuses are paid to executive officers under the Company's Corporate
Incentive Plan. Participants in the Corporate Incentive Plan (the "CIP") are
determined by the Board of Directors upon recommendation of the Compensation
Committee. Target bonus opportunities under the CIP are based on achievement of
previously established financial goals for the Company, and on achievement of
individual objectives.
For Fiscal 2001, bonuses were accrued pursuant to the CIP. For Fiscal
2000, bonuses were accrued and paid pursuant to the CIP. For Fiscal 1999 no
bonuses were paid pursuant to the CIP. Some bonuses were paid in Fiscal 1999 in
appreciation for contributions made during those years by selected
officers. These amounts are included in the "Bonus" column of the Summary
Compensation Table.
25
STOCK OPTIONS
In addition to Annual Compensation, the Company provides to certain of its
officers and employees long-term incentive compensation under the Company's
Equity Plan. Most of the stock options granted under the Equity Plan vest over
a period of years determined by the Company's Compensation and Stock Option
Committee. The Equity Plan provides for long-term incentives based upon
objective, quantifiable measures of the Company's performance over time through
the payment of incentive compensation, including the grant of stock
options. See also "Executive Compensation - Summary Compensation Table" above.
OTHER COMPENSATION
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.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Fisher receives his annual compensation pursuant to his employment
agreement. In addition, Mr. Fisher received grants of options to purchase
420,000 shares of Common Stock that are intended to provide him with an
incentive to increase stockholder value. For a more in-depth discussion of
Mr. Fisher's employment agreement, please see the discussion of Joseph V.
Fisher's compensation under his employment agreement above.
Peter L. Zurkow, Chairman
Byron E. Allumbaugh
David B. Jenkins
Gabriel S. Nechamkin
26
REPORT OF THE AUDIT COMMITTEE
The Audit Committee is composed of four independent directors and operates
under a written charter adopted by the Board of Directors (see Exhibit A). The
current members of the Committee are Messrs. Collins (Chair), Jenkins, Sonnino
and Zurkow, each an outside independent director. The members of the Audit
Committee held two meetings during the fiscal year ended February 3, 2001. In
addition, the Chairman of the Audit Committee held discussions with the
Company's financial management and the Company's independent auditors regarding
the Company's Consolidated Statement of Operations and Consolidated Balance
Sheet and matters required by the Statement of Auditing Standards ("SAS")
No. 61, as amended by SAS 89 and 90, prior to the public announcement of
financial results of the Company's financial results for the first, second and
third quarters of Fiscal 2001.
The Audit Committee's primary function is to assist the Board of Directors
in fulfilling its oversight responsibilities by reviewing (i) the financial
reports and other financial information provided by the Company to the
shareholders, the public and others, (ii) the systems of internal controls
regarding finance, accounting, legal compliance and ethical behavior that
management and the Board of Directors have established and (iii) the Company's
auditing, accounting and financial reporting process generally.
The Company's independent auditors provided to the Audit Committee the
written disclosures required by Independence Standards Board Standard No. 1
(Independence Discussions with the Audit Committee) and the Audit Committee has
discussed with the independent auditors that firm's independence. Based on this
discussion, the Audit Committee recommends to the Board of Directors the
appointment of PricewaterhouseCoopers LLP as the Company's independent auditors.
Based on the Audit Committee's review of the Company's consolidated
financial statements and its discussions with management and the Company's
independent auditors, the Audit Committee recommended that the Board of
Directors include the audited consolidated financial statements for fiscal year
ending February 3, 2001, in the Company's 10-K filed with the Securities and
Exchange Commission.
AUDIT FEES
Aggregate fees, including out-of-pocket expenses, for professional
services rendered by PricewaterhouseCoopers LLP in connection with (i) the audit
of the Company's consolidated financial statements for fiscal year ending
February 3, 2001 and (ii) the limited review of the Company's unaudited
consolidated interim financial statements were $390,000.
27
ALL OTHER FEES
In addition to the Audit Fees described above, the Company paid
PricewaterhouseCoopers LLP an aggregate of $265,000 for pension, actuarial, tax
and other services rendered during Fiscal 2001.
The Audit Committee considered whether the non-audit services rendered by
PricewaterhouseCoopers LLP were compatible with maintaining
PricewaterhouseCoopers LLP's independence as auditors of our consolidated
financial statements.
Kevin P. Collins, Chairman
David B. Jenkins
Mark D. Sonnino
Peter L. Zurkow
28
PERFORMANCE GRAPH
The following are graphs which compare the cumulative total stockholder
return of the Company's Common Stock, the cumulative total return of Standard &
Poor's 500 Stock Index ("S&P Index") and the cumulative total return of
Standard & Poor's Retail Food Index(1) ("S&P Food Index") for (i) the period
from February 3, 1996, through June 28, 1999 and (ii) the period from June 29,
1999, through February 3, 2001. The Company includes two graphs to demonstrate
(i) the performance of its former Common Stock through the date of the
completion of the Company's financial restructuring and (ii) the performance of
the Common Stock since the completion of the Company's financial restructuring
on June 29, 1999.
-------------------------------------------------------------------------------------
2/3/96 2/1/97 1/31/98 1/30/99 6/28/99 6/29/99 1/29/00 2/3/01
-------------------------------------------------------------------------------------
Penn Traffic $100 $16 $41 $5 $1 $100 $63 $32
S & P 500 100 124 154 201 212 100 103 100
S & P Food 100 115 156 246 183 100 94 81
(1) Includes Albertson's, Great Atlantic & Pacific, Kroger, Safeway and
Winn-Dixie.
(2) Assumes $100 invested on February 3,1996, in the Company's former
Common Stock, the S&P 500 Index and the S&P Food Index (also assumes
reinvestment of dividends).
(3) Assumes $100 invested on June 29, 1999, in Penn Traffic Common Stock,
the S&P 500 Index and the S&P Food Index (also assumes reinvestment of
dividends).
(4) The stockholder returns shown are neither determinative nor indicative
of future performance.
29
2. RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected PricewaterhouseCoopers LLP,
independent certified public accountants, as independent auditors for the
Company for the fiscal year ending February 2, 2002. A proposal to ratify such
selection will be submitted to stockholders at the Annual Meeting. Although
ratification by stockholders is not a prerequisite to the ability of the Board
of Directors to select PricewaterhouseCoopers LLP as the Company's independent
auditors, the Company believes such ratification to be desirable. If the
stockholders do not ratify the selection of PricewaterhouseCoopers LLP, the
selection of independent auditors will be reconsidered by the Board of
Directors; however, the Board of Directors may select PricewaterhouseCoopers LLP
notwithstanding the failure of the stockholders to ratify its selection.
It is expected that a representative of PricewaterhouseCoopers LLP will be
present at the meeting, will have an opportunity to make statements and will be
available to respond to appropriate questions.
PricewaterhouseCoopers LLP, or its predecessor, has performed the annual
examination of the Company's financial statements since 1981.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE "FOR" THIS
PROPOSAL. PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE SO VOTED UNLESS
STOCKHOLDERS SPECIFY A CONTRARY VOTE.
30
3. ALL OTHER MATTERS THAT MAY COME BEFORE THE MEETING
As of the date of this Proxy 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, proxies in the enclosed form will be voted in accordance with the
judgment of the person or persons voting the proxies.
4. 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 as a director by 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. 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 Securities and Exchange Commission,
any proposal of a stockholder intended to be presented at the Company's 2002
Annual Meeting of Stockholders must be received by the Secretary of the Company
by April 16, 2002, for the proposal to be considered for inclusion in the
Company's notice of meeting, proxy statement and proxy relating to the 2002
Annual Meeting of Stockholders, provided, however, that in the event that the
date of the annual meeting is changed by more than 30 days from such anniversary
date (July 11, 2001), notice by the stockholder to be timely must have been
received no later than the close of business on the 10th day following the day
on which public announcement of the date of such meeting is first made.
31
5. 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. A quorum comprising the
holders of a majority of the outstanding shares of Common Stock on the record
date must be present in person or represented by proxy for the transaction of
business at the Annual Meeting.
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 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
$3,500 plus expenses.
By Order of the Board of Directors
FRANCIS D. PRICE JR.
Secretary
May 25, 2001
Syracuse, New York
32
EXHIBIT A
THE PENN TRAFFIC COMPANY
CHARTER OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing (i) the
financial reports and other financial information provided by the Company to
shareholders, the public and others, (ii) the systems of internal controls
regarding finance, accounting, legal compliance and ethical behavior that
management and the Board of Directors have established and (iii) the Company's
auditing, accounting and financial reporting processes generally. Consistent
with this function, the Audit Committee should encourage continuous improvement
of, and should foster adherence to, the Company's policies, procedures and
practices at all levels.
In meeting its responsibilities, the Audit Committee is expected to:
- Serve as an independent and objective party to review the Company's
financial reporting process and internal control system.
- Review and appraise the audit activities of the Company's independent
auditors and internal auditing department.
- Provide an open avenue of communication among the independent auditors,
financial and senior management, the internal auditors and the Board of
Directors.
Without limiting the foregoing, and in recognition of the fact that the
Company's independent auditors are ultimately accountable to the Board of
Directors and the Audit Committee, the Board of Directors and the Audit
Committee have the ultimate authority and responsibility to select, evaluate
and, where appropriate, replace the independent auditors (or to nominate the
independent auditors for shareholder approval).
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. ORGANIZATION
The Audit Committee shall be comprised of three or more directors as
determined by the Board, each of whom shall be independent of the management,
and free from any relationship that, in the opinion of the Board, would
interfere with the exercise of the director's independence from the management
and the Company. For purposes of this Charter, certain relationships as set
forth on Annex I shall negate the status of independence.
33
All members of the Audit Committee shall have a working familiarity with
basic finance and accounting practices, and at least one member of the Audit
Committee shall have accounting or related financial management expertise, as
determined by the Board of Directors.
The members of the Audit Committee shall be elected by the Board of
Directors at the annual organizational meeting of the Board and the members
shall serve until their successors shall be duly elected and qualified. The
Chair of the Audit Committee may be designated by the full Board or, if it does
not do so, the members of the Audit Committee may elect a Chair by vote of a
majority of the full Audit Committee membership.
III. MEETINGS
The Audit Committee shall meet semi-annually, or more frequently as
circumstances dictate, with management and the Company's independent
auditors. The Chairman of the Audit Committee individually or the Audit
Committee as a whole shall meet with management and the independent auditors
each quarter to review the Company's Consolidated Statement of Operations and
Consolidated Balance Sheet (consistent with IV.b below). The Audit Committee
may require members of management or others to attend meetings and to provide
pertinent information as necessary. As part of its job to foster open
communication, the Audit Committee or its Chairman shall meet in separate
executive sessions at least semi-annually with the Company's independent
auditors, and periodically with the Company's financial management and Director
of the Internal Auditing Department to discuss any matters that the Audit
Committee or any of these groups believe should be discussed privately.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
(a) Review with financial management and the Company's independent
auditors the Company's Consolidated Statement of Operations and
Consolidated Balance Sheet and matters required by the Statement of
Auditing Standards ("SAS") No. 61, as amended by SAS 89 and 90,
prior to any public announcement of financial results for the
periods covered thereby. The Chairman of the Audit Committee may
represent the entire Audit Committee for purposes of this review.
(b) Review the Company's Form 10-K, Form 10-Q and annual and quarterly
(if applicable) reports to stockholders prior to submission to the
Securities and Exchange Commission or stockholders, as the case may
be, including any certification, report, opinion or review rendered
by the independent auditors. In addition, recommend to the Board
that the Corporation's audited financial statements be included in
the Corporation's Annual Report on Form 10-K for the last fiscal
year for filing with the Securities and
34
Exchange Commission. The Chairman of the Audit Committee may
represent the entire Audit Committee for purposes of the review of
the Form 10-Q and any quarterly reports to stockholders.
(c) Review and reassess the adequacy of the Audit Committee's Charter
annually and recommend to the Board any changes deemed appropriate
by the Audit Committee. The Chair of the Audit Committee may
represent the entire Audit Committee for purposes of this review.
(d) Prepare any reports of the Audit Committee required by applicable
securities laws or stock exchange listing requirements or rules to
be included in any proxy statements, information statements or
other documents.
(e) Review the performance of the independent auditors and make
recommendations to the Board of Directors regarding the appointment
or replacement of the independent auditors.
(f) On an annual basis, review and discuss with the independent auditors
all relationships the independent auditors have with the Company to
determine the independent auditors' continued independence. In
connection with the foregoing, the Audit Committee shall ensure
that the independent auditors submit to the Audit Committee on an
annual basis a written statement delineating all such relationships
(consistent with Independence Standards Board Statement No. 1),
shall discuss with the independent auditors any disclosed
relationship or services that may impact the objectivity and
independence of the independent auditors and shall recommend that
the Board of Directors take appropriate action in response to the
written statement to satisfy itself of the independent auditors'
independence.
(g) Periodically consult with the independent auditors without management
being present about the completeness and accuracy of the Company's
financial statements.
(h) Periodically discuss with the independent auditors their judgments
about the quality and appropriateness, as opposed to the
acceptability, of the Company's accounting principles and financial
disclosure practices as applied in its financial reporting.
(i) Consider and approve, if appropriate, major changes to the Company's
auditing and accounting principles and practices as suggested by
the independent auditors, management or the internal auditing
department.
(j) In consultation with the independent auditors and the internal
auditors, review the integrity of the Company's financial reporting
processes, both internal and external.
35
(k) Establish regular and separate systems of reporting to the Audit
Committee by each of management, the independent auditors and the
internal auditors regarding any significant judgments made in
management's preparation of the financial statements and the view
of each as to the appropriateness of such judgments.
(l) Following completion of the annual audit, review separately with
each of management, the independent auditors and the internal
auditing department any significant difficulties encountered during
the course of the audit, including any restrictions on the scope of
work or access to required information.
(m) Review any significant disagreement between management and the
independent auditors or the internal auditing department in
connection with the preparation of the financial statements.
(n) Review with the independent auditors, management and the internal
auditing department the extent to which changes or improvements in
financial or accounting practices, as approved by the Audit
Committee, have been implemented. (The review should be conducted
at an appropriate time subsequent to implementation of changes or
improvements, as determined by the Audit Committee.)
(o) Review, with the Company's counsel, legal compliance matters
including corporate securities trading policies.
(p) Review, with the Company's counsel, any legal matter that could have
a significant impact on the Company's financial statements.
(q) Report, through its Chair, to the Board following meetings of the
Audit Committee.
(r) Maintain minutes or other records of meetings and activities of the
Audit Committee.
(s) Perform any other activities consistent with this Charter, the
Company's by-laws and governing law, as the Audit Committee or the
Board deems necessary or appropriate.
36
ANNEX I
Definitions of Independence. None of the following will be deemed independent:
(a) a director who is employed by the Company or any of its affiliates for
the current year or any of the past three years;
(b) a director who accepts any compensation from the Company or any of its
affiliates in excess of $60,000 during the previous fiscal year, other than
compensation for board service, benefits under a tax-qualified retirement plan
or nondiscretionary compensation;
(c) a director who is a member of the immediate family of an individual who
is, or has been in any of the past three years, employed by the Company or any
of its affiliates as an executive officer. Immediate family includes a person's
spouse, parents, children, siblings, mother-in-law, father-in-law,
brother-in-law, sister-in-law, son-in-law, daughter-in-law and any other person
who resides in such person's home;
(d) a director who is a partner in, or a controlling shareholder or an
executive officer of, any for-profit business organization to which the Company
made, or from which the Company received, payments (other than those arising
solely from investments in the corporation's securities) that exceed 5% of the
corporation's or business organization's consolidated gross revenues for that
year, or $200,000, whichever is more, in any of the past three years;
(e) a director who is employed as an executive of another entity where any
of the Company's executives serve on that entity's compensation committee.
37
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PROXY PROXY
THE PENN TRAFFIC COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY
FOR THE ANNUAL MEETING OF STOCKHOLDERS -- JULY 11, 2001
The undersigned hereby appoints Peter L. Zurkow and Joseph V. Fisher
proxies, each with the power to appoint his substitute and with authority in
each to act in the absence of the other, to represent and to vote all shares of
common stock of The Penn Traffic Company which the undersigned is entitled to
vote at the Annual Meeting of Stockholders to be held at the Wyndham Hotel, 6301
Route 298, East Syracuse, New York 13057 on July 11, 2001 at 1:00 P.M. Eastern
Standard Time, and at all adjournments thereof, as indicated on the proposals
described in the Proxy Statement, and all other matters properly 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 PROPOSAL 2.
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 PROPOSAL 2. UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE
VOTED FOR ALL NOMINEES LISTED IN PROPOSAL 1 AND FOR APPROVAL OF PROPOSAL 2.
1. ELECTION OF DIRECTORS FOR WITHHOLD FOR ALL
NOMINEE(S): ALL ALL EXCEPT
01 Byron E. Allumbaugh 02 Kevin P. Collins
03 Joseph V. Fisher 04 Martin A. Fox |_| |_| |_|
05 David B. Jenkins 06 Gabriel S. Nechamkin
07 Lief D. Rosenblatt 08 Mark D. Sonnino
09 Peter L. Zurkow
INSTRUCTION: To withhold authority to vote for
an individual nominee, write that nominee's name
in the following space:
----------------------------------------------
2. The proposal to ratify the appointment of FOR AGAINST ABSTAIN
PricewaterhouseCoopers LLP as the independent
accountants for The Penn Traffic Company for the |_| |_| |_|
fiscal year ending February 2, 2002.
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 , 2001
-----------------------
THIS SPACE RESERVED Signature(s)
FOR ADDRESSING -------------------------------------
(key lines do not print)
-------------------------------------------------
(Please sign as name(s) appear 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.)
- -------------------------------
- --------------------------------------------------------------------------------
^ FOLD AND DETACH HERE ^
YOUR VOTE IS IMPORTANT!
PLEASE MARK, SIGN, DATE AND MAIL THIS PROXY CARD PROMPTLY
USING THE ENCLOSED ENVELOPE.